In 2024, the national government instituted the South African National Water Resources Infrastructure Agency SOC Ltd Bill to contribute to water sector development and water security over the next decade. The legislation, which is intended to enable expanded bulk water infrastructure, improve water asset management and long-term water security, is also expected make space for more private sector involvement in South Africa’s water infrastructure development.
The reforms come as South Africa faces significant water scarcity challenges. With 75% of explored surface water resources already harnessed and persistent low rainfall, the pressure on water resources is expected to intensify. The situation is further complicated by municipal distribution system problems, wetlands degradation, and climate change impacts.
The new agency, expected to be operational by May 2025, will take on the task of developing and managing national water infrastructure. It will also be the vehicle that will explore innovative funding models and private investment to finance new projects.
While the private sector already plays a significant role in the water sector, the National Business Initiative’s Kopano ya Metsi programme maintains that the private sector has a more powerful role to play in the sector’s development and that it will require the collaborative effort of the public and private sector, as well as civil society, to deliver on the country’s water future.
The Department of Water and Sanitation’s 2023 No Drop Report anticipates a national water supply deficit of 17% by 2030.
Private sector water investment opportunities
A joint report between the Development Bank of South Africa (DBSA) and National Treasury in 2023 identified the country’s water sector investment needs as about R256 billion annually, or R7.16 trillion through to 2050. The report recommended mobilising public and private sector investments to find the best mechanisms for leveraging more private sector co-funding for water and sanitation infrastructure.
To facilitate private sector engagement, the DBSA established the new Water Partnerships Office in 2023. This office will package public-private partnership opportunities and accelerate the development of urgent water and sanitation infrastructure delivery in alignment with the National Water Programme.
Several opportunities exist for private sector involvement in the water development in South Africa. These include the development of new bulk water projects, such as dam construction and pipeline installation, as well as the establishment and management of water treatment facilities at the municipal level. The mining sector presents additional opportunities, particularly in water treatment and environmental management, while projects that implement desalination or other water remediation projects offer another avenue for private investment.
CSI support for water and sanitation
Corporate social investment (CSI) spend on water and sanitation is relatively low with only 1% of overall South African CSI expenditure allocated to housing and living conditions. Of this, support for water and sanitation decreased from 29% in 2023 to 11% in 2024.
While Kopano ya Metsi notes that individual corporate social investment (CSI) is insufficient to address the country’s water sector funding gap, CSI does have a role to play in addressing water and sanitation challenges. In particular, CSI could provide catalytic support for vulnerable municipalities to improve their water supply models, making better use of government grants, accessing reliable cash flows and managing debt.
The new developments present an opportunity for companies to grow their contribution to sustainable water management while participating in crucial infrastructure development. The range of investment opportunities spans from technical expertise to direct infrastructure funding, allowing for various levels of engagement in addressing South Africa’s water security challenges.