South Africa’s hidden trillion rand crisis

South Africa will have to spend R1 trillion to repair its collapsing water infrastructure and upgrade it to meet the growing demand for the resource.

Parts of South Africa have been experiencing water shortages for over a year, with the country’s economic hub of Gauteng particularly hard hit. 

These outages are not due to a lack of water but rather the failure to get water from bulk suppliers to where it is consumed. 

“It is not a water scarcity issue. It is an institutional failure issue,’ Professor at the University of the Free State, Dr Anthony Turton, said. 

Nearly half of all water supplied in South Africa is estimated to be non-revenue, meaning it does not reach an end user. Instead, it is lost through leakages and theft. 

As a result, it is becoming increasingly difficult for bulk water suppliers to maintain sufficient pressure to get water from their facilities to reservoirs in major cities and the end user. 

They have resorted to increasing the pressure at which they pump the water, which has accelerated the deterioration of infrastructure. 

Turton explained that South Africa’s water system, particularly in Gauteng, is similar to a sieve. “The more that Rand Water pumps into this leaking sieve, the more they are depleting their reservoirs.” 

“The system is now starting to self-destruct,” he warned. 

Aside from a lack of supply, deteriorating water infrastructure has also resulted in a sharp increase in water that is unsafe for human consumption. 

Water scientist Dr Ferrial Adam said 46% of the country’s water is undrinkable due to high bacteria levels. 

“This is a crisis. People have to work with urgency and do everything in their power to make sure things change,” she said. 

Over the last decade, the proportion of unsafe drinking water has skyrocketed from only 5% of water supply in 2014 to 46%. 

The Green Drop Report, which tracks the performance of South Africa’s wastewater treatment plants, showed that at least 67% of them are unable to operate properly, while some are not operational at all. 

Adam warned that if this trend continues, South Africa may end up with no safe drinking water in less than a decade. 

This is entirely possible with complex systems such as water supply, where things often cross a tipping point, after which their decline accelerates. 

The R1 trillion price tag

Turton estimates that South Africa needs R1 trillion to fix its water infrastructure and ensure it can meet future demand. 

Due to its poor financial health, the government cannot afford this price tag, forcing it to turn to private sector funders. 

“If you look at the amount of capital needed to fix what is broken, there is no way the taxpayer can carry that cost.” 

In 2019, the government released a National Water Plan, which said R900 billion needs to be spent on water supply and storage infrastructure by 2030. Turton said this will have to be revised upwards. 

Johannesburg Water alone needs over R25 billion to fix its infrastructure. This does not include the amount Rand Water would need to maintain and upgrade its infrastructure to supply the city with bulk water. 

The private sector is willing to step in and pump the necessary capital into this sector but has bemoaned inadequate governance structures to ensure the money is not stolen or used outside of water infrastructure. 

Last year, the Development Bank of Southern Africa (DBSA) and the Department of Water and Sanitation created a Water Partnership Office to facilitate private investment in this sector. 

Its head, Johann Lubbe, told Bloomberg that it may hold several bidding rounds for various water projects in the future. 

Lubbe’s office aims to help municipalities prepare projects for investment and make them accessible to the private sector. 

The unit was given funding from the National Treasury to the tune of R4.4 billion and aims to create a pipeline of projects worth around R28 billion – a fraction needed to solve the crisis. 

Lubbe said the office has turned to international funders to help fill this shortfall.