The Localisation Support Fund (LSF) commissioned a sector-wide study to identify where local manufacturing in South Africa’s water and sanitation value chain can be expanded through import replacement and export promotion. The study characterises the sector, maps the manufactured products used in its investments and operations, and identifies the areas of opportunity where targeted support could grow local manufacturing activity. The work was grounded in direct engagement with manufacturers and their representative bodies, on the principle that the industrial base behind the water sector has received far less attention than the institutional reform agenda but is just as critical to service delivery.
Sector Scope and Strategic Context
The water sector considered in the study extends well beyond public water supply and sanitation. It covers the management of the natural water resource by the Department of Water and Sanitation, bulk supply by water boards and utilities, retail distribution by municipalities and appointed water service providers, and the water-dependent industries that anchor much of the economy, including agriculture, food processing, mining and manufacturing. Government holds the resource in trust on behalf of users and is constitutionally obligated to ensure equitable access and environmental protection. The sector’s institutional complexity makes targeted industrial interventions difficult, but the scale and essential nature of the activities concerned guarantee ongoing demand for a wide range of manufactured products.
Product Categories Reviewed
The study examined the principal capital goods and operational consumables used across the sector. These products underpin both new infrastructure and the day-to-day operation of existing systems:
Pipes and fittings, where over 175 000 km is installed across South Africa’s public networks. The market is largely served locally, with PVC dominant in the 125 to 500 mm range, HDPE in the 500 to 1 000 mm range, and steel for pipelines larger than 1 000 mm.
Valves, used to isolate, control and protect water systems. Local manufacture has largely been displaced by imports because of small production scales, high steel costs and declining foundry capacity. The water sector market is estimated at between R120 million and R260 million annually.
Pumps and motors, which move water and wastewater through public networks and underpin treatment and groundwater abstraction. Imports were valued at between R3,7 billion and R4,9 billion in 2024, despite a 2017 designation requiring 70% local content on public procurement.
Treatment process equipment, ranging from large custom-designed plants to a growing market for smaller package units, with rehabilitation and replacement of existing capacity the dominant medium-term driver.
Water meters, where regular replacement cycles and a National Treasury-led smart meter programme are reshaping the market, with annual values ranging from R105 million for basic mechanical meters to R855 million if smart meters take a 50% share.
Treatment chemicals and membranes, including locally produced lime, hydrochloric acid and gaseous chlorine, alongside imported HTH and a mix of locally produced and imported coagulants (notably imported aluminium sulphate) and proprietary polyelectrolytes.
Control systems, switchgear and maintenance manufactures for pump stations and distribution networks were also assessed as part of the operational requirements of the sector.
Current Foundations
South Africa retains a meaningful industrial base across most of these product families, but it is under pressure. Pipe manufacturers operate with significant spare capacity, with PVC utilisation estimated at 50 to 55%, and face medium-term raw material supply risk as major domestic petrochemical producers exit feedstock production, forcing manufacturers to import polymers and absorb additional inventory and exchange rate exposure. The three steel pipe manufacturers are idle or operating well below capacity, and one is considering relocating large-diameter production to Mozambique. Local valve and pump manufacture has contracted sharply, with several former producers now focused on marketing, assembly and technical support for imported equipment. At the same time, regional export markets are active, with HDPE pipe exports of over R400 million in 2024 directed mainly to mines in Zambia and the Democratic Republic of Congo, and some local pump assembly serving both the domestic market and regional customers.
Priority Opportunities
Across the products reviewed, the study identifies a focused set of opportunities where local production could realistically be expanded in the near to medium term. These were selected based on market scale, alignment with existing industrial capability, and the presence of policy or procurement momentum that LSF can build on:
Water meters, where the National Treasury smart meter intervention creates an immediate entry point. LSF can support increased local content within the existing programme and back export promotion in partnership with international corporates already participating.
Submersible borehole pumps, where roughly 100 000 boreholes are drilled annually and equipment replacement could support a market of up to R800 million. The scale may be sufficient to anchor local manufacture, and some assembly is already taking place for both local and export customers.
Package treatment plants for drinking water and wastewater, driven by private developers in fast-growing areas where municipal infrastructure cannot keep up. The drinking water package plant market alone could reach R470 million annually, with comparable potential for wastewater units.
On-site generation of sodium hypochlorite as a substitute for imported HTH in small treatment works, which addresses both an import substitution opportunity and a safety constraint in facilities that cannot handle gaseous chlorine.
Tannin-based coagulants for water treatment, where the development case is strengthened by the potential to combine black wattle cultivation with the rehabilitation of former mining areas.
Shade cloth for agricultural water conservation, building on an established South African industry and research base, with the prospect of expanding production within existing water allocations.
Drip irrigation packs, building on the country’s existing trade in starter packs into neighbouring markets, with public, private and NGO distribution routes.
Low-end borehole drilling rigs, where local assembly and a broader package approach could lift local content over time.
Recommended Actions
To convert these opportunities into sustained local manufacturing activity, the study sets out a focused agenda for LSF and its partners:
Shift from product-only support to package strategies that incentivise equipment providers to embed more local components, in line with the growing market preference for products supplied as a service.
Use long-term, predictable infrastructure programmes to smooth out the procurement cycles that have eroded capacity in the steel pipe, pump and valve industries.
Plug LSF support directly into the National Treasury smart meter programme as a scalable, near-term entry point into local manufacturing for the sector.
Develop regional export markets where South Africa already has a merchandising footprint in SADC, and progress from distribution to manufacturing value-add over time.
Integrate South African activities into regional and global value chains where standalone manufacture is no longer viable, drawing on the model used by the automotive industry.
Address upstream raw material risk, particularly the medium-term exit of major domestic petrochemical producers from PVC and HDPE feedstock, as a prerequisite for sustaining domestic pipe manufacture.
Discussion of the water and sanitation sector tends to focus on its institutional challenges, with less attention paid to the industrial base that supplies it. That base is nonetheless relevant to service delivery, to broader reindustrialisation objectives, and to South Africa’s position in regional markets. The opportunities identified in this study are grounded in existing capability and are practical in scale. Taking them forward will require coordinated engagement between LSF, the water sector institutions, manufacturers, and the national programmes that shape demand.