Editing Water supply and sanitation in South Africa (section)

==Financial aspects==
===Tariff level===
Tariffs include bulk water tariffs charged by water boards to municipalities and retail water tariffs charged by municipalities to users.

'''Bulk water tariffs''' vary greatly. In 2011 the largest water board, [[Rand Water]], charged Rand 3.97 (US$0.48) per cubic meter. The highest bulk water tariff (Rand 9.11 or US$1.10 per cubic meter) was charged by the financially crippled Namakwa Water Board, while the lowest tariff (Rand 2.28 or US$0.28) was charged by the Pelladrift Water Board.<ref>{{cite web|last=allAfrica.com|title=South Africa: Water Tariffs Set to Rise to Reduce Need for Borrowing|url=http://allafrica.com/stories/201005050084.html|access-date=4 August 2011|date=5 May 2010}}</ref>

'''Retail water tariffs''' vary between municipalities and between user categories, with non-residential users being charged higher tariffs than residential users. Typically water tariffs also vary with consumption, with higher tariffs applied to higher consumption. The average retail water tariff in 2006 for a sample of cities and across all consumption levels was estimated to be the equivalent of US$1.06 per cubic meter.<ref name="IBNet"/>

In 2010 '''Johannesburg''' water provided between 6 and 15 cubic meters of water per month for free, depending on the poverty level of residents. For those considered not poor, the tariff for the tranche between 6 and 10 cubic meters was R4.93 (US$0.73), for the tranche up to 15 cubic meters it was R7.31 (US$1.08) and so on until R14.94 (US$2.21) for a consumption exceeding 40 cubic meters per month. The bill for 10 cubic meters per month thus is R20.<ref>{{cite web|last=Johannesburg Water|title=Tariffs|url=http://www.johannesburgwater.co.za/asp/content_sub.asp?id=8&sid=91&pageName=Tariffs|access-date=4 August 2011}}</ref> Poor households have to register themselves as "indigent" (poor), which – according to critics – leads to a situation where only a fraction of the poor receive the higher free basic water allocation to which they are eligible.<ref>{{cite web|last=Coalition Against Water Privatisation|title=City of Johannesburg's proposed water tariff increases and shifts in free basic water allowance escalates the war on the poor|url=http://apf.org.za/spip.php?article300&lang=en|access-date=4 August 2011|date=26 March 2010}}</ref>

In '''Cape Town''' water tariffs for the first block beyond free basic water are slightly lower than in Johannesburg at R4.55 until 10 cubic meters, and the next tranche at R9.7 is broader than in Johannesburg covering until 20 cubic meters per month, with R23,42 charged beyond 50 cubic meters, resulting in a steeper tariff structure. The water bill for 10 cubic meters per month is R18. The sewer charge is 70% of the water charge.<ref>{{cite web|last=Water Rhapsody Conservation Systems|title=Cape Town Water Tariffs for 2010|url=http://www.capewatersolutions.co.za/2010/05/01/water-tariffs-for-2010/|access-date=8 September 2012}}</ref>

'''Durban''' distinguishes between a lower tariff for semi-pressure service for houses in low-income settlements with roof tanks and a higher full pressure service for "formal" housing areas. Semi-pressure service is free until 9 cubic meters, while full-pressure service costs R9.50 per cubic meter until 9 cubic meters per month, and R11.25 until 25 cubic meters. The bill for 10 cubic meters per month is R7 for semi-pressure service and R97 for full-pressure service. There is also a free low-pressure service for ground tanks in informal and rural areas, under which water is pumped once a day to fill a 200 litres ground tank.<ref>{{cite web|last=eThekwini Municipality|title=Water Tariffs as of July 1, 2012|url=http://www.durban.gov.za/City_Services/water_sanitation/Bylaws_Tariffs/Tariffs/Pages/Water_Tariffs_English.aspx|access-date=8 September 2012}}</ref>

===Free basic water===
South Africa has introduced a policy of free basic services, including water, electricity and solid waste collection. As part of that policy, every household is to receive the first 6 cubic meters per month for free. The policy was introduced gradually since 2000 within the means of each municipality.<ref>{{cite web|last=Mike Muller|title=Free basic water – a sustainable instrument for a sustainable future in South Africa|url=http://eau.sagepub.com/content/20/1/67.full.pdf+html|work=Environment and Urbanization 2008, 20:67|access-date=8 September 2012}}</ref> Each municipality decides if free basic water is made available to everyone or only to the poor. Most municipalities provide free basic water to all or almost all their residents. In 2012 the program reached 86% of all households.<ref>Department of Water Affairs:[http://www.dwaf.gov.za/FreeBasicWater/ Free Basic Water Project:Implementation Status], as of 31 August 2012. Retrieved 8 September 2010. Out of 152 water services authorities, 10 provide free basic water to all their residents and 142 to most. The city of [[EThekwini Metropolitan Municipality|eThekwini]] provides free basic water to 99% of households in its service area and the municipalities in the Gauteng area to 90%.</ref>

