Tackling South Africa’s Infrastructure Deficit: The Role of Development Finance Institutions

This policy brief examines the role of international development finance institutions (DFIs) and multilateral development banks (MDBs) in addressing South Africa's infrastructure deficit. It analyzes the shift from a historical reluctance to seek external aid toward a current necessity driven by rising public debt and the economic impact of COVID-19. The document details the government's Infrastructure Build Programme, the establishment of the Investment and Infrastructure Office (IIO), and the creation of a ZAR100 billion Infrastructure Fund, while highlighting critical gaps in project preparation skills and procurement coordination.

• South Africa faces a significant infrastructure funding gap, with the Infrastructure Build Programme identifying a deficit of approximately ZAR502 billion. The country's gross fixed capital formation (GFCF) was 18.19% of GDP in 2019, which is considerably lower than the 30–35% norm suggested for developing economies.
• Rising public debt and declining credit ratings have constrained the government's ability to fund infrastructure internally. The debt-to-GDP ratio, including state guarantees to SOEs, is projected to reach 100% by 2023, far exceeding the emerging-market average of 45%.
• International DFIs and MDBs have provided substantial funding, with a strong bias toward renewable energy and green-efficiency projects. Notable contributions include $4.1 billion from the World Bank and $31 billion from the African Development Bank for regional integration projects since 2007.
• The South African government has introduced the Sustainable Infrastructure Development Symposium (SIDS) methodology to improve project packaging and private sector engagement. This is intended to correct previous failures where the private sector was engaged too late in the planning process.
• A ZAR100 billion Infrastructure Fund has been established via a memorandum of agreement between the Investment and Infrastructure Office (IIO), National Treasury, and the Development Bank of Southern Africa (DBSA). The fund will use a blended finance model involving public, private, local, and international funding.
• A critical bottleneck in infrastructure delivery is the lack of project-preparation skills among civil servants, leading to incomplete projects and budget overruns. The DBSA has attempted to mitigate this through a project preparation fund and a specialized business unit to create 'bankable' project concepts.
• The document identifies a lack of coordination in procurement, noting that separate processes exist for the National Treasury’s PPP programme, the Department of Energy’s REIPP, and the IIO's infrastructure programme. It recommends a single, unified procurement plan.

APA

Ramokgopa, D. (2021). Tackling South Africa’s Infrastructure Deficit: The Role of Development Finance Institutions. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/03/Policy-Insights-102-ramokgopa.pdf

Chicago

Ramokgopa, Dineo. Tackling South Africa’s Infrastructure Deficit: The Role of Development Finance Institutions. South African Institute of International Affairs, 2021. https://saiia.org.za/wp-content/uploads/2021/03/Policy-Insights-102-ramokgopa.pdf.

Wikipedia

{{cite report |last1=Ramokgopa |first1=Dineo |title=Tackling South Africa’s Infrastructure Deficit: The Role of Development Finance Institutions |publisher=South African Institute of International Affairs |date=March 2021 |url=https://saiia.org.za/wp-content/uploads/2021/03/Policy-Insights-102-ramokgopa.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ramokgopa2021tackling, author = {Ramokgopa, Dineo}, title = {{Tackling South Africa’s Infrastructure Deficit: The Role of Development Finance Institutions}}, institution = {South African Institute of International Affairs}, year = {2021}, month = mar, url = {https://saiia.org.za/wp-content/uploads/2021/03/Policy-Insights-102-ramokgopa.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }