Johannesburg - South African companies are sitting with “lazy cash” on their balance sheets that should be invested in expansion and modernisation to boost economic growth, the head of the government-owned ports and rail operator said.
The country’s economic success depends on public sector infrastructure spending being “matched and galvanised” by companies investing in growing their companies, Transnet Acting Chief Executive Officer Siyabonga Gama said on Thursday.
Companies in Africa’s most developed economy are holding record amounts of cash in the bank, reflecting negative sentiment about prospects for the domestic market, Stanlib Asset Management said in September. The 50 largest South Africa-based companies reported an average of R10.3 billion ($722 million) in cash or equivalents in their most recent filings, according to data compiled by Bloomberg. That compares with R9.2 billion a year ago and R7.7 billion two years ago.
Transnet plans to spend as much as R380 billion in the next decade to expand and upgrade its port and rail capacity in South Africa. The company has completed an R800 million expansion to double capacity at its Johannesburg container terminal, the continent’s largest such inland facility, as it seeks to reduce bottlenecks and shift freight from road to rail, Gama said in a speech at the site.
“We as the public sector will continue to do our part, but we require a concomitant commitment from captains of industry so we can build a stronger and more competitive South Africa,” he said. “A great number of our South African companies have lazy cash on their balance sheets, which we urge must be used as an investment to modernise their plants and make new expansionary investments.”
BLOOMBERG