South Africa is approaching a critical inflection point in its water system − one that has developed steadily and largely out of public view. According to participants at the Investec-Proparco industry dialogue, the window for effective intervention is narrowing.
Despite being among the world’s 30 most water-scarce countries, South Africans consume an average of 218 litres per person per day − well above the international average of 173 litres. Meanwhile, the deterioration in drinking water quality and service reliability is accelerating: the proportion of municipal water supply systems failing microbiological standards has surged from 5% in 2014 to 46% in 2023, and municipal reliability has fallen to just 68%.
Almost half of all municipal water (47.4%) is lost before it reaches consumers or generates revenue. Ageing infrastructure, failing pipes and mounting municipal debt to water boards are steadily eroding the financial foundations of the water sector nationwide.
This convergence of infrastructure decay, governance failures and unsustainable consumption has pushed water security to the top of the national agenda. Participants at the event warned that South Africa cannot afford to mismanage this moment. Government cannot turn the tide alone. Securing the country’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. In essence, South Africa must start treating water like a currency − and build a national “water bank account” to secure future supply.
Infrastructure at the heart of economic survival
Melanie Humphries, head of Investec Sustainable Solutions, said water security is now inseparable from economic growth. “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. What’s required now is coordinated action that moves from diagnosis to implementation.” She added that water resilience is not only about risk mitigation. “It’s also about unlocking opportunities such as cost efficiencies, operational improvement and potential revenue streams, depending on project design and execution. Collaboration can help explore solutions that may be scaled where conditions allow.”
Crisis now firmly on the business agenda
National supply stable − local systems failing
Dr Sean Phillips, Director-General at the Department of Water and Sanitation, painted the broader picture explaining that nationally, raw water supply is still broadly in balance with demand. The problem lies in how water is managed and distributed locally.
“Demand is rising through urbanisation and economic growth, while municipal systems suffer losses, pollution and infrastructure neglect,” he says. “The national level picture is more encouraging and optimistic than the municipal one. South Africa currently has over R100 billion in national water infrastructure projects underway, supported by both public and private capital.”
With approximately 75% of surface water resources already harnessed, South Africa must accelerate diversification – including groundwater, desalination, water reuse and treatment of poor-quality water sources such as acid-mine drainage.
“Consumption patterns also demand urgent change,” noted Phillips. High levels of leakage – estimated to be around 35% in Johannesburg and 25% in Cape Town – combined with insufficient storage and pumping capacity continue to leave systems fragile.
Municipal finances threaten service delivery
Municipal finances have become one of the most significant risks to reliable water services. According to Lubabalo Luyaba, senior water specialist, World Bank Water Resources Group, municipalities are owed approximately R428 billion, while owing creditors around R156 billion, leaving many unable to sustain basic operations. As a result, nearly 59% of municipalities are effectively insolvent.
“When municipalities collapse, service delivery collapses − and the economy follows,” he said. “However, there is growing momentum to unlock solutions. Government is increasingly calling for greater private-sector participation, supported by World Bank programmes aimed at improving trading services, enabling private investment and restoring trust through collaborative platforms.”
Luyaba added that progress will depend on reform discipline, collaboration and accountability. “Efficiency, public-private partnerships, accountability and investment discipline matter. Water security will only improve if services are paid for, systems are used responsibly, and capital is directed towards projects intended to support long-term service improvement.”
A national responsibility
Participants agreed that securing South Africa’s water future demands collective action. While municipal reforms, licensing of service providers and new utility models are underway, infrastructure investment, financial sustainability and operational competence must accelerate.
Industry has a critical role to play. Property developers, mining houses, manufacturers and commercial operators must invest in recycling, reuse, efficiency measures and alternative supply solutions to ease the burden on municipal systems. The shift is clear: water has moved from a sustainability reporting concern to a core financial and operational risk.
“South Africa’s economic future will be determined by how decisively it confronts the infrastructure challenge at the heart of its water crisis,” Humphries concluded.