Based on an average consumption of 5 cubic meters of free water per household and month, an estimated 8 million beneficiary households, and an estimated water supply cost of 4 Rand per cubic meter, the annual cost of the policy can be estimated at 2bn Rand (US$280m). This corresponds to about 0.1% of [[GDP]] in 2011, or about 0.25% of government expenditures. Another estimate puts the cost of free basic water at 5.84 Rand per capita per month, which corresponds to 2.2bn Rand per year.<ref name="WRC Rural"/>

Out of the 32 million people that received free basic water in 2005, almost half, or 15 million, were not poor. Furthermore, many poor in rural areas, who receive limited amounts of water for free through standpipes, do not benefit fully. Those without access to publicly provided water do not benefit at all from the program.<ref>{{cite journal|last=Mosdell, T. and A. Leatt|title=On Tap: A Review of the Free Basic Water Policy|journal=In: Towards a Mean to Live: Targeting Poverty Alleviation to Make Children's Rights Real|year=2005|issue=Children's Institute, University of Cape Town|pages=25}}</ref> The policy is more successful in wealthier municipalities, which have the ability to cross-subsidise water provision for the poor, than in poorer, often rural municipalities. This is one of the reasons why in 2009 the government announced it would review its implementation strategy for free basic water, possibly through registers of poor users.<ref name="GWI">The price of free water in South Africa, in:Global Water Intelligence, August 2009, p. 31</ref>

As part of this review process, Durban has now changed its implementation of the free basic water policy: Households living in properties that are valued above a certain threshold now must prove that their income is below the poverty limit, in order to continue to receive free basic water. The reason for the change was that most of those benefiting from free basic water were not poor. They used less than amount of free basic water – 9 cubic meters per month in the case of Durban – for the simple reason that there were two or less residents in the household.<ref name=Galvin/>

===Affordability===
There is little information available on their affordability, i.e. the share of water bills in household income. If a household consumes less than the free basic water limit, the share is obviously zero. For a household in Cape Town that has no sewer connection and consumes 10 cubic meters of water, the monthly water bill is almost R20 or US$2.40. With the poverty line at R500 per capita and month,<ref>{{cite web|work=Mail & Guardian|title=Poverty and inequality in South Africa|url=https://mg.co.za/article/2011-09-16-poverty-and-inequality-in-south-africa|access-date=8 September 2012|date=16 September 2011}}</ref> the monthly income of a four-person household at the poverty line would be R2000, and the water bill would be 1 percent of income. However, according to another source the poverty level in South Africa was only R1000 per household,<ref name="WRC Rural"/> in which case the share of the water bill would be 2 percent of income, and higher for those living below the poverty line.

===Cost recovery===
In 2010, eleven of the 13 water boards were financially viable. The exceptions were Namakwa and Bushbuckridge water boards. Municipalities owed the water boards more than Rand 1.3bn (about US$200 million). There is little information available on cost recovery at the municipal level, partly because revenues and costs associated with water supply and sanitation are not necessarily accounted for separately in municipal budgets. If Water Services Authorities prepare water and sanitation budgets, asset replacement costs (depreciation) are often not included in budgets.<ref name="WRC Rural"/> Furthermore, the policy of free basic water leads to deficits in the supply of these services. Municipalities cover these deficits in large part through the "equitable share" transfers from national government.<ref>{{cite web|last=Paulina Calfucoy|title=Improving Free Basic Water Provision in South Africa|url=http://www.lafollette.wisc.edu/publications/workshops/2009/southafrica.pdf|publisher=Prepared for the Financial and Fiscal Commission, South Africa|access-date=8 September 2012|pages=11–13|year=2009|display-authors=etal}}</ref>

===Investment===
According to the 2008 Infrastructure Barometer published by [[Development Bank of Southern Africa|DBSA]] and based on figures provided by the National Treasury, total municipal investments in water supply and sanitation in 2007 were 13.4 billion Rand (US$1.9 billion at the 2007 exchange rate), broken down as follows:

