South Africa’s water boards on the brink of collapse

The state of municipalities in South Africa continues to decline, with the Department of Water and Sanitation warning that two of the country’s seven water boards are on the brink of bankruptcy due to massive municipal debts.

The Department of Water and Sanitation has told the National Treasury to withhold R500 million in grants from municipalities with massive unpaid debts.

The issue stems from water boards, like Vaal Central Water, being funded solely by municipal payments for water services rather than by the national government.

When municipalities fail to pay, as seen in the Free State’s Matjhabeng Council, which owes R7 billion, the water boards face financial collapse.

This is not an isolated problem, Dr Ferrial Adam, Executive Manager of WaterCAN, explained on The Money Show with Stephen Grootes.

A similar situation led to the bankruptcy of Sedibeng Water, whose responsibilities were later divided between Magalies Water and Vaal Central Water – both now in financial distress.

Adam noted that shuffling responsibilities won’t solve the underlying problem. WaterCAN has proposed two key solutions.

First, they recommend ringfencing funds specifically for water and sanitation to ensure these critical services are prioritised.

Second, they advocated for bypassing municipalities that fail to pay their water boards by directing grants or funds straight to the boards.

However, legal barriers prevent the Treasury from allocating the equitable share grant directly to water boards.

This is a big problem, Adam said, since it leads to the situation the country is currently in where municipalities simply refuse to pay their debt.

For many of these municipalities, the problem is that they simply cannot afford to pay their debt to the water boards.

“That is exactly the problem,” she said. “How is it that they cannot pay or pay even a little? How did it get to this point?”

At some point, there needs to be a serious look at how these municipalities function, Adam said. “We cannot have this. Imagine if this happens across the country.”

Already, there are signs of trouble: Johannesburg faces ongoing electricity problems from City Power, and two water boards are on the verge of bankruptcy.

If left unchecked, these failures could cripple basic city functions.

A recent example underscores the problem – Mogale City, which faces significant water issues, has opted to spend on luxury items like BMWs and a new six-story municipal building instead of addressing critical infrastructure, such as the failing Percy Stewart Wastewater Treatment Works.

While addressing water challenges requires fixing municipalities, this alone is insufficient due to the lasting impact of past mismanagement at the national level.

Adam pointed out that state capture during a “dark decade” has left a legacy of weakened services, further straining local governments.

“It’s impacted the services, it’s impacted the state of pollution.”

Instead of expecting local governments to fix these problems on their own, decisive national intervention to address systemic failures.

“The Auditor-General’s report is clear. Many municipalities are failing. How do we manage that without saying to municipalities, ‘No, you’ve got to fix’, it when they just can’t?”

Adam explained that addressing this issue also requires stricter consequences for government officials. Councillors, municipal managers, and utility heads responsible for arrears over 90 days should face pay cuts or suspensions.

“If you don’t have some action on the people that are responsible for those entities, this is just going to carry on.”

“It’s an urgent issue,” she added.”Municipalities are going to keep giving themselves increases and buying BMWs if they do not start losing their jobs.”

Current penalties, like pollution fines, fall short because they do not target individuals responsible for the negligence.

“And that’s the thing, there’s no repercussions for bad behaviour or mismanagement of funds.”

She said that until that changes, the same issues will continue to arise, even if new people are elected or municipal guidelines are changed.

“We really need to see that people are being held accountable.”