Why South Africa needs an independent water regulator

Considering South Africa’s weak economic prospects and severe constraints in skilled human capacity, a realistic approach is required for establishing an independent water regulator. (Delwyn Verasamy/M&G)

Considering South Africa’s weak economic prospects and severe constraints in skilled human capacity, a realistic approach is required for establishing an independent water regulator. (Delwyn Verasamy/M&G)

COMMENT

South Africa’s water sector is inadequately regulated. This has the potential to contribute significantly to economic decline in the face of water-induced capital constraints, not least of all, our country’s food security.

The department of water and sanitation’s shortcomings in regulating South Africa’s water sector requires serious and effective intervention. And, according to the Organisation Undoing Tax Abuse (Outa) and Water Shortage South Africa, establishing a regulator independent of the department is a solution on which both organisations agree.

At this juncture, it is important to make clear that it is not Outa and Water Shortage SA’s position that South Africa’s water sector be denationalised and/or privatised, but rather that there be effective regulation through an independent water regulator.

The envisioned impact of an independent water regulator speaks to the respective mandates of Outa and Water Shortage SA, thus the decision to pool our intellectual resources in this regard.
On the one hand, Outa having been established primarily to challenge the abuse of taxpayers’ money, aims to ensure that the presence of an independent water regulator will not only halt the abuse of taxpayers’ money in the water sector, but ensure the efficient and effective utilisation of such resources.

On the other hand, Water Shortage SA sees the presence of an independent water regulator as a necessary contribution to shifting South Africa’s water management paradigm from one of scarcity to one of abundance, which requires, among other things, sustainable management of the resource.

South Africa’s water resources are scarce and limited. In 2015, it was estimated that there was just over 1 200kl of fresh water available for each person a year for a population of approximately 42 million, of which most is already allocated. With an increased population since then, the availability of water per person is logically less.

The department of water and sanitation is the custodian of water resources. It is primarily tasked with formulating and implementing policy governing the water sector. Among other things, the department aims to:

  • Make “a positive impact [in South Africa] as custodians of water and sanitation resources, and as innovative and committed partners in the drive for sustainable development”; and
  • Be service-delivery orientated, striving “to get it right the first time, every time, on time — ensuring that citizens are provided with the water and sanitation services they deserve”.

Sadly, the department’s less than desirable record in governance has significantly crippled its ability to execute its mandate. For instance, as recently as March 23 last year, the auditor-general of South Africa produced a report on the department of water and sanitation titled Challenges Facing the Water and Sanitation Portfolio. Irregular expenditure, financial viability and fruitless and wasteful expenditure in the department of water and sanitation are among the matters raised by the auditor general.

Adverse impacts, particularly on consumers, linked to the department’s less-than-desirable track record, include:

  • The blue and green drop reports that have not been published since 2014, indicating no evidence of timeous monitoring of South Africa’s drinking and waste-water. The poor drinking water quality reported in areas such as Parys, Vryheid and Makhanda speaks of poor or no monitoring;
  • Over 40 sanitation schemes that have been reported to have failed to meet minimum standards or are noncompliant (more are suspected). An example of such failure is best captured by the pollution in the Vaal River, currently being investigated by the South African Human Rights Commission to ascertain whether it violates or threatens human rights, including environmental rights provided for in section 24 of the Constitution;
  • Currently, pricing of water at distribution level from municipalities is unregulated, resulting in disproportionate and irregular pricing to households and business; and
  • Land reform in agriculture is being stalled, partly due to insufficient water allocations, resulting in slow transformation and induced poverty in rural areas. This is in direct conflict with the land reform and transformation policies of the government that an independent regulator would easily overcome.

As it stands, South Africa is off-track in meeting its water-related objectives provided in the 2030 National Development Plan (NDP) such as “ensuring that all people have access to clean potable water […]”. This further stagnates South Africa’s efforts in contributing to continental and global objectives such as the first aspiration of the African Union’s Agenda 2063, which aims for “a prosperous Africa based on inclusive growth and sustainable development” and goal six of the United Nations’ Sustainable Development Goals, which aims to ensure by 2030, “the availability and sustainable management of water and sanitation for all”.

To this end, leaning on the department’s own estimates, a nearly R1-trillion investment over the next 10 years is required for water and sanitation infrastructure aimed at meeting South Africa’s water and sanitation needs. In South Africa’s current economic climate and mindful of the “bailouts” that have regularly been given to state-owned entities, it would be unconscionable to expect the taxpayer to shoulder this additional burden.

A viable option for raising such capital is through private funding or public-private partnerships, which will require critical nonnegotiable preconditions that include policy and regulatory certainty insulated from party political considerations. Securing such capital under the department’s regulatory climate is highly unlikely.

The department’s 2018-19 budget vote speech identifies the need for a “National Water Resources and Services Regulator: RSA” as among the initiatives to be undertaken if the department is to be successful in addressing its challenges. For Outa and Water Shortage SA, identifying this need points to the department’s shortcomings as the regulator of the water sector.

With that said, Outa and Water Shortage SA agree, in principle, with the initiative to put in place a regulator. However, it is the position of Outa and Water Shortage SA that such a regulator must be independent of the department of water and sanitation.

This is to say South Africa’s independent water regulator must be an “institution able to abide all the time by sound basic regulatory principles such as clarity of mission and purpose, integrity, accountability, effectiveness, objectivity and a professional technical capacity to fulfil all its assigned functions. Further, it must act in a professional manner without fear of political interference and with the aim of fulfilling the objective of acting in the public interest through the sustainable management of water services.”

It is important to note that the notion of a regulator independent of a government department is not new to South Africa. In fact, the South African government, in its 2030 NDP, recognises it as an international practice and demonstrates its alignment through its established regulatory agencies in areas such as energy and telecommunications. As such, a similar approach is not outside the realm of possibility for the water sector when considering South Africa’s development framework. In fact, it is aligned with South Africa’s development plan.

The independence of an institution of this nature will not only ensure regulatory certainty but remove the influence of political cycles from its functions. Furthermore, and perhaps more importantly, it will aptly contribute to executing the state’s constitutional mandate with regards to water, which, among other things, includes providing sufficient safe drinking water to people in the country.

It is also important to note that industries that drive South Africa’s economy (such as agriculture, energy, mining and manufacturing) and are pivotal to its further development, are dependent on the sufficient access to water. Therefore, effective independent regulation of the water sector will mean that the resource is recognised and positioned as an economic enabler that will aid socioeconomic development.

Considering South Africa’s weak economic prospects and severe constraints in skilled human capacity, a realistic approach is required for establishing an independent water regulator. Outa and Water Shortage SA intend to engage broadly with stakeholders on the matter, desiring to gain insights on regulatory challenges they have confronted in the water sector and how stakeholders envision a regulator in mould proposed by the organisations to not only address such challenges but to aid South Africa in its developmental path.

Yamkela Ntola is water and environment portfolio manager for the Organisation Undoing Tax Abuse and Benoit Le Roy is chief executive of Water Shortage SA

Yamkela Ntola

Yamkela Ntola

Yamkela Ntola is portfolio manager: water and environment at the Organisation Undoing Tax Abuse. He is currently doing an MPhil, specialising in sustainable mineral resource development, at the University of Cape Town
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