Hello, and welcome to the So What podcast, in
which political economic analyst J .P. Landman
discusses the issues uppermost in the minds of
South Africans. You can find a written version
of this content on J .P.'s website, jpluntman
.co .za. I am Ruda Landman, and I am your host.
This conversation goes with JP's newsletter dated
the 4th of April 2025 and titled South Africa's
Water Crisis and the Reform Agenda. JP, your
first point is that we as South Africans don't
have water to waste, but we do. What are the
facts behind that? Yeah, indeed. South Africa
is one of the 30 driest countries in the world.
Now, if you consider that there are more than
190 countries in the world, It gives you a clear
idea where we fit in. It's a dry country and
we're dependent on irregular and intermittent
rainfall. Why do I say we waste it? Because our
average consumption per person in South Africa
is running at 233 liters per day per person,
per capita consumption, 233. The global average
is 173. In Gateng alone, just that province,
we... Our consumption is approaching 300 liters
per person per day. So consumer awareness about
water in South Africa is very, very low, and
that will certainly have to change. One of the
contributing factors is, of course, the fact
that the water is so cheap. If it was the cost
of wine or beer, then we wouldn't waste it like
that. But the fact remains our consumption per
person per day is way above the global average.
But there's also something called non -revenue
water. What is that and how do we score on that?
We score badly. First, what is it? It's water
which is billed to municipalities and which municipalities
distribute, but for which no income is coming
in. And that sits at 47 % of total water supply.
That's a very huge percentage. And again, it's
almost half. And again, it's way above the global
average. Middle -income countries like South
Africa, that number is sitting at about 30%.
In some countries, it's higher. For example,
in Mexico, it's sitting at between 40 % and 50%.
In Kenya and Nairobi, it's sitting at 45%. So
for South Africa, to sit at 47 % is a higher
percentage. And that's burst pipes and that kind
of thing? It's burst pipes, it's illegal connections
or theft, of which there's a lot, all over society,
from residences, from farms, from factories,
where people don't actually pay for the water
that they extract. So there are a variety of
reasons, but I think the main one would be poor
maintenance and poor infrastructure. Actually,
the infrastructure is not that poor, but poorly
maintained infrastructure. That is what's causing
a lot of the non -revenue water. Well, at least
these days we do know what's going on. There
are the so -called drop reports, the blue drop,
green drop, no drop reports. They were introduced
in 2008, but they were suspended under the Zuma
administration in 2014. And then reinstated in
2022 by Cyril Ramaphosa's government. What do
they show us? It goes to the fundamental point
that what you measure, you can manage. And if
you don't have those reports, well, then you
can't manage the problem. The Blue Drop report
measures water quality. Is the water that comes
out of your tap safe? And does it meet all the
standards for water to be consumed? Now, in South
Africa, 52 % of water treatment systems failed
or barely passed the quality test. They didn't
score. Even if they passed, they didn't score
very high. 48 % of water distribution systems
were found to be okay. There's no risk there.
It's fine. So it's a story of two halves. That's
blue water. It's the quality of water. No drop
is non -revenue water, which we have just discussed.
And it reveals in South Africa 47 % losses. And
interestingly enough, that's up from 35 % in
2014 when the reports, the publication of the
reports were suspended. And probably if we didn't
suspend the publication, we could have, you know,
managed the problem earlier. And then the last
one is Green Drop, and that measures wastewater
treatment. The report found that 64 % of wastewater
plants are at a high or critical risk of discharging
untreated or partially treated water into the
environment. So those three reports helps us
to understand what's going on and one can now
manage the situation better. Not a pretty picture.
No. But how does the system work? How does water
get from, say, the Vaal Dam or Steenbras or Theewaterskloof
in the Western Cape to the consumer? It starts
with strategic water areas, which we find in
South Africa in five provinces. Four provinces
have got no strategic water areas, so you've
got to distribute water to them. How does that
work? First of all, these strategic water areas
feed water into dams. The Waal River that you've
mentioned. the Berggevier Dam and the Western
Cape and so on. The dams get filled from the
strategic water sources and the dams are run
by the Department of Water and Sanitation. And
that is what one can call the beginning of the
system. Then we have seven water boards in the
country. There used to be 15, but they have been
rationalized to only seven. Those seven water
boards distribute water. They are basically what
you can call wholesalers. they distribute water
to the country's municipalities. And the municipalities
form the third level. Now here we must distinguish
between two things. Municipalities are water
services authorities. That's the mandate that
was given to them in the constitution. They're
responsible for ensuring that the citizens in
a municipality has got access to water. It's
a constitutional obligation. But then most municipalities
have also taken on the duty of a water service
provider. which actually runs the pipes and the
taps in a particular municipality. So there's
a water services authority, which has the responsibility
to make a plan. And then there's the water services
provider. But it doesn't have to be the same
entity. It doesn't have to be. But in practice,
it is. It mostly is. And that's one of the areas
where change is now going to take place, where
you separate the authority from the provider.
