Water: A Pressurized System in Transition

Three years ago, we published an article shedding light on the severe pressure faced by the country’s water infrastructure and the rising prospects for private-sector investment.

At that point, the rationale for investment was primarily based on the substantial infrastructure deficit. While this thesis still remains relevant, the scope for private-sector involvement has expanded considerably.

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South Africa is grappling with water stress, as nearly 98% of its available surface water is already earmarked for public and private use. Further strain has arisen from deteriorating infrastructure systems, unpredictable climate events, and uneven geographic distribution.

A 2024 study reveals that only 36.7% of rural residents have access to safely managed water, while almost 47% of treated water is lost due to leaks, unauthorized usage, metering errors, and insufficient billing systems.

These issues have garnered attention.

Water security has become pivotal to the national agenda for growth, governance, and infrastructure development.

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

Enhanced Policy

One significant shift since our previous article is the public sector’s reaction.

Along with the NWCC, the government has reinstated benchmarking through the Blue Drop, Green Drop, and No Drop frameworks, leading to a more robust, evidence-driven evaluation of water quality, wastewater performance, and non-revenue water.

Institutional reforms are also progressing.

The government is enhancing the management of national water infrastructure and funding mobilization by consolidating strategic asset management within a streamlined framework, specifically the National Water Resources Infrastructure Agency (NWRIA), building on the capabilities of entities like the Trans-Caledon Tunnel Authority (TCTA), a state-owned enterprise with a proven track record in financing and executing large-scale bulk water projects.

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Concurrently, public funding pledges have become more defined, with notable increases in budget allocations for water and sanitation infrastructure and fresh incentives to safeguard municipal service revenues for reinvestment.

Within this context, the NWCC should be viewed not as a separate entity, but as a high-level coordinating mechanism.

Its function is to align various institutions, expedite interventions, deploy technical support, and fortify accountability where municipal systems are inadequate.

This enhances the prospects for quicker execution, better oversight, and clearer pathways for intervention in stressed areas of the system for investors.

The Water Partnerships Office introduces an additional layer of credibility, focused on developing standardized programs for private sector involvement while aiding municipalities in crafting more bankable projects.

Wider Investment Potential

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

As the president noted in Sona 2026, the issue is often not the availability of water but ensuring it reliably reaches people’s taps.

This distinction is crucial for investors, as it expands the range of investable opportunities beyond traditional dam and bulk transfer financing.

It suggests opportunities throughout the production process, from potable treatment, transfer assets, and non-revenue water to wastewater treatment and reuse. This indicates a more intricate investment proposition.

Not every opportunity has to be a substantial, independent concession; some may be more effectively structured as performance-driven rehabilitation, technical service contracts, availability-based models, ring-fenced utility enhancements, or blended municipal support frameworks under robust national oversight.

This is precisely where the combination of the NWCC and the Water Partnerships Office could prove most beneficial: one enhancing coordination and intervention, while the other assists in transforming municipal needs into bankable projects.

From Crisis to Reform

Reform doesn’t have to erase risk to create opportunity. Instead, it should enhance transparency, structure, and accountability sufficiently to facilitate disciplined capital deployment. This increasingly reflects the trajectory of South Africa’s water sector.

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Water infrastructure has become a realm where public necessity, policy prioritization, and capital demand converge, allowing institutional investors to engage with essential assets that support national growth.

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

The scale of capital necessary to achieve water security far exceeds what the national treasury can fund independently, with estimates suggesting around R90 billion annually required over the next decade.

Current spending has consistently fallen short of this requirement. It is in this scenario that institutional capital can play a crucial role in addressing the capital gap.

The Investment Case

For investors, the allure of SA’s water sector is its combination of:

• Essential and mandatory demand;
• A substantial and clear infrastructure need;
• Increasing policy prioritization;
• Development significance; and
• The possibility of inflation-linked or utility-style cash flows in specific segments.

The opportunity is best understood as a layered investment platform, not just a single market: strategic bulk infrastructure, municipal stabilization, wastewater compliance and reuse, and technology-driven operational enhancements.

Reliable supply is vital to mining, agriculture, manufacturing, housing, healthcare, and urban productivity. Thus, it isn’t 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 most significant challenges, it also represents one of its most promising long-term investment opportunities.

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