Water — or rather the lack of it — is one of the biggest risks for business in South Africa as parched industries are faced with a perfect storm of dwindling supplies, rising tariffs and crumbling infrastructure.
In his latest cabinet reshuffle, President Cyril Ramaphosa rightly said that water security was fundamental not just to the lives and health of our people, but to the stability of society and the growth and sustainability of our economy.
Just like load-shedding, water insecurity will have a significant effect on the business sector. Here’s why:
- South Africa has a serious water shortage and it’s going to get worse
Unlike energy, you can’t make water. It is a finite resource, which means that companies either need to adapt, close shop or ship out to less water-stressed regions. These regions will, of course, be few and far between; and where water is readily available, it is going to be increasingly expensive.
Looking at current usage trends, our water deficit will grow to around 17% by 2030. This deficit will only be exacerbated by climate change and increasing population growth.
Already scarcity has resulted in sky-rocketing water costs and municipalities in some areas have mandated big users to reduce their consumption, some by as much as 20%. In many instances, tariff structures — particularly in drought-stricken regions — are designed to throttle industrial usage to motivate reductions. This results in an added and unpredictable cost burden to industries and consumers.
- As the deficit widens, we run the risk of the economy contracting and consolidating to regions with a sufficient and secure supply.
All production processes need water, which means that whether you are manufacturing paper, toiletries, textiles, margarine, metals or makeup, supply interruptions and restrictions will hurt your operations, profits and future business viability.
There is an emerging trend of companies seeking a more reliable supply, having discovered first-hand the severity of water’s impacts on their bottom lines.
Clover, for instance, has announced its intention to move the country’s largest cheese factory from its facility in the North West to an existing plant in Durban. News reports state that it decided to quit the region because of relentless energy and water supply disruptions and a sustained lack of support following engagements with the local municipality.
The move to KwaZulu-Natal will reportedly cost Clover R1.5-billion, so one can only imagine the extent of the impact that prompted the move.
Astral Foods is another company that has directly borne the brunt of supply disruptions, having lost millions during water and electricity supply disruptions at its Standerton-based chicken production unit.
- Electricity supply failures upset communities; water supply failures destabilise them
For the man on the street, load-shedding is annoying and inconvenient, but citizens have adapted (or rather become conditioned) to interruptions and breaks in supply.
“Water-shedding” and restrictions will be far more problematic. For the vast majority of the population, there will be a significant impact on quality of life, which will lead to increasing tension.
Violent protests for exactly this reason have recently played out in Iran. In Africa, Egypt is objecting to efforts by Ethiopia to start operating a $4.8-billion dam on a major tributary of the Nile without a binding agreement that preserves Cairo’s rights to the waters.
At home, community members in Mthwalume, KwaZulu-Natal, who have reportedly gone two months without water, blocked the R102 with burning tyres before causing a disruption on the N2 freeway. This is just one of many instances in which communities have made their dissatisfaction known over failing water service delivery.
Whether it is an impact on your workforce, increased security risks, a disruption to your supply chain or dwindling foreign investment, this social destabilisation will be felt on the bottom line.
Taking responsibility for water
As with any challenge, water scarcity brings with it opportunities to be leveraged. To survive and prosper, industry will need to become resilient to the impacts of climate change and water scarcity as they start to hamper operations more frequently. Those companies that do will have the competitive advantage because they will be able to operate where and when others simply can’t.
Thinking bigger, a trend is starting to emerge among larger companies that are not only increasing their own water resilience, but the resilience of the catchments and communities in which they operate, thereby further ensuring their own sustainable future.
PepsiCo Inc, for example, announced recently its ambition to become “net water positive” by 2030, and aims to replenish more water than it uses. These “Net Zero” initiatives are potentially very powerful if implemented correctly.
Helen Hulett is one of Africa’s foremost water strategists and provides industrial players across the continent with strategic advice on how to reduce their water risks, assess and improve water security and optimise their profits to ensure business continuity in water-constrained environments. She is an executive director at water sustainability company Talbot.