The authority is a constitutional thing and it's
a political responsibility to citizens. Provider
is the technical function to get water out, to
maintain the system and to collect the money
for selling water. So let's take it from the
top. What's happening with bulk water supply?
Quite a lot has actually happened. And in Appendix
A to the document, there's quite a list detailing
the projects that we've had since 1994 and ongoing
projects right at the moment. Right now, government
has committed about 150 billion rand to 11 big
water projects all over the country in the provinces
where there are strategic water supply sources.
The biggest one is, of course, the Lesotho Highlands
Water Scheme Phase 2. Phase 1 was completed in
respectively 1996 and 2003. Phase 2 was supposed
to be completed already, but... Corruption allegations
in the Zuma time, plus, of course, COVID, plus
the fact that you had to resettle communities
in Lesotho from land which will now be covered
by water, delayed that project. But I must say,
again, the Ramaphosa administration has succeeded
in getting that thing going. And currently, their
three big construction works ongoing. It's the
building of the Polyagli Dam. It's the building
of a tunnel to transfer water from Polyagli to
Dikatsi Dam, which is the biggest dam in the
system, and it's the building of roads and bridges
to service that. And that scheme delivers water
to Gauteng. It will be operational on current
planning by 2028, and that will enhance the Gauteng
water supply system quite considerably. Some
of the other provinces, the one where there is
the largest number of The projects and money
is KwaZulu -Natal, both the north and the south
coast. There are three big projects on the go
there. And I think that will make a big difference
to the water supply problems on both the north
and the south coast of Natal. And then there
are two projects in the Western Cape. There are
two projects in Mpopo and so on. But all those
details are in Appendix A to the document. And
if we come to the seven water boards, are they
functioning well? One of the reasons why the
15 were rationalized to 7 was precisely to cut
wastage and expense and try to get them to function
better. The Achilles heel there is municipalities
who don't pay. And at the moment, municipalities
owe the water boards about 22 billion rand in
water that has not been paid for. That's a substantial
151 % increase over the last five years. And
the problem there is that although municipalities
receive 62 billion rand annually from National
Treasury for water and sanitation projects, not
all that money gets spent on water by the local
municipality. They spend it on other priorities.
So that brings the issue of ring fencing to the
fore. It sounds as if the municipalities really
are... The weakest link. No, they absolutely
are. There's no question. I think bulk water
supply, you know, that's going on. The water
boards have been reorganized and they are proceeding.
The real problem is the municipalities. That
is where things are falling apart. What the drop
reports tell us is that in December 2023, There
were 144 water service authorities in South Africa,
in other words, municipalities which are designated
as water service authorities. They run close
to a thousand water systems, 958 to be precise.
Only 26 of those 958 systems, that's 3%, achieve
blue drop status. I earlier made a point that
about 52 % of systems either failed or barely
passed the quality test. But only 3 % got 95
% score or scored 95%. So you can see where the
problem lies. It lies with the local water systems
in various municipalities. Is it just aging infrastructure?
No, it's not just aging infrastructure. The same
reports found that 85 % of drinking water systems
are of an average or better condition, average
or better. So it's not so much the infrastructure
that's not working. It's more a question of skills.
It's more a question of process flow. It's more
a question of maintenance. Maintenance is a very,
very big story. Treasury requires that 8 % of
a budget must be spent on maintenance. But in
real life, only about 2 % gets spent on maintenance.
So maintenance is really the big problem. Linked
to that is simply a lack of management. The Minister
of Water, Minister Pemi Majordina. has said in
parliament that her department has given a whole
lot of very doable tasks to Johannesburg Water
and to other Gauteng municipalities, but that
they simply do not respond. The water board for
Gauteng, Rand Water, which is actually functioning
quite well, reported that they had some 40 meetings
with Gauteng municipalities to give them practical
advice. on how to improve water distribution
systems, and there's simply been no appropriate
reaction. So no, it's not so much the infrastructure
as people. Is there something about this system
which could possibly be different to make it
better? Yes, most certainly. And that is where
a number of reforms have now been initiated,
which should change it, and let's go through
them. The first and most important one is a licensing
system. I've said earlier that we've discussed
the fact that there's a water service authority
which deals with the constitutional obligation
and a water service provider. Legislation has
now been amended. It's going through the parliamentary
process to compel every water service authority
to have a license before they can be a water
service provider. And what is the point about
the license? The point about the license is certain
minimum performance standards and certain...
achievements that must be maintained by the water
service provider. If the water service provider
does not meet those license requirements, then
the license can be revoked and given to somebody
else. And that somebody else can be the for -profit
private sector. It can be the not -for -profit
private sector, like an NGO or a community -based
organization. It can be a different water services
authority. There's no limitation. It can go to
any licensee. That is best place to deliver the
water and fulfill the water provision functions.
