WEBVTT

1
00:00:00.380 --> 00:00:04.522
You're listening to Strictly Business
Podcast with Lindsay Williams.

2
00:00:05.462 --> 00:00:12.325
I think it was a few decades ago a book
was written about water and I think the

3
00:00:12.325 --> 00:00:14.325
whole subject of the book was the next
world war would be

4
00:00:14.325 --> 00:00:16.325
fought over water.

5
00:00:16.325 --> 00:00:20.309
Well I don't know about that but certainly
there seems to be a growing global water

6
00:00:20.309 --> 00:00:22.309
crisis and certainly

7
00:00:22.309 --> 00:00:22.490
South Africa is part of that crisis.

8
00:00:22.830 --> 00:00:27.012
Let's find out why and what can be done
about it with Chapiri Mwedi.

9
00:00:27.532 --> 00:00:31.773
Managing Director, SA Infrastructure at 91
in Cape Town.

10
00:00:31.813 --> 00:00:33.774
Is it bad in South Africa, Chapiri?

11
00:00:34.954 --> 00:00:36.194
Well, it's very serious.

12
00:00:36.234 --> 00:00:40.256
It's extremely serious and the issues are
very much systematic.

13
00:00:40.996 --> 00:00:47.178
So I think most people would know that
South Africa is already a very

14
00:00:47.178 --> 00:00:49.178
water-stressed country.

15
00:00:49.178 --> 00:00:49.938
In fact, in a recent webinar,

16
00:00:50.719 --> 00:00:55.400
the DG of the Water and Sanitation
Department indicated that

17
00:00:56.020 --> 00:01:01.063
The water supply is currently imbalanced
with existing demands on a national scale.

18
00:01:01.724 --> 00:01:08.529
However, beyond that, the real issue that
we have is how efficient is the system,

19
00:01:08.529 --> 00:01:10.529
the system has become,

20
00:01:10.529 --> 00:01:16.174
with nearly half of all the treated water
being lost through non-revenue water, that

21
00:01:16.174 --> 00:01:18.174
is through leaks,

22
00:01:18.174 --> 00:01:20.857
through theft, through poor billing and
also some metering issues.

23
00:01:21.597 --> 00:01:25.560
So access is also uneven, particularly
when you compare you

24
00:01:25.920 --> 00:01:29.402
the urban areas to the rural areas as well
as the township.

25
00:01:29.982 --> 00:01:33.623
So the challenge is that it isn't just
about having enough water.

26
00:01:33.923 --> 00:01:40.726
It's about whether that infrastructure is
getting the water reliably to the people

27
00:01:40.726 --> 00:01:42.726
and to the industries

28
00:01:42.726 --> 00:01:44.726
where it's needed.

29
00:01:44.726 --> 00:01:48.690
I've got a person that I interview a
couple of times a week, Chipiri, and he's

30
00:01:48.690 --> 00:01:50.690
very well known.

31
00:01:50.690 --> 00:01:55.076
I won't tell you who it is, but he lives
in the northern suburbs of Johannesburg,

32
00:01:55.076 --> 00:01:57.076
and very regularly he said, Says Lindsay,

33
00:01:57.076 --> 00:01:57.797
I didn't have water for four to five hours
this morning.

34
00:01:57.817 --> 00:02:02.499
I look out my window and there's water
pouring out of a water main and running

35
00:02:02.499 --> 00:02:04.499
down the street.

36
00:02:04.499 --> 00:02:05.440
And I think of him and I think of his
privileged position.

37
00:02:05.680 --> 00:02:07.400
And then I think of the rural areas.

38
00:02:07.680 --> 00:02:10.081
And it seems to me that it's across the
country.

39
00:02:10.141 --> 00:02:13.782
And you've sort of confirmed that in your
commentary just now.

40
00:02:15.583 --> 00:02:19.024
No, it is indeed across the country.

41
00:02:19.948 --> 00:02:26.254
And I think one of the challenges in the
rural areas, for example, where in the

42
00:02:26.254 --> 00:02:28.254
village where I grew up, where I come
from,

43
00:02:28.254 --> 00:02:33.601
in terms of, you know, the government
statistics, they will say there's existing

44
00:02:33.601 --> 00:02:35.601
pipelines, piped water coming to the
houses.

45
00:02:35.601 --> 00:02:39.686
But the reality is that no water has been
flowing in those pipes for probably

46
00:02:39.686 --> 00:02:41.686
decades.

47
00:02:41.686 --> 00:02:41.808
So I think.

