The 2025 Budget Review points to the need for R256 billion in annual investments to ensure South Africa’s water security by 2050, creating unprecedented opportunities for private sector participation in safeguarding the country’s water future.
Citing a 2023 Southern Africa Towards Inclusive Economic Development (SA-TIED) report on SA’s water sector investment requirements, the Budget Review notes that a total estimated R7.2 trillion investment is needed by 2050 to achieve water security and universal access. But while this represents an enormous commitment given the many competing demands on the public purse, it simultaneously offers exciting prospects for investors and the construction sector, states industry expert Roelof van den Berg, CEO of the Gap Infrastructure Corporation (GIC).
He emphasises the critical importance of private sector involvement and public-private partnerships (PPPs) to support government in this essential undertaking.
“South Africa is considered a water-scarce country, with average rainfall totalling just half of the global average. This places even greater emphasis on efficient water resource infrastructure, and effective water and sanitation services to reduce any wastage, optimise existing resources, and increase supply for a growing population,” he says.
“As such, any delay in investment in water infrastructure risks costing our economy millions in productivity. Ensuring ongoing investment in water is vital to safeguarding communities’ health and supporting industries reliant on water, such as agriculture, manufacturing, mining, and construction.
“But the good news is that we’re seeing innovative solutions emerge through increased emphasis on water infrastructure and PPPs – as highlighted by the latest National Budget.”
Private funding to bridge budgetary gaps
Government’s R49.9 billion allocation to water and sanitation in 2025 marks a strong starting point for the ambitious expansion and transformation of the water sector, and successful PPPs could assist in unlocking the additional R206.1 billion required annually.
To this end, van den Berg notes that amendments to certain regulations – particularly those aimed at easing the PPP approval process – will streamline collaboration between government and private sector participants in project tendering, allocation, and financing. These reforms will strengthen the broader infrastructure sector and make it more attractive for private investors.
GIC itself has already raised R616 million in private investment over the past four months to assist in infrastructure development, with a goal of securing R20 billion by the end of 2026.
“We’ve seen substantial investor interest in South African infrastructure, including water infrastructure. Both local and international investors recognise the opportunity present in supporting government’s strategy for infrastructure-led economic growth. All they need is the appropriate financial mechanisms and structures – an area where government has made significant progress.
“Improvements in the PPP framework represent a triple-win. By involving private partners from the early planning and financing stages, government will distribute risks and responsibilities far more equitably. For investors, well-structured PPPs offer predictable long-term returns. For government, efficiencies and innovative technologies introduced by private companies can reduce long-term costs, while communities benefit from improved water access and service delivery. But to truly succeed, we must critically reexamine and refine how PPPs are developed and managed in South Africa,” he explains.
Key measures to encourage PPPs
During the 2025 Budget Speech, Finance Minister Enoch Godongwana highlighted several steps that will make it easier for private developers to pursue PPPs:
- New PPP regulations, taking effect on 01 June this year, will simplify procedures and introduce clearer rules for better fiscal risk oversight and sector‐specific PPP units in national departments. This will simplify and shorten the process of setting up and approving PPPs, which will be critical for large water‐sector projects that often involve complex engineering and construction.
- Clearer protocols for government to evaluate and accept (or reject) unsolicited proposals from private firms have been introduced, providing an avenue that can be especially relevant if a private partner has a unique technical solution for local water challenges.
- A renewed focus on risk oversight and transparent fiscal management will allow private participants to have greater confidence in the government’s financial obligations and the predictability of project cash flows.
- The Budget Facility for Infrastructure (BFI) has been reconfigured to allow multiple bid windows per year. This means that water infrastructure partners seeking public co‐funding or guaranteed support can submit proposals more flexibly on a rolling basis, instead of waiting for a single annual opportunity.
- A new credit guarantee vehicle (launching in 2026) will initially focus on energy transmission, but is intended to expand to other sectors once proven effective. This facility would derisk large infrastructure investments so that private lenders and developers can access better financing terms.
“Looking ahead, GIC plans to collaborate closely with government and other private partners to make the most of opportunities within the water sector. With 40+ water projects in our pipeline and strong interest from institutional investors, we’re already well positioned to support government’s vision for water security. If we channel the momentum from the Budget Speech into well-structured PPP collaborations, we can turn the tide for South Africa’s water sector in the coming years,” concludes van den Berg.
