Investing in infrastructure, the platform for accelerating human progress

Sustainable urban growth across South Africa presents a significant opportunity for cities to attract and nurture valuable inward investment. While challenges, such as business costs, regulatory complexities, and evolving policy frameworks exist, there is growing momentum towards creating more welcoming environments for capital. By embracing reforms and innovative approaches, cities can actively encourage investment that supports vibrant, productive urban economies. 

Infrastructure planning is increasingly viewed as an integral part of a dynamic investment ecosystem. Roads, utilities, and digital connectivity lay the foundation, but planners are now thinking more holistically about how cities can become investment-friendly, reducing barriers through streamlined land-use processes and transparent incentives. With this positive shift, even the most ambitious urban visions can be realised, creating new economic opportunities and inspiring citizens to engage and thrive. 

Perhaps the toughest challenge facing infrastructure planning in Africa is to take the learnings from the developed world versus repeating mistakes through emulation. One of the most common missteps is building cities around machines rather than people.

For over a century and a half, the shape of cities around the world has been dictated by the dominant mobility technology of the era. Suburbia, multi-lane motorways devouring precious land, and car-dependent spatial layouts are all symptoms of private automobiles being allowed to shape design. 

The challenge is to resist this path dependency and instead pursue human-centred infrastructure that prioritises walkability, mixed-use density, public transit and non-motorised transport networks. Given that most of Africa's urban residents do not own private vehicles, designing cities around cars is not just poor planning; it is a fundamental misalignment with the lived reality of the population.

Plan for

• Walkability and mixed-use density
• Public transit as backbone
• Protected non-motorised networks
• Co-location of housing and jobs

Plan against

• Highway-led expansion
• Single-use zoning sprawl
• Car-dependent suburbia
• Peripheral affordable housing

The world's most skilled professionals, entrepreneurs and innovators remain inherently ’footloose’, willing, and able to relocate to wherever offers the best quality of life, opportunity, and environment for their families. South Africa’s cities are competing in this global talent marketplace, whether they acknowledge it or not. 

The infrastructure planning challenge here extends well beyond office parks and broadband speeds. It encompasses the quality of schools, healthcare access, public safety, cultural vibrancy, green spaces and the overall liveability of a place. Cities that fail to plan holistically for talent attraction risk losing skilled people, which undermines long-term economic growth and prosperity. A talent-rich population is not a byproduct of development; it is a prerequisite, and infrastructure must be planned accordingly.

Finally, there is a challenge that is often overlooked in technical studies but is no less critical: the failure to design places that make people feel something. 

South African infrastructure projects must be designed beyond efficiency and functionality. Real attention should be given to the emotive dimension by, for example, keeping in mind how a well-designed public square can be used to instil civic pride, the role of cultural infrastructure in nurturing identity, and the power of inspiring architecture to signal ambition and belonging. 

The challenge for planners is to embed cultural intentionality in infrastructure from the outset, creating spaces and assets where the arts thrive, where communities gather with purpose, and where the built environment tells a story that residents see themselves in. Without this, cities may function, but they will not inspire. And cities that do not inspire will struggle to retain the hearts, minds and energies of their people. 

The infrastructure planning challenge is not fundamentally about concrete, steel or capital, though all three matter enormously. It is about breaking away from one‑size‑fits‑all approaches and ensuring the concrete, steel and capital are forged around human need, economic magnetism, cultural vitality, and long-term resilience. 

Across Africa's fastest-growing cities, Lagos, Nairobi, Johannesburg, Accra and Dar es Salaam, a persistent spatial mismatch continues to undermine economic inclusion. Affordable housing is overwhelmingly located on the urban periphery, far removed from the employment centres, commercial nodes and service hubs where opportunities are found. The result is a difficult daily reality for millions: two-hour-plus round-trip commutes. According to the South African 2020 National Household Travel Survey (Stats SA, 2022), travel cost surpassed travel time as a national priority (30,8% of households), while travel time was important to 23,3% and flexibility was mentioned by 11,9%. 

South Africa and Africa have the opportunity to fundamentally reimagine the relationship between where people live and where they work. This means integrating land-use and transport planning in ways that older cities never managed, ensuring that affordable housing developments are co-located with economic activity, that transit corridors anchor mixed-use development, and that digital connectivity reduces the need for physical travel where possible. Bringing opportunity and people together instead of forcing people to chase opportunity across vast distances is not just a transport fix, it is an equity imperative, and planners are increasingly recognising it as such. 

Although most Africans depend on walking, cycling, and informal public transport, investments have mainly supported private vehicle infrastructure such as wider roads, interchanges, and large parking areas. Meanwhile, active mobility infrastructure remains inadequate, and higher-capacity formal public transport systems such as bus rapid transit and regional, commuter and light rail are absent, underfunded, or fragmented. 

