MONEY 4 ALL

Record R1.8-trillion corporate cash hoard tests Ramaphosa’s reform agenda

Companies hold back investment amid low confidence, pressuring president to turn idle funds into growth and jobs

 

October 14, 2025 at 05:00 am

Kabelo Khumalo

 

South African President Cyril Ramaphosa speaks next to European Commission President Ursula von der Leyen (not pictured), as they address the press, in Brussels, Belgium, October 9, 2025. REUTERS/Yves Herman (Yves Herman)

The amount of cash held by SA non-financial companies has surged by R700bn over the past six years, approaching R2-trillion at the end of July as a wave of corporate caution, persistent low growth and high inflation holds back investment.

The Reserve Bank’s September quarterly bulletin shows cash held by companies in their bank accounts amounted to a record R1.8-trillion at the end of July, up from the R1.1-trillion reported in 2019.

The enormous safety net piles pressure on President Cyril Ramaphosa to convert latent liquidity into productive capital, reversing a decade-long trend of weak growth and capital flight. Staking his political legacy on private sector-led economic recovery, he has unleashed structural reforms in energy, water and logistics.

The Bank said companies are holding excess cash because they are responding to economic conditions and balancing risk with readiness to invest when confidence returns.

President Cyril Ramaphosa faces pressure to turn SA’s corporate cash piles into real economic growth. Picture: REUTERS/YVES HERMAN

The uptick accelerated when the economy came to a standstill during the Covid-19 pandemic, which triggered a frenzied scramble for cash to navigate the health emergency that morphed into an economic crisis.

“Cash holding thus increased significantly during the pandemic and the subsequent high-inflation period and again when economic growth moderated from 2023 amid increased global and domestic uncertainty,” the Bank said.

“But since mid-2022, deposit growth has outpaced GDP growth, a sign that businesses are still keeping extra cash as a safety measure amid heightened uncertainty and limited investment opportunities in the low-growth environment.

“From late 2023, the gap between deposits and investment widened due to heightened uncertainty, subdued business confidence and SA’s low economic growth.”

Cash as a buffer

Business Day reported in June that SA corporates are holding excess cash as a cushion to bridge the timing mismatch between cash generation and sudden cash needs, as business sentiment wanes in a low-growth economy and geopolitical uncertainty delays investment decisions.

Absa CFO Deon Raju said in June: “There is a lot of excess cash out there, particularly among corporate clients. It talks a little bit about a lack of confidence. Surplus cash is certainly a trend in SA.”

Corporations hold cash as pragmatic insurance against policy and market shocks, avoiding ill-timed investments that would decimate shareholder value, and preserving the option to pounce on disciplined mergers and acquisitions when the macro picture brightens.

Business confidence subdued

The RMB/BER second-quarter business confidence index slipped by one point to 39, implying that about 60% of respondents are dissatisfied with prevailing business conditions.

“The underlying results point to an economy that is muddling through, with many activity and demand indicators in line with 20-year average levels. That said, the current level of confidence is insufficient to drive an acceleration of much-needed investment to improve SA’s potential economic and employment growth rate,” the results of the index released last month noted.

“Respondents struggle amid rising electricity costs, an onerous administrative burden and competition from imports, which do not always face the same hurdles in getting their product to market as local businesses. While corruption, red tape, sluggish logistics and other structural issues in the South African economy continue to feature.”

Government reforms 

To shore up business confidence, the government has embarked on major reforms across the network industries, with private sector participants expected to play a prominent role in the logistics, rail and energy sectors.

Still, gross fixed capital formation, a core macroeconomic indicator of investment and future capacity, has suffered fluctuations and even declines in recent years. Domestic capital spending has barely changed since the late 1980s, languishing at less than 20% of GDP.

In comparison, emerging Asian countries have seen a steady increase in investment over the same period, from 25% to almost 40%, helping them rack up decades of growth, which propelled some of them into the ranks of the advanced economies.

Service delivery challenges

Eskom has made progress in keeping the lights on, accelerated from 2024. Irregular and erratic power supply and logistics bottlenecks have hurt the economy and business sentiment over the past few years.

But the price of electricity, as regulated by energy regulator Nersa, has made SA industry uncompetitive. The poor state of local government and dismal service delivery, while municipal rates surge, have weighed on business sentiment. Water shortages have emerged as a key socioeconomic threat.

