Abstract
The Government of South Africa has been the main provider of public infrastructure, particularly in the water sector. Government administration and institutional structures continue to shape and influence infrastructure investment. The South African constitutional system imposes unique complexities and constraints on infrastructure investment. The country experiences a serious backlog in water infrastructure investment for the development and management of water resources and water services. In 2011, this under-investment was estimated at more than R600 billion (600 x 109 ZAR: South African Rand). The national Government traditionally had a pivotal role in shaping water infrastructure investment. Government needs to find a solution to this backlog by putting in place new institutional structures and funding models for effective strategies leading to prompt water infrastructure provision. The research identified several funding models for financing water infrastructure development projects. The existing public provision model continues to characterise much of the publicly-provided water infrastructure in South Africa. These models see Government planning, installing and financing infrastructure with pricing at marginal costs or on a loss-making basis, with returns recovered through the taxation system. Nowadays, water infrastructure provision is split between fully-public and mixed ownership by water entities. Public-private partnerships (PPPs) in the water sector are not yet a reality.Keywords: Department of Water Affairs, funding models, water infrastructure, National Treasury, operations and maintenance
Highlights
Many developing countries need water infrastructure to improve the livelihoods of their citizens and their quality of life, and South Africa is no exception
Utilising the expertise in the Department of Water Affairs (DWA) to manage the implementation of AFP projects; and
With overwhelming demand for the provision of regional bulk infrastructure assets to be accelerated around the country, implementation of any of these models will go a long way toward leveraging private sector investment in economic infrastructure assets and allowing the government to recycle its capital and share in the future recovery of financial markets, while at the same time addressing demand risk
Summary
Many developing countries need water infrastructure to improve the livelihoods of their citizens and their quality of life, and South Africa is no exception. The World Bank (2010) indicates that infrastructure in Africa lags behind other developing countries. Meeting Africa’s infrastructure needs calls for a substantial programme of infrastructure investment and maintenance Some twothirds of this estimate relate to capital expenditure, with the remaining third linked to operation and maintenance requirements (Brineco-Garmendia et al, 2008; World Bank, 2010). Continued growth in infrastructure productivity will play a crucial role in managing the emerging challenge of South Africa’s growing population (DBSA, 2009; DWAF, 2004, 2008). There is pressure to develop alternative funding models for improved national water infrastructure management, by investigating relevant funding models implemented in similar emerging economies, e.g. Brazil, Mexico, and India (World Bank, 1994; Mayle et al, 2001; Matta and Ashkenas, 2003)
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