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- Nedbank’s listing shows a dramatic decline in fixed investment activity in 2023 as persistent power outages, rising interest rates and cost pressures weighed on profitability and eroded business confidence.
- The value of new projects announced during the year fell to R184.8 billion from R259.9 billion in 2022.
- The government replaced the private sector as the major driver, with planned new projects of R101.6 billion, accounting for 55% of the total value of new projects announced in 2023.
- Project announcements by public corporations picked up in the second half of the year, bringing the total value to R27 billion, which is nonetheless a sharp decline from the flurry of announcements in the previous years.
- Capital projects by the private sector dropped to a meagre R56.1 billion, amounting to around 30% of the total value of new projects announced.
- Nedbank expects the weakness in capital spending to continue into 2024. Gross fixed capital formation (GFCF) is forecast to grow by about 0.5%, down from a forecasted 4.2% in 2023. The only boost will come from investment in renewable-energy generation and public sector infrastructure spending.
- GFCF growth is, however, expected to accelerate to 3.9% in 2025, supported by renewable energy investments, stronger global growth, and firmer commodity prices.