South Africa’s economic hub desperately needs R27 billion

Johannesburg Water, the entity that supplies water to the City of Johannesburg’s over 6 million residents, has an over R27 billion critical infrastructure backlog.

This risks worsening already prevalent water supply disruptions, increased pipe bursts, water losses, and inadequate service delivery, potentially leading to a water crisis for Johannesburg’s residents.

On 9 December 2024, the entity’s financial director, Ntshavheni Mukwevho, spoke with Johannesburg Chamber of Commerce and Industry (JCCI) and outlined the state of the country’s economic hub’s crumbling water infrastructure.

He stressed that urgent action is needed to avert an unmitigated disaster.

Mukwevho outlined that Joburg Water’s infrastructure assets have a current replacement value of R125-billion, with a good portion of this supposed to be renewed annually to maintain system functionality. 

However, this is far from the case.

“About 60% of our water infrastructure is beyond its designed lifespan, and the result is frequent pipe bursts, water losses and inefficient supply systems that simply cannot meet the growing demand,” said Mukwevho.

This has resulted in Joburg Water sitting with a backlog of R27 billion for infrastructure upgrades and renewal.

“This is the amount we need to fix ageing pipes, leaking reservoirs, and deteriorating treatment plants,” said Mukwevho.

Mukwevho said that the City of Johannesburg should be investing around R1 billion to meet the pipe renewal target of 1.5%, or 186km of water pipes; but it has not met this target in the last decade.

Beyond the R27 billion needed for immediate upgrades, Mukwevho said that the financial constraints stifling long-term sustainability.

Mukwevho said that Johannesburg Water needs to invest over R3 billion annually over the next 10 years to replace and upgrade infrastructure.

“Without this investment, the situation will only deteriorate further. However, there is a current strain due to operational challenges,” said Mukwevho, adding that the entity’s systems “were never designed” to handle such a large population.

This amount seems a far way away, given that the City’s 2024/25 capital expenditure budget allocates about R290 million (less than 10%) for work on 17 reservoirs and towers.

A big problem that has led to this is the underinvestment in infrastructure maintenance and or upgrades that sees a huge amount of water lost from the system before reaching the taps of residents.

Non-revenue water (NRW) is the volume of water that is pumped but for which the municipality receives no income. The target for municipalities in South Africa is less than 25% but the actual NRW is much higher – currently ~46% in Johannesburg.

Additionally, real or physical water losses (runs to waste) are around 20% over the ideal target.

This translates to a loss of ~ R2.4 billion annually (up R300 million from the previous year).

Joburg Water’s July 2024 turnaround strategy highlights significant challenges in delivering quality water and sanitation services, primarily due to underfunding and inadequate investment in capital projects.

When recently asked, Joburg Water told BusinessTech that “infrastructure theft and vandalism are two of the most prominent and ongoing challenges that Johannesburg Water experiences, which results in substantial losses in terms of service delivery and financial targets and, consequently, the City’s revenue.”

Over 15 years, water pipe bursts increased by 30%, and water reserve capacity fell by 28%, making the system more vulnerable to disruptions.

Cash collection dropped from 86% in the early 2010s to 75% in 2022, and capital expenditure from service charges decreased from 18% to 7%.

Going forward

Mukwevho emphasised the need for government support and community co-operation to tackle the water crisis and avert a potential Day Zero.

“We cannot do this alone. We need financial backing from all levels of government and collaboration with residents to reduce wastage and illegal connections.

“We are facing an uphill battle with ageing infrastructure and huge backlogs. If we do not act decisively and urgently, the situation will worsen, affecting service delivery and residents’ livelihoods,” added Mukwevho.

The Department of Water and Sanitation gave Gauteng municipalities four projects which it said could and should be undertaken immediately to mitigate a water collapse:

• With immediate effect, leaks must be fixed.
• Illegal connections must be disconnected.
• People must be billed correctly.
• The focus must be on pumping enough water to reservoirs for the usage needed (for example, some reservoirs do not need to be filled to supply the area adequately, so the water can be shifted to another area that needs it).

“The situation in Gauteng is self-inflicted… it can change if there is political will,” said Water and Sanitation Minister Pemmy Majodina,

The Johannesburg City Council recently approved a turnaround strategy for Joburg Water.

This strategy gives the entity full accountability for its billing and aims to increase cash collection from 80% to 95% by 2028.

By controlling its revenue and increasing capital expenditure to R3 billion by 2025, Joburg Water aims to improve infrastructure and access additional capital for upgrades.

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