Municipal debt of R21bn a threat to water boards’ viability

SA’s 15 water boards, which are responsible for providing and maintaining water infrastructure, are owed R21.3bn by municipalities, threatening the viability of the sector, water & sanitation minister Pemmy Majodina said on Monday. 

Failure by municipalities to pay for treated water supplied by water boards results in the latter being unable to properly maintain and operate their infrastructure. 

“The water boards do not receive money from the fiscus and this debt is threatening their financial viability, as well as the financial viability of the whole sector,” Majodina said at a press conference. “Apart from the grants which the national government provides to municipalities to address water and sanitation infrastructure backlogs and to provide free basic water to the indigent, the water sector has to be self-financing through revenues from the sale of water.”

Business Day previously reported on warnings from the asset management industry about “water-shedding” in SA and the associated risks to SA’s long-term social, economic and political future. 

Kasief Isaacs, head of private markets at Mergence Investment Managers, said: “It is estimated that SA municipalities lose an average of 40% to 50% of potable water before it reaches the end user. Also, despite being ranked as the 30th [most] water-scarce country in the world, SA’s average consumption of 235l per person per day is higher than the global average.”

The department of water & sanitation has indicated about R900bn will be required over the next decade to halt further deterioration of the country’s water infrastructure. 

“One of our immediate priorities will be to work with our colleagues in cabinet, particularly the minister of finance and minister of co-operative governance & traditional affairs, to find a solution to the problem of the financial sustainability of the water sector,” Majodina said. “Despite the high level of support that we are providing to municipalities, in general, municipal water and sanitation services continue to decline.”

maekot@businesslive.co.za