TURNING THE RIGHT TAPS FOR GROWTH CRUCIAL

THE aloe plant made another appearance in the Budget speech this year, meant to symbolise an ongoing challenge in our country – growth – and emphasising that, like the aloe, growth will be slow, long-lived and resilient to water scarcity – “for the Aloe Ferox to grow to its full potential, we need to do things that help in the medium to long run”.

A long-term view supported by an economic resilience strategy is therefore key. Minister of Finance Tito Mboweni went on to mention the importance of the right amount of water, and how our money must be invested properly. The government would inject R10 billion into the infrastructure fund over the next three years to support the R200bn capacity that is to be built under the Development Bank of South Africa.

The National Treasury document, “Economic Transformation, Inclusive Growth and Competitiveness” offers some appreciation for the tautomeric relationship between water and the economy. The economy must invest in water security to enable further economic growth. The document cites the 2019 Budget review, noting that water infrastructure projects have been allocated R90.4bn between 2019/2020 and 2021/22.

That number is now R106.9bn, allocated for the term 2020/21 to 2022/23, in spite of the fact that the National Water and Sanitation Masterplan is costed at over a trillion rand. Recognising this, the government has touted the idea of not only private sector participation in the water sector, but now also private sector funding.

The downgrade of South Africa’s investment rating by Moody’s recently to sub-investment grade, as well as the further downgrade by Fitch Ratings, presents serious constraints to the government’s own fiscal plans to fund water infrastructure. The impact of the downgrade is expected to be prolific.

The Water Masterplan’s comprehensive approach to realise a better water security future for South Africa is driven by a funding model that is highly susceptible to the Sovereign Credit Rating. Large infrastructure projects like Lesotho Phase II and the Umzimvubu Dam have debt capital funding models, with state guarantees.

The contagion effect of a subinvestment grade rating is obvious and puts both the institutions as well as the projects at the mercy of the markets and the DFIs. This puts both our ability to deliver on the social projects, like the SDGs, as well as make water available for economic growth and development, at risk.

Then there is the second domain of new technologies and innovations. The 4IR toolbox has the potential to take our planning, monitoring and control systems to a completely new level. Earth observation and remote sensing combined with smarter management of Big Data will enable real-time water and wastewater management prompting efficiency of use, better sustainable access and much higher levels of water security.

The Brown Revolution with new waterless and low water toilet systems feeding into non-sewered decentralised waste treatment will not only ensure South Africa’s ambition to meet the goal of universal access to safe and dignified sanitation, but also has the potential for us to supply a global market whose current shortfall in sanitation access is upward of two billion people.

If we add to this the science that is enabling the beneficiation of human waste to produce high value products – energy, chemicals, proteins and lipids – we have the genuine possibility of a new industrial platform with high performing businesses feeding a global market and creating new jobs and livelihoods and jobs for millions of South Africans. These have already been recognised as priorities in the Industrial Policy Action Plan. But, to get these off the ground requires investment – substantive investment – local and foreign with potentially high returns. This enterprise is greatly affected by the knock-on effects of a sub-investment grade sovereign credit rating.

The Aloe Ferox may be a species in danger. What is true, though, from Mboweni’s formulation is the need to invest our money wisely. If this is to be true in water, a more robust and collaborative strategy is needed. This may include a much more dramatic review of our institutional framework.