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Private investors would be foolish to invest in a government-run water infrastructure project, the writer says. File photo: SHARON SERETLO/GALLO IMAGES
Private investors would be foolish to invest in a government-run water infrastructure project, the writer says. File photo: SHARON SERETLO/GALLO IMAGES

Parastatals and government institutions have thrust SA into years of rolling blackouts, generated insurmountable levels of debt and corruption, and led to the destruction of crucial infrastructure. Yet, with all the evidence that public sector institutions just aren’t that competent, the government thinks the best way to guarantee water security is to form yet another state-owned company to manage water.

The National Water Resources Infrastructure Agency (NWRIA) is expected to be in place by May, with the aim of centralising the responsibility of water management, attracting private investment, improving accountability and preventing water outages and substandard water quality.

The goal of the agency is to ensure “sustainable and equitable water supply for all South Africans”. This goal is already under the purview of the department of water & sanitation, as Dr Ferrial Adam of WaterCAN points out.

At best, the agency seems completely redundant. Its takeover of the Trans-Caledon Tunnel Authority (TCTA), rather than a consolidation of resources, seems like shuffling the deck chairs while the ship sinks.

While streamlined management is good, shouldn’t this duty fall to the department? Creating yet another state company seems more like an opportunity to create another public coffer to loot, and more useless job positions to place cronies in for free money.

The solution is simple. Less government. More free markets. More money. And with all that, more water to enable South Africans to survive and thrive.

We don’t need more state companies, especially given the track record of our current parastatals. While Eskom is functioning better than it has for years, it is still a lacklustre utility that should be privatised and replaced by a host of private firms. Transnet has overseen the destruction of our commercial infrastructure, causing untold billions of losses to the entire economy. The SABC is a zombie that needs to be put down, and the Post Office can do nothing but beg for scraps. And that’s just a handful of state-owned companies.

The problem with state companies is that by their nature as companies, they are meant to be financially self-sufficient and profit-chasing. Yet state-owned status gives them limitless access to public money and government-guaranteed credit. This removes any incentive to embrace fiscal prudence. 

Without the need to raise their own capital, state companies spend recklessly, usually on wasteful expenditure. In 2023 Eskom paid R80,000 for kneepads that cost R150 at Builders Warehouse, and R238,000 for a single mop. Access to an endless stream of public money incentivises corruption and laziness.

On top of this, for public sector institutions in general there is no incentive to perform well. Their employees get paid regardless of whether the job is done well or badly. Eskom executives were still paid handsome salaries despite years of load-shedding. This is while their rolling blackouts caused billions to be shaved off the economy.

The solution to water insecurity is not to create yet another incompetent, corrupt and lazy state company. If there is a role for the government in water security, it should be performed by the department that is already in charge of water security.

The department must stop trying to lazily outsource its job and focus on performing its duties. Otherwise, what is the point of it existing in the first place?

Water provision needs to be privatised as much as possible. Private investors would be foolish to invest in a government-run water infrastructure project. They know their money will disappear into a politician’s back pocket with no infrastructure being built. And if it is built, it will be far past its deadline and nowhere close to an acceptable standard.

The solution is to adjust legislation to encourage direct private investment in water infrastructure. Deregulate the industry to make it easier for private companies to enter the market and replace ailing public sector institutions. 

For the water infrastructure and management that needs to remain public, the solution is still to embrace the free market. As SA liberalises and allows for more economic growth through free market friendly policies, more tax revenue will be generated and can be distributed to the department to fund crucial infrastructure investment.

The solution is simple. Less government. More free markets. More money. And with all that, more water to enable South Africans to survive and thrive.

• Woode-Smith is a senior associate at the Free Market Foundation. He writes in his personal capacity.

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