SA firms won't invest cash as long as there's heightened uncertainty - Kganyago
South African Reserve Bank Governor Lesetja Kganyago told a webinar hosted by the Centre for Development and Enterprise (CDE) on Wednesday night that there was uncertainty about policy and also the way forward with regards to COVID-19.
CAPE TOWN - South African companies will continue to hold on to their cash instead of investing, as long as there is heightened uncertainty.
That’s according to South African Reserve Bank Governor Lesetja Kganyago.
Kganyago told a webinar hosted by the Centre for Development and Enterprise (CDE) on Wednesday night that there was uncertainty about policy and also the way forward with regards to COVID-19.
The central bank governor said that South African companies were sitting on a lot of money which was not being invested in the economy. He said that this was because uncertainty made for low business confidence.
"If there is no investment taking place and corporates are sitting on cash, you just have to go and look at the business confidence indicators and see that you have a problem," Kganyago said.
But he said that there was also uncertainty with regards to COVID-19.
"Besides the policy uncertainty, there is the uncertainty with respect to the COVID shock itself.
"We do not know if this thing is behind us, if anything, it looks like we must learn how to live with it. And that means risk models have got to be re-looked at, so that you adjust your returns based on the risks associated with this virus now being part of our lives."