The busi­ness of wa­ter

The re­source may fall from the sky, but when it comes to har­ness­ing its eco­nomic power, we have chal­lenges to over­come, writes Gayle Ed­munds

CityPress - - Business -

Wa­ter is life. It can also drive eco­nomic growth – or con­strain it se­verely. Recog­nis­ing wa­ter’s in­te­gral role in ad­vanc­ing the in­dus­tri­al­i­sa­tion of South Africa’s econ­omy, the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) has put the de­vel­op­ment and re­ha­bil­i­ta­tion of wa­ter-re­lated in­fra­struc­ture close to its heart.

Lizeka Mat­shekga, the IDC’s di­vi­sional ex­ec­u­tive of agro, in­fra­struc­ture and new in­dus­tries, says the cor­po­ra­tion has re­alised it has to be more “de­lib­er­ate in fo­cus” to drive busi­nesses to think dif­fer­ently about wa­ter.

“When it comes to wa­ter, peo­ple think of it as a nat­u­ral re­source; an act of God. But we must do what we can to catch wa­ter and to also un­lock ex­ist­ing wa­ter ca­pac­ity,” she says.

How­ever, chang­ing con­sumer at­ti­tudes to­wards con­serv­ing what many con­sider to be a free and al­ways avail­able re­source seems to be an enor­mous task.

“Wa­ter sup­ply and sta­ble in­fra­struc­ture is a cat­a­lyst for in­dus­trial de­vel­op­ment,” says Mat­shekga, adding that three of the IDC’s core value chains – agro­pro­cess­ing and agri­cul­ture, metal in­dus­tries, and chem­i­cal in­dus­tries – are re­liant on a sta­ble sup­ply of wa­ter.

“No mat­ter how great a busi­ness pro­posal is, we will only con­sider fund­ing a new min­ing or agri­cul­tur­ere­lated busi­ness if its own­ers have a wa­ter use li­cence.” This is to com­ply with the reg­u­la­tory frame­work. Al­lud­ing to the dev­as­tat­ing drought in the Western Cape, she says this chal­lenge can be suc­cess­fully har­nessed to help drive a shift in at­ti­tudes to­wards the busi­ness op­por­tu­ni­ties it un­cov­ers in the wa­ter sec­tor.

She cites Eskom’s load-shed­ding cri­sis, which ef­fec­tively wiped out the coun­try’s first-quar­ter GDP for 2008, as one of the big­gest chal­lenges in re­cent times that helped trans­form con­sumer at­ti­tudes to­wards pre­serv­ing re­sources.

“Those who didn’t see the value of mount­ing so­lar pan­els on their rooftops sud­denly had to think about where the power to run their busi­nesses op­ti­mally would come from.”

The up­side to this cri­sis, Mat­shekga says, is that it helped to gal­vanise the IDC and pri­vate sec­tor par­tic­i­pa­tion in gov­ern­ment’s re­new­able en­ergy pro­gramme. Hav­ing helped de­risk (re­mov­ing busi­ness risk) the re­new­able en­ergy in­dus­try, the IDC has – in the past six years – com­mited R15.7 bil­lion in sup­port of 31 pro­jects in the depart­ment of en­ergy’s Re­new­able En­ergy In­de­pen­dent Power Pro­ducer Pro­cure­ment Pro­gramme.

While a full-blown wa­ter cri­sis would spell doom for many pro­duc­tive sec­tors of the lo­cal econ­omy, she sees a sil­ver lin­ing.

“We need to en­cour­age com­pa­nies to adopt wa­ter­ef­fi­cient poli­cies and pro­grammes – to see the op­por­tu­ni­ties in re­cy­cling wa­ter, like for use in the mines, or look at how acid mine drainage pro­grammes have un­locked op­por­tu­ni­ties for en­trepreneurs.”

The IDC has since iden­ti­fied op­por­tu­ni­ties for en­trepreneurs look­ing for a break in the wa­ter and san­i­ta­tion man­age­ment space.

It is plan­ning to use agro­pro­cess­ing as a guinea pig to help draw po­ten­tial and ex­ist­ing black in­dus­tri­al­ists to such pro­jects.

“We will be ask­ing par­tic­i­pants in this sec­tor to ap­proach the IDC to help re­place aged in­fra­struc­ture. This is be­cause 60% of the wa­ter in South Africa is used for agri­cul­tural pur­poses, such as for ir­ri­gat­ing crops, and, if the sys­tem is old, wa­ter loss is ex­ten­sive.”

To il­lus­trate just how wa­ter-in­ten­sive agri­cul­ture can be, ac­cord­ing to wa­ter­foot­, it takes a whop­ping 1 222 litres of wa­ter to pro­duce 1kg of mealies, 4 325 litres to pro­duce 1kg of chicken and 2 495 litres for one cot­ton shirt.

