South Africa’s growth prospects are increasingly tied to infrastructure. Energy, transport, logistics and water lay the foundations of a competitive and productive economy. The country’s ability to support these foundations is not being constrained by the availability of capital, but by the supply of investable opportunities. With about R4.8-trillion in retirement assets available, the priority is creating projects capable of converting that capital into long-term economic growth. Visible investor demand Institutional allocations to infrastructure have increased as the asset class has matured. For example, the Stanlib Infrastructure fund of funds has grown from about R1bn in 2021 to more than R15bn now, attracting 40 South African institutional investors. Over the same period Stanlib’s Khanyisa suite of impact-focused private debt funds has grown to about R6bn. The growth of these funds reflects strong demand for well-structured infrastructure opportunities. However, investor appetite is not enough. Capital can only flow where projects are investable. Infrastructure’s economic dividend Infrastructure offers long-term cash flows, inflation protection and diversification. Its link to essential services can also support stable demand and more predictable income streams. The investment case extends beyond investment returns. Infrastructure investment can be a powerful driver of economic growth, particularly in developing economies where critical networks are underdeveloped. Improvements in energy, transport, logistics and water infrastructure help to unlock productivity and competitiveness in the broader economy. Research suggests that a 1% increase in infrastructure stock can raise long-run economic output by 0.12%-0.16% in emerging markets. South Africa’s gross fixed capital formation remains at about 12.2% of GDP, significantly below the levels typically associated with faster-growing emerging economies. Capital follows certainty South Africa’s renewable energy programme demonstrated that investors respond when projects are supported by clear regulatory frameworks, transparent procurement processes and credible implementation structures. The next step is extending this model to other infrastructure sectors where investment demand is significant. Water infrastructure illustrates the challenge. Investor interest is growing, but municipal funding and credit constraints limit the pipeline of investable opportunities. Addressing this will require new funding and delivery structures. Regulatory certainty is equally important. Infrastructure investments are measured in decades, requiring confidence that policy frameworks, procurement processes and legal structures will remain stable over time. In a fiscally constrained environment where government debt is about 79% of GDP, attracting institutional capital is essential to meet South Africa’s infrastructure needs. Encouragingly, recent National Treasury initiatives and increasing collaboration between the public and private sectors suggest growing recognition that long-term investment depends on a predictable, enabling investment environment. Building investable opportunities Blended finance structures, public-private partnerships and other innovative funding models can help to unlock greater private sector participation in infrastructure. By combining public funding, development finance and institutional capital, these structures can improve project viability and expand investable opportunities. The scale of the opportunity is significant. The Development Bank of Southern Africa estimates that R440bn will be required in 2025-34 to modernise South Africa’s transmission network and integrate new electricity generation capacity. Closing the infrastructure gap will require specialist capabilities in project structuring, risk management and partnership design. Experienced investment managers can help governments, developers and investors to align long-term investment objectives with national development priorities. Infrastructure has always been a growth imperative. Increasingly, it is also becoming a measure of a country’s ability to translate ambition into execution. South Africa has the institutional capital, expertise and development need to support a new phase of infrastructure investment. The missing link is a pipeline of projects, partnerships and policy certainty that can bring these elements together.Infrastructure is already an established asset class; the greater opportunity lies in harnessing it as a catalyst for stronger growth, greater competitiveness and long-term economic renewal. • Spence is head of institutional distribution at Stanlib Asset Management.Business Day