South Africa has always been a water-scarce country with around half the global average in rainfall and relatively high evaporation rates, making water security an ongoing problem. The rapid increase in population growth and increasing urbanisation has further strained our water resources as food demand has increased substantially, putting pressure on the agricultural sector that uses in round numbers 60% of our water reserve.
The economy has simply lagged way behind the population growth, resulting in fewer financial resources to keep the water infrastructure and delivery systems able to match the demand. The government recently disclosed that 59% of households do not pay for water-related services, a clear indication of economic hardship and undervalued water services. In reality, our water reserve was reportedly 98% allocated already in 2002 and now with an additional fifteen million population, we are simply unable to satisfy the demand without radically changing and implementing different economic and infrastructure policies.
To add to our very real problems, the recently published Green Drop report showed that an astounding 97% of our sewage works did not achieve the required status. This does not only result in a reduced water reserve availability, but it also clearly indicates the reduced capacity of municipalities to adequately manage sewage systems since the last reports were published nearly a decade ago.
The real opportunity to engage the private sector and its skills and funding abilities is upon us after decades of trying but to no avail
The Blue Drop reports were not much better, confirming the serious reduction of our state’s ability to manage our water and sanitation systems. The No Drop report that covers Non-Revenue Water (NRW) had not been published for nearly a decade and stood at 41% then as a national average; my feeling is that it would have deteriorated like the rest of the infrastructure to over 50% which makes any water augmentation efforts fruitless and irresponsible. So, we call this the perfect storm of problems, where we have no choice but to all get stuck into turning the situation around with the 2018 Water and Sanitation Master Plan stating that at least R900 billion (USD 60 billion) would be required. This amount is more than double the average current water infrastructure spend if implemented in a planned decade-long programme, far too late in reality. To add to this, like energy, there simply is not sufficient fiscus to fund such a massive programme; herein lies the opportunity for change.
The very real opportunity to engage the private sector and its skills and funding abilities is now upon us, after decades of trying but to no avail, with a major pushback then from government in what was perceived as privatisation as opposed to private sector participation.
The National Infrastructure Plan 2050 (NIP 2050) has four sectoral priorities and water is one of them, with private water sector participation central to the plan, and with various initiatives to attract the private sector whilst removing dated policies and constraints. The South African Water Chamber has been central to influencing change, where three main themes were prioritised:
- Policy certainty.
- Regulatory certainty.
- Contracting certainty.
These themes are clearly embedded in the NIP 2050 and now it’s time to get traction as the stark reality is that since 2018 very little has been implemented due to political instabilities and leadership issues.
We are happy to state that now much of this has been resolved at the national level with a ministerial team in the Department of Water and Sanitation (DWS) consistently confronting issues, having appointed a permanent Director General after years of temporary or acting ones, and the entire directorate being placed on a steady footing, creating an environment conducive to the required action.
The traditional water resources and associated bulk infrastructure are generally not the main thrust of the master plan as we are dammed out and rainfall patterns have changed dramatically over the past two decades. This means that water reuse and desalination, far more complex than large dams, are the new resource initiatives and hence all at the local government level of mandate, that is the weakest it’s ever been; the DWS minister stated earlier this year that 99% of municipalities cannot deliver on their water mandates. To add to this, we are losing over R10 billion per annum in NRW; that is a parallel priority to redressing the water insecurities of South Africa.
Whilst South Africa has water security problems, we have the opportunity to change it on the back of a mega reindustrialisation strategy
There is clearly sufficient funding in the system, R10 billion, to address the NRW issue, where a combination of hardware and software with unique financial engineering will be the way forward, driven by the private sector in short-, medium- and long-term programmes.
The reuse and desalination programs are very capital intensive by nature and will generally require long term programmes to affordably depreciate, so twenty years which is our PPP time limit. The infinite availability of sea water will bring our coastal towns to 99,5% water availability independently of rainfall with a consistently high quality. Some 1,600 MGLD is planned according to the master plan. There is an additional benefit with desalination in that the latest concession awards in 2021 in the MENA region are hovering at around USD 0,30/m³ delivered, which is half to a third of the current average bulk water costs delivered by water boards in South Africa to their clients and escalating at 1270% the last quarter decade. We also understand that the continual reduction of desalination costs is not yet at its end as the sector is driving for USD 0,20/m³ by 2025. So higher availability, consistent quality and reduced prices can only be favourable for South Africa in general. It will also lead to making more inland water reserves available once the coast is on desalination for base load.
We are also finalising a Water and Sanitation Industrialisation Master Plan with the DTIC that seeks to re-establish South Africa’s local participation in the supply chains, as we have over the past two decades become net importers of most of the supply chain. So, from chemicals to plumbing components to process systems and technology, we are often reimporting what was developed in SA at a premium. We can not only create new jobs but also stimulate massive SMME establishment on the back of a “Marshall Plan” for water and sanitation where we all win and export our products, services and systems whilst earning significant hard currency and probably to kick start serious FDI to catalyse the sector’s momentum.
Whilst South Africa has serious problems with respect to water security, we also have the perfect opportunity to change it on the back of a mega reindustrialisation strategy with serious multipliers in the economy.