South Africans missing out on free water and electricity

The percentage of South Africans receiving free basic services has declined significantly over the past decade, as municipalities have become more selective, and awareness of this option is lacking.

Statistics South Africa (Stats SA) recently released a report on the provision of free basic services in the country, which showed this decline.

The government’s Free Basic Services policy was adopted in 2001 to provide free services to South Africa’s most indigent households.

Between 2001 and 2009, this policy expanded to include free basic electricity, water, solid waste removal, and sewerage and sanitation services.

Under this policy, the government provides free basic municipal services to eligible households at no charge.

The services include a minimum amount of electricity, water, and sanitation that the government considers sufficient to meet the basic needs of a poor household.

Individual municipalities are responsible for providing these services, and the amount provided may differ among municipalities.

This also means that, in some municipalities, households qualify for 100% subsidies while others qualify for less than 100% depending on the criteria set.

However, in general, free basic water should include around 6,000 litres of water per month per household, and free basic electricity is 50 kWh per month per household.

 Sewerage, sanitation and solid waste management are subsidised up to R50 per month or 100% for indigent households.

While municipalities are responsible for providing these services, households have the responsibility of applying for and subsequently renewing their 

Stats SA explained that this is part of the reason why the use of free basic services has declined dramatically over the past decade.

From 2014 to 2023, the number of consumer units receiving services increased. However, the number benefiting from free services decreased over this period.

This downward trend can be seen in the graphs below, courtesy of Stats SA.

Impact on affordability

Nationally, the percentage of consumer units benefiting from free basic water declined from 38% in 2014 to 16% in 2023. 

Similarly, the percentage of consumer units benefiting from free basic sewerage & sanitation declined from 31% to 16% between 2014 and 2023.

For electricity, the percentage of consumer units using the service for free dropped from 25% to 14% over the same period.

Interestingly, out of South Africa’s nine provinces, only KwaZulu-Natal reported an increase in the percentage of people receiving free electricity between 2014 and 2023.

The only exception to this trend was solid waste removal, albeit marginally, as the proportion receiving the service for free increased from 16.6% to 16.8%.

Stats SA attributed the decline in the use of free basic services over the past decade to two reasons: municipalities have become more selective, and households are not aware of the services.

Firstly, municipalities have shifted from granting subsidised services to all households in their jurisdictions to only focusing on the poorest.

This is primarily due to budget constraints and mushrooming informal settlements, which strain municipal resources.

Secondly, Stats SA said awareness is a challenge. Since the onus of registering for free basic services rests with households, these services cannot reach South Africans who are unaware of their existence.

In addition, even households that have applied and been registered for free basic services may not know that they need to renew their status regularly, often annually.

Stats SA said this lack of awareness around free basic services causes many households to fall through the cracks.

In its recent economic survey of South Africa, the Organisation for Economic Co-operation and Development (OECD) said the low uptake of free basic electricity has contributed to high electricity spending in the country. 

This comes at a time when electricity prices in South Africa are exorbitant. Between 2007 and 2022, electricity prices rose by 450%, significantly outpacing inflation of 129% and surpassing OECD averages.

The OECD recommended strengthening the Free Basic Electricity (FBE) subsidy and improving its uptake to support struggling households better.

The organisation estimated that 5.4 million, or almost 80% of eligible households, did not receive this service in 2020.

It attributed this to poor targeting, with many municipalities lacking registries of indigent households, weak administration and coordination issues between Eskom and municipalities when the utility is responsible for delivery. 

“Additionally, the FBE programme currently provides an insufficient amount of free electricity to meet basic needs, such as cooking and heating fully,” the OECD said. 

“Estimates suggest that the FBE allocation would need to be increased by 50% to support eligible households adequately.”

The graphs below, courtesy of the OECD, show how South Africans’ spending on energy is among the highest in the world, yet the share of households receiving the FBE subsidy has decreased.