South Africa’s water boards are drowning in R28bn of municipal debt, leading to deferred maintenance and the looming threat of bankruptcy. The National Treasury’s decision to withhold ‘equitable share’ transfers is a drastic but necessary move to restore fiscal discipline and protect the country’s water security. Safeguarding water security in South Africa requires decisive fiscal and institutional action to stabilise water boards and protect the entire water sector from systemic collapse.
In this context, the Association of Water and Sanitation Institutions of South Africa (Awsisa) fully supports the National Treasury’s decision to withhold equitable share transfers from municipalities that are defaulting on their payment obligations to water boards. This unprecedented intervention reflects the gravity of the financial crisis confronting water boards and the urgent need to restore sustainability across the water value chain. For many years, South Africa’s water boards and sector institutions have operated within a complex and often contradictory policy environment.
They are required to function as self-financing entities operating under the Public Finance Management Act (PFMA), while simultaneously fulfilling a developmental mandate that obliges them to supply bulk water to municipalities that are themselves financially distressed. This structural tension has long been recognised, but insufficiently addressed. The outcome has been both predictable and severe.
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Chronic non-payment by municipalities has resulted in water boards accumulating staggering levels of debt, with outstanding municipal arrears now standing at R28-billion and continuing to rise as non-payment persists. As revenues have declined, critical maintenance and refurbishment of infrastructure have been deferred, balance sheets have weakened and financial resilience has steadily eroded. For too long, these challenges were treated in isolation, with individual institutions attempting to manage what is, in reality, a systemic failure.
Today, South Africa’s water boards, custodians of bulk water supply and critical infrastructure, are facing an unprecedented financial crisis that threatens their very survival. This mounting debt has not only eroded cash flows, but has also compromised water boards’ ability to meet basic operational obligations, including routine maintenance and debt servicing. Without intervention, the sustainability of several water boards is in jeopardy.
The root of this crisis lies primarily within the municipal tier of government. Many water services authorities continue to grapple with weak governance, dysfunctional billing systems, poor revenue collection and high levels of non-revenue water, which in some cases approach 47% of treated volumes due to leaks and losses.
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