Innovative strategies: How South African businesses tackle infrastructure challenges

More private companies in South Africa are now generating their own electricity, while some opt to buy electricity from traders to access cheaper tariffs and green electrons, indicating a shift beyond the widespread adoption of solar and back-up power. 

This, as the private sector innovates and adapts to overcome infrastructure bottlenecks, such as load shedding, load reduction, poorly maintained roads, and water supply issues, ultimately reduces reliance on state resources.

Lunga Maloyi, director of Economic Policy at Business Unity South Africa (BUSA), said, beyond load shedding, the other critical factors are the affordability and cleanliness of electricity. 

“We have seen a growing number of private sector power purchase agreements, with many companies opting to buy electricity from traders to access cheaper tariffs and green electrons.

“Another trend is that more companies are generating their own electricity. The ERA s2 reform (Electricity Regulation Amendment Act of 2024) has enabled this by removing the licensing requirement, allowing companies to generate power by simply registering with NERSA,” Maloyi said.

He added that research undertaken by BUSA under the umbrella of Business for South Africa (B4SA) indicates that, in the absence of load shedding, transport and logistics continue to be a primary constraint on meaningful and sustainable economic growth.

Maloyi said that BUSA assesses private sector resilience using a combination of policy impact tracking, sectoral investment flows, and direct feedback through member forums. 

“One of the most tangible indicators is the growth in private capital investment into clean energy, logistics reform, and infrastructure resilience. While BUSA does not collect company-level data, we’ve seen the logistics and renewable energy sectors make significant strides. 

“For instance, rail companies have launched new routes under the reformed regulatory framework, and clean energy firms have utilised blended finance models to scale their operations. These are not isolated cases; they reflect a shift in how businesses are adapting structurally to South Africa’s operating environment,” he said.

He added that BUSA envisions a South African private sector that leads in building a more inclusive, adaptive, and competitive economy.

“Moving from ‘coping’ to ‘leading’ requires three key ingredients: Policy coherence and implementation consistency; Scalable access to finance, particularly in climate adaptation and infrastructure; Collaborative institutions that link government, business, and civil society around shared economic goals.

“Our focus is on strengthening these enabling conditions so that businesses, both large and small, are empowered to drive sustainable development and job creation, Maloyi said.

He added that BUSA recognises that small and medium-sized enterprises (SMMEs) face some of the most acute challenges in today’s economy. 

“We advocate for: inclusive procurement and transformation-driven infrastructure reform to open market access to smaller firms; Enterprise development incentives that support SMMEs investing in energy resilience and productivity improvements; Capacity building and knowledge transfer, delivered through partnerships with sector bodies and public entities.

“We continue to push for reforms that ensure SMMEs are not only protected but also empowered as contributors to national economic renewal,” he said.

Maloyi said several practices have shown strong potential for broader replication such as collaborative working groups that align business and government on reform implementation have proven effective in sectors like energy and freight logistics; Finance and risk-sharing models, used by clean energy firms, offer a replicable template for sectors like water infrastructure and low-carbon transport; Innovation partnerships between corporates, SMMEs, and research institutions are helping bridge the gap between high-level policy and ground-level impact.

He added that BUSA is working to codify and disseminate these practices through sector councils and advocacy platforms.

He said BUSA’s key policy recommendations are focused on enabling certainty, unlocking capital, and enhancing implementation capacity. 

These include:

• Streamlining permitting processes to reduce delays in infrastructure and energy projects;
• Scaling well-designed public-private partnerships, particularly in transport, water, and digital infrastructure;
• Ensuring regulatory consistency, especially in sectors undergoing reform such as logistics and energy;
• Expanding investment incentives that reward innovation, localisation, and transformation. A predictable, well-executed policy environment is essential to attract the long-term investments needed to fuel growth and employment, he said.

Maloyi said since May 2023, B4SA has been actively partnering with government structures and State-Owned Companies (SOC) through the National Logistics Crisis Committee (NLCC) to drive stabilisation and improvement of Transnet’s performance (rail and terminals/ports) as well as structural reform.

“The guiding principles of this dual approach were encapsulated in the Freight Logistics Roadmap and the Private Sector Participation Framework, adopted by Cabinet in December 2023. Structural reform initiatives focus on introducing third-party private train operating companies and promoting private sector investment in rail and port infrastructure through private sector participation (PSP),” Maloyi explained. 

On addressing the challenges through private sector initiatives, he said, the primary private sector initiative lies in the value of the partnership between B4SA and the government structures through the NLCC.

This engagement mechanism allows for deep and transparent analysis of the challenges facing rail, port, and road transport as well.

Maloyi highlighted that leveraging the analysis of performance across all key corridors (coal, ore, manganese, chrome, and containers) has enabled B4SA and its customers to contribute to the development of solutions through Action Labs and Deep Dives, with each solution having defined roles and responsibilities. 

“The range of private sector support for rail encompasses: Security deployments (personnel and drones) primarily on the Coal Line and Ore Corridor. Mutual Co-operation Agreements (MCA), which permit the private sector to procure emergency spares and equipment to address operational challenges.

“Providing planning expertise and skills to partner with Transnet in scheduling the ‘Maintenance Shuts’. Developing a Joint Funding and Collaboration policy, which will allow for customer funding support to expedite critical Transnet maintenance programmes, Key corridor restoration planning and scheduling support,” Maloyi said.

Additionally, and as evidence of the strength of the partnership, Transnet has permitted B4SA to second certain skilled and experienced experts to provide support to the freight rail, port terminals, engineering, and procurement divisions, he said.

“In the ports/terminals, there have been significant engagements between B4SA and Transnet Port Terminals (TPT), with the support well-received. Private initiatives have centred around support for world-class operating processes, workshop programmes, alignment between Customers and TPT executives, and equipment support at the Durban and Cape Town ports,” Maloyi added.

Dawie Roodt, chief economist at Efficient Group, said the private sector has no choice but to invest in alternative infrastructure when the state has failed.

“So, South Africa has a shortage of savings and of investment, though officially, we see investments in things like, for example, solar panels. These are investments that were not supposed to have happened because the state was supposed to have provided these kinds of things. So, the cost to the South African economy is significant because of this,” Roodt said. 

He added that the private sector is actually doing a pretty good job and is even getting involved in state-run entities, like Eskom and Transnet, recently.

Roodt said the most vulnerable sectors are those directly dependent on the state, such as manufacturing, agriculture, and mining, since they depend on electricity and railroads. He added that they have overcome much of this in recent months and years.

He said his estimates for economic growth projections this year, next year, and the year thereafter are actually quite weak. 

“So my growth expectations are for less than 1%, generally speaking, because of the destructive nature of economic policies, by the state, by the government, and of course, the destructiveness of previous policies and the inefficiency of the state, incompetence and corruption, things like that,” Roodt said.

Professor William Gumede, a governance expert from Wits University, said state and infrastructure failures have undermined economic growth, development, and even entrepreneurship, as the absence of a rule of law makes it difficult to establish a business.

Gumede said businesses have to hire private public services, such as private security, because they can’t trust the police.

“The police are ineffective because of state failure. So, it becomes more costly to do business under state failure, even engaging with the state is more expensive, because many have to bribe people just for basic documentation, and so on. And then, on the one hand, it increases the cost of doing business,” he said.

Gumede highlighted that many policies and regulations in South Africa are anti-business growth.

gcwalisile.khanyile@inl.co.za