The chair of asset management firm Coronation, Alexandra Watson, has warned that SA’s water security crisis and failing municipalities are eroding the good work done by Eskom in ridding the country of load-shedding.
Businesses and think-tanks are increasingly voicing their concerns about water shortages countrywide — largely the result of ageing and neglected infrastructure, particularly in the economic heartland of Gauteng — and a lack of service delivery as a result of widespread municipal dysfunction.
In a letter to shareholders, published in the investment manager’s annual report, Watson said the formation of the government of national unity had infused new energy and the public-private partnership forged in 2023 was bearing fruit.
However, she said progress made on the energy security front was being undermined by the water challenges and misfiring local councils.
“A reinvigorated public-private partnership under the reaffirmed CEO Pledge bodes well for much-needed increased infrastructure investment that will improve business efficiency and help tackle the concerning high level of unemployment,” she said.
“While these green shoots are encouraging, SA’s many headwinds prevail, as more than a decade of mismanagement, neglect and corruption have wrought havoc on the country’s key assets and infrastructure.
While more than 260 consecutive load-shedding-free days are a cause for celebration, this has been eclipsed by grave concerns about SA’s growing water crisis, failed municipalities, decaying transport infrastructure and high levels of debt.
“And, while more than 260 consecutive load-shedding-free days are a cause for celebration, this has been eclipsed by grave concerns about SA’s growing water crisis, failed municipalities, decaying transport infrastructure and high levels of debt.”
Johannesburg, SA’s largest city and economic hub, has over the past year grappled with frequent planned and unplanned water outages, affecting areas from townships to upscale suburbs.
The water crisis in the City of Johannesburg has seen commercial property owners in the city to prepare for the worst. JSE-listed Attacq, for instance, has implementing plans to manage being without municipal water for up to five days as dry taps become a feature in Gauteng, where its assets are concentrated.
The company owns the Mall of Africa and is developing the Waterfall City complex in Midrand.
Redefine announced plans in July to spend more than R200m on new water tanks to ensure a reliable supply of up to five days at its properties in the region.
Phase 2 of the Lesotho Highlands Water Project was designed to increase supply to Gauteng, but it has been beset by delays and is only expected to be completed by 2028.
Business Day reported in December that Lesotho objected to the reappointment on October 1 of Tente Tente as CEO of the Lesotho Highlands Development Authority, which was established by the two countries in 1986 and is responsible for providing water to Gauteng. That has cast uncertainty over the project that includes the construction of the Polihali Dam and a tunnel to channel water to SA and generate hydropower for Lesotho.
The 2024 fourth-quarter RMB/BER business confidence index showed that Gauteng’s water crunch and the proliferation of construction mafia activities, which have halted projects with a combined value of R63bn over the past five years, are weighing on sentiment.
The Bureau for Economic Research has urged the government to curb local political interference in municipal management and to intervene in failing municipalities, which have been a drag on economic growth and service delivery.
In November Citibank SA chief economist Gina Schoeman said one of the hallmarks for the success of Operation Vulindlela 2.0 would be the progress made in turning around dysfunctional municipalities.
Their dismal performance has also affected the financial standing of Eskom, with local councils now owing the cash-strapped power producer R109.4bn in unpaid electricity bills up from less than R5bn in 2015.
Eskom chair Mteto Nyati has warned that runaway municipal debt risks delaying the unbundling of the utility’s distribution unit and placing its viability at risk.
With Noxolo Majavu
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.