Editing Water supply and sanitation in South Africa (section)

===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>