The experience of private investment in the South African water sector: The Mbombela Concession

Abstract

South Africa is a water-stressed country that over a protracted period has suffered from poor water service delivery. The major problems are inefficient operations, lack of capacity in spending allocated budgets, unclear management structures, and a long-term decline in capital expenditure. Economists have long argued that private investment will bring good fiscal control and efficient structures and will improve service delivery. However, there may be trade-offs between this improved economic efficiency and the necessity to pursue more egalitarian social outcomes. The purpose of this research is to explore the experience of private-sector investment on operational efficiencies and social objectives in the South African water sector in the Mbombela Concession. The study concludes that, in this case, private investment has enhanced service delivery by improving efficiency, technical skills and the capacity to spend allocated budgets without any significant negative impacts on equitable water distribution.

Keywords:

• water
• South Africa
• privatisation
• social and economic trade-offs

JEL classification:

• H41
• H54
• H83
• L95

Acknowledgements

The support of Economic Research Southern Africa (ERSA) is acknowledged with the usual disclaimers.