South Africa in need of R140 billion to stop water infrastructure collapse

In order for South Africa to replace its ageing bulk water infrastructure it will need R140 billion, and take R1.4 billion annually to maintain, with the private sector increasingly unwilling to fund due to poor local governance, unreliable payments, a lack of skills, and complex municipal processes.

Dr Valerie Naidoo who is the executive manager for business and innovation at the Water Research Commission, told eNCA that the private sector would have to invest as municipalities do not have the funds or skills for large infrastructure projects.

The research by the commission estimates the replacement value of the country’s deteriorating bulk water infrastructure to be R139 billion. Naidoo revealed that municipalities are turning to the private sector for project funding, but many are struggling to attract financing as investors do not consider the return justifies the risk of lending money to a municipality.

Historically, local water infrastructure projects and maintenance have been financed through private sector investment and lending. Companies in the private sector point to poor local governance, a lack of return on investment, unreliable payments from municipalities, and a lack of technical skills. Meanwhile, municipalities are wary of private sector investment as companies tend to impose strict conditions that they are unwilling to adhere to.

Naidoo also mentioned that the country is at loggerheads with regard to private investment in water infrastructure as politicians look to maximise local job creation while the private sector aims to create sustainable, long-term, high-skill employment.

At the current moment, the private sector is not willing to create many jobs tied to specific projects, which will be lost when the project is completed. Moreover, municipalities are reluctant to invest heavily in maintaining infrastructure as it does not create the same number of jobs as new projects.

The solution is for the Development Bank of Southern Africa (DBSA) created the Water Partnership Office to facilitate private sector funding into local water infrastructure projects.

The office is aiming to help municipalities access financing by providing the requisite skills to manage large infrastructure projects while helping private companies navigate complex municipal processes.

“The gap from planning to execution is large. So, we have huge delays in large and small projects,” Naidoo said.