Photo: LegalCouncil / Wikimedia Commons, CC BY-SA 4.0
South Africa’s economy is facing renewed pressure after investment fell to 13.6% of GDP, its lowest level in five years, as planned public infrastructure spending struggles to become active projects.
Investment warning follows GDP decline
The warning comes after Statistics South Africa reported that gross domestic product contracted by 0.2% in the second quarter of 2026, ending six consecutive quarters of expansion. Mining, manufacturing, and trade, catering and accommodation were among the sectors pulling output lower.
DGBN has also reported on South African Presidency reaffirms B-BBEE as it pursues policy overhaul.
Original source: Original source.
Business Leadership South Africa (BLSA) chief executive Busisiwe Mavuso said the investment figure was far below the roughly 30% of GDP she argues is needed to support credible long-term growth. Gross fixed capital formation also declined by 0.2% quarter-on-quarter in the April-to-June period, according to official data.
For a country confronting persistently high unemployment, weak investment means fewer new factories, transport links, energy projects and construction opportunities that could widen access to work and strengthen local economies.
Budgeted projects are not reaching construction
Mavuso said government has earmarked more than R1 trillion for infrastructure over the next three years, a commitment that could significantly lift overall investment if it reaches implementation.
But she pointed to figures presented by Infrastructure South Africa to Parliament in June showing that, of 2,549 government tenders advertised in 2025, only 433 were awarded. That award rate of about 17% points to a deep gap between policy announcements and projects reaching the ground.
For more context, read DGBN’s coverage of Nigeria’s digital future must reach beyond Lagos, advocates say.
The problem is especially significant for Black communities, where reliable transport, water, electricity, schools, clinics and municipal infrastructure are central to economic inclusion rather than simply measures of national competitiveness.
Skills and procurement are central obstacles
BLSA argues that shortages of specialised public-sector skills are slowing project preparation, bid assessments and delivery. Mavuso said the loss of experienced personnel from government has weakened its ability to execute major infrastructure programmes.
She called for greater use of private-sector expertise through public-private partnerships, citing cooperation on electricity and logistics reforms as evidence that joint work can improve outcomes.
The proposal does not remove the state’s responsibility. Strong public oversight, transparent procurement and capable institutions remain essential to ensure infrastructure spending serves communities, creates local jobs and delivers value for public money.
Why it matters
South Africa’s latest quarterly contraction is relatively small, but weak capital investment is a longer-term concern. Consumer spending can support an economy temporarily; sustained growth needs productive assets, functioning networks and confidence that businesses and the state can complete projects.
Related DGBN reporting includes Alamein Africa Forum opens in Egypt with 1,500 delegates.
The immediate test for the government will be whether its infrastructure budget moves from plans and tenders to visible construction and operational services. Without that shift, the country risks continuing a pattern in which modest growth is repeatedly constrained by the same structural bottlenecks.