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Safeguarding water security in South Africa requires decisive fiscal and institutional action to stabilise water boards and protect the entire water sector from systemic collapse. In this context, the Association of Water and Sanitation Institutions of South Africa (AWSISA) fully supports National Treasury’s decision to withhold equitable share transfers from municipalities that are defaulting on their payment obligations to water boards. This unprecedented intervention reflects the gravity of the financial crisis confronting water boards and the urgent need to restore sustainability across the water value chain.
For many years, South Africa’s water boards and sector institutions have operated within a complex and often contradictory policy environment. They are required to function as self-financing entities operating under the Public Finance Management Act (PFMA), while simultaneously fulfilling a developmental mandate that obliges them to supply bulk water to municipalities that are themselves financially distressed. This structural tension has long been recognised but insufficiently addressed.
The outcome has been both predictable and severe. Chronic non-payment by municipalities has resulted in water boards accumulating staggering levels of debt, with outstanding municipal arrears now exceeding R24 billion and continuing to rise as non-payment persists. As revenues have declined, critical maintenance and refurbishment of infrastructure have been deferred, balance sheets have weakened and financial resilience has steadily eroded. For too long, these challenges were treated in isolation, with individual institutions attempting to manage what is, in reality, a systemic failure.
Today, South Africa’s water boards, custodians of bulk water supply and critical infrastructure, are facing an unprecedented financial crisis that threatens their very survival. This mounting debt has not only eroded cash flows, but has also compromised water boards’ ability to meet basic operational obligations, including routine maintenance and debt servicing. Without intervention, the sustainability of several water boards is in jeopardy.
The root of this crisis lies primarily within the municipal tier of government. Many water services authorities continue to grapple with weak governance, dysfunctional billing systems, poor revenue collection and high levels of non-revenue water, which in some cases approach 47 per cent of treated volumes due to leaks and losses. These structural failures severely constrain municipalities’ ability to meet their financial obligations to water boards, entrenching a vicious cycle of declining service delivery, growing arrears and deepening institutional fragility.
The consequences of sustained non-payment are stark. Several water boards, including Vaal Central Water and Magalies Water, face the prospect of exhausting their cash reserves within the next year should current trends persist. This raises the real risk of bankruptcy or the interruption of bulk water services. The collapse of Sedibeng Water Board in 2022, following prolonged municipal non-payment, serves as a sobering warning of what unchecked debt can precipitate.
The erosion of water boards’ financial viability has direct and far-reaching implications for national water security. Water boards are responsible for the treatment, distribution and maintenance of bulk systems serving millions of households, businesses and agricultural users. When they are financially distressed, infrastructure maintenance is deferred, leakages increase and operational reliability deteriorates. In extreme cases, water boards have been unable to pay the Department of Water and Sanitation (DWS) for untreated raw water, further destabilising the broader water value chain.
It is against this backdrop that National Treasury - supported by AWSISA, DWS, Parliamentary Portfolio Committee and the Minister of Water and Sanitation, took the necessary step of withholding equitable share transfers from defaulting municipalities as a mechanism to enforce payment discipline. Early indications suggest that this fiscal intervention is yielding results, with some defaulting municipalities making significant payments towards current invoices. While this measure does not eliminate historical arrears, it sends an unequivocal message that the sustainability of water boards is non-negotiable.
The debt owned by municipalities to water boards is now over R28 billion. Municipal debt to water boards is not a peripheral concern, but an existential threat. When municipalities fail to pay for bulk water, the ripple effects are felt across the system. Water boards are unable to maintain infrastructure, service debt or invest in refurbishment, their creditworthiness deteriorates, and the reliability of water supply to communities is ultimately compromised.
Treasury’s intervention is therefore not punitive, but corrective. It seeks to reinforce fiscal discipline, protect the sustainability of water boards and uphold the public interest, in line with the Constitution, the PFMA and established principles of accountability. It safeguards water boards from financial collapse, secures essential maintenance and infrastructure investment, and ensures continuity of bulk water supply. Crucially, it aligns with the National Water and Sanitation Master Plan, which identifies financial sustainability and institutional reform as prerequisites for water security, and with the National Development Plan’s vision of a capable and developmental state.
This intervention should not be misconstrued as an attack on local government. Water boards are not adversaries of municipalities, but essential partners in service delivery. Their financial viability is fundamental to the ability of municipalities to fulfil their own mandates. Protecting water boards from systemic non-payment is therefore not only fiscally prudent—it is socially just.
The equitable share is an unconditional transfer intended to enable municipalities to fulfil their constitutional mandate, including the provision of basic services. It was never designed to subsidise persistent financial mismanagement or to underwrite non-compliance with legal and contractual obligations. Allowing municipalities to continue receiving equitable share transfers while systematically failing to pay for bulk water undermines the integrity of the intergovernmental fiscal system and weakens cooperative governance.
There is also a compelling ethical dimension to this debate. When financially distressed water boards are forced to absorb unpaid municipal debt, the burden is ultimately shifted onto compliant municipalities, responsible consumers and the state. This creates a perverse redistribution that penalises good governance and rewards persistent non-compliance.
Treasury’s decision, reinforced by the institutional coherence fostered through AWSISA, begins to correct this imbalance. It affirms that equity does not imply the absence of accountability, and that justice in public finance requires consequences for sustained failure to meet obligations.
Most importantly, this intervention protects citizens. Financially stable water boards are better positioned to maintain infrastructure, safeguard water quality and respond effectively to emergencies. Fiscal discipline is therefore not a theoretical concept. It is a practical necessity for reliable and equitable service delivery.
Water security will not be secured through rhetoric, complacency or short-term fixes. It will be secured through strong institutions, enforcement of financial obligations and decisive leadership at every level of government. The time for ambiguity has passed. The financial sustainability of water boards is not a technical matter to be deferred; it is a national imperative that demands collective responsibility and immediate action.
National Treasury’s intervention must therefore be defended, sustained and strengthened. Municipal leadership must treat the payment for bulk water as a non-negotiable obligation, not a discretionary expense. Provincial governments must exercise their oversight responsibilities with greater urgency, and national departments must act in concert to ensure that fiscal transfers reinforce, rather than undermine, service delivery and institutional accountability.
All stakeholders in the water sector - municipalities, water boards, regulators, organised labour, business and civil society - must now rally behind a shared commitment to restore financial discipline and protect strategic water institutions. AWSISA will continue to play its role in fostering institutional coherence, strengthening governance and advocating for reforms that secure the long-term sustainability of the sector.
The choice before us is clear. We can continue to tolerate systemic non-payment and risk the collapse of institutions that underpin public health, economic activity and social stability, or we can act decisively to secure water for current and future generations. Supporting National Treasury’s actions is a fiscal, moral and developmental imperative. The future of South Africa’s water security depends on it.
ABOUT THE AUTHOR
Ramateu Monyokolo is Chairperson of the Rand Water Board and the Association of Water and Sanitation Institutions of South Africa (AWSISA)
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