The Critical Role of Banks in Unlocking PPP Success

South Africa faces a multi-trillion-rand infrastructure-funding shortfall. According to the World Bank and the Development Bank of Southern Africa (DBSA), the country needs approximately R6.2 trillion by 2030 to address shortages in basic education, basic transportation, water and sanitation, and technical and vocational education and training (TVET). And while challenges remain, opportunities exist through blended finance, green bonds, and PPPs to unlock new capital flows and embed climate-smart solutions into urban development. Partnerships are increasingly prioritising investment in critical infrastructure, with a particular focus on water supply and wastewater management, to ensure solutions are fit for purpose and resilient.

Projects like the Medupi and Kusile power stations, which experienced extended timelines and higher than planned costs, highlight the complexities involved in large-scale infrastructure delivery within parts of South Africa’s public sector. The full commissioning of Kusile’s Unit 6 in September 2025 marked completion of the project, five years behind schedule and over budget by more than R150 billion.

This illustrates the opportunities  for public–private partnerships (PPPs) to overcome some of these pervasive challenges. PPPs allow the innovation, capital and expertise of the private sector to complement the public sector funding for large infrastructure and service projects ensuring better fiscal returns. While PPPs are globally recognised as a powerful tool, they are still emerging in South Africa. For the economy to grow, it is imperative that the public and private sectors work together in a coordinated and transparent way.

Achieving this requires meaningful dialogue with key stakeholders to ensure lasting impact. South Africa cannot rely on government alone to address infrastructure gaps. We need risk-mitigated structures that bring together local banks, DFIs, investors, and other partners.

Multi-stakeholder collaboration including government, civil society, academia, and private clients is essential to mobilise capital, drive climate resilience, and build confidence in South Africa’s growth story.

Bringing these stakeholders together is essential to shaping effective, bankable projects. we regularly collaborate with DFIs, including the DBSA, to strengthen project preparation and planning. DFIs have built deep expertise in project preparation and planning, addressing one of the key impediments to infrastructure investment: ensuring that projects are structured and bankable. This ensures that by the time a funding request reaches a commercial bank, the proposal is investment-ready, with a clear funding strategy that can be presented confidently to a credit committee.

We have also seen the Joburg City Metro’s collaboration with DFIs which demonstrates how structured partnerships can unlock capital and enable effective project implementation, an area where corporate banking institutions see opportunity and value.

Commercial banks play a vital role in unlocking the success of PPPs, not only by providing debt financing from our balance sheet, but by leveraging deep sector expertise to structure viable projects and mitigate risk. Banks also serve as a strategic bridge between government, as the project owner, and investors in various capital markets.

As a Pan-African bank, we are ideally positioned to link our clients with the relevant investors through various specialist teams including sustainable finance, project finance, debt capital markets, advisory and syndication team, across the continent. Various investors apply different metrics to assess projects, depending on the investment phase and their mandates. There are specific investors in the market who are primarily looking for a financial return, and there are also investors whose mandate includes environmental, social and governance (ESG) considerations. As a bank we are well-positioned to match the right bankable projects with the appropriate investors, aligning project needs with investor priorities.

From a sustainability point of view, there are several opportunities related to water. For example, many people do not realise that in South Africa, we are not only solving for clean, potable water, there is also the wastewater problem, with a significant infrastructure backlog related to water treatment plants.

On the public sector side, there is an urgent need for infrastructure funding in South Africa. Equally, on the private side, there is funding available. Investors, banks and various lenders are looking for bankable projects in which to invest. To ensure alignment, greater open engagement between the two sides is required.

Ultimately, for large infrastructure projects, commercial banks like Absa serve as a bridge between public and private entities, bringing a vital element of trust that enables effective collaboration and instils confidence in the success of the project.

B20 and G20 engagements highlight the level of collaboration observed between private sector players, public entities, civil society, and academia, demonstrating the value of structured and cooperative approaches to financing infrastructure. By working together, PPPs can deliver tangible economic and social outcomes, illustrating that collaboration is key to unlocking South Africa’s infrastructure potential.