South Africa faces serious water, energy and food problems. Drought, overuse and ageing infrastructure strain water supplies. Coal-fired electricity is not sustainable in the long term and causes high greenhouse gas emissions. Tens of millions of people can’t afford enough food because of rising prices. These crises are interconnected: water is needed to grow food and cool power plants; and energy is needed to pump and treat water and grow food. Problems in one area affect the others. Agricultural economists Thulani Ningi and Saul Ngarava and environmental law specialist Alois Mugadza were part of a team that researched uncoordinated funding and planning in food, water and energy. They explain what needs to change.
What are South Africa’s water, energy and food problems?
Water: Millions of South Africans still don’t have reliable access to clean water, proper toilets, or steady electricity.
The country has limited water sources, and has experienced changing climate (floods and drought).
Energy: The country suffered from regular power cuts between 2007 and 2024.
A big part of the problem is that South Africa still depends heavily on coal for energy. The transition to green energy is slow and largely depends on individuals, businesses and families to buy solar systems. However renewables are now cheaper in many parts of the country.
Food insecurity: High levels of hunger, with about one in four families going to bed hungry, show how the system isn’t working well. About 23% of children in South Africa live in severe food poverty.
How are food, energy and water funded now?
Apart from receiving government funding, these sectors are funded by institutions like the World Bank, European Investment Bank and African Development Bank, as well as local institutions such as the Public Investment Corporation and Land Bank.
Our research found that funding decisions about water, energy and food are usually made separately.
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This makes it difficult to get funding for projects that could solve problems across all three areas at once. For example, using solar power to pump water for irrigating crops could help with energy, water and food needs all at the same time.
Our research found that one of the main funding problems is that the current financing model is highly centralised. Decisions are taken in national offices about local projects. Big institutions like the Public Investment Corporation and Land Bank dominate decision-making.
Communities are rarely consulted, even though they understand their own challenges in managing drought or securing food best. They’re also not chosen to lead projects.
In addition, international funding tends to go towards big infrastructure projects, rather than helping local communities get basic services like clean water and toilets.
Another problem is that local municipalities sometimes lack the technical capacity, skilled personnel and financial management systems to deliver effectively. For example, a national plan to roll out solar-powered water pumps in small towns might not happen if the municipalities lack the ability to procure the pumps or maintain them.
Many municipalities are also mired in corruption and mismanagement, which undermines their ability to act on plans or use funds appropriately.
The current financing model slows down progress, wastes resources, and fails to build the resilience needed for a just transition, away from coal and towards renewable energy.
How should water, energy and food projects be funded?
Water, energy and food should be funded through financing hubs. These could pool funding from different sectors and sources specifically to support integrated projects.
Development finance institutions should also use blended finance, which means combining public and private money, to fund climate-friendly infrastructure. In practice, this works by using government or donor funds to reduce the risk for private investors. This makes solar energy, water systems, or sustainable farming projects more attractive to private investors.
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We also suggest that decentralised funding instruments be set up. These include:
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Provincial green funds – locally managed public funds that support environmentally friendly projects, like renewable energy or sustainable farming, within a specific province.
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Local water, energy and food financing trusts – these would fund projects that meet the needs of specific communities.
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Water, energy and food communities – there should be localised funding mechanisms allowing communities to self-finance and self-govern their own initiatives. Communities could come together and decide on projects, and finance these themselves. But a proper framework needs to be in place to prevent abuse of finance going to these initiatives.
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Community development finance institutions – locally rooted financial organisations that provide loans and support to underserved communities for projects like small businesses, housing and basic services.
Banks and government agencies should check how big projects affect all three – water, energy and food – before approving a project in one area. Departments should share information, work together on projects, and keep track of money openly. These steps make the system clearer, fairer and easier to understand.
What needs to happen to get there?
Finance institutions must change how they work. Development banks should require different government departments to set up teams that work across departments. This will ensure that food, water and energy projects are rolled out in a coordinated way.
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Local communities should have a say in how money is used. This helps make sure funding matches both national plans and the needs of local people. Community-based organisations like stokvels, cooperatives and catchment partnerships should be explored and developed as alternative funding structures.
Finally, development finance institutions should prioritise pilot projects involving women, youth and smallholder farmers. These can highlight how local leadership drives sustainability and equity.