Ironically, the modal shift baseline is already favourable. The opportunity lies in making walking, cycling, and public transport safer, more dignified, more efficient, and more integrated. Investing in protected cycling infrastructure, pedestrian-priority streetscapes and well-designed bus rapid transit networks can leapfrog the car-dependent trap entirely. Cities and regions such as Lagos, Cape Town, and Gauteng are already demonstrating what is possible. The challenge is to accelerate these efforts at scale and make sustainable modes so attractive that even those who can afford a private vehicle choose not to use one. 

The global conversation around transport decarbonisation has largely centred on electrification. But for South Africa, simply swapping internal combustion engines for electric motors is insufficient if the electricity powering those motors comes from fossil fuel sources. True decarbonisation demands electrification coupled with a high renewable energy mix, and the continent faces real hurdles in grid reliability, charging infrastructure, upfront vehicle costs and the availability of locally appropriate electric vehicle technology. 

Notwithstanding this, South Africa has an extraordinary renewable energy endowment. The continent as a whole—and South Africa in its own right—possesses some of the planet's richest solar irradiation, significant wind resources, and vast hydroelectric potential, much of it still untapped. This means that transitioning to electric modes of transport could be genuinely green from the outset and not retrofitted onto a fossil-dependent grid as an afterthought. The country has a realistic pathway to not just follow the global energy transition, but define a version of it that is cleaner, more decentralised, and more resilient. 

Africa's transport sector, from paratransit operators running minibus fleets to formal bus companies and motorcycle taxi networks faces profound disruption. Legacy business models built around diesel vehicles, cash fares, informal route licensing and fragmented ownership structures are increasingly misaligned with the demands of a modernising, electrifying, digitising mobility landscape. Public transport operators risk losing relevance if they cannot evolve to attract choice riders, that is, passengers who have alternatives and will only use transit if it is competitive on comfort, reliability and cost. Fleet replacement at scale requires capital that most operators do not have. New energy supply models, battery swapping, depot charging, and pay-per-kilometre leasing are needed to keep electric fleets viable, but the financing and regulatory ecosystems to support them are still emerging. 

At the same time though, disruption presents opportunity. The very informality that has long been cited as a weakness can, with the right policy frameworks, become a source of entrepreneurial agility. New business models are already taking root: mobility-as-a-service platforms in Lagos and Nairobi, electric motorcycle leasing operations in Kigali and Kampala, digital fare collection systems transforming the economics of minibus operations across multiple cities. For South Africa, the challenge is to create regulatory clarity, financing mechanisms, and technical support structures that allow these innovations to scale, enabling existing operators to transition rather than be displaced and ensuring that the economic benefits of the new mobility economy are broadly shared.

Fixed-route, fixed-schedule transport works well in dense urban corridors with predictable demand patterns. But many of Africa's and South Africa’s mobility needs do not fit this mould. In peri-urban areas with their dispersed populations, off-peak travel demand, last-mile connections from transit hubs to final destinations, and the unpredictable travel patterns of informal economy workers there is a call for more flexible, responsive service models. Demand-responsive transport with services that deploy vehicles where and when they are needed offers a compelling solution. However, realising its potential requires thoughtful infrastructure provision, digital platforms that are accessible to low-income users, and regulatory frameworks that allow such services to integrate seamlessly into broader mobility ecosystems rather than operate as isolated novelties. 

Africa is arguably the world's most fertile ground for demand-responsive innovation. The continent's mobile money penetration, smartphone adoption rates and digital literacy among young urban populations provide a foundation for app-based, on-demand mobility services, which are indeed already being piloted. The opportunity is to embed demand-responsive minibus routing, shared ride-hailing for underserved corridors, and digitally optimised paratransit scheduling within an integrated mobility ecosystem. This ecosystem needs to be connected to transit networks such as passenger rail and bus rapid transit which are supported by dedicated pick-up and drop-off infrastructure, and governed by policies that encourage complementarity rather than competition. Done well, demand-responsive services can fill the gaps that fixed-route systems can’t reach, extending the benefits of modern mobility to populations and geographies while urban densification catches up. 

Mobility challenges are real, complex, and urgent. But they are not impossible to overcome. The continent can harness the momentum of demographic shifts and urbanisation by thoughtfully directing the transport infrastructure investment needed over the next 25 years.

