Recommended Resources

Governance and institutional capacity

Concerns related to the capacity to effectively deliver water services are most keenly felt at local government level. At least a third of the municipalities that deliver water services in South Africa are regarded as dysfunctional.2 Issues in this regard range from difficulties in attracting and retaining skilled personnel, through to political appointments, corruption, and mismanagement.

Infrastructure investment and maintenance

There is a need to refurbish and better maintain existing infrastructure, as well as invest in new assets. Much of our current water infrastructure was designed for a substantially smaller population than it currently serves. Roughly 56% of South Africa’s waste water treatment works are dysfunctional and require urgent refurbishment, while almost half of the country’s water treatment works are in a poor or critical condition, according to the Department of Water and Sanitation.

Financial sustainability

Artificially low water tariffs, poor revenue collection and varying customer service levels are also undermining the financial viability of water provision. Many water institutions are not creditworthy and accumulated municipal water debt is now over R13 billion. At a national scale, the water sector funding gap is currently estimated at R330 billion over the next decade. This implies that a significant amount of the funding needed for water infrastructure has yet to be found.

Climatic variability and climate change

South Africa is a semi-arid country that receives roughly half the world’s average rainfall. Persistent drought from climate variability has been a concern for decades. There is also little doubt that climate change will exacerbate this physical risk further, resulting in higher  evapotranspiration and more extreme droughts in certain parts of the country. The NBI Climate mApp, which provides publicly accessible climate change projections for all smart devices, provides a sobering illustration of our potential climate future.

Unsurprisingly, South Africa has experienced significant water shortages since 2014. The result has been a need to drastically curtail consumption in affected areas, most visibly in Cape Town in 2018, when the city tackled its worst drought in a century. In March 2020, just before the national lockdown commenced,restrictions were still in place in many areas including:

  •  Makana Municipality, where residents were rationed on a two-days-on and one-day-off basis and required to use just 25 litres of water per person per day.

  • Sol Plaatje Municipality, where water restrictions in Kimberley reached Level 5, with weekend and nightly water shutdowns in place.

  •  Polokwane Municipality, where water shedding was implemented in the city and its surrounding areas, with water supply cut daily between 20:00 and 04:00.

The decline of the natural system

While most water experts and commentators tend to focus on built infrastructure, there has also been a steady associated decline in the country’s natural infrastructure. In particular, there has been a significant degradation of South Africa’s rivers and wetlands in the past two decades. Between 1999 and 2011, the extent of the main rivers in South Africa with a poor ecological condition increased by 500%.3 An estimated 50% of wetlands have been lost.

Partnering in the face of adversity

The current situation is clearly not heartening, especially at a time when our economy faces massive upheaval due to the novel coronavirus and its aftermath. But we should remember that times of upheaval are also sources of newfound resilience and changed mindsets.

As the NBI, we have assisted in two declared disasters in recent times, the first being the severe water shortages faced in the Western Cape in 2018, and the current Covid-19 epidemic. We have noted in both that a crisis can quickly galvanise partnerships and build lasting bridges between business, government, and civil society. And these lasting bridges are critical when the dust settles, and the new growth begins.

The NBI’s Covid-19 response, which focuses on providing people in highdensity settlements with safe access to handwashing facilities, often for the first time in their lives, has been backed by AECI, Astron Energy and the Grundfos Foundation and undertaken in collaboration with Business for South Africa (B4SA) and the City of Ekurhuleni. It demonstrates that practical partnerships can work and deliver affordable and safe handwashing solutions to those who are most vulnerable. In the course of our work we have seen companies using their transport fleets to help deliver water to isolated rural communities that the municipality struggles to reach. We have also seen the provision of pro bono technical assistance from firms, support in the development of new groundwater sources through the supply of equipment and manpower, as well as the large-scale donation of sanitiser to municipal service delivery teams.

housing water sector img 1 BIS 2020We witnessed similar responses from the private sector during the Western Cape drought, with companies making great strides in reducing their operational water usage, donating significant volumes of water, and assisting all spheres of government with disaster planning and preparedness.

The role of companies

For companies, the work related to water security begins within the factory fence, by reducing their consumption, increasing water recycling, and ensuring that discharges are minimised and of an acceptable standard. But no company is an island, and operational improvements are just the start of the journey. True water risk mitigation and value creation can be found in supporting improved catchment management and city or community-level water partnerships. Sectors in South Africa such as food and beverages, retail, banking, forestry, chemicals, and mining have already played a key role in supporting their supply chains and operations in water-stressed areas, while enhancing their relationships with customers, communities and regulators.

