Infrastructure funding is not the constraint. Governance is.

South Africa does not face a shortage of capital for infrastructure. It faces a shortage of institutions that are structurally ready to absorb it. This distinction is often overlooked in debates about infrastructure delivery.

Funding gaps are frequently cited as the primary obstacle, yet South Africa’s financial system remains deep, liquid and capable of supporting large scale investment. The more persistent constraint lies in governance, project preparation and institutional capacity. That assessment emerged from complementary conversations with Zen Dlamini, head of public sector at Standard Bank, and Mohammed Bhabha from the bank’s energy and infrastructure funding division.

Their remarks reframe a debate that often assumes funding is the central barrier to infrastructure investment. Liquidity exists. Domestic banks remain well capitalised.

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Institutional investors are searching for long term assets. International operators are positioning to participate in infrastructure opportunities as reforms begin to reshape South Africa’s energy and logistics sectors. When asked what makes municipalities financeable, Dlamini resisted a simple binary answer.

“It’s very important that we unpack municipalities,” she said, noting that South Africa’s 267 municipalities span metros, district municipalities and smaller local authorities with vastly different fiscal capacities. Her focus is on the large metropolitan municipalities such as Johannesburg, eThekwini, Cape Town and Tshwane because of their systemic economic significance. “The impact thereof is much, much bigger,” she said.

“I’m not saying the other municipalities are less important, because municipalities have a very big impact on the communities that they service.” Metros are under strain. Governance instability, revenue collection weaknesses and mounting service delivery pressures have left several operating in tight fiscal conditions. But Dlamini cautions against framing the issue in terms of municipalities being simply bankable or unbankable.

“You can’t really distinguish between a municipality that cannot be financed,” she said. The real issue is institutional condition and project structure. Municipalities receive transfers from National Treasury and are expected to operate efficiently. Borrowing should ideally support capital expenditure such as energy projects, water systems and infrastructure upgrades where there is a defined asset base and measurable economic return.

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