South Africa

Government wants big business to come to the rescue

The government is increasingly turning to big business to help solve the country’s looming water crisis, with plans to increase private-sector investment in infrastructure. 

South Africans have been increasingly experiencing water shortages as the country’s infrastructure deteriorates to the point where water cannot be delivered to the end user. 

The main issue is not that the country is running out of water but that its infrastructure can no longer transport it from bulk suppliers to the end user. 

This problem is particularly severe in Gauteng, which has increasingly been hit by water shedding. 

The director-general at the Department of Water and Sanitation (DWS), Dr Sean Phillips, said the province loses around 49% of its water to leakages or illegal connections. 

Several provinces in the country report water losses exceeding 50%. This means that over half of the water from bulk suppliers does not reach the end user. 

This is the result of a steady collapse of water infrastructure across the country, as municipalities have failed to ensure adequate maintenance. 

The most recent Blue Drop Report from the DWS revealed that nearly a third of all water systems in the country are in critical condition. 

‘Critical condition’ means these systems require “urgent intervention for all aspects of the water service business”. 

Anlu Keeve of the South African Institute of Race Relations (IRR) said many factors contribute to this problem.

Among these are contractors’, laboratories’, and service providers’ non-payment, which leads to equipment failures, dysfunctional pumping and treatment infrastructure, and disruptions in service provision. 

Vandalism and theft of electric cables, equipment and civil structures further degrade infrastructure. 

In addition, several water systems are operating beyond their design capacity, and many have not undergone necessary infrastructure upgrades, extensions and refurbishments. 

This situation is compounded by the presence of boreholes that are not operational and the lack of flow monitoring.

Furthermore, the technical and management capacity and the competency of managers, superintendents, process controllers, engineers, technicians, technologists and scientists vary significantly.

This inconsistency often means that institutions do not have access to professionals with the appropriate skills, exacerbating the challenges in ensuring and maintaining water quality.

The graph below shows the sharp increase in the number of water systems in critical condition over the past decade, according to the Blue Drop Report of 2023. 

Source: The IRR’s Blueprint for Growth 5

Phillips said the only solution to this particular problem, at least in the short term, is to turn to the private sector for funding and expertise. 

He explained that municipalities are stuck in a downward spiral. They do not have enough money to conduct maintenance, and thus, leakages increase, resulting in less revenue being collected. 

While they can turn to the national government for funding grants, the scale of the problem is such that it cannot provide adequate financing. 

It is estimated that around R1 trillion will be needed to first halt the deterioration of water infrastructure in South Africa and then expand supply to meet growing demand. 

As a result, the DWS created the Water Partnership Office (WPO) in collaboration with the Development Bank of Southern Africa. 

This office supports municipalities in getting private sector companies to invest in local water infrastructure by ensuring their projects are investable. 

Phillips said the WPO should enable local governments to tap private-sector funding for water infrastructure projects while giving investors a suitable return. 

This return is expected to come from savings on water losses and increased revenue as less water will be lost to leakages or illegal connections. 

The WPO appears to have the buy-in of big business as Business for South Africa (B4SA) has held talks with President Cyril Ramaphosa over helping with the water crisis. 

B4SA  is already working with the government to boost energy production, fix a broken logistics system and tackle one of the world’s highest crime rates. 

The organisation plans to initially pool information about what the private sector is doing in the water industry and then seek to assist the government.

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