Water-shedding warning for South Africa Shaun Jacobs

Water-shedding is on the rise across South Africa, with more areas experiencing prolonged outages and the country’s economic hub of Gauteng being particularly hard hit.

This will have significant consequences for economic growth and political stability, as water security is one of the largest risks the country faces.

This is feedback from Coronation’s Marie Antelme and Leila Joseph, who outlined in a research note the devastating impact water shortages could have on South Africa’s economy.

They said water is a critical resource for businesses as it is a universal input into production processes, whether through employee hygiene or a direct input into products.

Water shortages have become so common in South Africa that Coronation has identified it as a key area of focus in its engagements with companies, actively driving them to become more resilient to supply shocks.

In particular, the asset manager said companies are having to reduce their reliance on deteriorating municipal infrastructure.

Water scientist Dr Anthony Turton said South Africa does not have a shortage of water as many of its dams are relatively full. The issue is institutional failure that prevents water from reaching the end consumer.

Around 50% of all water supplied from bulk providers does not reach the end user. This not only negatively impacts users but also results in municipalities losing out on value revenue.

“If we manage our water wisely, we have enough to grow our economy and population. The problem is that we are not managing it wisely. It is not a water scarcity issue. It is an institutional failure issue,” Turton said.

Antelme and Joeseph said this issue is exacerbated by the impacts of climate change, which have the potential to limit South Africa’s fresh water sources.

South Africa is a water-scarce country, and the supply chain from source to tap is immensely complex. The regulatory framework that governs water infrastructure is also complicated and problematic, they said.

While water as a resource is regulated by the Department of Water and Sanitation (DWS), the provision of water – which is what most companies rely on – falls under the purview of local government.

The legislation governing the two entities is different, and one department cannot interfere with the workings and obligations of the other. Thus, appeals to the national government are often misplaced.

Water stoppages are increasingly common, and “water-shedding” has become common in most geographies outside of the Western Cape.

According to the Water Research Commission, 36.8% of the total municipal water supply in South Africa is lost before it reaches industries and households.

Of particular concern are water shortages in South Africa’s economic hub of Gauteng, which has sustained prolonged periods of water-shedding since mid-2023.

Johannesburg Water, which distributes water in the city, loses around 44% of the volume supplied to it to leaks and theft.

“The more that Rand Water pumps into this leaking sieve, the more they are depleting their reservoirs,” said Turton. “The system is now starting to self-destruct.”

He explained that water shortages in this region threaten South Africa’s economy and threaten social unrest.

“Water shortages are part of a new trend where we can see that our infrastructure is not in healthy shape at all, and politicians are only waking up now.”

“In the case of Gauteng, it is a very specific issue because three major metros contain a significant portion of our national manufacturing capacity. They are all at risk from water supply disruptions.”

“Of course, when water supply is disrupted, businesses cannot operate. It means that there will also be an impact on the workforce,” he said.

“You must appreciate that water is the foundation of your national economy. It is the foundation of social stability.”

“Once your water infrastructure starts collapsing, you start to see things like social instability, the flight of capital out of the country, businesses collapsing, and the loss of jobs.”

“This is a national crisis. It is an existential threat to the very viability of our national economy,” Turton said.

SOURCE:Water-shedding warning for South Africa – Daily Investor