A key focus of phase two of Operation Vulindlela is to achieve water infrastructure reform, which aims to tackle the root causes of service delivery failures, among other issues.

A lost decade for growth and investment

SA’s economy has struggled to grow over the past decade, a period some have described as a “lost decade”. Foreign investors have withdrawn about R1-trillion from SA’s equity and bond markets over the past 10 years.

Shoprite chair Wendy Lucas-Bull, in her annual letter to shareholders, reflected on SA’s investment case and challenges with municipal services.

“The state of local government remains a concern, with many municipalities falling short in terms of service delivery. Critical infrastructure, particularly roads, rail, ports, water delivery and waste water management, are in need of significant reinvestment and improved administration,” Lucas-Bull wrote.

“This environment continues, unfortunately, to hamper multinational investment, affecting production capability and product availability.

“While the group maintains high levels of capital investment, underscoring our long-term commitment to our operations in SA, we face ongoing challenges across the supply chain and in the local agricultural sector, with many local suppliers struggling to consistently meet demand.”

SOURCE: BusinessDay

LINK:  https://www.businessday.co.za/bd/companies/2025-10-14-record-r18-trillion-corporate-cash-hoard-tests-ramaphosas-reform-agenda/

Economic-Freedom 4 All

Proposed R100-billion Transformation Fund will have significant implications for Broad-Based Black Economic Empowerment (“BBBEE”) regulation in South Africa

23rd April 2025

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On 19 March 2025, the Department of Trade, Industry and Competition (“DTIC”) issued a draft Transformation Fund Concept Document for public comment. The proposed Fund was first announced by the Minister of Trade, Industry and Competition (“Minister”) in January 2025 and involves raising R100 billion over 5 years for the purposes of supporting firms that are majority owned and controlled by black people as defined in the Broad-Based Black Economic Empowerment Act (“BBBEE Act”).

The concept document provides that the proposed Fund will be administered through a Special Purpose Vehicle (“SPV”). The SPV will be a tax-exempt entity and a registered Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act. It will have an eight member board of directors appointed by the Minister which will include two representatives from the private sector. The Fund will be financed by the Government, public entities, donor agencies (including international organisations and development banks) and the private sector. Regarding funding from the private sector, two main sources are identified in the concept document –

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1) the Equity Equivalent Investment Programme (“EEIP”) which allows the local subsidiaries of certain multinationals to score BBBEE ownership points without having an actual black shareholding. Funds are instead contributed to BBBEE initiatives approved by the DTIC. It is not clear if the DTIC will request changes to existing EEIPs to require them to contribute to the proposed Fund or whether contributions to the Fund will only be required for new EEIPs;

2) allowing firms to score Enterprise and Supplier Development (“ESD”) points for the purposes of their BBBEE rating by making a contribution to the proposed Fund. In this regard, the DTIC will amend the current Codes of Good Practice (“Codes”) issued under the BBBEE Act with regard to the measurement of a firm’s score for ESD.

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The concept document does not give much detail regarding the proposed amendments to the ESD provisions of the Codes. In terms of the BBBEE Act, any amendments to the Codes must be published by the Minister in the Government Gazette for public comment for at least 60 days.

The current framework for measuring a firm’s ESD score in terms of the Codes involves assessing a firm’s supplier development (“SD”) and enterprise development (“ED”) contributions to firms which are at least 51% black owned and have a total annual revenue of R50 million or less (contributions to firms exceeding such threshold may be recognised for five years if they first received assistance while their annual revenue was under the threshold). A firm’s SD and ED score is measured having regard to targets based on its net profit after tax (2% for SD and 1% for ED). The key difference between SD and ED is that a SD beneficiary is an existing supplier whereas an ED beneficiary is not an existing supplier. The Codes provide that if a firm fails to score at least 40% of all the available points for SD and ED, its BBBEE rating will automatically be downgraded by one level if its total annual revenue exceeds R50 million. ESD accordingly constitutes a key part of determining a firm’s BBBEE rating.