* 5.6 billion Rand for water supply by municipalities
* 4.7 billion Rand for sanitation by municipalities
* 1.0 billion Rand for water resources development by Water Boards
* 1.0 billion Rand for water resources development by DWAF
* 1.1 billion Rand for water resources development by the Trans-Caledon Tunnel Authority (TCTA)<ref name="Barometer Financing">{{cite web|last=Development Bank of Southern Africa|title=Infrastructure Barometer 2008, Chapter 5: Water|url=http://www.dbsa.org/feature/Documents/Section%2005%20Water.pdf|access-date=18 August 2012|pages=114–116|archive-date=5 May 2020|archive-url=https://web.archive.org/web/20200505203633/https://www.dbsa.org/feature/Documents/Section%2005%20Water.pdf|url-status=dead}}</ref>

Municipal investments in the sector increased substantially from 2001 when they were about four times less than in 2007 at 2.8 billion Rand.<ref>White Paper 2002, p. 2</ref>

In 2010/11 total spending by the Department of Water Affairs was 8.2 billion Rand, including compensation for employees (1.2 bn), consultants for the design and supervision of civil works (0.6 bn) and investments. Investments include direct expenditures for TCTA and indirect expenditures in the form of transfers to Water Boards and Water Service Authorities (municipalities), mostly for dams, bulk water transfers and water treatment plants. The largest project under construction is the [[De Hoop Dam]] which is part of the Olifants River Water Resources Development Programme that provides water for mining and municipal uses.<ref>Department of Water Affairs: Strategic Plan (Annual Performance Plan) 2011/12 – 2013/14, p. 23–25</ref>

===Financing===
Municipal water and sanitation investments were financed from the following sources in 2003–06:

* 51% through inter-governmental grants;
* 19% through borrowing; and
* 30% through internal cash generation.<ref name="Barometer Financing"/>

The larger municipalities rely more on loans and on internal cash generation, while the smaller ones depend more on grants and other sources of funding. Wealthier municipalities partially finance free basic water through cross-subsidies from non-residential users and local tax revenue.

All municipalities receive a constitutionally mandated share of national tax revenues as an unconditional recurrent grant, called "equitable share". One of its objectives is to offset the cost of free basic water and free basic electricity. The formula provides higher grants to those municipalities that have a high number of poor among those that receive water services. If a municipality increases access to water, its share in the transfers thus also increases. The number of poor is determined through census data, which – according to some municipalities – underestimates the actual extent of poverty.<ref name="WRC Rural">{{cite web|last=The Water Wheel|title=Rural Free Basic Water Under Magnifying Glass|url=https://docs.google.com/viewer?a=v&q=cache:bRQjRsG97l8J:www.win-sa.org.za/index.php%3Foption%3Dcom_docman%26task%3Ddoc_download%26gid%3D70%26Itemid%3D13+Rural+Free+Basic+Water+UnderMagnifying+Glass+south+africa&hl=de&gl=de&pid=bl&srcid=ADGEESjLUIbPHpfdt2Ju-N4FEsi1pIm0jUNKEb_JzjTvqYE2XsndMk03NvxnSLBc8U2I3hALFby-mkac1BrQa9KPrO7eOk7WyVlz4q4I1KHy2D4r56QQLExRof9tF74xvb8H8pbFjw6N&sig=AHIEtbT67gNRHMRzv_mUzsjmhOSUW6-MNg|work=Summary of "Development of Models to Facilitate the Provision of Free Basic Water in Rural Areas (Water Research Commission Report No 1379/1/05)"|access-date=8 September 2012|date=September–October 2005}}</ref>

In the 2012/13 budget the total equitable share was Rand 37.8 billion (US$4.6bn). In addition there is a Municipal Infrastructure Grant (MIG). The MIG programme is aimed at providing all South Africans with at least a basic level of service by the year 2013 through the provision of grant finance to cover the capital cost of basic infrastructure for the poor. In the 2012/13 budget the allocation for MIGs was Rand 13.8 billion (US$1.7 billion). In addition, there is a Capacity Building Grant. All these grants are administered by the Department of Cooperative Governance and Traditional Affairs (formerly the Department of Provincial and Local Government).<ref>{{cite web|last=Department of Cooperative and Traditional Affairs|title=Minister Baloyi's 2012 Budget Vote speech|url=http://www.cogta.gov.za/index.php/component/content/article/244-minister-richard-baloyi/328-minister-baloyis-2012-budget-vote-speech.html|access-date=8 September 2012}}</ref>