South Africa stands at a pivotal moment in its journey to achieve its sustainable development goals and inclusive economic revitalisation. Infrastructure is recognised as critical to growth and social stability, but challenges persist across key sectors such as energy, transport, water and telecommunications; creating pressures that affect both economic progress and public welfare.
According to the government’s own estimates, an additional R3.2-trillion in private-sector investment will be required to achieve the infrastructure targets it has set for 2030. While it has committed R540bn to its strategic integrated projects, this is insufficient to meet its ambitious targets. Closing the gap will demand significant private-sector involvement, particularly through public-private partnerships (PPPs).
These not only offer a realistic means of bridging this funding gap but also help to mitigate operational risks and foster resilience by leveraging the financial and technical capacity of the private sector with the public sector’s regulatory oversight and commitment to public welfare. Partnerships are important in several key infrastructure areas that are imperative for sustainable and inclusive economic development.
Energy security remains one of South Africa’s most urgent challenges. While disruptions to the national power supply have eased in recent months, the need for sustainable generation capacity remains critical to support a growing economy. In fact, through the world-class renewable energy independent power producer procurement programme ((REIPPPP), we have seen the effectiveness of PPPs in resolving some of the challenges faced in the energy generation sector. Similar partnerships will be needed to mobilise more investment and capacity required in transmission.
Anchor sectors such as mining and logistics rely heavily on efficient logistic infrastructure to operate. These industries, along with major international shipping lines, contribute directly to the economic viability of rail and port networks, helping ensure these systems can handle increasing demand. An estimated R120bn is needed to modernise and maintain South Africa’s rail infrastructure — a task that Transnet cannot manage independently.
Water infrastructure is another area requiring urgent attention, as both supply reliability and service quality have been strained. The maintenance and expansion of water systems face numerous financial and operational challenges, particularly at municipal level, and PPPs provide a viable path forward by combining public oversight with private operational efficiencies.
The financial sector is essential in providing and structuring funds to support infrastructure ambitions. Sustainable finance instruments provide a powerful tool for financing infrastructure that supports South Africa’s broader environmental and social goals.
Recent reforms at a national level, such as the establishment of a water regulator and the National Water Resources Infrastructure Agency are encouraging steps. These institutions aim to create a more stable investment environment by improving regulatory oversight and governance. For example, South African Water Works has demonstrated how private involvement can boost water service delivery through projects in Ballito and Mbombela, where private sector efficiencies have transformed service levels and bolstered revenue collection.
The financial sector is essential in providing and structuring funds to support infrastructure ambitions. Sustainable finance instruments provide a powerful tool for financing infrastructure that supports South Africa’s broader environmental and social goals. For example, green and social bonds have proven effective in attracting investors interested in supporting infrastructure aligned with environmental sustainability and social equity. By offering sustainability-linked financing options, banks can encourage corporations to meet specific sustainability targets, aligning profit motives with positive environmental outcomes.
Transition financing models, which fund projects that facilitate a gradual shift to lower-carbon operations, offer an additional pathway for South Africa to meet its energy needs while reducing its carbon footprint.
Finally, blended finance structures, which bring together development finance institutions, commercial banks and donors, can play a crucial role in South Africa’s infrastructure landscape. These innovative funding structures balance the risks across multiple stakeholders, allowing public and private partners to jointly support projects that would otherwise struggle to secure financing. Also, by structuring deals that align state and private interests in this way, financial institutions can create opportunities for investment that are both profitable and socially beneficial.
By aligning strategic priorities and fostering a conducive investment environment, South Africa’s infrastructure ecosystem can become a cornerstone of a more resilient, inclusive and prosperous economy. But achieving this ambition depends on the willingness and ability of all stakeholders in the public and private sectors to collaborate effectively. PPPs present a viable and sustainable model for spearheading critical infrastructure gaps, harnessing investment and expertise, promoting socioeconomic sustainability and addressing the needs of South Africa’s growing population.
• Masinda is CEO of Standard Bank Corporate & Investment Banking
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