By Prinesha Naidoo and Jennifer Zabasajja.
Middle East sovereign wealth funds, backed by trillions of dollars in assets, have advised South Africa to create a fundraising vehicle as part of a plan for a new state firm that will manage its R155 billion ($9.5 billion) property portfolio.
Authorities in Africa’s biggest economy recently held discussions with Johannesburg’s stock exchange about how to set up a development fund to raise money for projects, after taking advice from sovereign wealth funds in the Gulf, Public Works and Infrastructure Minister Dean Macpherson said in a Bloomberg TV interview. He didn’t identify them.
President Cyril Ramaphosa first announced the establishment of the South African National Property Company, which will oversee 88 000 buildings and 5 million hectares (12.4 million acres) of land, in February.
South Africa has courted Gulf wealth funds and asset managers in recent years to help fund its development plans. The nation needs about R1.6 trillion in public-sector investment and an additional R3.2 trillion from private companies to meet its infrastructure targets by 2030.
Officials are focused on boosting construction to revive a sluggish economy and to restore public finances after years of corruption, mismanagement and bailouts of struggling state-owned companies.
“We know that government cannot fund the entire infrastructure pipeline itself,” Macpherson said from Dubai, where he is due to meet potential investors this week. “External funding is going to be important and we know that there’s a big appetite within the Middle East to do that.”
South Africa remains committed to opening an office for its infrastructure development agency in the Middle East despite the US-Iran war, the minister said, adding that its important for the country to have a presence in the region.
The outpost would most likely be in Dubai, with the country aiming to set it up “sooner rather than later,” he said.
The agency, Infrastructure South Africa, last year presented investment opportunities across energy, water and logistics to wealth funds, state entities and government ministries in the UAE, Kuwait, Saudi Arabia and Qatar.
The nation has a R350 billion construction book and expects procurement and construction for projects to start in the next 12 to 18 months, Macpherson said.
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