One of the big­gest ob­sta­cles to in­cen­tivis­ing com­pa­nies to be­come more sus­tain­able in their use of wa­ter is that the tar­iffs are so low.

“It is a con­straint to get­ting the pri­vate sec­tor to in­vest in up­grad­ing in­fra­struc­ture. Drought causes peo­ple to think about wa­ter dif­fer­ently and we need to change peo­ple’s mind-sets – from wa­ter be­ing free to it be­ing a ne­ces­sity.

“If you con­sider wa­ter to be a com­mod­ity that could un­der­mine the po­ten­tial of your busi­ness, that should change your per­spec­tive and how you use it.”

To pre­pare for a pro­gramme to help peo­ple re­assess how they think about wa­ter and how it af­fects their busi­ness, Mat­shekga says the IDC has spent the past two years scop­ing out the ex­ter­nal en­vi­ron­ment. It has ex­plored acid mine drainage op­por­tu­ni­ties with pri­vate sec­tor de­vel­op­ers an has looked at de­sali­na­tion op­por­tu­ni­ties with mu­nic­i­pal­i­ties. It is also co­op­er­at­ing with man­u­fac­tur­ers who wish to use wa­ter more ef­fi­ciently, and is look­ing for quick wins in the area of wa­ter in­fra­struc­ture.

An ex­am­ple of a sim­ple fix is a youth-owned com­pany that the IDC funded. This com­pany makes a valve that stops toi­let cis­terns from leak­ing – all it does is stop the toi­let from fill­ing up past at a set level. It is both a quick fix and a pre­ven­ta­tive mea­sure.

Mat­shekga makes it clear that, when it comes to max­imis­ing our wa­ter us­age across the spec­trum, any­thing that ful­fils the IDC’s man­u­fac­tur­ing man­date will be con­sid­ered. The IDC is also de­vel­op­ing pro­grammes in place to en­sure that com­pa­nies that are heavy wa­ter users are more ef­fi­cient.

Usu­ally, Mat­shekga ex­plains, it takes 10 to 15 years for in­vestors to reap div­i­dends from a big in­fra­struc­ture pro­ject, which is why the struc­ture of the IDC’s pack­ages are aimed at in­clud­ing tra­di­tion­ally ex­cluded groups – black in­dus­tri­al­ists, young­sters and women.

To re­duce the bar­ri­ers to en­try, the cor­po­ra­tion is working on struc­tur­ing fund­ing prod­ucts that un­lock ben­e­fits for tar­geted par­tic­i­pants dur­ing the en­gi­neer­ing, pro­cure­ment and con­struc­tion phases of the long-term in­fra­struc­ture pro­jects, as well as dur­ing the op­er­a­tions and main­te­nance phases. In this way, it cre­ates ben­e­fits for par­tic­i­pants from in­cep­tion, rather than ex­pect­ing busi­nesses to lock up cap­i­tal for up­wards of a decade.

The other role the IDC will play is in fa­cil­i­tat­ing the par­tic­i­pa­tion of the pri­vate sec­tor in solv­ing the chal­lenges that an in­se­cure wa­ter sup­ply presents. Get­ting busi­ness to work with gov­ern­ment on solv­ing wa­ter sup­ply prob­lems will also have the ef­fect of tak­ing some of the strain off gov­ern­ment when it comes to ful­fill­ing its man­date to sup­ply wa­ter to all South Africans as a ba­sic hu­man right.

Although the IDC hasn’t yet had as much up­take in the in­vest­ment of bulk wa­ter in­fra­struc­ture as it had hoped, Mat­shekga sees op­por­tu­nity. Just as in­suf­fi­cient power sup­ply was a risk to the econ­omy that the IDC helped busi­nesses trans­form into an op­por­tu­nity, so wa­ter has the same po­ten­tial. It can kick-start new ven­tures and drive in­no­va­tion, which, in turn, will grow the econ­omy and see more peo­ple get jobs.

“Au­thor­i­ties in the Western Cape re­cently an­nounced plans to part­ner with the pri­vate sec­tor to cre­ate a short­term emer­gency wa­ter sup­ply us­ing de­sali­na­tion, storm wa­ter cap­ture or aquifer ex­trac­tions as a stop­gap to ease the cri­sis in that re­gion. These are op­por­tu­ni­ties for busi­ness to solve a prob­lem and, in the process, fa­cil­i­tate the creation of jobs,” she says.


COM­MIT­TED The IDC’s Lizeka Mat­shekga says there are many op­por­tu­ni­ties for en­trepreneurs to help fix the wors­en­ing wa­ter sit­u­a­tion in the coun­try

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