The NBI has been an important aid and ally for many companies in this process. Through our member-based capacity-building programme we have provided businesses with a means to learn from national and global water experts, and probably most importantly, from one another. Through the CDP (formerly the Carbon Disclosure Project) we have assisted companies to ask the right questions and effectively disclose their water practices to their investors. We have also served as a partner in implementation, whether in the Western Cape, northern KwaZulu-Natal, or in the national Covid-19 response. You will find excellent examples of corporate water leadership and disclosure from companies such as AB InBev, Distell, Exxaro, Mondi,  Tongaat Hulett, and Woolworths on the NBI’s water page.

These company efforts are to be commended, but they alone will not address the substantial risks facing the South African water sector. To address these, the risks must become opportunities, and the value at risk must become value created.

 

Unlocking finance and investment

Closing the water funding gap in South Africa will require two main things: the raising of municipal water revenues and the attraction of private-sector capital. Improved billing, collections, credit control and customer service have the potential to raise municipal revenues substantially. The NBI, for its part, has commenced with a new programme referred to as Technical Assistance, Mentorship and Development (TAMDEV), supported by business, to enhance the capacity of the state. A key focus of this programme is to assist municipalities in enhancing their financial management and procurement capacity. TAMDEV uses a network of retired engineers, accountants and managers, and although a relatively new programme, has already made good strides in the Eastern Cape, Limpopo, and Gauteng, including the development of a fully footoperated public handwashing facility as part of the NBI’s Covid-19 response.

Leveraging private-sector expertise and finance through long-term public-private partnerships (PPPs) provides a further means to revitalise water investment. In the NBI’s work on water PPPs under Kopano ya Metsi, we argued that PPPs can, if well designed, create a channel for private capital to flow into the sector, thereby supplementing government spending and freeing up public-sector resources for other purposes.

In assessing the PPP potential at municipal level, we identified that 28 South African municipalities demonstrate good PPP potential in one form or another.These municipalities include large metropolitan municipalities, secondary cities and small towns, suggesting that PPPs can be applied across a range of  contexts. South Africa’s water PPP track record, while limited, is also largely very successful. Both the long-term Mbombela and iLembe concessions and more institutionally focused Joburg Water Management Contract provide a source of encouragement.

housing water sector img 2 BIS 2020Where PPPs are not viable, it will remain important to focus on strengthening municipal water delivery and financial management, but also to blend water-related government grants with private finance, in a way that effectively quadruples the funds that are available.The much talked about concept of ‘blended finance’ is a real opportunity for South Africa, given the prospect of combining our considerable public-sector grants with a well-established commercial banking and finance sector.

Opportunities for new growth

We know that water is essential for economic development, food security, and public health. But water and sanitation are also filled with opportunities for job creation, small business development, and large-scale commercial industry. One of the biggest commercial opportunities lies in tackling water leakage within municipal reticulation networks. Staggeringly, about 40% of all potable water is lost through leaks before it even reaches a consumer. This lost water is estimated at a R9.9 billion opportunity at present. Companies such as Sasol, Anglo American and AB InBev have all taken concrete steps in recent years to help realise the strategic and financial value of water leakage for municipalities.

Another key opportunity lies in waste water. Run correctly, waste water is a business that has several revenue streams. Revenue options include treatment charges, the use of nutrients in fertilisers, the generation of biogas, and opportunities for water reuse. Current examples of large-scale water reuse, specifically the eMalahleni Water Reclamation Plant and Durban Water Recycling Project, provide different examples of how industry can both support and benefit from water reuse projects. Turning waste water into new water is going to be essential to adapting  to future water scarcity in our country. Storing this new water in underground aquifers as part of managed groundwater development (to limit evaporation losses) provides a powerful combination that will make our cities more resilient to both shocks and long-term change.

Water leakage and waste water are well-known opportunities, but in many ways, they only scratch the surface. The sanitation economy, ranging from the extraction of high-value chemicals, the development of animal feed, the sale of innovative sanitation solutions, and sanitation-derived biogas are some of the areas unlocking commercial interest in Africa and Asia, including in pockets of South Africa. The opportunity for South Africa to be the sanitation economy leader on the continent has already been highlighted by the Water Research Commission. The NBI is working with one of these dynamic local companies in our Covid-19 response, a company that currently exports a range of innovative hygiene and sanitation products across Africa.

