In March 2026, Coca-Cola, or rather the Coca-Cola ‘system’, as the broader family of the beverage giant calls itself, announced it was investing almost US$2 million to increase water security in Tanzania.

The investment is part of its US$25 million Africa Water Stewardship Initiative, launched two years ago to help address critical water-related challenges in local communities in 20 African countries by 2030.

For example, in Mozambique, Coca-Cola Beverages Africa, the largest authorised bottler of Coca-Cola products in Africa, invested MZN8 million in two infrastructure projects to provide access to safe water for communities near its bottling plants in Nampula, in north-eastern Mozambique, and Matola-Gare, near Maputo.

The investment is part of a growing trend among the private sector to step in to help finance improvements to the continent’s infrastructure, including for water, logistics, energy and healthcare. And now private-sector investors are increasingly being asked to go further than their ESG (environment, social and governance) obligations.

Looking at South Africa’s investment gap for water infrastructure, it becomes clear why private investment is so badly needed. An estimated 34% of the country’s water supply systems and 54% of its wastewater systems are deemed to be in high or critical risk condition. According to the latest published (2023) research – by the Development Bank of Southern Africa (DBSA), the National Planning Commission and the Presidential Climate Commission – South Africa is facing an investment gap of ZAR91 billion a year until 2050, and that’s the best-case scenario. The worst-case scenario amps up that gap to ZAR149 billion a year, about 49% of the total investment requirement.

GreenCape’s 2026 Water market intelligence report, which focuses on the Western Cape, notes that in the face of diminishing allocations from, for example, the Water Services Infrastructure Grant and Regional Bulk Infrastructure Grant, municipalities are increasingly having to turn to private investment.

President Cyril Ramaphosa has acknowledged the need for public-private partnerships (PPPs) to develop water infrastructure. ‘Through the Infrastructure Fund and new regulations for public-private partnerships, we are using innovative funding models, reducing risk and attracting investors to fast-track projects in energy, water, transport and digital infrastructure,’ he said in his 2026 State of the Nation Address in February.

One of those ‘innovative funding models’ is South Africa’s first-ever Infrastructure and Development Finance Bond, which was more than two times oversubscribed, having raised ZAR11.8 billion at its close in December 2025.

The bond will be channelled to fund projects that fall under government’s Budget Facility for Infrastructure (BFI). While not a new intervention, from 2026 the BFI will for the first time run four bid windows a year instead of only one, to better enable municipalities and other public institutions to apply for funding for infrastructure projects. It is meant to fund only 80% of project costs, which, while adding financial pressure, also creates opportunities for private investment.

The ZAR1.4 billion upgrade of the Paarl Wastewater Treatment Works (WWTW) and the bulk sewer system in southern Paarl in the Drakenstein municipality, encompassing the Cape Winelands, is an example of the BFI initiative in action. It is reportedly the municipality’s largest infrastructure undertaking.

Many municipalities are attracting private investment through a build-operate-transfer (BOT) model, according to GreenCape. It cites Beaufort West, which is using a 20-year BOT model to build a direct potable-water reuse system that uses ultrafiltration, reverse osmosis and advanced oxidation technology, and the Bergrivier municipality, which plans to establish a water reclamation facility at Piketberg and to upgrade the Veldrif WWTW.

The Western Cape, which is generally regarded as the best-performing of South Africa’s nine provinces in terms of water delivery, has also established the Sustainable Infrastructure Development and Financial Facility (Sidaff) to support creditworthy intermediate municipalities to develop and finance catalytic sustainable infrastructure projects that align with national development goals. Its grant facility is funded through international donors from countries such as Switzerland and Denmark.

Planned Sidaff projects include a R135 million capex project to replace ageing asbestos cement water pipes with a high-density polyethylene alternative in the Overstrand towns of Betty’s Bay and Kleinmond; three planned water infrastructure projects in Saldanha Bay, with a combined projected capex of R165 million; and the proposed expansion of the Swartland Water Treatment Works from 29 million litres a day to 40 million litres a day.

At a national level, reforms are also under way to improve the framework for PPPs – its first comprehensive overhaul in 15 years. Among the proposed changes is that projects worth less than ZAR2 billion follow a simplified process, therefore reducing costs. There will also be more clarity on how construction, demand and operational risks are shared between public and private partners. Treasury is also developing a toolkit offering guidance on how to prepare feasibility studies, allocate risks and structure contracts.

The Water Partnerships Office (WPO), set up in 2023 under the auspices of the Development Bank of Southern Africa, is also providing support to municipalities to improve procurement pathways, co-financing structures and project preparation.

‘Our main focus is to create opportunities for the private sector to support municipalities – specifically looking at water services. We do this through developing standardised programmes and assisting with project preparation,’ says Johann Lübbe, who heads the WPO.

Another possible avenue to raise private investment in water infrastructure is blue bonds – an extension of the already-familiar green bonds. While not targeting water infrastructure as such, Seychelles in 2018 became the first country in the Southern African Development Community to launch a sovereign blue bond, raising US$15 million from international investors to finance the sustainable use of marine resources.

Last year, Angola issued a US$64 million sovereign bond to finance 43 dam projects in the southern province of Namibe.

Lerato Nkanza, parter at Webber Wentzel, writes in an online blog that blue bonds ‘present a viable solution to channel funding into restoring and expanding’ South Africa’s water infrastructure.

‘These instruments are used to finance initiatives such as the research, design, development and implementation of efficient water supply and treatment solutions. There is clear potential for their application in tackling the country’s water infrastructure challenges,’ she writes.

Jason Lightfoot, senior portfolio manager at Futuregrowth, acknowledges that the argument in favour of blue bonds for water projects is gaining traction. However, he cautions that fancy financing mechanisms, blue bonds among them, will not be enough to close the wide infrastructure financing gap.

He tells the Africa Global Funds magazine that the real problem in South Africa isn’t accessing private capital but rather the bankability of projects. ‘Institutional investors collectively manage over R5 trillion in assets, but retirement fund capital requires certainty of cash flows, appropriate risk sharing, robust legal agreements and recourse mechanisms when obligations aren’t met.’

The GreenCape report echoes Lightfoot’s concern, outlining three barriers to increased private investment – complex procurement processes; complex PPP regulations; and extended project timelines and transaction costs. Ferrial Adam, executive manager of citizen advocacy group WaterCan, adds another note of caution, warning that commoditising water and privatisation are not the answer in a country with high levels of inequality. She tells Engineering News that the private sector has an important role to play – but only if safeguards, such as against corruption and pro-curement abuse, are in place. ‘Any partnerships must be carefully designed,’ she says.

While some initiatives are still being finalised, those such as the WPO, BFI, the Western Cape’s Sidaff and proposed amendments to the PPP framework may go some way to improving the design and bankability of water infrastructure projects in South Africa.

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