The building blocks—renewable energy abundance, young innovation ecosystems, digital infrastructure, and a population that already overwhelmingly travels by sustainable modes—are in place. What remains is to connect them with purpose, urgency and a relentless focus on the outcome that matters most: 

Ensuring that every citizen can access opportunity with minimal friction, at the lowest possible cost, without compromising the planet they will pass on to their children.

Rapid population growth, rural-to-urban migration and rising living standards are driving surging demand for water, energy, sanitation and digital connectivity. The combination of keeping up with maintenance requirements and building new capacity in synchronisation with demand creates a complex challenge for all stakeholders. 

To meet the challenge, South Africa needs to break free from the centralised, capital-heavy infrastructure models of the twentieth century. Modularised and decentralised solutions such as mini –solar grids, modular water treatment plants, and satellite broadband can be deployed incrementally and scaled responsively. This approach allows capital to be deployed in an affordable way,pacing demand, versus traditional models of substantial upfront capital investment associated with large supply provision years ahead of demand and, by implication, revenue materialising.

Much of the existing urban infrastructure in South Africa, as elsewhere in Africa, dates from the colonial or early post-independence era, when it was designed for far smaller populations. Decades of deferred maintenance have created a vicious cycle: neglected assets deteriorate, eventual repair costs multiply and scarce resources are perpetually consumed by crisis response rather than planned renewal. For example, non-revenue water loss estimates through degraded networks of 40 to 60 percent are not uncommon. 

Technologies such as smart sensors, predictive maintenance, IoT-enabled monitoring, and digital twin technology now allow infrastructure operators to extend asset life and prioritise interventions with precision. It’s crucial to leapfrog reactive maintenance cultures entirely to create the capacity to build what’s needed next.

Across Nigeria, Ghana, Kenya and South Africa alone, $54 billion of investment in infrastructure was needed in 2025, set to grow to $96 billion in 2050. Governments are simultaneously contending with declining GDP growth per capita, rising debt burdens and constrained borrowing capacity. Yet the obligation to provide essential services to growing urban populations does not pause for economic downturns. This is exacerbated by having to balance investment between critically needed social infrastructure and economic infrastructure that enables productivity and competitiveness. Traditional public funding models alone cannot close the gap.

This creates a testing ground for innovative financing, with green bonds, blended finance vehicles, land value capture instruments, and infrastructure investment trusts gaining traction. The sheer scale of unmet demand represents a compelling proposition for institutional investors seeking long-duration returns. The capital exists globally, and the enabling environment to attract it is steadily improving.

Africa contributes less than four percent of global emissions yet bears a disproportionate burden of climate impacts. Flooding in Durban, drought in the Horn of Africa and cyclones in Mozambique are exposing infrastructure designed for climate conditions that no longer exist. Cities face a dual mandate: expanding capacity to meet growing demand while simultaneously adapting to an increasingly volatile threat environment. 

This challenge will require not just innovative technical solutions but innovation in infrastructure finance and a rethink of the insurance sector’s business model. Fortunately, the global climate finance architecture, including the Green Climate Fund, the Africa Adaptation Acceleration Program and a growing ecosystem of climate-focused investors, is beginning to direct meaningful capital toward African resilience. 

It is not enough to build new infrastructure. South Africa must get dramatically better at making the right investment choices in the right sequence, delivering projects efficiently, maintaining assets diligently and continuously improving operational performance. Without this, the cumulative result is infrastructure that delivers far less value than the investment warrants. 

Efficacy gains are among the highest-return investments any government can make—and they do not always require new capital. Better data transforms prioritisation. Performance-based contracts align incentives around long-term outcomes. Digital platforms optimise existing networks. South Africa has the opportunity to embed life-cycle thinking from the outset rather than retrofitting it decades later.

The continent is urbanising at a time when better tools, technologies and financing models to build better infrastructure are more accessible than ever. South Africa can build decentralised rather than monolithic, smart rather than passive, resilient rather than rigid. The challenges are immense. But the window of opportunity over the next 25 years is immense. 

Political and policy uncertainty and regulatory and planning delays hinder the development of infrastructure and reduce its attractiveness as an investment. At the same time, infrastructure assets are inherently long-lived, often spanning multiple economic and political cycles. To maximise their value, robust frameworks that enable decision-making beyond short-term horizons are needed. This means establishing stable regulatory environments and clear national or regional strategies that provide certainty for investors and delivery partners. Governments should form independent bodies empowered to make infrastructure investment decisions across political parties. In parallel, planning and regulatory approval processes must be streamlined to accelerate delivery and reduce uncertainty.