48
00:02:42.272 --> 00:02:49.198
The measure itself as well can be a bit
misleading to who has access to water and

49
00:02:49.198 --> 00:02:51.198
who doesn't have access

50
00:02:51.198 --> 00:02:53.198
to water.

51
00:02:53.198 --> 00:02:57.364
You know, it's being elevated to a
national conversation because this problem

52
00:02:57.364 --> 00:02:59.364
is suddenly now flowing to the urban

53
00:02:59.364 --> 00:03:03.209
areas, as you are indicating with your
friend who's always complaining from

54
00:03:03.209 --> 00:03:05.209
Johannesburg that they don't have water.

55
00:03:05.209 --> 00:03:06.992
The rural areas have been living like this
all their lives.

56
00:03:08.473 --> 00:03:11.055
Yeah, so that's a sobering sentence you've
just given me.

57
00:03:11.956 --> 00:03:14.697
And when I think of a water crisis in
South Africa, I think of two things.

58
00:03:14.717 --> 00:03:18.278
I think, well, maybe it's climate change
and the weather patterns are changing.

59
00:03:18.498 --> 00:03:22.799
So some areas are getting water that don't
need them and some areas that do don't,

60
00:03:22.799 --> 00:03:22.959
etc.

61
00:03:23.539 --> 00:03:29.861
And also, I think of the mismanagement of
the water infrastructure, not just by the

62
00:03:29.861 --> 00:03:31.861
current administration,

63
00:03:31.861 --> 00:03:33.042
but also previous administrations that
have just neglected it.

64
00:03:33.782 --> 00:03:36.883
Is there a case to be made for both of
those arguments, Chapiri?

65
00:03:36.884 --> 00:03:41.584
No, there's definitely a case to be made
for both arguments.

66
00:03:41.764 --> 00:03:46.067
I don't think anyone can deny the impact
of climate change.

67
00:03:46.728 --> 00:03:52.292
I think one of the biggest examples of
that was Day Zero in Cape Town a few years

68
00:03:52.292 --> 00:03:52.432
ago.

69
00:03:53.133 --> 00:03:59.158
The Western and Eastern Cape towards the
Garden Route have been experiencing severe

70
00:03:59.158 --> 00:04:01.158
droughts,

71
00:04:01.158 --> 00:04:02.100
whereas the other areas in the north are
having flooding.

72
00:04:02.841 --> 00:04:08.546
So recently, if you look at the Limpopo
Basin, look at the places like

73
00:04:09.206 --> 00:04:11.088
Venda, like Giani.

74
00:04:11.704 --> 00:04:15.047
You look at the Kruger National Park and
some parts of Mpumalanga,

75
00:04:15.147 --> 00:04:19.490
they've had way so much rain that there
was flooding.

76
00:04:19.530 --> 00:04:21.792
It was a crisis course, didn't open on
time.

77
00:04:21.812 --> 00:04:24.174
So climate change, we cannot refuse that
it's here.

78
00:04:24.314 --> 00:04:25.014
It is here.

79
00:04:25.134 --> 00:04:30.398
If you look at Deben over the last five
years, they've made a lot of instances of

80
00:04:30.398 --> 00:04:32.398
flooding,

81
00:04:32.398 --> 00:04:37.484
which also continues to damage, you know,
the already, you know, challenged

82
00:04:37.484 --> 00:04:39.484
infrastructure.

83
00:04:39.484 --> 00:04:39.786
of water that we have in the country.

84
00:04:39.846 --> 00:04:43.730
So there is a case of climate change that
is impacting the water sector.

85
00:04:44.311 --> 00:04:47.674
However, on the other hand, there's also
an issue,

86
00:04:47.734 --> 00:04:52.179
a case for poor management of that same
infrastructure.

87
00:04:52.700 --> 00:04:59.226
Some of the water infrastructure that we
have in the country is as old as from the

88
00:04:59.226 --> 00:05:01.226
1970s and without any...

89
00:05:01.238 --> 00:05:03.519
refurbishment and rehabilitation.

90
00:05:04.160 --> 00:05:10.663
And if that is mixed with municipalities
that are not allocating sufficient funding

91
00:05:10.663 --> 00:05:12.663
to the

92
00:05:12.663 --> 00:05:14.725
maintenance of already that very old
infrastructure,

93
00:05:15.245 --> 00:05:18.267
then things start to fall apart in some
areas.

94
00:05:18.807 --> 00:05:23.389
So I think, you know, both cases are
affecting South Africa.