The current framework involves establishing a direct business relationship between the firm seeking ESD points and ESD beneficiaries identified by it. This has several commercial benefits for the beneficiary especially as the Codes contemplate both monetary and non-monetary SD and ED contributions like investments, loans, grants, guarantees, credit facilities, training, mentoring, discounts and other preferential terms with a view to integrating the beneficiary directly into the firm’s supply chain. The contributions are made directly to the beneficiary and generally requires significant time and resources from the firm which develops and implements the ESD program. Significantly, the beneficiary must receive the contributions during the firm’s financial year in order to contribute to the firm’s ESD score for that financial year. This incentivises the quick delivery of contributions to beneficiaries.

The concept document however indicates that a firm could earn ESD points “immediately” by merely contributing to the proposed Fund. This could save the firm significant time and costs if it did not have to implement its own ESD program. The concept document is not clear on this point but states that a “participation agreement” will have to be concluded with the SPV. The terms and conditions of such agreement will have to be carefully considered especially if it seeks to impose obligations in addition to the contribution to the Fund.

The concept document states that contributions to the Fund will generally be exempt in terms of section 56(1)(h) of the Income Tax Act and would qualify for a deduction in terms of section 18(A) of the Income Tax Act. There may accordingly be a tax incentive in contributing to the Fund.

Compliance with the current SD and ED targets in the Codes are not obligatory and ESD points are scored on a pro rata basis having regard to whether or not a firm meets the target. This means that a firm has the flexibility to decide how much to spend on SD and ED (bearing in mind the risk of the automatic downgrade referred to above). It is not clear from the concept document whether a firm’s contribution to the Fund may be less than the target.

The concept document states that a firm may decide whether or not to contribute to the Fund ie contributions will be voluntary. Presumably a firm will be able to choose not to contribute and rather continue with its own ESD program although the concept document is not clear in this regard. Much will depend on the detail of the proposed amendments to the Codes.

The current framework envisages direct business relationships between private sector firms and ESD beneficiaries. The concept document envisages interposing the SPV as a third party between the private sector and ESD beneficiaries. The SPV will collect and distribute funds and implement its own ESD initiatives. This adds complexity to the delivery of ESD contributions to beneficiaries and may adversely affect the benefits for beneficiaries of such direct business relationships.

There are several existing entities and programs tasked with promoting BBBEE and supporting majority black owned and controlled business and small, medium and micro enterprises (SMMEs) including the National Empowerment Fund, the Industrial Development Corporation, the DTIC’s Black Industrialist Scheme, the Small Enterprise Development and Finance Agency (SEDFA) and the Department of Small Business Development. A key question is whether the funds earmarked for the proposed Fund should not rather be provided to existing entities and programs rather than establishing a new entity.

The proposed Fund should operate in conjunction with and supplement (rather than duplicate and overlap with) existing entities and programs. The effect of the Fund on existing ESD programs being implemented by the private sector should also be carefully considered. Ultimately the Fund’s success will depend on its delivery, efficiency, credibility and good governance.

Written by Pieter Steyn, Director, Werksmans

SOURCE: Polity

LINK: https://www.polity.org.za/article/proposed-r100-billion-transformation-fund-will-have-significant-implications-for-broad-based-black-economic-empowerment-bbbee-regulation-in-south-africa-2025-04-23

MONEY STUFF

GEPF portfolio rises 13% to R2.69trn 

 

‘We can’t stay away from investing in infrastructure that will keep the South African economy going’ – Musa Mabesa, Government Employees Pension Fund.

By Jimmy Moyaha · 18 Nov 2025   22:11 

You can also listen to this podcast on iono.fm here.

JIMMY MOYAHA: The Government Employees Pension Fund [GEPF], the pension fund that is responsible for the pensions and funds of almost 1.8 million South Africans – 1.2 million or so active members as well as 560-odd thousand pensioners – released its annual report for the financial year ended 31st March 2025.

I’m joined on the line by GEPF principal executive officer Musa Mabesa to take a look at this and see what we make of it.

Listen: Delays and risky investments: GEPF defends finances

Dr Mabesa – I’m putting that into existence. Thank you so much for taking the time to join us. Your initial thoughts and reflections around the year that was for the fund? A very good year, if we’re looking at the numbers and the performance, to have a portfolio size that is now just shy of R2.7 trillion. When we spoke last year it was around the R2.3 trillion mark. So quite a good year.

