SA's corporates sitting on almost R1.5 TRILLION in excess cash, choosing not to invest it

The Money Show's Stephen Grootes interviews Kevin Lings, chief economist at Stanlib Asset Management.

Corporate South Africa is right now sitting on a record amount of excess cash - a staggering R1.4 trillion.

Stanlib chief economist Kevin Lings ascribes the reluctance to invest this money to a lack of business confidence.

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He detailed his thinking at a recent Stanlib 2025 InPerspective Roadshow.

In conversation with Stephen Grootes, Lings points out that, since the beginning of 2020, corporate cash in the bank has grown more than twice as fast as inflation.

During the same period, the economic environment has been challenging, including factors like the COVID pandemic, electricity outages, low economic growth and social unrest.

"You can only really increase your cash twice as fast as the rate of inflation in these circumstances if you've been ultra-conservtive, if you're cutting costs wherever you can, if you're holding back on fixed investment where you can."

"Obviously you're making profits, but more than that you're making sure your balance sheet is constantly being bolstered and your debt level kept down. Looking at South African corporate debt relative to emerging markets, it's certainly one of the lowest at aout 31% of our GDP - govenment debt is at 76%..."

Kevin Lings, Chief Economist - Stanlib Asset Management

From their perspective it's a matter of questioning the need to invest if the economy is barely growing, Lings says.

Having said that, he adds that the money would be forthcoming if these corporates found projects that met certain criteria, particularly when it comes to infrastructure development in partnership with government.

"They're very interested... but obviously you don't want those projects to be badly managed; you want to know they're well scoped, there's not going to be corruption and that projects are going to lead to capacity building."

"I'm not convinced that within the private sector there's a shortage of capital. What there's a shortage of, is available projects AND a shortage of confidence within the corporate sector to unlock their balance sheet."

Kevin Lings, Chief Economist - Stanlib Asset Management

Scroll up to the audio player to listen to Lings' analysis