From repairing roads and maintaining water systems to funding refuse removal and disaster mitigation measures, speakers described how municipalities’ financial collapse, technical incapacity, and poor governance are placing the rural economy under mounting strain.
At the same time, government, organised agriculture, communities, and the private sector are increasingly exploring partnership models that could help stabilise rural infrastructure and unlock investment into agricultural regions.
Opening the discussion, Minister of Public Works and Infrastructure Dean Macpherson acknowledged that many municipalities lack the expertise and institutional capacity required to manage large infrastructure projects.
According to him, municipalities collectively return about R100 billion in unspent municipal infrastructure grants annually because projects cannot be effectively implemented.
“That represents lost opportunity, lost growth, and lost change in communities,” he added.
Macpherson said government had attempted to address the problem through partnerships with Infrastructure South Africa (ISA), which provides municipalities with technical expertise and project support.
However, he noted that municipalities were often resistant to outside involvement because of sensitivities around their constitutional mandates.
To encourage participation, ISA developed a model in which municipalities that partner with it gain access to project preparation funding and assistance in attracting private-sector investment.
Macpherson said participation is subject to strict governance conditions, including the appointment of permanent municipal managers, stable governance structures, and formal council resolutions committing municipalities to the programme.
The approach has already produced significant investment outcomes in several rural municipalities, he said.
“Four largely rural municipalities with budgets of roughly R500 million to R600 million each have already leveraged between R6 billion and R8 billion in infrastructure investment. For those municipalities, this is game-changing.”
Macpherson added that government remains involved after projects are launched through oversight committees and implementation support structures to improve accountability and delivery.
Agriculture featured prominently in the discussion on future infrastructure investment opportunities.
Macpherson highlighted the recently announced R17 billion bioethanol project unveiled during the US investment conference as an example of how infrastructure development can diversify rural economies and create new opportunities for farmers.
He explained that the project, aimed at producing blended biofuels, could create additional revenue streams for grain producers while stimulating rural industrial development.
He also questioned whether South Africa’s current municipal funding formula is suitable for supporting productive agricultural regions.
“Currently, allocations are largely based on population numbers, but there are many other indicators that should be considered, including economic activity, irrigation output, electricity usage, and agricultural production,” he said.
He argued that infrastructure investment should increasingly focus on economic nodes capable of generating growth and employment rather than relying solely on census-based allocations.
Macpherson stressed that partnerships between government, business, and communities will become increasingly important as fiscal constraints intensify.
“The project we launched in the Free State actually began with a conversation at Nampo last year,” he said, adding that engagement with industry is critical for creating investment-friendly conditions.
Community representative Nico Palm said communities themselves also need to play a more active role in municipal governance and local development.
“Communities cannot wait for government alone to solve problems. Communities are government,” he said.
Palm explained that his organisation had spent the past 15 years developing “adopt-a-municipality” concepts aimed at improving cooperation between residents, businesses, and local government.
According to him, communities need to establish credible and representative structures capable of constructively engaging municipalities rather than relying solely on legal action or political activism.
He compared municipalities to companies in which residents act as shareholders: “Communities are effectively the shareholders of municipalities. Just as shareholders elect a board of directors in a company, residents elect municipal councils.”
Palm warned that many municipalities had become dysfunctional or technically insolvent, making it increasingly difficult to attract private-sector investment or development finance.
One potential solution, he argued, is the establishment of utility companies to manage services such as electricity, water, and sanitation independently from struggling municipal administrations.
Palm said non-profit utility structures have already been registered in some areas and could help to improve continuity, compliance, and access to funding.
He described functional infrastructure in simple practical terms: reliable water supply, stable electricity, passable roads, operational stormwater systems, and cleaner towns.
Fanus Coetzee, CEO of Santam Broker Solutions, explained that deteriorating infrastructure is now directly affecting agricultural risk profiles and insurance costs.
According to Santam, poor road maintenance, collapsing flood management systems, and inadequate fire management infrastructure are contributing to rising claims and escalating premiums across the agriculture sector.
Coetzee referenced the Knysna fires and the 2022 KwaZulu-Natal floods as examples where infrastructure failures had exacerbated the scale of damage.
He added that deteriorating roads increase transport accidents and vehicle damage, placing additional financial pressure on agriculture and logistics businesses.
“Santam has already partnered with more than 110 municipalities through resilience and disaster management programmes focusing on flood mitigation, fire prevention, and risk reduction.” Coetzee concluded.
Private-sector partnerships, including firefighting helicopter initiatives and municipal support projects, demonstrate that industry can help strengthen local government capacity when properly coordinated, the panel heard.
NWK Limited Group CEO Pieter Kleingeld described how agribusinesses are increasingly being forced to fill gaps left by failing municipalities.
According to him, NWK had spent amounts equivalent to its annual profits on repairing and maintaining public infrastructure in recent years.
The company currently grades thousands of kilometres of rural roads every year through agreements with municipalities and provincial government.
“In many communities, residents and businesses now effectively provide their own refuse removal, water supply, and road maintenance because municipalities can no longer do so reliably,” Kleingeld added.
He also warned of broader economic consequences resulting from infrastructure collapse, including rising transport costs, increased vehicle damage, pressure on grain logistics, insufficient rail infrastructure, and inadequate electricity supply for modern technologies such as electric vehicle charging systems.
He added that poorer rural communities are often hardest hit because they lack the financial resources to install generators, solar energy systems, and water storage infrastructure.
Grain SA Chairperson Richard Krige said farmers are becoming increasingly frustrated at effectively paying twice for infrastructure.
Farmers already contribute through taxes and fuel levies but are also being forced to spend directly on public infrastructure repairs to keep their businesses operational, he said.
The discussion also highlighted concerns around corruption, poor workmanship by contractors, inefficient spending, and a lack of accountability within infrastructure projects.
One speaker noted that despite the North West provincial public works budget exceeding R11 billion, road conditions in many parts of the province remain poor.
Farmers argued that many public-private partnerships effectively require the private sector to fund and carry out projects while government merely grants permission for them to proceed.
Food security also emerged as a recurring concern throughout the discussion, with speakers warning that continued infrastructure deterioration threatens agricultural production, logistics systems, and the long-term viability of rural economies.
In his closing remarks, Macpherson acknowledged many of the frustrations raised by the agriculture sector.
He noted that infrastructure responsibilities are often fragmented between national, provincial, and local government structures, complicating accountability and implementation.
However, he confirmed government support for alternative service delivery models, including ring-fenced utility structures for water and electricity services.
Macpherson said public-private partnerships in sectors such as electricity, rail, and ports had once been viewed as politically impossible but had increasingly become accepted as necessary interventions.
“The next major frontier for partnership is local government,” he added.
He also acknowledged growing discussions around tax incentives or rebates for private-sector infrastructure investment, although no formal proposals have yet been announced.
Macpherson concluded by praising the agriculture sector’s resilience and problem-solving capacity.
“If you want solutions, come to the agricultural community. Farmers have been finding solutions for more than 130 years and will continue doing so. But if government becomes an active and willing partner, the next 150 years can be far better than the last,” he said.
