Water: A system under pressure, a sector in transition

Three years ago, we wrote an article highlighting the systemic strain on the country’s water infrastructure and the emerging opportunities for private-sector investment.

At the time, the investment case rested largely on the scale of the infrastructure deficit. While that thesis still holds, the investment opportunity for private-sector participation has broadened significantly.

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South Africa is a water-stressed country, with almost 98% of its available surface water allocated for public and private use. Additional pressure has come from failing infrastructure systems, erratic climate events and uneven geographic supply.

According to a 2024 study, only 36.7% of rural residents have access to safely managed water, while nearly 47% of all treated water is lost through physical leaks, unauthorised use, metering failures and weak billing systems.

These challenges have not gone unnoticed.

Water security has since moved to the centre of the national growth, governance and infrastructure agenda.

In his 2026 State of the Nation Address (Sona), President Cyril Ramaphosa described water as “the single most important issue” for South Africans, announcing the formation of a National Water Crisis Committee (NWCC) to coordinate the state’s response.

Improved policy

One of the more pronounced changes since our earlier article has been the public-sector response.

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In addition to the NWCC, government has restored benchmarking through the Blue Drop, Green Drop and No Drop frameworks, creating a stronger, evidence-based assessment of water quality, wastewater performance and non-revenue water.

Institutional reform has also advanced.

Government is strengthening national water infrastructure management and funding mobilisation by consolidating strategic asset management through a more streamlined structure, namely the National Water Resources Infrastructure Agency (NWRIA), building on the role of entities such as the Trans-Caledon Tunnel Authority (TCTA), a state-owned enterprise with a credible track record of financing and implementing large-scale bulk water projects.

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At the same time, public funding commitments have become more explicit, with significant increases in allocations for water and sanitation infrastructure and new incentives to protect municipal service revenues for reinvestment.

Within this framework, the NWCC should be understood not as a separate delivery vehicle, but as a high-level coordinating mechanism.

Its role is to align institutions, accelerate interventions, deploy technical support and strengthen accountability where municipal systems are failing.

For investors, this improves the potential for faster execution, better oversight and clearer intervention pathways in stressed parts of the system.

The Water Partnerships Office adds a further layer of credibility, tasked with helping develop standardised programmes for private sector participation while supporting municipalities in preparing more bankable projects.

Broader investment opportunity

While South Africa’s major bulk water assets continue to underpin long-term supply, the more immediate bottleneck lies downstream in reticulation, treatment, pumping, storage, metering and wastewater management.

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As the president noted in Sona 2026, the challenge is often not the existence of water in the system but getting it reliably to people’s taps.

That distinction is important for investors, as it broadens the investable opportunities beyond traditional dam and bulk transfer infrastructure finance.

It points to opportunities across the production line, from potable treatment, transfer assets and non-revenue water to wastewater treatment and reuse. This suggests a more nuanced investment thesis.

Not every opportunity needs to be a large, standalone concession. Some may be better structured as performance-led rehabilitation, technical service contracts, availability-based models, ring-fenced utility improvements, or blended municipal support structures under stronger national oversight.

This is precisely where the combination of the NWCC and the Water Partnerships Office could prove most valuable: one improving coordination and intervention, the other helping convert municipal needs into bankable projects.

From crisis to reform

Reform need not eliminate risk to create opportunity. Rather, it needs to improve visibility, structure and accountability enough to support disciplined capital deployment. That is increasingly the direction of travel in South Africa’s water sector.

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Water infrastructure has become a space where public need, policy focus, and capital demand converge, and where institutional investors can gain exposure to essential assets that underpin national growth.

The sector should no longer be viewed solely through the lens of crisis and risk; it should be seen as one of SA’s clearest and most sustainable long-term investment opportunities.

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The scale of the capital required to achieve water security remains far beyond what the fiscus can fund on its own, with estimates of roughly R90 billion a year required over the next 10 years.

Actual spending has remained well below that level. It is here where institutional capital can play a constructive role in helping to fund the capital shortfall.

The investment case

For investors, the attraction of SA’s water sector is that it combines:

Essential and non-discretionary demand;
A large and visible infrastructure requirement;
Rising policy prioritisation;
Developmental relevance; and
The potential for inflation-linked or utility-style cash flows in selected segments.

The opportunity is best understood not as a single market, but as a layered investment platform: strategic bulk infrastructure, municipal stabilisation, wastewater compliance and reuse, and technology-enabled operational improvement.

Reliable supply is critical to mining, agriculture, manufacturing, housing, healthcare and urban productivity. It is therefore not a narrow thematic allocation, but a foundational infrastructure exposure.

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While South Africa’s water crisis remains one of the country’s greatest constraints, it is also one of its clearest long-term investment opportunities.

Tshiphiri Muedi is managing director of SA Infrastructure at Ninety One. 

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