The financial situation of many South African water boards is dire, largely due to non-payment by municipalities, and some boards are at risk of bankruptcy. Here is a summary:

Municipal debt to water boards has risen dramatically, reaching R22.36 billion by June 2024, a 151% increase from 2019. This debt threatens the stability of water boards, particularly Vaal Central Water and Magalies Water, which could face bankruptcy within 6 to 12 months.

Several factors contribute to this debt, including:

○ Ineffective municipal billing and revenue collection

○ High unemployment, hindering residents’ ability to pay for water

○ Non-revenue water (water lost before reaching customers) due to leaks and illegal connections

○ Disputes over historical debts

The consequences of water board bankruptcies would be severe, including:

○ Disruption of water services to all customers, even those who pay their bills

○ Deterioration of service quality due to cuts in essential expenditures like infrastructure maintenance

○ A strain on the national budget as the national government would likely need to provide ongoing subsidies to prevent total collapse

Various efforts are underway to address the crisis, including:

○ Standardized debt collection and credit control processes developed in collaboration with National Treasury

○ A debt relief mechanism, like Eskom’s, is being finalized, conditional on municipalities paying their current invoices

○ Engagement with municipalities and provincial governments to secure payment commitments

○ Exploration of alternative funding solutions and budget reprioritization within the Department of Water and Sanitation

○ Consideration of using the Division of Revenue Act to prioritize water board payments from municipalities’ equitable share

It is important to note that not all water boards are in dire straits. Some, like Rand Water and uMngeni-uThukela Water, are in better financial condition but are experiencing declining payment levels from municipalities.

Ratepayers Revolt believes that current efforts to address the crisis are misguided, suggesting a lack of understanding of the underlying issues. They argue that the crisis is unlikely to be resolved unless a new approach is taken.