In addition, looking more closely at the decline of our natural capital holds the tantalising prospect of finding ways to finance improved land and catchment management, through the restoration of degraded landscapes and the use of cleared alien vegetation. These ideas are not new, and many have been supported by government for some time, but the scale of the opportunity seems far bigger in a post-Covid-19 world, where the largescale benefits for tackling unemployment and poverty are so clear.

The water sector offers substantial opportunities to tackle inequality, poverty, and unemployment in South Africa. The private sector can be a powerful partner in this regeneration, where the combination of company in-house efforts, collaborative partnerships, and largescale private investment are all needed to achieve a resilient future.

The future holds an exciting prospect. Out of the current Covid-19 pandemic and its accompanying water crisis, emerges an environment in which new relationships have been formed, and a realisation that collective will is needed in the face of adversity. Change and innovation have taken place. New knowledge, products, business models, and services have emerged. The water sector is increasingly recognised as fundamental to economic activity, public health, and human livelihoods. Resilience, renewal, and new growth are at work.


References

1 NBI (2017) CDP Water South Africa 2017: Executive Summary. Accessible at: https://www.nbi.org.za/wp-content/uploads/2020/03/NBI-CDP_Water_Executive-Summary-2018.pdf.

2 Department of Water and Sanitation (DWS). (2018). National Water and Sanitation Master Plan, Volume I: Call to Action. Version 10.1. Accessible at:   http://www.dwa.gov.za/National%20Water%20and%20Sanitation%20Master%20Plan/Documents/NWSMP%20Call%20to%20Action%20Final%20Draft%20PDF.pdf

3 Nel, J and Driver, A (2015). National River Ecosystem Accounts for South Africa: Discussion Document. Accessible at:  www.statssa.gov.za/wp-content/uploads/2016/08/National-River-Ecosystem-Accounts-Discussion-Document-FINAL.pdf

4 See 1. https://www.nbi.org.za/focus-areas/environmental-sustainability/water/

5 NBI (2019a). Kopano ya Metsi: Water PPP Opportunities in South Africa. Accessible at:  Kopano ya metsi (meeting for water) | National Business Initiative (nbi.org.za)

6 NBI (2019b). Kopano ya Metsi: Strengthening South Africa’s Water Services Authorities. Accessible at:  Kopano ya metsi (meeting for water) | National Business Initiative (nbi.org.za)


 Source: Trialogue Business in Society Handbook 2020

Finding Solutions for Homeless People

Homeless people have been severely affected by the lockdown imposed in response to Covid-19. As the pandemic pummels the economy, so more people are rendered homeless through unemployment. Sam Vos, director of U-Turn, an organisation supporting homeless people with skills training, said he had seen the demand for assistance increase sevenfold. Vos said that 30% of U-Turn’s self-generated income had fallen away during the crisis, but many companies had made donations in cash and kind, which helped to feed homeless people and cover salaries at some organisations.

In Cape Town, the Strandfontein Temporary Emergency Shelter erected by the City at a cost of well over R30 million was a well-meaning but ultimately ill-conceived intervention. It was set up to accommodate 1 500 people and provide meals, hygiene packs, ablution facilities, medical assistance, and isolation tents for people with tuberculosis. However, women, men, transgender people, the elderly, pregnant women, drug users, gang members and people with mental health disorders were accommodated in close proximity, and a rape was reported. Doctors Without Borders called for the phased decommissioning of the overcrowded camp, suggesting that smaller, community-based shelters would better meet the needs of homeless people – a vital lesson for future interventions.

In Johannesburg, the City of Johannesburg and the Gauteng Department of Social Development (DSD) worked together to house homeless people during the lockdown period, moving them to various recreational centres across the city, as well as 30 schools with hostel facilities. Around 1 800 of the 15 000 homeless in Johannesburg were housed within the first month of lockdown. In Tshwane, the Caledonian Stadium in Pretoria housed around 2 000 homeless people, but 200 decamped to a temporary shelter in April when

overcrowding and food shortages became an issue. Mary Gillett-de Klerk of the Johannesburg Organisation of Services to the Homeless said that the crisis has led the DSD in Gauteng to start formulating a provincial policy on homelessness.


Source: Trialogue Business in Society Handbook 2020

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