The report suggests that corporate South Africa is prioritising liquidity over long-term investment, even as economic growth shows modest recovery.
The central bank noted that this accumulation of deposits began after the COVID-19 pandemic and has since become entrenched as a defensive financial strategy.
“Companies are not merely stockpiling cash. They are making a rational response to prevailing macroeconomic conditions, balancing short-term risks with readiness to invest once business confidence returns,” the SARB observed.
Corporate savings soar as investments stall
The divergence became particularly evident from late 2023, underscoring how private firms are opting for stability amid policy uncertainty, energy constraints, and weak demand.
In 2024 alone, corporate deposits surged by R186.1 billion ($9.9 billion), the highest annual increase on record. The SARB attributes this to ongoing structural bottlenecks and subdued confidence across key sectors, including manufacturing, mining, and agriculture.
Firms borrow strategically amid uncertainty
Interestingly, while companies are holding vast cash reserves, they are also borrowing more selectively. Credit extended to non-financial firms increased by 6.5% in July 2025, driven by demand in capital-intensive sectors such as resources and consumer goods. Yet, household borrowing remains sluggish, signaling that consumer confidence remains weak.
Economists suggest that the trend reflects a continental reality: businesses across Africa are becoming increasingly cautious in deploying capital. With inflationary pressures and slow GDP growth, South Africa’s economy grew just 0.8% in Q2 2025. Many firms prefer to safeguard liquidity until there’s stronger policy clarity and market stability.
The SARB warned that this “liquidity preference” may slow down job creation and economic dynamism in the short term, even as it boosts financial system resilience.
The report concludes that once confidence returns, these cash-rich firms could become powerful drivers of investment and growth across the region.
