South Africa's wealth and children's futures are entirely different. The Institute of Race Relations (IRR) warns that the fact that non-financial firms hold a record of R1.8 trillion in cash while 21% of children under five suffer from malnutrition exposes a serious economic and moral crisis.
John Endres, the CEO of IRR, cautions that while millions of South African children go hungry, corporate investment has been paralysed by broken policies and growing risks.
“These figures are a stark indictment of South Africa’s policy environment. Companies are not hoarding cash out of greed – they are responding rationally to policy uncertainty, collapsing infrastructure, crime, and burdensome race-based regulations that make investment risky. The result is corporate paralysis and frozen capital, while millions of children go hungry.”
He added that the government cannot force businesses to invest through punitive taxes or expropriation; capital follows confidence, which relies on stable, transparent, and growth-focused policies.
Endres said the IRR’s Blueprint for Growth offers a roadmap to restore confidence and encourage investment by securing property rights, repealing expropriation without compensation, removing race-based empowerment laws that deter investment, deregulating energy and transport, professionalising the civil service, and upholding the rule of law.
“Investment drives growth, growth creates jobs, and jobs reduce malnutrition. Growth is the only sustainable solution,” he added.
According to the IRR, malnutrition contributed to the deaths of nearly 4,500 children under five between 2020 and 2025. The institute warns that stunting is more than a statistic: malnourished children face lifelong cognitive and physical impairments, threatening South Africa’s future workforce and economic growth.
The IRR lamented that South Africa’s economic failure is also a moral failure: government policies that repel investment leave millions of children hungry. Until confidence is restored, R1.8 trillion will remain frozen in corporate accounts while the nation’s children go without, an unconscionable reality.
Endres explained that while businesses safeguard themselves amid risky policies, feeding programmes must expand, and government funds should focus on child nutrition.
“Business cannot be blamed for protecting its balance sheet when government policy undermines the business case. Yet, while we work to restore growth, feeding programmes run by companies, NGOs, and communities must expand to save lives. The state, in turn, should redirect spending from ineffective transformation schemes and bailouts to target child nutrition directly,” he added.
While the IRR focuses on the economic and moral consequences, political analyst Sindile Swana points to leadership and governance failures as key drivers of the crisis.
Swana explained that South Africa’s current economic decline stems from a drop in state capacity and leadership quality. While economic policies remain largely unchanged since Thabo Mbeki’s era of 5% GDP growth, successive administrations under Jacob Zuma and Cyril Ramaphosa failed to maintain competent ministers and civil servants.
Swana added that deployment of underqualified, opportunistic cadres has weakened governance and fueled a “mafia state,” while private-sector investment has historically relied on strong state-led initiatives.
He explained that privatisation is increasingly allowing private capital to take control of profitable state assets, transferring power from the state to private hands. He highlighted that private security firms now outnumber the SANDF and SAPS combined.
Noting that Mbeki achieved over 5% GDP growth under existing policies, including BEE, he questioned the source of current policy uncertainty. He argued that the ANC, especially under Zuma and even more under Ramaphosa, despite his close ties to corporate South Africa, has strayed from the growth path, driving away private investment.
According to the South African Reserve Bank, the accumulation of deposits by companies began after the COVID-19 pandemic and has since become an entrenched defensive financial strategy.
The SARB observed, "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 Star
masabata.mkwananzi@inl.co.za