REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY Mr. Silas Mbedzi Chief Director Institutional Oversight Department of Water Affairs and Forestry South Africa. WORLD WATER FORUM 5 1

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 2 Presentation Outline 1.Introduction 2.Background 3.Catering for Inequities and the Poor in Regulation 4.Overcoming the Challenges 5.Performance and Alignment to Best Practice 6.Conclusion

“Governments throughout the world engage in three main activities: they tax, they spend, and they regulate, by - Bernard Tenenbaum

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 4

5 Background The core focus areas that underpin water national policy in South Africa Basic Services Effective Water Use Effective water Resource Management Efficient Institutional arrangements

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 6 Water Services The water services sector in South Africa is broadly structured into three tiers. The primary institutional arrangements involved in the provision of water services are the following: DWAF Water Boards/Utilities Municipalities Other Providers Customers Water services Revenue flow Figure 2

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 7 The service delivery backlogs Due to the political history of our country the majority of the backlogs for services occur in the more rural parts of the country where the challenges of providing services are the greatest. The backlog for the provision of water services to all the people of South Africa is a massive challenge for the sector. 5 million people do not have access to adequate water services 18 million people do not have adequate sanitation services.

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 8 Access to Water Resources CMAs allocate water at a catchment management level to ensure access to water Stakeholder participation for communities/stakeholders is critical to decision making and empowerment Twinning project with the Dutch regional water authorities for exchange of experiences Catering for Inequities and the poor in Regulation

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 9 Scope of Regulation and Regulatory Domains Economic regulation (pricing and service standards). Social Regulation (access and subsidies/grants). Environmental/water use regulation (abstraction, use and discharge). Public health regulation (drinking water quality). International Interests.

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 10 Access to Water Services and Regulatory Frameworks (Continued) Social Regulation To ensure that the prescribed social policies of the government are effectively implemented in the context of access to water: The Free Basic Services policy which requires that every poor household receives a minimum of 6kl of water per month free of charge. The Equitable Share grant municipalities which is intended to provide for the provision of free basic services The Municipal Infrastructure Grant to municipalities that is directed at the provision of infrastructure for services.

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 11 Access to Water Services and Regulatory Frameworks (Continued) Social Regulation The regulatory functions associated with social regulation are typically directed at the following; Monitoring outcomes of policy implementation Monitoring performance of institutions Reporting on the performance of performance institutions that are responsible for extending access to services and who receive grants and subsidies..

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 12 Overcoming the Challenges Successes in servicing the poor are possible as evidenced by the example of the city of Durban in South Africa. Free basic services implemented Differing levels of service Rising block tariffs (X subsidies) Low pressure systems and roof tanks Water consumption 50% less than conventional systems Services adequate for basic level of hygiene and health.

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 13 Performance and Alignment to Best Practice Fast track the establishment of CMA’s sequentially so that the mandate and capacity to regulate water resource management issues can be decentralized to the local level where it will be most effective and participatory. South Africa recognizes the importance of having a regulatory framework that is pro poor. It also recognizes the need to ensure sustainable service provision.

REGULATION OF THE WATER SECTOR IN SOUTH AFRICA: DEALING WITH THE REALITIES OF POVERTY AND INEQUALITY 14 CONCLUSION To address issues of poverty and inequality, regulatory frameworks should be designed to facilitate increased and improved access to water and sanitation services, in terms of the availability, affordability, and sustainability of these services. Incentives (or obligations) for the water service provider institutions to extend services; A tariff level and structure that foster access without compromising the financial sustainability of the provider; A flexible approach to service standards and quality in order to give incentives to service providers to experiment with alternative technologies and to cut costs whilst complying with basic quality/service requirements;

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