95
00:05:24.230 --> 00:05:27.847
But I think You know, in most of the
areas, especially inland,

96
00:05:27.927 --> 00:05:34.589
it's mostly the impact of the
municipalities not doing what they're

97
00:05:34.589 --> 00:05:36.589
supposed to do with their water
infrastructure and

98
00:05:36.589 --> 00:05:38.589
delivering water to the people.

99
00:05:38.589 --> 00:05:43.951
Of course, you've touched on anyway the
social impact of water that is just simply

100
00:05:43.951 --> 00:05:45.951
not getting

101
00:05:45.951 --> 00:05:47.951
to people that need it.

102
00:05:47.951 --> 00:05:49.951
And that's been a case for decades now.

103
00:05:49.951 --> 00:05:50.193
But also we've got to think about
investors.

104
00:05:50.233 --> 00:05:53.134
And again, when I think of a water
shortage, I think of an industry.

105
00:05:53.454 --> 00:05:55.056
that uses a lot of water.

106
00:05:55.057 --> 00:05:58.999
It might be a mining industry, it might be
a chemical industry, I don't know.

107
00:05:59.199 --> 00:06:04.044
But what does it matter that there's a
water crisis looming in South Africa for

108
00:06:04.044 --> 00:06:06.044
investors?

109
00:06:06.086 --> 00:06:12.872
I think it matters because, you know,
water is one of the co-enabling

110
00:06:12.872 --> 00:06:14.872
infrastructure in the country.

111
00:06:14.872 --> 00:06:17.697
Without water, you know, they always say
water is life.

112
00:06:17.857 --> 00:06:18.998
So without water.

113
00:06:19.626 --> 00:06:26.149
Not much can happen, whether it's your
mines, whether it's your industries,

114
00:06:26.149 --> 00:06:28.149
whether it's us as people,

115
00:06:28.149 --> 00:06:28.170
we cannot really live without water.

116
00:06:28.910 --> 00:06:32.492
So I think, you know, what we are seeing
in the sector,

117
00:06:32.672 --> 00:06:37.574
especially post the 2026 State of the
Nation address,

118
00:06:37.794 --> 00:06:40.876
as well as the budget in February,

119
00:06:41.476 --> 00:06:46.038
what we saw was water being elevated to
the national.

120
00:06:46.606 --> 00:06:53.288
discussion similar to what they had done
with the energy sectors when we had a lot

121
00:06:53.288 --> 00:06:55.288
of you know load

122
00:06:55.288 --> 00:06:57.288
shedding.

123
00:06:57.288 --> 00:07:01.310
So now I think with the establishment of
the National Water Crisis Committee a

124
00:07:01.310 --> 00:07:03.310
number of reforms going into that

125
00:07:03.310 --> 00:07:07.852
sector like the establishment of the
National Resource Implementation, Water

126
00:07:07.852 --> 00:07:09.852
Resource Implementation Agency,

127
00:07:09.852 --> 00:07:14.474
Water Partnership it's starting to become
a national agenda point that this issue is

128
00:07:14.474 --> 00:07:14.934
a

129
00:07:14.934 --> 00:07:15.214
crisis.

130
00:07:15.674 --> 00:07:20.679
However, with that, the flip coin to the
investor is that it creates opportunities.

131
00:07:21.039 --> 00:07:24.542
This is how also in energy you saw that
once, you know,

132
00:07:24.562 --> 00:07:28.466
those discussions came at a national level
and, you know,

133
00:07:28.726 --> 00:07:35.572
the politicians started to think about the
structural reforms of that sector, the

134
00:07:35.572 --> 00:07:37.572
investment followed.

135
00:07:37.572 --> 00:07:41.578
So for the investors, there's a big
opportunity that we see coming through.

136
00:07:42.570 --> 00:07:49.455
These reforms that are going on in the
water sector and those investments are not

137
00:07:49.455 --> 00:07:51.455
only in the raw and bulk

138
00:07:51.455 --> 00:07:53.455
transfer infrastructure,

139
00:07:53.455 --> 00:07:57.661
we see a lot of possibilities in terms of
the downstream value chain of the water

140
00:07:57.661 --> 00:07:59.661
sector,

141
00:07:59.661 --> 00:08:04.086
in the water treatment works, in the
reticulation infrastructure around the

142
00:08:04.086 --> 00:08:06.086
municipalities,

143
00:08:06.086 --> 00:08:09.310
in non-revenue water initiatives and other
initiatives that will require funding.

144
00:08:09.906 --> 00:08:13.987
to be delivered through investment into
infrastructure.

