“South Africa is open for business,” the country’s minister of public works and infrastructure, Sihle Zikalala, told delegates in his keynote speech at last week’s GTR Africa 2023 London event, alluding to his mission to target UK and EU financiers and drive investment in energy, transport and water projects.

Investment is needed: two weeks ago, South Africa’s finance minister Enoch Godongwana flagged the country’s struggles with poor water management, as well as “deteriorating rail performance and inefficient ports” in his November budget statement.

Godongwana announced several measures designed to entice private finance, including bringing in new mechanisms – such as build-operate-transfer structures and public-private partnerships – to connect private sector investors, multilateral institutions and the South African government.

Speaking on stage at the event as well as exclusively to GTR’s Jenny Messenger, Zikalala addresses his priorities for energy, transport and water infrastructure as the country continues to combat power cuts, water shortages and pollution, an infrastructure funding gap and uneven investment across its provinces.


GTR: Which global markets are you keen to see building financing and contractor partnerships with South Africa in the long term?

Zikalala: There are two key areas of focus in terms of the global market that we want to attract. The first is the EU and Britain. This year, I went to the Netherlands to engage on issues of green hydrogen, and received quite a warm reception. We also want to connect more with the UK, given the historical ties between the two countries – we believe we can exchange knowledge and expertise. We are also working with Asia as part of the developing world. But it is not about neglecting other global opportunities. South Africa is open for investment as long as that is based on mutual benefit and implemented transparently within the rule of law.


GTR: What opportunities are available for commercial financiers and investors?

Zikalala: Our infrastructure investment drive is detailed in two clearly defined documents. One is the national infrastructure development plan, which is about ensuring that there is a comprehensive synergy in development and delivery of infrastructure. Key areas are energy, including energy generation through the state-owned entity, Eskom, and various alternative forms of energy generation. We are also prioritising the integrated resource-efficient renewable plan, which is about targeting government buildings, installing either solar or any other form of energy generation. We are also looking at water treatment and waste management. It’s about going green and ensuring that we focus on attaining net zero, but without leaving the country without energy.

Another important area within the energy space is investment in green hydrogen projects. We have a big project that is at the feasibility stage, Boegoebaai Green Hydrogen. It is part of the development within the special economic zone that is planned for the Boegoebaai area in the Northern Cape. We are also focusing on rail development connecting to ports – in Cape Town and Gqeberha, and we are developing the ports of Durban as well as Richards Bay. We’re seeking to revamp the rail network and ensure that there is fast service from Pretoria to Gqeberha, particularly as there is a special economic zone that focuses on the automotive sector, based in Pretoria. Lastly, we want to see development in the form of big dams, to ensure they are providing the bulk of water to local schemes.

We are inviting the private sector and financiers to invest. We use public-private partnerships, but we also want to engage in concessions, where we say yes, they are funded government-funded projects, you come and invest in them, and we will pay you over time.


GTR: How are you encouraging new investment?

Zikalala: We are gazetting the new treasury regulations, which will help to make it easier for financiers to invest, and will also give a proper, regulated approach to how to protect investors and ensure that they generate income. This is about making sure that there are sovereign guarantees. We know it is about front-loading projects that are not in the budget, either currently or in the next three to five years, and then when we fund them through concessions, we will be able as a government to pay this back over a period of time.


GTR: What regulatory changes are needed?

Zikalala: Changes are needed that make regulations easy and quick to enforce for investors, such as  in areas like environmental impact assessments and water use regulations. We want to see that these are not a stumbling block. We want to help ensure that all processes and regulations are followed, but within a short period of time. We also want to see that there is protection of investors, but that what they invest in is guided by government priorities.


GTR: What are your plans for supporting SMEs?

Zikalala: It is important that as we grow the economy and ensure infrastructure is developed, small, medium and micro enterprises (SMMEs) benefit. Firstly, we still have regulation that says for big projects, there must be programmes of subcontracting to SMMEs. Secondly, SMMEs must also focus on manufacturing, including construction materials. These spaces must also be left for SMMEs to participate. We believe there must be a mutual relationship between big and small companies, and that they both stand to benefit under the regulations and leadership of the government.


GTR: What do you anticipate your main challenges will be?

Zikalala: The first challenge is to raise financial investment, which is key. The second challenge is to build the required capacity for implementation. That’s why we want to collaborate with countries that are much more advanced in project design and execution.

I want to emphasise the importance of investing in South Africa. There are two advantages. Firstly, South Africa has some of the best macroeconomic policies in Africa, and institutions that ensure democracy and protect the constitution. We also have stable financial institutions. Secondly, South Africa is a strategic location, as an entry point to Southern Africa and to Africa overall. With the introduction of the African Continental Free Trade Area agreement, we can see more benefit for those who come to invest in South Africa, both in terms of investment, and in terms of ensuring there are companies in the country that focus on manufacturing, because it will be easy to access the African market.