MUSA MABESA: Good evening Jimmy and thank you very much for having me. Yes it’s Mr Musa Mabesa, not ‘doctor’.

JIMMY MOYAHA: I was putting it out there in advance.

MUSA MABESA: [Chuckling] Thank you, Jimmy. Once it’s done, we’ll communicate it.

Well, Jimmy, it’s been a good year for the GEPF and I think for the local markets as well.

We grew by 13.1% from last year’s closing assets under management, or AuM. We’ve also seen positive returns at 14.1% for the year ended 31st March 2025. So the GEPF is happy with the performance of its investments.

JIMMY MOYAHA: Musa, I want to take a look at some movements throughout the year. There was obviously the cybersecurity breach in this financial year that we are referring to that affected the business. Take us through the impact that had on the fund but, more importantly, the recovery that came from that.

MUSA MABESA: Yes, Jimmy. The cybersecurity attack was on our benefits administration system. The administrators themselves did not breach the benefits system itself, but its supporting systems around it.

But the impact was that it delayed the processing of payments as we were trying to recover our systems and ensure that we safeguarded the integrity of our systems.

So that was the impact of that cybersecurity attack in February and March last year. But we’ve since found ways to cover our systems to prevent future attacks to the extent that we can.

JIMMY MOYAHA: Speaking of payments, can we take a look at the two-pot [pension fund system] for this year or the impact that two-pot withdrawals have had over the last financial year? When you and I initially spoke, we had just rolled out two-pot sort of late last year. We’ve kind of come through a full cycle of that. Can you perhaps just take us through how you’re seeing that from a pensions point of view?

Read:
One year into the two-pot system: Lessons from the frontline
Two-pot withdrawal repeat claims surge
Two-shot boost for the fiscus

MUSA MABESA: We paid around R14.3 billion from September last year when two-pot was introduced until March 2025, our year-end, and that was on average around 691 000 withdrawal applications that we had received – and we paid 565 000 of those claims.

So we did see a significant uptake on these two-pot withdrawals, with an average claim of around R23 500.

What this tells us is that most of these members withdrew from the R30 000 initial allowance at the time of the introduction of two-pot. We’ve seen these numbers slow post April 2025 and we’re hopeful that members, once they get used to the savings culture and the new arrangement, will be more comfortable withdrawing only when there is a need.

Listen/read: Two-pot withdrawals: Where was the money spent?

JIMMY MOYAHA: Well, we could tell them that the GEPF has R6 billion in a reserve account as part of a savings culture. I think that would encourage a lot of savings. It’s very impressive to see that the pension fund is able to still manage its finances and balance its portfolio.

I want to look at that portfolio, Musa, in a bit more detail. An almost 86% exposure to South Africa, in particular across equities, across bonds, across cash, all manner of investments. You and I have spoken about this in the past, about concentration risk and how you’re navigating that.

But at the moment, given that some of the best-performing stocks that contributed towards the portfolio were the likes of Gold Fields and AngloGold, it’s not such a bad thing to be invested in a country that you ultimately believe in.

MUSA MABESA: Indeed. We strive to have around 80% of our assets in SA, with the balance being invested outside South Africa – up to 5% as a continent and 15% offshore.

We may not have maximised that, understanding the size of the fund, but I think we need to remind our listeners the GEPF’s liabilities are rand-based, so it makes sense for the GEPF to also have some of its assets in rands, so that at the point we need to liquidate the liquidating rands there’s no currency exposure risk, and we’re able to pay your benefits accordingly.

We will over time be increasing to make sure we maximise up to the 20% outside of South Africa so that we take advantage of the diversification and benefits in other jurisdictions.

JIMMY MOYAHA: Musa, can we take a look at the developments unfolding at the Public Investment Corporation, the PIC? I bring them up because the PIC, as we’ve discussed in the past on the show, manages 82% or so of the GEPF’s finances – or portfolio, rather – and we’ve seen a couple of developments coming out of the PIC, some concerns around some deals that have been made, concerns that even the PIC chief executive has flagged, and the fact that we are still dealing with a suspended chief investment officer.

Listen/read: PIC assets under management hit record high [Oct 2024]

These ordinarily might not be too concerning, but given the position of the GEPF and given the amount of money that sits within the PIC, I want to get your thoughts on that.