Concentrating investment in power or digital sectors without making corresponding upgrades in other sectors such as transport or water risks creating bottlenecks that may ultimately constrain both returns and growth. Conversely, spreading and coordinating investment across the infrastructure ecosystem unlocks multiplier effects, while at the same time enabling the alignment of capital, capability, and policy to deliver integrated systems that boost productivity and long-term value. Examples to consider include: combining data centre campuses with clean power purchase agreements and water reuse; developing electric vehicle corridors alongside grid upgrades, battery storage, and depot charging; linking port automation with rail and logistics hubs.

Because public budgets alone will be insufficient, institutional investors, sovereign wealth funds, pension funds, and private credit providers will be central to the next 25 years of infrastructure development. What’s needed is more effective and efficient collaboration between governments and the private sector.

This includes developing new financing structures, risk-sharing mechanisms, and delivery models that leverage the strengths of both sides. One example is capital recycling, wherein governments sell or lease mature infrastructure assets and reinvest the proceeds in new projects—unlocking funding without increasing public debt. A priority will be the rapid bankability of new technologies, such as green hydrogen, geothermal technology, virtual power plants, behind-the-meter platforms, advanced storage, and data centre energy solutions.

This will require standardised performance data, common risk taxonomies, stronger public-sector risk-mitigation tools, and new insurance products that de-risk technologies in the early stages. Blended finance will also need to evolve. Instead of bespoke, deal-by-deal structures, the market will shift towards standardised, scalable platforms: template risk allocation models, platform-level vehicles that pool assets, modular instruments, and digital marketplaces that match de-risked projects to capital, particularly in emerging markets.

Progress is already being made. The introduction of the National Treasury’s Infrastructure and Development Finance Bond in South Africa marks an important milestone in the evolution of public sector infrastructure financing in the country. This milestone signals a strategic transition from treating infrastructure expenditure as a recurrent cost to recognising it as a long-term capital investment.

This approach aligns South Africa with global practices, where sovereign bonds are leveraged to raise substantial funding for essential infrastructure projects and programmes. By engaging capital markets, government can secure the necessary upfront funding to augment other sources for large-scale development, reducing dependence on annual tax revenues and mitigating budgetary constraints that often impede project delivery.

The South African construction sector has experienced a prolonged structural downturn, characterised by declining order books and distress among major listed entities leading to significant job losses. Factoring in the industry’s history, the bond addresses more than just a funding gap, it sends a credible demand signal to a construction industry that has struggled with uncertainty and inconsistent deal flow for over a decade. The exclusive use of the bond mechanism for infrastructure enhances funding certainty, promotes fiscal sustainability for a construction industry that’s in need of renewed confidence and positions infrastructure as an enabler for broader economic growth, improved service delivery, and sustained private sector participation.

By 2050, industries will deliver infrastructure through integrated, cross sector platforms. Energy, transport, digital, water, and industrial systems will be co-designed, co-located, and co-optimised. They’ll be supported by modular construction and automated project controls that compress delivery times and improve accuracy. End-to end building information modelling (BIM), digital twins, and integrated data environments will be universal. Generative AI and agentic AI will transform delivery by predicting long term risks at the concept stage, auto generating and stress testing design and sequencing options, orchestrating complex interfaces, and recommending real time mitigation—thereby reducing overruns, accelerating delivery, and saving billions across capital programmes. In parallel, circular construction practices such as large scale reuse and recycling, low carbon materials, off site manufacturing, and low impact site practices will materially reduce the cost and carbon footprint of major projects.

Outcome-based contracting that is focused on emissions, resilience, reliability, and user experience will become the default. Infrastructure as a service subscription model will expand across energy, digital, mobility, heat, and resilience assets, with data-driven value streams increasingly complementing traditional tariffs. As systems become more integrated, multi-party platform models will replace linear supply chains. These platforms—sharing risk, data, and value across operators, technology providers, investors, and the public sector—will enable faster deployment of infrastructure at a lower cost. 

Community opposition can delay or derail projects. Involving communities from the outset and maintaining an ongoing dialogue helps explain why both public and private investment is needed, and how these projects will bring people real benefits such as more jobs, improved access to places of employment, and better connectivity to essential services. Communities also need to be engaged on the topic of who pays for infrastructure, given the high cost of capital and limited access to financing. Leaders must reframe costs and investments that can generate both financial and social returns in the form of improved quality of life or expanded services.

Infrastructure spending is defined as gross fixed capital formation (GFCF) by the public and private sectors on fixed, immovable structures that support long-term economic growth. In addition to new spending, it includes replacement spending and capital expenditure on maintenance (i.e., to substantively extend the lifetime of an asset). This measure is a subset of total fixed spending and excludes cultivated biological resources, intellectual property products, transport equipment, and information and communications technology (ICT) equipment.

