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Nicholas Ngepah, School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus Johannesburg, South Africa

CHARLES SABA, School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus Johannesburg, South Africa
JOEL HINAUNYE EITA, School of Economics, College of Business and Economics, University of Johannesburg, South Africa
MDUDUZI BIYASE, School of Economics, College of Business and Economics, University of Johannesburg, South Africa

The Effect of Transnet's Capital Expenditure and Investment in Various other Selected Sectors of the South African Economy

Volume 76 - Issue 1, February 2023
(pp. 65-90)
JEL classification: C22; C32; E22
Keywords: Fixed Effects-IV; Transnet, Endogeneity; Hausman and Taylor


As South African government continues to inject capital into its state-owned enterprises, the question is, has the capital injection into Transnet brought about investment in the different economic sectors? Addressing this question is critical, given the poor performance of state-owned companies in the past two decades. A battery of estimation techniques were utilised to achieve our objective. The findings from the causality results suggest that Transnet’s capital expenditure results in investment in the South African economy. The findings robustly confirmed that Transnet's capital expenditures are positively and significantly associated with levels of investment, although the impact differs by sector. The study posits that the impact occurs through the degree of backward and forward linkages that Transnet’s activities have with the rest of the economy. It is suggested that significant investment in Transnet should be accompanied by linking Transnet’s procurements with local content within South Africa’s economic sectors.

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Institute for International Economics
of the Genoa Chamber of Commerce

Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)