MUSA MABESA: Look, I think, Jimmy, the noise around what may be happening is concerning, but we have full faith in the new board as well as the new CEO.

Again, these are allegations and we should respect that. They remain allegations until proven otherwise. So we remain focused on making sure we manage our relationship with the PIC through the investment mandate. We’ve given them the results. We spoke about the good performance of our assets.

It’s all thanks to the PIC to a large extent, because they are managing those assets.

So they continue to manage our assets, barring some of the negative coverage that they’ve received. But we have full faith in them that they will attend to those matters while we monitor and ensure the performance of our investments.

JIMMY MOYAHA: Musa, just as an aside while we are on that topic, does the GEPF have alternative arrangements in place in the event that something should happen with the PIC? I know we’ve spoken about this before, saying it’s unlikely that something will happen, given the size and the experience that sits within the PIC.

Just from a preparedness perspective, is this something that the GEPF has to consider?

MUSA MABESA: Jimmy, we look at our risks holistically, also appreciating that 80% of our portfolio is passively managed. So that’s a risk that can easily be managed.

If that prospect should come to life, what we should also remember is that the PIC has appointed other managers – in excess of 25 – to assist in the management of our portfolio. So it would not be a difficult thing to try and manage ourselves out of such a challenge.

But we are hopeful that the systems that we have in place and the controls that the PIC has in their own institution will safeguard us from such an eventuality.

JIMMY MOYAHA: Well, given that the Public Investment Corporation has been around for more than 110 years since 1911, we can safely assume that they’ll still be around for a lot longer.

Musa, before I let you go, I want to take a look at the infrastructure conversations that have been developing of late. You touched on the fact that it is important to be invested in the local environment, in the local economy, and as to that I want to look at the announcement made last week by the minister of the National Treasury around the infrastructure bond that we’re looking to introduce into South African markets, ring-fencing funds specifically for infrastructure development.

Read:
Top Africa money manager sees private capital fixing funding gap
PIC seeks sovereign fund partners

Is there something that we could perhaps see the GEPF looking to get involved in? Infrastructure forms the cornerstone of development of an economy – and what better way to do it than through something like an infrastructure bond?

MUSA MABESA: Indeed, Jimmy. We appreciate that infrastructure, like you’ve just mentioned, is an important asset class for us and the country.

For the GEPF to continue to exist, the economy of South Africa needs to be performing. So we will look into this through the PIC on the infrastructure bond.

I’m hopeful that through the return aspirations of the fund and the PIC also managing those expectations, we should be able to find expression in that new scheme. We can’t stay away from investing in infrastructure that will keep the South African economy going.

Read: Ramaphosa targets R3trn private sector infrastructure boom

So I’m certain that through the mechanisms that the PIC has and discussions with National Treasury we should be able to participate like we’ve done based on our other bond holdings, which are for government in excess of 23%, excluding SOEs [state-owned enterprises].

So I’m confident that the GEPF, subject to meeting the return expectations, should be able to participate in that.

JIMMY MOYAHA: A fund heading towards the R3 trillion mark, a fund that is doing well and has had an exceptional year. We’ll leave the conversation on that note.

Thank you so much to the principal executive officer at the GEPF, Musa Mabesa, for joining us to take a look at the performance of the GEPF over the last financial year.

Just a side note on that. The reason I put it out that it would be potentially Dr Musa soon enough is that the principal officer, has a master’s degree from the University of London and usually these are followed by PhDs. So Musa, we’ll see how that works.

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TAGS: assets under management |  concerns |  cybersecurity breach |  delayed payments |  gepf |  GEPF 2025 annual report |  infrastructure bond |  Musa Mabesa |  offshore assets |  pic

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Jimmy Moyaha

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Jimmy Moyaha has worked actively in financial markets for almost a decade. He has worked for and with numerous international companies and has been responsible for strategy and expansion opportunities within the African market. He provides professional market commentary on platforms like Moneyweb, and has hosted a number of radio shows. 

 

SOURCE: Moneyweb

 

LINK:  https://www.moneyweb.co.za/moneyweb-radio/safm-market-update/gepf-portfolio-rises-13-to-r2-69trn/