An Appraisal of Water Infrastructure Projects’ Financing Challenges in South Africa

Abstract

Purpose Targets set out by state institutions, with respect to supplying water to deprived communities, seem to be idealistic and not realistic. Study envisioned to assess challenges of financing water infrastructure projects, and determines the role of the state towards infrastructure development by holistically planning and engaging with the private sector. Design/Methodology/Approach The study adopted a quantitative approach, whereby a questionnaire survey was conducted among different stakeholders involved in water infrastructure projects in South Africa. Data gathered were analysed using percentages, mean item score and standard deviation. Findings The study revealed that most challenges affecting the success of the financing of water infrastructure projects in South Africa are corruption, hostility towards private participation, cost recovery constraints, high fiscal deficits by state government, unreliable planning and procurement processes, and a rapid increasing number of municipalities that lack technical and administrative capacity to plan implement, operate and maintain water assets. Research Limitations/Implications This research paper investigates projects’ financing challenges with a broad inspection on the role of the public sector. The apparent role of the international structures such as OECD, IMF and World Bank had no influence in the study. From the findings, it is clear that the central government and state institutions lack the necessary resources to accelerate infrastructure development, water infrastructure in particular. The study, thus, recommends a complete expansion and development of state capacity as well as improved collaborations with the private sector to drive the success delivery of services to the public. Originality/Value Improved and flexible regulations and legislative guidelines are required to ensure that both sectors fulfil their side of the bargain, with an ultimate goal of meeting the predetermined targets of supplying adequate water to the deprived communities.