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Minister Mchunu: “Increase private sector involvement in water services to achieve the SDG goals”

Minister Senzo Mchunu addresses International Water Association World Water Congress

Minister Senzo Mchunu says there is a need to increase private sector involvement in water services to achieve the 2030 Sustainable Development Goals (SDG). Minister Mchunu spoke at the International Water Association (IWA) World Water Congress in Copenhagen, Denmark, on 12 September. This year, the global summit focused on Innovative Funding for SDGs and Climate Change. Minister Mchunu was invited by the Danish Minister for Development Cooperation, Mr. Flemming MØller Mortensen and the Danish Minister for Environment, Ms. Lea Wermalin, to present at the high-level summit and to share South Africa’s experiences.

During the visit, Minister Mchunu also strengthened the bilateral cooperation between the two countries, a programme run by the Department’s Director-General, Dr. Sean Phillips. In his speech, Minister Mchunu indicated that some of the challenges that hinder achieving the SDGs are the way municipalities run water and sanitation services.

Minister Mchunu explained that municipal water supply is supposed to be managed as a self-sustaining business, with maintenance, operation and refurbishment costs covered by revenue from the sale of water. “In many municipalities, water and sanitation services are in a poor state and deteriorating,” said Minister Mchunu. “And the percentage of the population with access to reliable and safe water and sanitation services is declining.

“Causes include weak governance and corruption, poor billing and revenue collection, poor asset management, operations management, maintenance and a lack of recruitment of people with the required qualifications and experience.” The Minister said where there is a constraint in the municipalities in terms of finance and expertise, there is substantial expertise in the private sector and banks and pension funds.

“However, private sector involvement in municipal water and sanitation services is considerably low compared to other middle-income countries. The reason for this is a lack of capacity in municipalities to take bankable projects to the market, coupled with a Public Private Partnership (PPP) regulatory framework, which means it takes 8-12 years to facilitate a PPP.

“In this context, we are doing two key things, a) Putting in place public-private collaboration agreements with industries, such as the mines and agriculture, for joint funding of infrastructure projects. This agreement will simultaneously provide bulk water to industry and reticulated water to communities, and b) putting in place a Water Partnerships Office (WPO) to assist municipalities [on how] to contract for PPP and independent water producers (IWPs),” he elaborated. 

The WPO is a ringfenced entity in the Development Bank of Southern Africa, and the work of such a WPO will be assisted by reforms of the PPP regulatory framework currently being finalized by the National Treasury.

Minister Mchunu concluded by assuring all relevant stakeholders that South Africa is keen to learn from the experience of other countries as it embarks on this journey.

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