By Dean Muruven, Associate Director at Boston Consulting Group Johannesburg
Water security should sit at the top of boardroom agendas in 2026. For South African businesses, water risk is no longer distant or theoretical. It is a direct threat to operations, supply chains and long-term growth.
The economic risk is real
Within four years, water scarcity in South Africa is expected to rise by 17 percent. This alone could shave around 0.5 percent off GDP. That number may seem small until you compare it with the 2017-2018 Western Cape drought, which caused R5.9 billion in agricultural losses and cost about 30,000 jobs. One drought event did that.
Water is also the primary way climate change manifests in daily life. Too little water brings drought. Too much brings floods. On our current path, climate-related water impacts threaten about 5 percent of GDP over the next 20 years. That level of loss would wipe out entire sectors, including automotive manufacturing, agriculture, and petrochemicals. The social and economic fallout would be severe.
Why the problem keeps growing
South Africa’s water crisis is complex. Unlike energy, water challenges involve both quantity and quality. They also differ sharply by location. A cubic metre of water does not hold the same value everywhere.
In North West, a mining-heavy province, the Crocodile West-Marico system is over-allocated and the Hartbeespoort Dam faces serious pollution. In the Western Cape, a climate-sensitive system underpins agriculture but faces growing drying risks. Solutions must reflect local realities. This makes national, top-down interventions difficult. Local government is where delivery succeeds or fails.
Despite years of warning, action has lagged. Protests over water access, degraded catchments, rising pressure from civil society and more frequent water disasters have all increased. Yet responses have not matched the scale or urgency of the threat.
Systemic constraints at municipal level
Most municipalities and water service providers face the same structural barriers. Limited budgets. Skills shortages. Ageing infrastructure. Weak maintenance. Fragmented planning. These constraints make long-term water resilience hard to implement without external support.
For corporate strategy teams, these limits are not a reason to disengage. They are a reason to engage differently. Phased investment, capability building and partnerships offer practical ways to move forward.
Why the private sector matters
Only about 30 percent of the funding needed for South Africa’s water infrastructure is currently available. Over the next decade, the country requires roughly R900 billion in water investment. The public sector cannot carry this alone.
Every sector carries water risk. Even financial services, with limited direct water use, face portfolio exposure through clients and supply chains. Without proper oversight, businesses risk sudden disruptions from drought, floods or failing municipal systems.
Small and medium enterprises are especially exposed. They generate about 40 percent of GDP and employ more than 60 percent of the workforce. Many operate in high-risk regions, including KwaZulu-Natal, Gauteng, and the Western Cape. With thin margins and limited reserves, prolonged water shocks threaten their survival.
Does water resilience make business sense?
Yes. Global evidence is clear. Investment in resilience across water, food and infrastructure often delivers strong returns. Studies show benefit-to-cost ratios ranging from 2:1 to 10:1. World Bank research in emerging economies indicates returns above 4:1.
The challenge lies in scale. Many water projects remain bespoke and slow to replicate. To unlock private capital at speed, solutions must scale across regions and sectors.
Clear pathways for private sector action
Recent work with the World Economic Forum outlines six practical models for private sector engagement. These apply directly to water resilience in South Africa.
• Protection of own operations. Co-invest to safeguard assets and continuity.
• Supply chain resilience. Partner to strengthen upstream and downstream systems.
• Revenue from adaptation benefits. Deliver solutions customers will pay for.
• Monetisation of co-benefits. Capture environmental and social value.
• Asset value uplift. Improve resilience to raise surrounding asset values.
• Collaboration for shared stability. Support wider resilience to protect markets.
Water investment almost always delivers adaptation and resilience benefits. These models help boards shape a clear business case rather than viewing water as a pure cost.
A strategic issue, not an engineering one
South Africa’s water challenge is well understood. Solutions exist. The real gap lies in strategy, coordination and execution.
Waiting for government-led infrastructure fixes is not an option for business. Water resilience presents both a risk and a growth opportunity. Companies that act early will protect operations, stabilise supply chains and unlock long-term value.
Water security is no longer an environmental concern alone. In 2026, it is a core business strategy issue.