That's an important change. Brazil has done this,
not so. And what happened? Absolutely right.
Brazil has. They've got similar problems than
what we've got. They made this change. It led
to a huge influx of private service, water service
providers coming in. Some for profit, some not
for profit. And I've said some community based
and so on. and it led to an improvement in both
water and sanitation supply in Brazil. In South
Africa, we only, or we do have, two examples
where the water service provider in a municipality
is a private entity. The one is Mombella, in
Mupumalanga, and the other one is on the Dolphin
Coast, in the northern part of Guazula Natal.
And in both those areas, what we see is we see
very efficient water provision. Water losses
have been cut down, so non -revenue water has
come down substantially in both cases. Maintenance
is being done, and there's a consistent and reliable
water supply. So all we really have to do is
to expand the Bombella and Dolphin Coast examples
to the rest of the country, and we will see a
substantial improvement. But that means that
municipalities must give up some of their authority
or some of, well, also some of their revenue.
And municipalities are set in their ways and
constitutionally protected. How are they being
chivvied along? That is exactly the problem.
They've got a vested interest in the current
system and they would like to maintain it. And
as I've said earlier, they also get money from
National Treasury. for a subsidy for the poor
and they use that subsidy for other things like
cars and salaries and so on. So yes, the municipalities
will have to change their behavior quite considerably.
But I think this legislative amendment forcing
them to become a licensee and losing their license
will do a lot to address that. Also, there are
currently both carrots and sticks being employed
by government. What are the CARATs? The CARATs
are a program the Treasury is running called
the Metro Trading Services Reform Program, very
long title, which essentially pay incentives
to municipalities if they meet certain performance
standards. So that's a CARAT, and it looks like
it's working quite well. Six of the eight metros
in the country have bought into the system and
are participating in this Treasury framework.
And it's all about... having better control over
what's happening. Another carrot which is being
employed is that the Department of Water and
Sanitation is now being authorized by changes
in the legislation that they can take over the
water service provider if that water service
provider is not doing a proper job. So you take
Johannesburg, for example, where Joburg water
is really not functioning well. It is possible,
it will be possible once the legislation is passed.
for the department to step in and take it over.
Those are the carrots. How far is the legislation?
It's still in the parliamentary process. It takes
time to write legislation. You're looking at
between six months and a year. You said there
were carrots and sticks? Sticks. The most important
stick is, I've now several times we talked about
the Treasury's equitable share, which is paid
to municipalities and then gets misused. The
Treasury in December last year started withholding
the transfer of equitable shares to municipalities
who are in the rears. They were the usual threats
of court cases and so on. In South Africa, everybody
runs to the courts when they're not happy. But
the legal position is quite clear. Treasury has
got the authority to do that kind of thing in
cases where there's consistent poor performance.
So withholding the equitable share is hitting
where it's hurt, as you say. And that's an important
stick. Another stick is criminal accountability.
The Department of Water has started criminally
prosecuting municipalities. And 36 cases have
been opened against 26 municipalities in six
provinces for discharging untreated sewage into
public water systems. to the government. Yeah,
so those are the main sticks that are around.
We've seen stunning success in involving the
private sector in electricity. Are there moves
to make that happen with regard to water? Yes,
absolutely. The Department of Water Affairs,
with the help of or in partnership with the local
government association, SOLGA, has created a
water partnership office in the Development Bank.
And the idea of that water partnership office
is to help the municipalities to involve private
companies in the provision of water. It's run
by Johan Libbe, who's an engineer with about
20 years experience. And essentially, they run
six programs. What do they do? First of all,
they develop a model of how you can run things
in those six areas so that municipalities don't
have to reinvent the wheel. In that way, you
want to make projects easier and more bankable.
