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

Figures & data

Figure 1: The water sector value chain, its stakeholders and issues.

Note: DWA, Department of Water Affairs; O&M, Operational & Maintenance; TCTA, Trans-Caledon Tunnel Authority; WB, Water Boards; WSA, Water Services Authority; WSP, Water Services Providers; WRC, Water Research Commission; WUA, Water User Associations (from Irrigation Boards); WC/WDM, water conservation/water demand management.Source: DBSA (2012:83)

Table 1: Top 10 water sector issues and challenges in South Africa

Issues	Challenges
1. Weak and/or poor institutional frameworks (management and governance)	Strengthening and/or reforming water institutional frameworks to ensure strong and integrated management and governance structures to, among other things, ensure understanding of roles and responsibilities
2. Lack of adequate funding, poor application of funds and/or lack of appropriate funding options and financing structures	Ensuring adequate funding and financing mechanisms for water sector projects supported by appropriate institutional frameworks
3. Shortage of operational and management skills	Development and implementation (financing) of skills development and capacity-building programmes for the water sector that align with international best practice
4. Pollution of water resources by human activities, especially poorly operated and maintained wastewater treatment works and industrial effluents	Managing and preventing the pollution of water resources through appropriate regulation for domestic, industrial and agricultural activities; management of effluent from mining activities (acid mine drainage); and agriculture in some areas is posing immense challenges
5. Poor water conservation and demand management across the entire water sector value chain, leading to high water losses	Institutionalisation of the implementation of water conservation and water demand management measures to ensure the allocation of dedicated resources for their implementation and integration in all infrastructure developments. Such institutionalisation can also enhance the capacity of water services providers to prepare WC/WDM bankable projects that can attract funding (especially with respect to dealing with water losses)
6. Poor operation and maintenance of infrastructure	Development and implementation of best-practice asset management programmes (which are budgeted for), for the optimal operation and maintenance of existing water resources and services infrastructure
7. Rehabilitation and/or upgrading of infrastructure	Development of funding/financing mechanisms for rehabilitation programmes given that some of the infrastructure was initially constructed without consideration of the need for maintenance funding
8. Resource management and development (water mix) in an environment of scarce water resources	Implementation of water allocation and processing of licences on time under conditions of constrained technical capacity; exploitation of alternative water sources (and conventional surface water where the potential exists); development of bulk infrastructure that promotes economies of scale
9. Poor domestic water quality management	Ensuring the provision of potable, safe domestic water, especially for drinking
10. Provision of or access to water services, especially in rural and unplanned settlements where unemployment and poverty levels are high	Addressing water services backlogs (i.e. lack of access to water services infrastructure) in poor and rural areas where cost recovery is difficult or impossible and reticulation infrastructure is expensive to roll out

Note: WC/WDM = water conservation/water demand management.

Source: DBSA (2012:84).

Figure 2: Concession area

Source: Bender & Gibson (2010:18).

Table 2: Views of respondents as to the impact of private investment on the economic goals of efficiency, capital spending and service delivery

Respondent position	Factor change after private investment
	Efficiency increase	Capital increase	Structure improvement	Increased capacity in spending budget	Improved service delivery
For	10	9	9	11	12
Against	0	0	0	0	0
Mixed	0	1	1	0	0
No response	2	2	2	1	0

Table 3: Population served at or above the basic level of service within the Mbombela Concession as contrasted with the South African national averages – 1999 and 2009

	1999			2009			Growth (%)
	Total	Above basic	%	Total	Above basic	%
Mbombela Concession
Urban	95 000	95 000	100	134 830	134 830	100	42
Rural	120 000	25 000	21	233 170	190 025	81	660
Total above basic LoS		120 000	56		324 855	88	171
Total population	215 000			368 000			71
South African National Statistics
Urban	24 816 564	19 613 168	79	29 525 791	28 001 254	95	43
Rural	17 922 277	8 611 244	48	19 921 962	15 686 928	79	82
Total above basic LoS		28 224 412	66		43 687 882	88	55
Total population	42 738 841			49 447 753			16

Note: LoS = Level of service.

Source: Bender & Gibson (2010:23).

Table 4: Views of respondents as to the impact of private investment on the social goals relating to service delivery and the equitable distribution of water

Respondent position	Factor change after private investment
	Increased service cut-offs	Reduced service delivery to rural poor	Equitable distribution of water
For	7	0	8
Against	2	10	0
Mixed	1	0	2
No response	2	2	2

Bender, P & Gibson, S, 2010. Case Study for the 10 Years of the Mbombela (Nelspruit) Water and Sanitation Concession South Africa. World Bank, Johannesburg.

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