South Africa is navigating growing water pressures that require both technical and social solutions. In Johannesburg, neighbourhoods such as Coronationville and Westbury have faced extended outages affecting homes, clinics, and schools—underscoring the need for more resilient systems. In Gqeberha and Nelson Mandela Bay, supply has fluctuated between rationing and recovery, while Durban and Tshwane work to match rapid urban growth with infrastructure upgrades.

Nationally, water losses remain significant: more than two in five litres of treated water never reach paying customers due to leaks, theft, and metering inefficiencies. This challenge impacts municipal finances and service reliability, but it also highlights where targeted interventions can deliver the greatest gains. Water infrastructure is foundational—its performance underpins health, economic activity, and social stability. Addressing these issues now creates an opportunity to strengthen resilience, restore public confidence, and unlock sustainable growth. 

The good news is that the enabling architecture is starting to take shape through reforms that shift the risk profile in the right direction. First, the National Water Resources Infrastructure Agency, created under the National Water Resources Infrastructure Agency SOC Limited Bill, is being set up to develop, operate and finance national water resources infrastructure and to raise commercial and development finance independently of government guarantees, giving the state a stronger platform to crowd in private capital for strategic schemes. Second, the Water Services Amendment Bill  clarifies the respective roles of Water Services Authorities and Water Services Providers and allows capable private or regional utilities to operate under clear service models and contracts with municipalities. Third, recent moves by the Department of Water and Sanitation and National Treasury to ring-fence municipal water revenues, reinstate Blue Drop, Green Drop and No Drop quality audits. 

Together these changes point to a more investment-friendly framework where responsibilities are clear and performance is visible. 

Another building block is the newly established Water Partnerships Office housed within the Development Bank of Southern Africa. It was created to help municipalities prepare, structure and procure bankable projects in areas like desalination, reuse and non-revenue water reduction, developing standardised documents and programme management to create scalable solutions. 

The priorities?

One immediate priority is to address non-revenue water which accounts for wastage of c. 40% of national supply. Performance-based contracts between municipalities and water service providers that incentivize maintenance have the potential to convert leaks and losses into billable volume and steadier service.

The second critical area is wastewater reuse. Municipal and industrial reuse adds climate-resilient capacity without new abstraction and when bundled at programme scale it supports standardised risk allocation and better pricing. Both categories come with clear public-interest benefits. 

Public private partnerships (“PPPs”) are a proven model for mobilising private capital into water infrastructure in South Africa and globally. Under these structures private partners finance, build and operate treatment and distribution assets under long term contracts, while government retains ownership and regulatory oversight, allowing operational risk to be transferred and service delivery to be improved. When supported by clear legal frameworks, bankable project preparation and cost reflective tariffs, PPPs can bridge funding gaps at municipal and provincial level, as seen in the Silulumanzi and iLembe concessions, which have expanded access, modernised systems and improved efficiency while navigating difficult questions around affordability, free basic water and equitable service levels. 

Applying lessons from South Africa’s renewable energy programme, standardising PPP agreements, establishing dedicated programme offices and drawing on institutions such as National Treasury’s PPP Unit and the experience of long-dated infrastructure debt investors can reduce transaction costs and help scale bankable PPPs so more communities benefit from reliable, sustainable water services.

Revenue certainty 

Revenue models in the water sector must balance three imperatives at once: investor certainty, municipal affordability and the public’s right to reliable services. For private capital, the core requirement is confidence that when households and businesses pay for water, those revenues are collected and allocated to the water service provider rather than being combined to meet other municipal obligations. Recent reforms by the Department of Water and Sanitation and National Treasury explicitly target this by ring-fencing municipal water revenues, separating Water Services Authority and Water Services Provider functions with distinct accounting and service agreements, and reinstating Blue Drop, Green Drop and No Drop audits to track water quality, losses and billing efficiency. Together these measures can create clearer, more predictable revenue streams that support cost recovery and make it possible to consider bankable tariffs under long-term PPP contracts.

Revenue models must consider municipal payment risk mitigation measures directly. Even with stronger revenue discipline, shortfalls in collections can still crystallise as payment risk, which is why additional credit mitigation and support from development banks and National Treasury remain important parts of the equation. 

There are success stories close to home. The iLembe–Siza Water concession on the Dolphin Coast and Silulumanzi in Mbombela both expanded access and professionalised operations under long-term contracts, showing how public-private collaboration can stabilise service when roles are clear and performance is measured. They also revealed pitfalls to avoid. Legacy under-investment cannot be unwound overnight. Affordability pressures need explicit social provisions, including indigent policies that are funded and enforced.

Sustainability 

None of this works without measurable outcomes. Sustainability in water is not a label, it’s a ledger of service delivered. In this sector, sustainability extends beyond regulatory requirements to actively drive progress towards the Sustainable Development Goals (SDG), particularly SDG 6 on clean water and sanitation and SDG 9 on resilient infrastructure. The impacts that matter are households reliably served, water resources used efficiently and infrastructure that supports long-term community resilience. This represents accountability for reliable water services and the opportunity to create lasting shared value across Africa’s sustainable development priorities.

Through our Infrastructure Debt division, we can provide the long-dated financing and structuring expertise needed to support water PPPs. As a long-term investor in infrastructure assets, our lens at Old Mutual Alternative Investments is practical and sustainable debt structuring. Finance should follow service. With ongoing policy reforms driving a positive framework for investor confidence, South Africa can convert today’s emergency into a replicable pipeline of bankable projects that restore dignity, protect growth and lower the total cost of water over time.