SUBMISSION BY RAND WATER TO THE PARLIAMENTARY PORTFOLIO COMMITTEE PROPOSED AMENDMENTS TO THE WATER SERVICES ACT
The current governance processes, for operations within the borders of South Africa, ensure adequate transparency and accountability of Water Boards. The proposed amendments will extend these governance processes to cover extra territorial activities of Water Boards.
3. CURRENT GOVERNANCE PROCESS
Current governance processes embodied in the Water Services Act No 108 of 1997 ("the Water Services Act") ensure that Water Boards do not undertake activities that are not in the water board's business plan or policy statement. Further, the executive authority is currently working on a shareholder compact process that will be reported on in terms of performance and compliance on a quarterly basis. However, Water Boards currently report annually to the executive authority in the form of an annual report. The board of a Water Board has a fiduciary duty to ensure that a Water Board operates within its authorised parameters and that it ensures that the business is viable
Section 54 of the Public Finance Management Act No I of 1999 requires a public l entity to seek approval for commencement of a significant business activity from its executive authority and from treasury. The current proposed section 3 of the bill is somewhat a duplication of this provision except for the fact that it enables extra territorial activities.
The Water Services Act currently requires a Water Board to separate its primary activities from its other activities. Further, that other activities are ring-fenced and to ensure that other activities will not have an adverse financial impact in respect of the Water Board's primary activities. This mitigates any potential risk or exposure to primary activities, thereby ensuring that water services to local government cannot be negatively impacted.
WHY IT IS OF NATIONAL IMPORTANCE FOR RAND WATER TO BE INVOLVED IN AFRICA - THE STRATEGIC IMPORTANCE OF WATER
Water is a basic service, and like all basic services, it is a key driver for socio- economic development, peace, stability and democracy in national contexts. Rand Water, as a government owned entity has over its 101 years history, built up capacity to provide bulk water and sanitation services as the foundation for socio-economic development. This was achieved without seeking either subsidies or guarantees from government and enabled effective development of a significant asset base to provide a basic service without burdening the coffers of the state. South Africa is a key player in the NEPAD programme for the development of Africa. It has a responsibility to share its capacity, knowledge and expertise with the rest of Africa.
In this role, South Africa is a key player in the establishment of peace, stability and democracy in the rest of Africa. In order to enhance South Africa's role as the purveyor of peace, stability and democracy in Africa, it is of paramount importance that South African government owned entities such as Rand Water play an enabling and a forerunner role in the provision of basic water and sanitation services. We believe we should help to build efficient and effective utilities to promote service delivery for Africa and that such utilities should be owned in Africa.
The rationale for Rand Water's enabling involvement in Africa's re-development is related to the strong capacity that Rand Water has built up over its 101 year history. Essentially, this capacity revolves around the design, installation and operation of large scale infrastructure (currently Rand Water has built up over R5bn worth of water purification plant and large diameter distribution pipelines) which would provide clean potable water on a high scale at affordable costs and in a sustainable manner.
Secondly, our capacity with regard to water demand management is of such a nature that organizations like the UNHABITAT programme has partnered with Rand Water to formulate appropriate approaches to address non-revenue water in various parts of the developing world. If applied properly, water demand management has the potential to save and use water in a manner that acknowledges it as a scarce resource, and to increase the revenue potential from water sales by governments. Rand Water firmly believes that this capacity will go a long way in contributing to the socio-political and economic development of Africa if used to support the NEPAD initiatives and to achieve the Millennium Development Goals.
If Rand Water is not allowed to pursue operational activity in support of the development of Africa, then private water companies from Europe and North America will undertake this work. The implication of this is that it will limit the development of African skills, it will limit the employment of African people, and will serve to repatriate profits out of Africa - all of which Africa cannot afford at this crucial stage of its development.
Another advantage for Rand Water to become involved in Africa is that we can use this opportunity to train and develop young African engineers. Given the slow-down of Rand Water's capital expenditure programme due to the consolidation of our infrastructure, there is limited scope to give exposure to young graduate engineers on new projects.
If given the opportunity to operate in Africa, the prospect of major infrastructure developments will present ripe training opportunities for African engineers. If Rand Water is not allowed to operate in Africa, or if its activities are constrained, then the existing engineering skill base, which is nearing retirement age, will be lost to the water industry in Africa.
NEPAD is about Africa's development that is led by Africans. South Africa is a strong partner in Africa's development and therefore cannot be seen to be playing a peripheral role. Likewise, Rand Water, the strongest water utility in Africa has to be seen to be playing a central role in the development of Africa. However, this role must not be seen as an attempt to re-colonize Africa. Rather, it will be a role that will serve to develop the skills base in Africa so that finances and skills are retained in Africa.
Rand Water is already building good relations with amongst other countries, Mozambique, Angola, Zambia, Malawi, Mauritius and the Democratic Republic of Congo. These countries are showing a keen interest in Rand Water and are already seeing the value they can derive from an association with Rand Water.
Finally, it would seem odd, in view of South Africa's role in the development of Africa and that Africa brings its Parliament to South Africa, specifically to Rand Water's area of supply, yet we are shy to allow our capacity and skills to work for the development of Africa. This would seem shameful and ridiculous if we were constrained, or worse still, disallowed.
The ability of Water Boards undertaking extra territorial activities will not have an adverse effect on their ability to perform their primary activities. The current governance processes ensure adequate risk management and should preferably be used to ensure streamlined administration processes to govern extra territorial activities. The bill will enable an extension of existing capabilities in the development of the continent. We believe that all who believe in Africa's development and in particular the role of South Africa in such development should support the well-governed enablement.