Gauteng Day Zero crisis

South Africa’s next looming crisis that must be addressed is the country’s water and sanitation services, with Gauteng in particular trouble. However, there is some light at the end of the tunnel for this crisis.

This is according to Cliffe Dekker Hofmeyr (CDH) legal experts Tessa Brewis, Deepesh Desai and Azola Ndongeni.

They explained that, with load-shedding seemingly under control for the present, securing access to water and sanitation services for South Africans appears to be the next looming issue.

The legal experts’ comments come after Finance Minister Enoch Gonongwana delivered his Medium-Term Budget Policy Statement (MTBS) on Wednesday, 30 October.

In his statement, the minister noted that growth-enhancing infrastructure would form one of the four key pillars of the National Treasury’s strategy. 

Godongwana noted that the Department of Water and Sanitation’s Water Partnerships Office would receive dedicated capacity. 

“In water, the focus is on creating independent economic regulation and strengthening the local water services regulatory environment,” the minister said.

The legal experts said Gauteng’s bulk water supply crisis and the province’s fast approaching “Day Zero” have been attributed to high water withdrawals by municipalities, largely caused by leaks due to failing municipal infrastructure.

Over the past few years, sporadic water shortages have hit South Africa’s economic hub as its infrastructure cannot get water to the end user. 

Water scientist Dr Anthony Turton previously explained that the issue is not that the province does not have enough water. In fact, its dams are relatively full. The problem is getting the water from the dams to the end user. 

Due to leaks, nearly 50% of all water pumped from the bulk supplier, Rand Water, is lost before it reaches the end user. 

“If we manage our water wisely, we certainly have enough to grow our economy and population. The problem is that we are not managing it wisely,” Turton said. 

“It is not a water scarcity issue. It is an institutional failure issue.” 

CDH’s experts said the results of the General Household Survey 2023 published by StatsSA show that about 13% of households in South Africa do not have access to on-site or off-site piped water.

In addition, about 16% of households do not have access to sanitation services. 

“The municipalities that are responsible for rendering such services often lack the financial stability and the necessary expertise and capacity to do so effectively,” they explained.

However, there are resolutions in the pipeline that could see South Africa address its water and sanitation crisis sooner, rather than later.

Firstly, the legal experts pointed to BRICS Bank funding to fuel water infrastructure development in South Africa.

At the end of August 2024, the New Development Bank, established by the founding BRICS nations, approved a loan of $1 billion (R17.6 billion) to South Africa to enhance the country’s infrastructure sector. 

“It is anticipated that these funds will be used to fund large national-level bulk water infrastructure projects and to address infrastructure funding gaps not covered by the Municipal Infrastructure Grant programme,” they said. 

“This will be a significant contribution towards developing much-needed water and sanitation infrastructure in South Africa.”

They said water infrastructure developers and contractors can anticipate numerous long-term opportunities to provide services to municipalities and partner with the state to develop and expand various water and sanitation infrastructure projects.

Secondly, the legal experts explained that public-private partnerships (PPPs) present an effective way to deliver improved water infrastructure in South Africa.

“One of the ways to address the lack of capacity, insufficient expertise and limited resources of municipalities to deliver water infrastructure is to promote PPPs,” they said.

These partnerships allow the private sector to contribute the upfront capital, technical skills, and experience that the government often lacks.

In his latest MTBPS, the Finance Minister announced that the proposed amendments to Treasury Regulations 16 would be finalised by November for implementation in 2025/26, and the Municipal Public Private Partnership Regulations will be finalised by June 2025. 

“These draft amendments are aimed at promoting PPPs in South Africa and attracting more private sector investment by streamlining the PPP processes,” the experts explained.

This includes issues related to the procurement, management of PPP contracts, and institutional relationships across a PPP process. 

“The minister’s statements in the MTBPS around making a concerted effort to increase the pool of funders to diversify public infrastructure financing through new mechanisms and instruments reinforce this commitment to realising goals through private-sector collaboration,” they said.

In addition, South Africa’s new Government of National Unity has adopted a business-friendly strategy and identified infrastructure, including water and sanitation, as a strategic area for private sector participation.

“Collaboration between business and government, with the support of institutions such as the New Development Bank, is essential for addressing South Africa’s water crisis,” they said.

“The private sector will have to consider all factors at play to ensure that while they benefit from participating in such projects, they also plan for the risks that may arise.”