The Privatisation of South Africa’s Domestic Water Supply, Part I

Welcome back to this latest edition of Water, Politics and Africa where we are going to look further at the privatisation of domestic water supply in Africa, turning out attention to two regions in South Africa.

Recap

Last week’s post investigated water use in the East African countries of Kenya, Uganda and Tanzania, and the conclusion was that since the late 60s circumstances have in many ways deteriorated to a shocking extent. Often discussed as a possible cause of this issue is privatisation, with “privatisation of water and health services in East Africa [having] taken place on a grand scale since the structural adjustment era of the 1980s, but not in ways that fit easily with the World Bank or IMF prescriptions” (Thompson et al., 2000). However, while privatisation has certainly brought some predictable troubles with it (such as street vendors of expensive water having an interest in piped supply of water failing), researchers (Thompson et al., 2001; Bayliss, 2003) tend to agree that it is difficult to assess its overall impact on the development of domestic water supply services. Bayliss (2003) states:

“Evidence on the impact of privatisation indicates that the performance of privatised utilities has not changed dramatically, but that enterprises have continued to perform well, or not so well, depending both on their state when they were privatised and on the wider economic context.”

This raises the question of what other possible factors could have caused the lack of development of East Africa’s water services, and how its privatisation in other African nations has fared. Thus, as announced last week, we will take a look at South Africa as a second privatisation case study, and then compare the two regions to see whether the degree of success achieved by privatisation can be linked to other factors, such as political stability, level of corruption, or effectiveness of management and governance. As this is going to be a lot to cover, I spreading the post over two parts.

Water Supply Privatisation in Mbombela Municipality, South Africa

While South Africa from 1991 to 1994 underwent a massive political transformation with the abolishment of apartheid, privatisation of water services was initiated before this and was carried on as a policy by the post-apartheid government, although only in some regions of the country (Chetty & Luiz, 2014). One of these regions is the Mbombela Municipality, which includes the city of Nelspruit and has a population of around 580,000. In 1999, the municipality put the water rights for certain areas within the municipality up for bidding, which Singaporean company Sembcorp won. After step-wise increases, Sembcorp supplied around 400,000 people in the area with water as of 2014.

A study by Chetty & Luiz (2014) used face-to-face interviews with 12 employees of both the private company Sembcorp and municipal employees related to water services to gather opinions on the effects of privatisation. The result of the interviews was that all 12 respondents thought that “water service delivery had improved”, ten of 12 agreed that “efficiency had improved” (especially “faster decision making, fault resolution, and project execution”), all but one said there was “improved water service delivery to the rural poor” and nine of 12 stated that “capital expenditure had improved.” (ibid)

This overwhelmingly positive feedback is backed up by statistics. While in 1999 44% of households had no access to the water supply service, this decreased sharply to 12% in 2009. The increase in number of people serviced in that period was 171%, while the national average was 55%, even though the area has also experienced above-average population growth (Bender and Gibson, 2010). Furthermore, due to the planning and execution of projects being carried out by the private company itself rather than them being outsourced, infrastructure quality had improved (ibid). While municipal governments were showing a “major inability to administer capital in the South African water sector” and were suffering from a worsening shortage of expertise, there were now clear improvements in both (Chetty & Luiz, 2014).

Water Supply Privatisation in Johannesburg, South Africa

Clearly privatisation has not had the same results in Mbombela as it has in East Africa. Another region in South Africa which has become particularly well known for water services privatisation is the city of Johannesburg. In 2000, the local government decided to privatise its water services, yet interestingly instead of offering a foreign investor to take over created its own company, Johannesburg Water, of which the City of Johannesburg would remain the sole shareholder. Due to the company not being able to balance its budgets when it entered business, a focus was put on reducing the amount of water that was being used illegally and without being paid for, as well as changing the way people were billed for their water consumption. This quickly led to conflict, and especially exposed the deep-rooted inequalities that exist in South Africa.

Johannesburg Water employee checking a prepaid water meter (City of Johannesburg, 2011)

Before privatisation, a major division already existed in the way water was supplied. In the predominantly black ‘townships’, water consumption was never actually metered or restricted, and households simply paid a flat fee of equal to around $10 per month for their supply, no matter how much water was consumed. The suburbs, generally inhabited by more wealthy white residents, were billed according to consumption every month, as here in the UK (Narsiah, 2011). In the predominantly black townships, the pricing of water was based on the assumption that an average of 20 kilolitres were used per household, per month. Johannesburg Water quickly realised, however, that actual consumption was much higher than that and so implemented a major programme of modernising infrastructure and replacing the flat monthly rate with a prepaid, metered paying system (ibid). While the company was required by law to supply 6,000l of water for free to every household per month, it meant the same consumption level of 20 kilolitres a month would still cost the equivalent of $15, thus an increase of $5.

To be continued..

These decisions led to widespread anger within the townships. Next, I will continue investigating the effects privatisation of water supply had in Johannesburg, how privatisation in South Africa compares to East Africa, and discuss whether privatisation should be avoided or not, or whether other factors are more important than whether privatisation occurs or not.