Construction SMEs could miss out on South Africa’s multitrillion-rand infrastructure pipeline unless they gain faster access to funding, despite growing investor appetite for the sector.
More than R1 trillion is expected to be spent on infrastructure over the next three years, creating opportunities across roads, schools, housing, energy infrastructure and other major developments. However, industry leaders warn that delayed payments, limited access to working capital and a shortage of bankable projects could prevent smaller contractors from participating meaningfully.
The challenge is not a lack of available capital, but ensuring infrastructure projects are investment-ready while giving SMEs the financial support needed to execute contracts.
Infrastructure and energy-related funds attracted 71% of capital raised by private equity funds in 2025, according to the Southern African Venture Capital and Private Equity Association (Savca). The sector also accounted for 40% of total private equity deal value, making it the country’s largest investment destination.
Savca CEO Anusha Naidu said investor confidence in infrastructure remains strong, but South Africa must improve project preparation to convert available capital into completed projects.
“Capital is already flowing into infrastructure opportunities, which reflects growing confidence in the sector’s long-term investment potential,” Naidu said.
She said investors also needed greater policy certainty and confidence that projects would move from planning to completion.
“For investors, this translates into the need for clarity on policy direction, consistency in execution and confidence that projects will move from concept to completion within defined timelines,” she said.
SMEs face funding pressure
While billions are expected to flow into infrastructure, many construction SMEs continue to face cash-flow constraints that limit their ability to deliver projects after winning contracts.
South Africa’s construction market is expected to reach R160.65 billion in 2026, while government plans infrastructure spending of R1.06 trillion between 2026 and 2029.
Speaking at the 14th Big 5 Construct South Africa, Lula Head of Product Clinton Thomas said delayed payments remain one of the biggest obstacles facing smaller contractors.
“The cash-flow problem facing construction SMEs is not a symptom of poor management; it is baked into the project cycle itself,” Thomas said.
“The business wins the tender, orders the materials and starts the work, but payment only arrives months later.”
He said contractors often need funding long before they can invoice clients, making access to working capital essential for project delivery.
“What construction SMEs need is working capital that moves at the speed of a project, not a bank’s credit committee,” Thomas said.
Slow payments threaten growth
Funding pressures are compounded by slow payment cycles across both the public and private sectors.
According to Lula, nearly 96,000 government invoices worth R12.4 billion remained unpaid after 30 days at the end of the second quarter of 2025, while private-sector payment cycles can stretch beyond 150 days.
The delays leave many SMEs operating with limited cash reserves, making it difficult to purchase materials, pay workers and take on new projects.
Industry data also shows that more than two-thirds of SMEs expect to require additional finance within the next six months to fund working capital.
Partnerships key to infrastructure delivery
Naidu said South Africa has a sophisticated private capital market capable of supporting infrastructure development, while reforms in the energy and water sectors are creating new opportunities for private-sector participation.
“The future of infrastructure finance will require greater collaboration between public institutions, private investors and innovative financing approaches,” she said.
She added that private capital can strengthen project governance, improve execution and introduce financing models that better support infrastructure delivery.
As South Africa accelerates infrastructure investment, industry leaders say success will depend not only on attracting capital, but also on ensuring SMEs have access to funding, bankable projects and the institutional support needed to participate.
“If that can be achieved, infrastructure-led growth will move from ambition to reality, supported by a deepening partnership between the public and private sectors,” Naidu said.
