R4 trillion hole in housing infrastructure as Simelane tells banks to fill the gap
Human Settlements Minister Thembi Simelane says the state alone cannot fund the infrastructure that serviced sites and new homes depend on, and wants private capital and blended finance to close the shortfall.
South Africa’s infrastructure financing shortfall sits at approximately R4 trillion, and Human Settlements Minister Thembi Simelane says the state cannot carry that bill alone.
Speaking at a dialogue on municipal infrastructure and sustainable inclusive communities in Midrand on Tuesday, Simelane said strategic partnerships with commercial banks, development finance institutions, pension funds, institutional investors and the private sector are the route to mobilising additional investment and squeezing more impact out of limited public resources.
“The scale of South Africa’s housing demand and infrastructure requires us to move beyond traditional approaches to financing,” she said. “The reality is that the State alone cannot afford the investment required. The solution lies in private sector partnerships and blended finance.”
The event was co-hosted by the University of South Africa’s Graduate School of Business Leadership and the Department of Human Settlements, under the theme “Building Blocks of Democracy: The Human Settlements Journey towards Inclusive Integrated Living”.
Simelane tied sustainable housing delivery to coordinated planning and provision of land, housing and bulk infrastructure, including water and sanitation. A housing project without adequate infrastructure is at risk of failing, she warned, while homes built far from employment and public transport can deepen spatial inequality and raise what households pay to live.
“We must move away from fragmented planning and ensure that our human settlements are integrated and situated closer to economic opportunities, transportation facilities, and social amenities,” she said.
She repeated her call for provincial housing plans, municipal integrated development plans, spatial development frameworks and infrastructure budgets to be aligned before construction begins. A project, she said, should have a credible implementation pathway covering land acquisition, planning approvals, infrastructure connections, occupation and appropriate tenure arrangements.
“The institutions responsible for operating and maintaining each asset must be identified from the outset.”
During its Budget Vote in May, the department set a target of 25 186 serviced sites for the 2026/27 financial year, a figure Simelane used to illustrate the link between land readiness, infrastructure and housing delivery. A site becomes useful to a household, she said, when the services it needs are in place and can be sustained.
“Serviced land also creates room for different forms of housing delivery, including opportunities for qualifying households to build incrementally,” she said. “Its value depends on sound planning, suitable location and functioning municipal systems.”
On the municipal side, Simelane named shortages of engineers, planners, financial managers and project managers, alongside unstable leadership and weak procurement processes, as factors that could undermine progress. She called for targeted technical support aimed at specific municipal constraints and at building institutional capacity that lasts.
Accountability, she said, has to reach past tracking expenditure to whether infrastructure actually functions, households are connected and completed developments are occupied. Maintenance, she added, must be prioritised to prevent service interruptions and costlier repairs later.
“When maintenance is deferred, households pay through service interruptions, damaged property and additional expenses,” she said. “Businesses lose operating time. The municipality then faces repairs that are more costly than the maintenance it postponed.”
She also pointed to National Treasury’s Metro Trading Services Reform as an opportunity to strengthen the operational and financial performance of municipal water, sanitation, electricity and refuse removal services, saying improvements there should support new housing developments and informal settlement upgrading while keeping existing communities sustainable.
The account of the dialogue is drawn from the government’s own summary of the event, published by SAnews (South African Government News Agency) at https://www.sanews.gov.za/south-africa/simelane-maps-ways-close-housing-funding-gap. No timeline was given for the financing measures Simelane raised, and the summary does not say which projects or municipalities would be first in line.
