R400 billion disaster taking hold in South Africa
South Africa is heading for a full-blown water crisis that has been years in the making, and it now demands urgent attention.
This is the feedback from several experts who participated in the Investec-Proparco industry dialogue last week.
They warned that the country has reached a critical inflexion point, where delayed action, failing infrastructure, and weak municipal finances have created a perfect storm that threatens economic growth.
Despite being among the 30 most water-scarce countries in the world, South Africans continue to consume water at unsustainable levels.
Average daily usage sits at 218 litres per person, well above the international average of 173 litres. At the same time, the quality and reliability of drinking water services have deteriorated rapidly.
The proportion of municipal water systems failing basic microbiological standards has jumped from just 5% in 2014 to 46% in 2023, while overall municipal reliability has fallen to 68%.
Losses within the system are compounding the problem. Almost half of all municipal water, around 47.4%, is lost before it ever reaches consumers or generates revenue.
Participants at a recent Investec–Proparco industry dialogue warned that the window for effective intervention is closing quickly.
Melanie Humphries, head of Investec Sustainable Solutions, said water security has become inseparable from South Africa’s economic future.
“Infrastructure underpins productivity, investment and inclusion. When it works, economies grow. When it fails, it becomes a binding constraint,” she said.
“Water is the crisis that has been building quietly in the background. Too often, it only becomes urgent once systems are already under strain.”
She added that the challenge now is to move decisively from diagnosing the problem to implementing solutions.
The scale of the problem was laid bare earlier this year by the Department of Water and Sanitation.
In February, Director-General Dr Sean Phillips confirmed that South Africa would need to spend about R400 billion to address the maintenance backlog in the country’s worst-performing municipalities.
The government cannot solve the crisis alone
“We’ve estimated that the backlog for water services infrastructure, not only in terms of fixing what’s broken, but also routine or preventative maintenance, is about R400 billion,” he said.
While the figure is daunting, Phillips stressed that the crisis is not driven by a lack of water at national level, but by failures in local management and distribution.
“Nationally, raw water supply is still broadly in balance with demand. The problem lies in how water is managed and distributed locally,” he said.
“Demand is rising through urbanisation and economic growth, while municipal systems suffer losses, pollution and infrastructure neglect.”
He noted that South Africa currently has more than R100 billion in national water infrastructure projects underway, supported by both public and private capital.
However, with around 75% of surface water resources already harnessed, the country must accelerate diversification into groundwater, desalination, water reuse and the treatment of poor-quality sources such as acid mine drainage.
High leakage levels continue to leave major cities vulnerable. Phillips pointed to losses of around 35% in Johannesburg and 25% in Cape Town, combined with insufficient storage and pumping capacity.
The financial health of municipalities has also emerged as one of the biggest threats to reliable water services.
Lubabalo Luyaba, senior water specialist at the World Bank Water Resources Group, said municipalities are owed about R428 billion, while owing creditors roughly R156 billion.
As a result, nearly 59% of municipalities are effectively insolvent. “When municipalities collapse, service delivery collapses—and the economy follows,” he warned.
However, Johann Choux, Proparco’s regional director for Southern Africa and the Indian Ocean, said that there are signs of hope.
He noted that water risk is rising rapidly on corporate and political agendas. “As a long-term financier of infrastructure and climate-related projects, Proparco sees growing interest in investments linked to water resilience,” he said.
Participants agreed that the government cannot solve the crisis alone. Securing South Africa’s water future will require public-private collaboration, new financing models, accelerated infrastructure investment and a fundamental shift in how water is valued and used.
Industry, from property developers and mining companies to manufacturers and commercial operators, will need to invest in recycling, reuse and efficiency measures to reduce pressure on failing municipal systems.
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