Business
Banks fuel R400 billion energy push as corporate lending surges
For years, the story around South African bank lending has been one of caution. Slow growth. Hesitant businesses. Households are keeping a tight grip on their wallets.
Now, the tide appears to be shifting.
Recent data shows that private sector credit extension, which tracks how much banks are lending to households and companies, has picked up sharply. In December alone, credit rose by R74.7 billion. That followed a R39.2 billion increase in November. Importantly, both months recorded month-on-month growth, signalling momentum rather than a once-off spike.
On an annual basis, credit growth reached 8.7 percent, up from 7.8 percent in November. It is the fastest pace seen since October 2022 and well above market expectations. On the surface, it feels like a welcome sign that parts of the economy are finding their feet again.
But there is a catch.
It is businesses, not households, leading the charge
A closer look reveals that companies are doing most of the borrowing. Corporate credit rose by R69.1 billion in December, representing 2.4 percent month-on-month growth. Consumer credit, by contrast, increased by just R5.6 billion, or 0.3 percent.
In simple terms, South African households are still cautious. Home loan growth remains muted, and consumer appetite for new debt has not rebounded in the same way as business borrowing.
For many South Africans, this will not come as a surprise. Living costs remain high, and confidence has been fragile after years of load shedding, water disruptions, and economic uncertainty.
Businesses, however, are facing a different reality. They cannot afford to wait.
The energy and water factor
A major driver behind the surge in corporate lending is investment in renewable energy and water backup systems. As electricity supply has opened up to private generation and companies look to shield themselves from unreliable municipal services, capital spending has accelerated.
Firms are installing solar plants, battery storage, and alternative energy systems. At the same time, many are investing in water storage and backup solutions to reduce dependence on struggling municipal infrastructure.
Over the past decade, corporate lending in South Africa was subdued, weighed down by weak economic growth and low business confidence. Now, necessity is forcing change. Companies are tapping their cash reserves and raising debt to fund infrastructure that keeps operations running.
There is also a significant pipeline ahead. The private sector reportedly has around 22,500 megawatts of energy generation projects in development, representing close to R400 billion over the medium term. Local banks have been key funders of projects under the government-led Renewable Energy Independent Power Producer Procurement Programme, as well as private power initiatives.
For banks, this represents a sizeable opportunity.
Why the Reserve Bank is not alarmed
One might expect rapid credit growth to ring inflation alarm bells. Yet the nature of this lending matters. Much of the borrowing is being directed towards investment rather than consumption.
Because corporate credit is rising off a relatively low base, there is still considerable room for expansion before it becomes a concern for monetary authorities. Investment in energy and infrastructure can, in theory, support productivity and ease supply constraints rather than fuel consumer demand.
Looking ahead to 2026, expectations are that corporate lending will remain robust. Projections suggest overall bank lending could grow between 8 and 9 percent, supported by modest GDP growth of around 1.5 percent, lower interest rates, and structural reforms.
Beyond energy, reforms in rail, ports, and water infrastructure are also expected to open further lending opportunities.
Image 1: Daily Investor
Image 2: Daily Investor
A cautious optimism
On social media and in business circles, the reaction has been mixed. Some see this as long-overdue confidence returning to the market. Others point out that until household credit and disposable incomes improve meaningfully, the broader recovery remains incomplete.
What is clear is that South African banks are not throwing money around indiscriminately. The taps are open, but primarily for companies investing in resilience and long-term infrastructure.
For ordinary consumers, relief may take longer to filter through.
Still, in a country where businesses once battled daily power cuts and dry taps, the fact that billions are being invested into self-sufficiency could be a quiet turning point. It may not feel dramatic, but it signals something important.
Corporate South Africa is betting on stability, and the banks are backing that bet.
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Source: Daily Investor
Featured Image: Daily Investor
