Transnet Urges South African Companies to Tap 'Lazy' Cash Piles

  • Companies should match spending by state enterprises
  • Rail, port operator to spend up to 380 billion rand in decade

South African companies are sitting with “lazy cash” on their balance sheets that should be invested in expansion and modernization to stimulate the economy, 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 galvanized” by companies investing for growth, Transnet SOC Ltd. acting Chief Executive Officer Siyabonga Gama said 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 10.3 billion rand ($717 million) in cash or equivalents in their most recent filings, according to data compiled by Bloomberg. That compares with 9.2 billion rand a year ago and 7.7 billion rand two years ago.

South African business confidence fell to the lowest in five years in the fourth quarter, according to the results of a survey published Thursday by the Bureau for Economic Research and Rand Merchant Bank.

Transnet plans to spend as much as 380 billion rand in the next decade to expand and upgrade its port and rail capacity in South Africa. The company has completed an 800 million-rand 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 modernize their plants and make new expansionary investments.”

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