South Africa’s capital expenditure on new assets experienced a notable decrease in the first quarter of 2023 compared to the previous quarter, according to recent statistics. The total capital expenditure on new assets, valued at R81,677 million, decreased by 12.3% compared to the previous quarter, which recorded a figure of R93,087 million. This decline was primarily driven by decreases in spending on computer software, construction works, plant, machinery and equipment, and other assets. However, certain categories, such as vehicles and other transport equipment, buildings and improvements, and computer and IT equipment, saw an increase in capital expenditure during the same period.
Decreases in Capital Expenditure on New Assets:
The first quarter of 2023 witnessed decreases in capital expenditure on various asset categories. The largest decline was observed in spending on computer software, which experienced a significant drop of 48.7%. This reduction in investment reflects a cautious approach by businesses in adopting new software solutions. Construction works also experienced a decline of 19.5%, indicating a slowdown in infrastructure development projects. Moreover, capital expenditure on plant, machinery, and equipment decreased by 17.6%, highlighting reduced investments in production and operational assets. Additionally, ‘other’ assets experienced a decline of 11.3%, indicating reduced spending on miscellaneous assets.
Increases in Capital Expenditure on New Assets:
Despite the overall decline, certain asset categories bucked the trend and witnessed an increase in capital expenditure during the first quarter of 2023. Vehicles and other transport equipment saw a substantial rise of 30.3%, signaling continued investments in the transportation industry. Buildings and improvements experienced a modest increase of 5.4%, reflecting ongoing construction projects and property development. Furthermore, computer and IT equipment saw a moderate increase of 3.3%, indicating continued investments in technology infrastructure.
Comparison with the Previous Year:
In a year-on-year comparison between the first quarter of 2022 and the first quarter of 2023, total capital expenditure on new assets increased by 18.1%. The largest percentage increase was observed in ‘other’ assets, which surged by 451.2%. This indicates a significant shift in investment strategies towards diverse asset classes. Computer and IT equipment experienced a notable increase of 196.3%, reflecting the ongoing digital transformation efforts across various sectors. Investments in vehicles and other transport equipment also grew substantially by 122.8%, showcasing the resilience of the transportation industry. Moreover, buildings and improvements saw a significant increase of 50.0%, emphasizing sustained investments in construction and infrastructure projects. However, plant, machinery, and equipment recorded a slight decline of 4.4% during this period.
Composition of Capital Expenditure:
Analyzing the composition of capital expenditure on new assets, plant, machinery, and equipment were the largest contributor in the first quarter of 2023, accounting for 63.0% of the total spending. Vehicles and other transport equipment followed at 13.3%, reflecting the significance of the transportation sector. Buildings and improvements accounted for 7.5%, indicating continued investments in infrastructure and real estate. ‘Other’ assets contributed 6.7%, emphasizing a diverse range of investment categories. Meanwhile, computer and IT equipment represented 3.7% of the total capital expenditure, while construction works accounted for 3.2%, and computer software comprised 2.6%.
Conclusion:
The first quarter of 2023 witnessed a decline in capital expenditure on new assets in South Africa, reflecting a cautious approach by businesses in various sectors. While decreases were observed in spending on computer software, construction works, plant, machinery, and equipment, and other assets, increases were recorded in investments related to vehicles and other transport equipment, buildings and improvements, and computer and IT equipment. These trends indicate the evolving landscape of technology and infrastructure investments, as well as the continued importance of the transportation sector in South Africa’s economic development.