If you take care of the admin and you standardize
the standards and you standardize the technical
requirements and those things, then you can just
copy and paste and it will help to improve projects
run. What are the six areas? I think it's important
to point them out. It's non -revenue water, which
we've already said is one of the biggest problems
in the country. It's management contract. It's
wastewater treatment. It's the reuse of water.
of which we don't do a lot in South Africa, desalination,
of which we also don't do a lot, and off -grid
water. So if you can get standardized procedures
for involving private companies in those areas,
helping municipalities, then I think it is a
win -win for everybody. And are the municipalities
coming on board? The six biggest metros are currently
working with the water office, water partnership
office, to employ some of those. programs in
their areas. Yes, and I think success breeds
success. Once you've had two or three places
where they can show a demonstrable improvement,
you will find other people also coming along.
This will have a political impact, not so? In
what way? If you have demonstrable success, then
it looks good for the municipality. It looks
good for the municipality, absolutely. And that's
the only thing that the municipalities has got
to get their mind around. It is quite possible,
as in Bombella and on the Dolphin Coast, to rent
your infrastructure out. Infrastructure belongs
to the municipality. It's their asset. It's their
thing. Rent it out, charge a fee for it, regulate
the price at which that private entity can sell
the water. You don't want to lose that. And take
a part of the equitable portion and pay that
over to the... service provider to provide water
to poor people. So you really can do everything
which is required, but you do it through a different
operator, not a municipality. Yes, it can have
a big impact. There's also another brand new
animal called the National Water Resource Infrastructure
Agency. Who are they and what do they do? Yeah,
I call it the three -in -one agency because they
combine three functions which are currently handled
by different people. The first one is they take
the functions of the Trans -Caledon Tunnel Authority,
which its name belies what it does. The Trans
-Caledon Tunnel Authority is responsible for
raising money on the capital market for bulk
water projects. And that is what they've done
for many years now. So this function will go
into the National Water Agency, raising capital.
The second thing is in the Department of Water,
there's a water trading entity. They sell water
from the various dams to the seven water boards
and from the water boards on to municipalities.
That trading of water, collecting the money,
making sure everybody pays what they have to
pay, that will go into the water resource agency,
the three -in -one agency. And lastly, the department's
infrastructure branch, engineers and technical
people responsible for overseeing the dams. Now,
what this reorganization doing is this. It takes
the dams and the distribution systems, which
has got a value. You build a dam, it's costing
millions or billions of rands. It's a real asset.
That asset is generating money. You sell water,
the water, the income comes in. You take that
and you put it on the balance sheet of the agency.
Now the agency has got assets, a balance sheet,
against which they can go and borrow more money.
from banks and insurance companies and so on,
to build more dams and to build more water systems.
It's quite a clever way of overcoming the fact
that government itself, the taxpayer, doesn't
have enough money to pay for backwater provision.
It works very well in, for example, the case
of national roads. We've got Sunroll, the national
road agency, and if you travel through the country,
all you have to do is compare a national road
to a provincial road or a municipal road, and
you can't believe the difference. And that's
what they do. National roads belong to the National
Road Agency. There's income against it, against
tolls. You take that income and the balance sheet,
you go to the bank, you borrow money and you
can build more roads. It's exactly the same idea
with water. That legislation has been signed
by the president and they're busy setting it
up. And the target date to get it going is the
beginning of the financial year in 2026. So what,
if you have to summarize all of this? I think
this first, so what is this? been happening and
has happened, especially around bulk water supply.
And again, PNXA give a lot of detail, not all
of it. It's not exhaustive, but it paints a picture
of that something is being done about the fact
that we need more bulk water supply. That's not
the area that I would be very worried about.
The two areas where we actually need huge in
progress is on the on the distribution side,
on the municipality side, in respect of non -revenue
water, as well as poor maintenance. If we can
sort just those two things out, it will make
a real difference to the lives of ordinary people.
It's maintenance and non -revenue water. To achieve
those two things, and that's the third so what,
is we've got to make legislative changes. And
those changes are now in process. So it's not
something that will happen. It's something that
is happening. We also have changes in the regulations,
for example, around not paying the equitable
share of municipalities if they fall in arrears
with their payments. So there are administrative,
legislative, regulatory changes taking place
to deal with those two big problems. In the end,
it comes down to local government and local municipalities.
They have to step up and improve their performance.
And the only way that you can really force them...
is you can do legislation and you can do regulations
and so on, and that's being done. But in the
end, it is the voters that must decide who must
run the water system in their municipality. They
have to exert the pressure on councillors and
on municipalities. So let's hope that with the
local government elections, that voters will
step up and deliver a lesson to their councillors.
Thank you very much. You will find two extra
sections in the written version of this newsletter.
The first is the appendix that JP has referred
to. That's not a complete list of projects, but
it gives an indication that as far as bulk water
supply is concerned, a lot has been done. But
then there's a second extra page, which is an
executive summary, an overview of all this information.
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