What are the challenges facing municipalities in financing their water services infrastructure? : a case study of water services authorities in the North West Province

Chuene, Tshepo Benny (2012-12)

Thesis (MDF)--Stellenbosch University, 2012.


The World Bank (1994) concluded that there is a close relationship between infrastructure and economic growth. This also reflects on the water sector because, despite water sector importance, water services infrastructure is probably one of the most difficult to finance, while its deficiency or absence instils a particular burden on society. According to Baietti and Raymond (2005), more than 1.1 billion people worldwide do not have access to safe drinking water, and approximately 2.4 billion are without adequate sanitation. Yet these estimates underestimate the gravity of the situation in relation to access gap and quality of services provided. Most consumers face situations where water services are intermittent and when available the water is not safe for consumption, while sanitation facilities are overloaded, unused or in despair. This research was conducted in the North West Province with municipalities that have the status of water services authorities. This included a combination of district and local municipalities. The North West Province has 11 water service authorities of which nine are local municipalities and two are district municipalities. The competing demands and needs for governments to provide infrastructure for other sectors such as roads and energy further aggravate the stance of finance unavailability for the water sector. The purpose of the study was to highlight the challenges that municipalities face in financing water services infrastructure. The result of the study will provide knowledge and innovative ideas that will allow South Africa‘s municipalities to address challenges of service delivery. At municipal level water services are provided through a variety of approaches, although most involve centralised systems with large supply, distribution and treatment facilities. The social benefits that water services provide are well known, particularly those that relate to public health including reduced morbidity and mortality from waterborne diseases. The challenge is that funding to meet these development objectives is either scarce or entirely unavailable. The Water Services Act 108 of (DWAF, 1997) requires water services authorities and water service providers to put significant efforts into cost recovery for sustainable provision of water services. This aspect has significant challenges which results from widespread poverty and a culture of non-payment from communities inherent as a remnant of protest against apartheid. The scope of the water sector is complex, owing to its diversity, interactions and synergies with other industrial, commercial and financial sectors, and its international nature. Under the current South African constitutional and legislative framework, municipalities will remain to be a major player in the development, financing and delivering of water services infrastructure for sustainable growth and development. Water Services Authorities (WSAs) have responsibilities including protection and management of water resources, provision of adequate and sustainable water services, operation and maintenance of water services infrastructure, monitoring and management of municipal water quality to regulatory requirements and reporting to the Department of Water Affairs (DWA) with regards to the aforementioned. Water service delivery failures at the municipal level are a widespread and fundamental problem in South Africa. At the same time, under the current decentralisation policies, the responsibility for delivering such services is increasingly being delegated to lower levels of government/municipalities that are often ill equipped for the challenge in terms of financial and human resources capacity. Cardone and Fonseca (2006) indicated public administration and financial management capacity at central and sub-sovereign levels of government as limited, and affecting the timely transfer of funding as well as the capacity of municipalities to absorb those funds. Various strategies are needed to enable municipalities to secure and finance their water services infrastructure. These include understanding what bankers are looking for, understanding where donors are going, greater involvement of the private sector, matching service levels to affordability, improving revenues and influencing the regulatory regime.

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