There is a common perception that South Africa’s infrastructure needs stem from a shortage of money. In reality, the country has enough savings to finance much of the infrastructure development it requires, which is why there is a growing debate about how the retirement savings industry can play a bigger role in financing economic growth.
South Africa has one of Africa’s deepest pools of institutional capital: pension funds manage about R5.8-trillion in assets, around 64% of GDP. The Government Employees Pension Fund alone holds R2.3-trillion, while privately administered retirement funds oversee a further R2.7-trillion on behalf of millions of members.
The real challenge, then, is one of policy and execution, not money. Far more capital could and would flow into infrastructure if we created a policy environment that enabled investment, alongside well-structured, investable projects that can be executed efficiently.
This is where the wider savings industry — trustees, consultants, asset managers and specialist infrastructure fund managers — has an important role to play in turning long-term savings into productive infrastructure investment.
South African retirement funds are permitted to invest up to 45% of their portfolios in offshore assets, reflecting the importance of global diversification. However, this results in South African savings contributing to building real assets in other economies, not ours.
We are building data centres offshore to enable AI. The opportunity now is to ensure that more attractive, investment-ready infrastructure opportunities are also available closer to home.
Pension fund trustees carry an important responsibility. Their primary duty is to generate reliable returns for members, while recognising the opportunity to invest in the infrastructure that will strengthen the economy those members ultimately retire into. Private infrastructure funds can help bridge the gap between pension capital and the country’s development needs.
Building on what South Africa already does well
South Africa’s infrastructure spending remains modest relative to the size of the economy. Gross fixed capital formation (GFCF) as a percentage of GDP reflects the extent of a country’s infrastructure investment, and in 2025 South Africa’s GFCF-to-GDP ratio stood at 14%, according to the World Bank. By comparison, the equivalent figures for Sub-Saharan Africa (2025) and China (2024) were 23% and 40% respectively.
Still, South Africa can deliver on its potential when the right elements come together. One example is the government’s successful Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), launched in 2009. It has shown that the right leadership, experience, skills, co-ordination and private-sector engagement, with long-term funding, can enable investment and deployment.
According to the BDO South Africa 2025 Renewables Report, the programme has attracted more than R292bn in renewable energy investment, securing over 9.6GW of generation capacity since its launch. By 2025, it had generated 133,764GWh of electricity cumulatively, offsetting 129.2-million tonnes of CO₂ emissions and creating nearly 93,000 job-years in construction and operations.
Contrary to popular perception, the REIPPPP was not primarily financed by foreign money, but by South African banks and retirement savings. It went on to deliver successive projects such as battery storage and transmission lines, and it is the reason we have independent power producers today.
Turning savings into growth
Beyond energy, South Africa has significant infrastructure opportunities in ports, logistics and rail. When a mine cannot move its production efficiently to port, growth is held back. When trucks carry what should be transported by rail, costs rise, roads become more dangerous and pollution increases.
Responsible investing means backing experienced management teams and supporting proven technologies and projects with realistic execution plans. This is where specialist infrastructure fund managers come in. Investments must be structured with mechanisms for downside protection and predictable income, so that returns align with what retirement funds need most: reliable, long-duration performance rather than speculative upside.
Getting there starts with screening, followed by strict due diligence that can take up to six months and may involve travelling to China or Dubai to check reference plants and previous building projects; where needed, international teams are brought in for technical due diligence.
Experienced fund managers assess skills, identify who the contractors are, and evaluate how labour and community issues are managed so that risks can be identified and projects structured accordingly. It’s equally important to know when not to invest. Unresolved land disputes, litigation, governance concerns or unproven technologies are all red flags.
Why infrastructure belongs in long-term portfolios
The biggest misconception about infrastructure investment is that it’s inherently illiquid. It isn’t. Once built, infrastructure generates predictable income and offers a good hedge against inflation. Because the risk is lower, returns aren’t spectacular, but they’re dependable.
That’s why pension funds globally increasingly view infrastructure as a core long-term asset class. For example, the Canada Pension Plan Investment Board allocated 9% of its C$714bn portfolio to infrastructure in 2025, with real assets — including infrastructure — returning 8.7% for the year.
For South African allocators to move in that direction more trustee education is vital. There is also an opportunity to consider whether regulation 28 of the Pension Funds Act could play a greater role in encouraging infrastructure investment, while still preserving trustees’ fiduciary responsibilities.
The regulation already allows funds to allocate up to 45% of their portfolios to infrastructure specifically; yet South African pension funds allocate only about 8% to alternative assets — the broader category that includes infrastructure — compared with 18% in Europe and 24% in the US, despite infrastructure being one of the asset classes best suited to the long-term nature of retirement savings.
None of this means pension funds should neglect governance or that investors should be expected to back projects if there is a lack of accountability or execution. But funding should go to well-governed, professionally managed infrastructure investments.
The opportunity is here
South Africa has used long-term capital to build critical infrastructure before, much of it through prescribed assets. Understandably, the topic is controversial but invested responsibly, pension funds can grow retirees’ money while also building our country’s future — and if we get it right, South Africa’s economy can grow by at least 5%.
Mines will be able to export their products using rail that works. Industries will expand, the JSE will grow, and we will generate jobs that build skills we can export to the world.
South Africa has the capital, institutional expertise and investment capability it needs. What it now requires is the right leadership, co-ordination and policy certainty, so that more of our long-term savings can be put to work building the economy on which future generations of retirees will depend.
• Mupita is cofounder and fund principal at Mahlako Financial Services.
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