The definition of infrastructure spending has varying implications for different sectors. A few examples: ICT equipment, such as CPUs and GPUs, which represents a significant proportion of the capital outlays for data centre construction, is not included under the definition of infrastructure. Power infrastructure assets such as solar panels are not explicitly defined under the OECD definition of GFCF. Transport equipment such as rolling stock or ships and planes in the defence sector are not included in the infrastructure figures. 

It should be noted that this is our preferred definition, but the analysis has required us to collect data from a wide range of sources, and definitions inevitably vary across those sources. We have attempted to identify the available data that most closely aligns with the definitions used.

The nine sectors of infrastructure investment analysed in this report consist of spending on fixed assets and structures used for the purposes described below.

Agriculture: The growing of crops, raising and breeding of animals, and harvesting of timber and other plants, including the cost of irrigation and drainage, on-farm structures, and storage facilities. 

Digital infrastructure: The information and communications sectors, including towers, fibre and cable networks, data centres, and related facilities. 

Defence: Physical installations that support defence, including barracks and other military facilities; transport networks, depots, and warehouses; ship-building facilities and dry docks; and communications infrastructure. 

Industrial manufacturing: Plants, facilities, and networks that support heavy metals and chemicals processing, petroleum refining, and automotive manufacturing. 

Power: The generation, storage, and distribution of electricity, including renewable assets, fossil fuel and nuclear power plants, transmission and distribution, and battery storage. 

Resources: The exploration, extraction, processing, transportation, and storage of oil and gas, coal, metals, and minerals, including mining facilities, pipelines, refineries, and storage terminals. 

Social infrastructure: The provision of health or education services, including aged care facilities. 

Transport: Transportation, including roads, bridges, tunnels, railways, airports, ports, and marine works.

Water: The treatment and distribution of water, including sewage and drainage systems. Assets include treatment plants, dams, pipelines, and drains. 

Each region in the Outlook is represented by a group of countries and territories that act as a viable proxy for the whole. The proxies for each region are:

Africa: Ghana, Kenya, Nigeria, South Africa

Americas: Brazil, Canada, Chile, Mexico, United States 

Asia-Pacific: Australia, Chinese Mainland, Hong Kong SAR, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Republic of Korea, Singapore, the Taiwan region, Thailand, Vietnam. 

Advanced or mature economies in the Asia-Pacific grouping include Australia, Japan, Hong Kong SAR, New Zealand, Republic of Korea, Singapore, and the Taiwan region. Developing and emerging Asia-Pacific economies include the Chinese Mainland, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Definitions are based on IMF aggregations, found here.

Europe: Belgium, Czechia, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Poland, Spain, Sweden, Türkiye, United Kingdom

Middle East: Gulf Cooperation Council (GCC) members: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

The main challenge in providing comparative infrastructure spending figures across countries and sectors is the lack of a single and consistent dataset. A comprehensive data sourcing exercise was undertaken for the analysis contained in this report. Most data sources, accessed in 2025, provided figures up to either 2023 or 2024.

The main sources of spending data used were the OECD, Eurostat, and national statistical agencies. Data that was not available from official public sources was estimated using a variety of techniques. This process involved using additional data sources (International Energy Agency, Milex), estimating sectoral infrastructure spending from sectoral capital expenditure, or using available metrics from peer countries to estimate spending. 

Oxford Economics created a new database of infrastructure spending forecasts to anchor PwC’s research. The forecasts are based on Oxford Economics proprietary models for the construction industry and cover nine sectors in 45 countries and territories. The infrastructure spending forecasts are globally consistent and are linked through global and country-level assumptions of trade volume and prices, competitiveness, capital flows, interest and exchange rates, and commodity prices. For a particular country and sector, the infrastructure spending forecast is informed by end-use demand factors such as population growth, income growth, cost of capital, and economic activity across sectors. Given the changing composition of economies over time, the infrastructure spending forecast will diverge from country-level GDP.

The database provides a structural economic framework that considers both supply and demand factors affecting sectoral growth. This is distinct from spending projections based on a pipeline of publicly announced projects, which are unable to provide long-term projections of spending due to a lack of project visibility in the future. The new infrastructure spending forecasts provide a macroeconomic outlook on future spending outcomes across the countries and sectors examined in this report. 

The calculations for defence stem from a slightly different methodology. Unlike other sectors, these projections are not derived from structural economic modelling; instead, they assume a fixed share of GDP, adjusted for announced and anticipated changes to defence spending as a percentage of future GDP. These reflect policy signals such as NATO’s interim target of allocating 1.5% of GDP to defence infrastructure (excluding equipment and personnel) by 2035, on the path towards a longer-term ambition of 5% of GDP.