Water: Navigating a Changing Pressurized System

Three years ago, we released an article spotlighting the intense pressure on the nation’s water infrastructure and the growing possibilities for private-sector investment.

Back then, the case for investment was largely driven by the significant infrastructure gap. While this rationale still holds, opportunities for private-sector participation have expanded greatly.

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South Africa is contending with water stress, with nearly 98% of its accessible surface water already allocated for public and private use. Additional pressures stem from aging infrastructure, erratic climate patterns, and uneven geographic distribution.

A 2024 study indicates that only 36.7% of rural inhabitants have access to safely managed water, while nearly 47% of treated water is lost due to leaks, unauthorized use, metering mistakes, and inadequate billing systems.

These concerns have gained traction.

Water security has become a vital element of the national agenda for growth, governance, and infrastructure development.

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

Enhanced Policy

A notable change since our last article is the public sector’s increased engagement.

In conjunction with the NWCC, the government has reintroduced benchmarking via the Blue Drop, Green Drop, and No Drop frameworks, facilitating a more robust, data-driven assessment of water quality, wastewater performance, and non-revenue water.

Institutional reforms are also underway.

The government is improving the management of national water infrastructure and capital mobilization by centralizing strategic asset management within a streamlined framework, specifically the National Water Resources Infrastructure Agency (NWRIA), leveraging the capabilities of entities like the Trans-Caledon Tunnel Authority (TCTA), a state-owned enterprise proficient in financing and executing large-scale bulk water initiatives.

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Simultaneously, public funding commitments have become clearer, with significant increases in budgetary allocations for water and sanitation infrastructure and new incentives aimed at protecting municipal service revenues for reinvestment.

In this framework, the NWCC should be viewed as a high-level coordinating body rather than a standalone entity.

Its role is to harmonize various institutions, accelerate interventions, deploy technical assistance, and strengthen accountability where municipal systems fall short.

This enhances the prospects for prompt execution, improved oversight, and clearer intervention strategies in stressed areas for investors.

The Water Partnerships Office adds an extra layer of credibility, focusing on developing standardized frameworks for private sector involvement while aiding municipalities in creating more viable projects.

Wider Investment Potential

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

As the president noted in Sona 2026, the challenge often isn’t the availability of water, but rather ensuring it reliably reaches households.

This distinction is crucial for investors, broadening the array of investable opportunities beyond traditional dam and bulk transfer financing.

It suggests potential investments throughout the production process, from potable treatment, transfer assets, and non-revenue water to wastewater treatment and reuse, indicating a more complex investment landscape.

Not every opportunity needs to be a large, independent concession; some may be better structured as performance-driven rehabilitations, technical service contracts, availability-based models, ring-fenced utility improvements, or blended municipal support frameworks under stringent national oversight.

This is where the collaboration between the NWCC and the Water Partnerships Office could be most advantageous: one bolstering coordination and intervention, while the other aids in transforming municipal needs into feasible projects.

From Crisis to Reform

Reform does not need to eliminate risk to create opportunity; it should rather enhance transparency, structure, and accountability adequately to facilitate disciplined capital deployment. This increasingly reflects the trajectory of South Africa’s water sector.

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

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

The scale of investment required to achieve water security far surpasses what the national treasury can independently finance, with estimates suggesting about R90 billion annually is needed over the next decade.

Current expenditure consistently falls short of this need. In this context, institutional capital can play a vital role in bridging the capital gap.

The Investment Case

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

• Essential and mandated demand;
• A significant and evident infrastructure requirement;
• Heightened policy prioritization;
• Development importance; and
• The potential for inflation-linked or utility-style cash flows in certain segments.

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

Reliable supply is essential for mining, agriculture, manufacturing, housing, healthcare, and urban productivity. Therefore, it represents not just 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 pressing challenges, it also represents one of its most promising long-term investment prospects.

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