/ 6 September 2019

Tito tackles the water crisis

Man with a plan: South African Finance Minister Tito Mboweni
Govener of the South African Reserve Bank, Tito Mboweni (Photo: David Harrison/M&G)



This week about 2 500 residents in Tshwane experienced what could be a daily occurrence in South Africa should the country leave its water systems unfixed. After a damaged pipe burst at Fountains, residents in Sunnyside, Arcadia and Clydesdale had to stand in long queues to fill their buckets with water from water tankers that had been provided by the municipality. The outage lasted for three days.

This is just one example of how the water infrastructure across the South Africa is poorly managed and regulated. As a water-scarce country, we are faced with a number of challenges regarding our water resources, including poor management of infrastructure, lack of proper planning, water tariffs that do not adequately cover the costs and the prospect of climate change.

It is estimated that, by 2030, water demand in South Africa will reach 17.7-billion cubic metres. Without taking into account the possible effects of climate change, supply will equal only 15-billion cubic metres. This is clearly unsustainable, given that water is an essential economic component and that its reliable provision is essential for growth.

It is against this backdrop that Finance Minister Tito Mboweni proposes the country devise “a comprehensive management strategy for investment in water resource development, bulk water supply, and wastewater management”.

In the recent policy paper titled Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa, Mboweni proposes that the country apply the principles of the independent power producers programme to the water sector.

Independent power producers have reportedly brought in investment to the tune of R190-billion in the country’s energy sector.

“It’s a widely known fact that most municipalities are dysfunctional and don’t have the capacity to run their wastewater treatment works, so introducing private companies … can help solve that,” says Jason Gifford, the co-founder of Logical Waste.

Additionally, Mboweni proposes establishing an independent water regulator, “which will improve the overall efficiency and effectiveness of water provision and ensure appropriate price setting”.

The proposal to establish an independent water regulator in the department of water and sanitation is part of a medium-term strategy to improve the sector. For the 2019-20 budget, the department has estimated that more than R460-million will be spent on enhancing its water-regulatory functions. The budget to support this programme is expected to increase at an average annual rate of 14.4%, from R303-million in 2018-19 to R453.3-million in 2021-22.

Benoit le Roy of Water Shortage SA says establishing an independent water regulator will unlock much-needed investment. “Regulatory certainty is important for industry, investors and the economy at large, as water is a fundamental economic enabler. The price of water has also been escalating way over 10% for the past decade, making water pricing a disabler to investors, much like our high energy prices,” he says.

Le Roy proposes that the independent water regulator should be modelled on similar lines to the National Energy Regulator of South Africa. One of the important functions of the regulator would be to ensure that the cost of bulk water storage and production would be determined by the independent water regulator instead of the department, which would “reduce unnecessary costs currently passed on to the consumer in a way that makes it difficult for industry to budget and household to plan”.

These sentiments are shared by University of the Free State professor Anthony Turton, who says the establishment of an independent water regulator is in line with international best practice, which separates players from referees. Under the National Water Act, the government is the custodian of water but is also tasked with providing water services to the country. This system, according to Turton, has led to a failure of the country’s water sector.

“We need to do this in order to restore public confidence in the water sector but, more importantly, rapidly turn around the sewage crisis in places like the Vaal because, if there is no intervention, then we are most likely to see a massive public health crisis,” he says.

Mike Muller, adjunct professor at the University of the Witwatersrand’s School of Governance, says establishing an independent water regulator right now would be premature. “[It] is not a priority at the moment. It will cost money and will require quite a lot in terms of capacity and we will probably not see an impact of the regulator for the next five years.”

Muller says, in the short term, the department should focus on managing its affairs adequately before establishing a regulator. “It’s just a recipe that everyone feels they must follow, but there is limited evidence for its effectiveness and, in our case, your can’t regulate before you are managing properly. The first thing a regulator wants is a clean set of accounts and the water department does not have that,” he says.

The water and sanitation department is tasked with formulating and implementing policy in the sector. The department’s ability has, however, been declining over the past few years. It has lost billions of rands to corruption and mismanagement.

The auditor general reported to the parliamentary portfolio committee on water and sanitation that the department had R1.8-billion expenses for the 2017-18 financial year, of which R904-million was allocated to infrastructure, but payments could not be made due to the department being strapped for cash.

Water and sanitation department spokesperson Sputnik Ratau says that, although the establishment of an independent regulator is in the pipeline, “It is still early days and the work on the [regulator] is incomplete. We will engage with the document to see whether or not the proposals made are in line with the department’s plans.”

Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian