Can public-private partnerships really tackle SA’s infrastructure challenges?

Infrastructure was once again positioned as a key pillar for economic development, job creation, and improved service delivery in the National Budget Address with over R1 trillion allocated over the next three years.

Focus understandably has been placed on transport and logistics, critical rail infrastructure, energy infrastructure as well as water and sanitation. Moreover, infrastructure reform continues to remain a key priority, with a focus on accelerating private sector participation and exploring alternative financing models to drive development. But can public-private partnerships truly tackle the challenges currently faced?

The answer is yes – but we have to move beyond discussion and start implementing solutions. This was also a key takeaway from Investec’s inaugural SA Economic Reform Conference. The event brought together key stakeholders from government, business, and civil society to explore actionable solutions for economic growth, job creation, and sustainable infrastructure development – all priorities on South Africa’s agenda.

A pivotal moment for action

Cumesh Moodliar, CEO of Investec South Africa’s message has been clear:

 "We are at a defining crossroads. We can no longer afford to simply talk – we need to act. The responsibility we bear to address unemployment, economic stagnation, and infrastructure deficits is significant. Solutions must come from within South Africa and it’s a responsibility we carry together".

This message was further reiterated in the Budget address, which sparked unprecedented levels of public debate about the difficult policy trade-offs we, as a nation, face.

With GDP growth projected at just 1.7% this year – far from the nearly 5% needed for meaningful economic upliftment – public-private partnerships have a critical role in setting the country on a path to sustainable long-term growth. 

Governance, infrastructure and investment

Beyond just budget allocation, high-impact action is needed to address critical challenges and opportunities in the sector, along with the strategies for the reindustrialisation of South Africa.

R19.2 billion for critical rail infrastructure upgrades is a start, but rail experts agree that given that it’s such an economic revenue enabler, the sector itself needs urgent reform. Rudi Dicks, Presidency project management office head, mentioned that South Africa’s rail system holds immense potential to drive economic efficiency, yet it remains hindered by a massive maintenance backlog – R11.5 billion on the Ore Corridor alone.

Traxtion and Juniper Consulting have also both stressed that private sector participation is crucial, advocating for PPP models that allow businesses to invest capital and leverage their expertise to ensure returns while benefiting the broader economy.  

It is encouraging to see that regulatory overhaul considerations have started, with new PPP regulations taking effect on 1 June 2025, especially considering that significant changes are needed in both the rail and port sectors. In fact, according to Dicks even if we fix rail, inefficiencies at the ports will continue to hold us back. Reform must be holistic, bringing in improvements driven by competition in both areas. South Africa has successfully implemented energy sector reforms - why not in transport?

While many emerging market economies face infrastructure or regulatory challenges – India with infrastructure and China with institutional and regulatory hurdles for example – South Africa grapples with both.

To unlock investment opportunities in SA’s ports – we need to look at key areas including:

• Identifying key port assets that could attract private investment
• Assessing the value these assets provide
• Understanding what types of investors would find South Africa’s port infrastructure an attractive opportunity

“The long-term competitiveness of South Africa’s ports depends on robust hinterland transport networks and efficient corridors,” said Bernard Aritua, Lead Transport Infrastructure and Logistics at the World Bank.  

Advocate Michelle Phillips Group Chief Executive of Transnet agreed – indicating that moving 250 million tonnes is not just a Transnet target – it’s a national imperative – but achieving this requires a collaborative, multi-modal perspective that integrates rail, ports, and broader transport infrastructure.

With global investment in emerging markets – excluding China – having declined over the past decade, the need for private sector investment in South Africa’s energy transmission and distribution (T&D) infrastructure has also been strongly highlighted. According to Andres Garcia-Novel, chief investment officer: global lead energy networks and infrastructure at the International Finance Corporation, we also cannot afford delays as these projects take over a decade to deploy. 

Government and private sector: A shared responsibility

Deputy Minister of Transport, Mr Mkhuleko Hlengwa, also reaffirmed the government’s commitment to working with the private sector to implement economic reforms, particularly in transport and logistics. He emphasised that infrastructure development is not just about logistics but also road safety, sustainability, and unlocking economic opportunities.

“Functioning municipalities are critical for this, along with opening up the transport sector to private sector expertise, addressing regulatory hurdles, and implementing governance reforms. Policy certainty, private investment, and anti-corruption measures are key to ensuring a competitive and inclusive economy.” 

The path forward: Mobilising investment for sustainable growth

South Africa’s path to 5% economic growth hinges on infrastructure investment and we don’t have time to waste. Mobilising private capital is not as complicated as it seems – the money is there. Government simply doesn’t have the funds and so the private sector must lean in. The introduction of a credit guarantee vehicle in 2026 to derisk private sector investment in infrastructure is desperately needed as it is time for the private sector to step up, facilitate investment, and work with government to implement another REIPPP-style model for infrastructure.