Why Private Capital Is Ready but Waiting in South Africa

The Real Problem: Too Few Projects Are Ready

The conversation about financing infrastructure in South Africa often starts with the same question: Where will the money come from?
According to Rachel Mukuze, a senior investment professional at Old Mutual Alternative Investments, that’s the wrong starting point.

South Africa already has plenty of private capital looking for places to invest. What’s missing is a pipeline of infrastructure projects that are prepared, structured, and managed well enough to give long‑term investors confidence. In other words, the country faces a bankability gap—the projects simply aren’t ready to attract money.

Why Preparation Matters

• Bankability means lenders and investors believe a project will deliver the promised returns and can be repaid.
• Without solid feasibility studies, clear contracts, and risk‑sharing arrangements, investors stay on the sidelines.
• When projects are well‑prepared, private partners can step in, finance construction, and earn returns based on performance, not just ownership.

Public‑Private Partnerships (PPPs): A Tool, Not a Sell‑Off

PPPs are returning to the national debate, especially after the 2026 budget hinted at more than R1 trillion of public‑sector infrastructure spending over the medium term.

Mukuze stresses that a PPP is not privatization. It is a long‑term contract where:

• The state defines the need, sets service standards, and keeps ownership or oversight.
• The private partner may finance, build, operate, or maintain the asset for a set period.
• Payment is tied to performance outcomes; if the facility under‑performs, the private partner can be penalised.

In a well‑structured PPP, the public interest stays central, but delivery becomes more disciplined and efficient.

Municipal Infrastructure: The Ultimate Test

Mukuze highlights several sectors where PPPs could make a difference:

• Logistics – weak rail and port performance hurts exports and raises business costs.
• Water – essential but tricky, because access is a constitutional right and municipal capacity varies widely.
• Municipal infrastructure – perhaps the most important proving ground. If cities can deliver reliable water, sanitation, roads, and transport through PPPs, the benefits ripple through the entire economy.

PPPs Aren’t a Magic Fix

Mukuze cautions that PPPs are not suitable for every project and should never replace direct public investment. They work best when:

1. Projects are properly prepared with clear specifications.
2. The procurement process is transparent and competitive.
3. There is a disciplined framework for monitoring performance and applying penalties or rewards.

When these conditions are met, PPPs can turn ambitious infrastructure plans into real, financeable assets that are delivered on time and maintained over the long term.

The Bigger Picture: Africa’s Housing and Infrastructure Gap

Shifting the lens to the continent, RB Property Group notes that Africa’s housing deficit exceeds 50 million homes, with about 230 million people living in slums in sub‑Saharan Africa alone.

The continent needs $130‑$170 billion per year to meet its infrastructure demands, yet current spending falls short by more than $60 billion annually. This shortfall shows up as unreliable electricity, poor transport networks, and high logistics costs.

But every gap is also an opportunity:

• Domestic capital in Africa tops $4 trillion, much of it still idle.
• A young, skilled workforce is driving innovation in construction, energy, finance, and digital tech.
• Regional frameworks like the AfCFTA (African Continental Free Trade Area) and PIDA (Programme for Infrastructure Development in Africa) lower risks and create scale for cross‑border projects.

Through PPPs, blended finance, and long‑term leases or concessions, Africa can mobilise both local and international money, share risks, earn predictable returns, and help governments hit development targets.

Sector‑Wide Impacts of Better Infrastructure and Housing

When roads are paved, homes are built, and utilities are upgraded, the benefits spread across many industries:

• Construction & Materials – demand for cement, steel, and local manufacturing rises.
• Finance & Real Estate – mortgage markets, REITs, and long‑term investment instruments grow.
• Energy & Utilities – renewable and traditional energy projects gain from stronger grids.
• Digital & Commercial Services – reliable infrastructure fuels logistics, e‑commerce, and urban innovation.

Ultimately, stronger infrastructure and housing don’t just improve lives—they spark jobs, boost local businesses, and drive broad‑based economic growth.

Conclusion

South Africa’s private capital is ready to invest; the hold‑up is the lack of bankable, well‑prepared projects. By shifting the focus from “where will the money come from?” to “how do we get projects investment‑ready?”, the country can unlock the potential of PPPs and other partnership models.

When municipalities, provinces, and national agencies prioritize solid preparation, transparent structuring, and disciplined performance management, infrastructure ambitions become real assets. The result: better services, stronger economies, and a brighter future for South Africans—and a model that the rest of Africa can follow.