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Water: our taps could run dry unless urgent action is taken

08 Nov 2019

Craig Ivy / Investment Analyst

Article

In recent years, it is has become evident that many regions in South Africa do not have enough water to satisfy demand.

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In some extreme cases, taps have run dry, and this predicament could spread unless urgent action is taken.

A research report about water security tabled in parliament by the newly appointed Minister of Human Settlements, Water and Sanitation, Lindiwe Sisulu, has confirmed that the demand for water in many areas exceeds supply. This means that South Africa is running out of water - and this crisis could soon emulate our electricity crisis with Eskom.

Grim outlook

The Department of Human Settlements, Water and Sanitation has identified the key (and somewhat disturbing) reasons for the potential water shortages, such as:

  • less rain in certain provinces, which is aggravated by droughts and climate change;
  • increased population growth and higher water consumption by industry and consumers;
  • aging and deteriorating infrastructure;
  • pollution and water wastage due to leaking pipes and taps;
  • vandalism and theft of water infrastructure;
  • non-payment of water services by consumers and lack of payment by municipalities;
  • poor management and implementation of infrastructure projects;
  • non-compliance by mines with their water license conditions; and
  • huge financial mismanagement that has resulted in top officials at national and municipal levels being under investigation.

Sisulu highlighted the problems faced by struggling municipalities in her budget vote speech, noting that the nine Water Boards are owed R14bn by municipalities for raw water and other services.

The Water Boards which are monitored by Futuregrowth and that tap into the capital markets, are profitable entities, with strong balance sheets. Although these Boards are currently in a strong financial position, the high levels of outstanding payments, mostly from the municipalities, remains a concern. This speaks to the inability of municipalities to pay for services, and this has resulted in poor service delivery and, ultimately, poor infrastructure.

Additional issues facing the sector have been an over-reliance on costly consultants, poor water management by municipalities, a shortage of technical staff, and a high level of water delivery backlogs.

Although the ageing infrastructure experienced by some municipalities is an issue, it may not be the sole cause of leakages, reduced supply or lack of access by some communities to water. Another likely cause is that the infrastructure currently in place is not being well maintained. This is largely due to a shortage of skills and poor governance within the municipalities. 

The Auditor General issued a report that found an alarming proportion of municipalities across the country had insufficient planning and bad policies regarding the improvement and replacement of infrastructure. This lack of planning has added to the crisis in the water sector, with the situation exacerbated by the vast debt levels arising from non-payment for the delivery of water supply.

Source: STATS SA

South Africa’s water sector requires urgent attention and additional resources if it is to avoid collapse and the risk that widespread water shedding could become a reality.

Some light at the end of the tunnel

The Department of Human Settlements, Water and Sanitation has implemented measures to address some of the risk.

The introduction of the new Minister has coincided with (in our view) positive changes to the boards of directors of the Water Boards. Furthermore, the Minister has said that the tendering process, which has been a major problem in the past decade, is to be reviewed - with additional standards to create a system that is “leak resistant”. The Department’s construction unit is to be re-established to undertake maintenance, and new regulations around the conservation of water will be issued.

The Water Boards themselves have implemented measures to improve their collection of municipal payments through intensive engagement with municipalities, provincial governments and National Treasury. Furthermore, they have introduced new payment and settlement plans with the municipalities and introduced the installation of water rationing devices that are used to reduce the supply and pressure of bulk water to defaulting municipalities, to encourage payment.

The positive changes to the governance of the Water Boards and better plans to improve municipal debt payments have somewhat improved the outlook for infrastructure implementation. But we need more. In order to protect the South African water industry, we all need to take a long hard look at the way we use water. All South Africans need to be aware that we are in a water-scarce country, and we cannot afford to treat water as an abundant and lasting resource.

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