145
00:08:14.547 --> 00:08:17.288
There's so many problems, but what I'd
like you to do, if you would,

146
00:08:17.488 --> 00:08:23.890
is identify the biggest problems and then
move from sort of pessimism to optimism by

147
00:08:23.890 --> 00:08:23.950
looking at the

148
00:08:23.950 --> 00:08:26.351
opportunities in the system, if you would,
Shapiri.

149
00:08:27.431 --> 00:08:28.451
Thanks for that question.

150
00:08:28.852 --> 00:08:34.313
So for me, one of the, maybe the two or
three biggest issues, I think,

151
00:08:35.694 --> 00:08:37.194
you know, the raw water.

152
00:08:37.994 --> 00:08:40.255
And the bulk transfer infrastructure,

153
00:08:40.555 --> 00:08:47.017
they're in a way already bankable with
organizations like the TCTA

154
00:08:47.197 --> 00:08:49.117
driving investment in that sector.

155
00:08:49.637 --> 00:08:54.499
Where the opportunity lies is where the
municipality is responsible.

156
00:08:54.619 --> 00:09:01.121
So the water treatment works, the waste
treatment works, the non-revenue water,

157
00:09:01.201 --> 00:09:03.401
the rehabilitation of those pipes.

158
00:09:03.801 --> 00:09:05.722
That's where the opportunities lie.

159
00:09:06.102 --> 00:09:11.924
I mean, if you look at the reports by the
Department of Water and Sanitation,

160
00:09:12.005 --> 00:09:14.546
it's estimated that about 47%

161
00:09:14.666 --> 00:09:20.208
of the potable water produced in this
country is lost through non-revenue water.

162
00:09:20.728 --> 00:09:27.031
So we see a lot of projects and pilots
being developed specifically to

163
00:09:27.211 --> 00:09:29.672
address those kind of issues.

164
00:09:30.192 --> 00:09:34.434
Because if you don't need to, it's much
more expensive to implement.

165
00:09:35.134 --> 00:09:38.498
large raw water dams, raw water projects,

166
00:09:38.898 --> 00:09:45.625
than to fix what you already have in the
municipalities and make sure that you just

167
00:09:45.625 --> 00:09:47.625
cut down on those losses.

168
00:09:47.625 --> 00:09:48.849
Even if it's a 10% reduction, it's still

169
00:09:49.349 --> 00:09:53.213
10% more water the municipalities can sell
to the people.

170
00:09:53.794 --> 00:09:57.238
There is also an opportunity with regards
to the way...

171
00:09:58.210 --> 00:10:01.992
The Department and National Treasury are
thinking about restructuring,

172
00:10:02.032 --> 00:10:07.494
starting from the metros in the way water
entities within municipalities operate.

173
00:10:08.114 --> 00:10:14.677
There's an initiative that was launched
this year where there's a grant that

174
00:10:14.677 --> 00:10:16.677
National Treasury has

175
00:10:16.677 --> 00:10:21.760
created to incentivize municipalities to
start to re-influence that water they

176
00:10:21.760 --> 00:10:21.899
collect

177
00:10:21.899 --> 00:10:25.541
from the revenue they collect for water
and sanitation.

178
00:10:25.661 --> 00:10:26.482
in that way.

179
00:10:27.762 --> 00:10:34.228
It means that, you know, it will be easier
to implement projects as the lenders and

180
00:10:34.228 --> 00:10:36.228
investors can see the flow

181
00:10:36.228 --> 00:10:38.228
of revenue into that

182
00:10:38.228 --> 00:10:42.136
sector and how it can be utilized to repay
any investment that will be made into that

183
00:10:42.136 --> 00:10:42.216
sector.

184
00:10:42.677 --> 00:10:49.663
So there's a lot of opportunities coming
from municipal side, but I think maybe it

185
00:10:49.663 --> 00:10:51.663
will take time because reforms,

186
00:10:51.663 --> 00:10:51.846
you know, they are announced to this year.

187
00:10:52.914 --> 00:10:59.898
They will still take a bit of time before
it becomes the norm, it becomes the way

188
00:10:59.898 --> 00:11:01.898
South African does things in the sector.

189
00:11:01.898 --> 00:11:06.342
When you put all this together, Jipiri, I
personally think to myself, this is a risk

190
00:11:06.342 --> 00:11:06.421
story.

191
00:11:06.422 --> 00:11:13.146
I mean, I sort of lean towards pessimism,
so I think this is a risk story for the

192
00:11:13.146 --> 00:11:15.146
country at the macroeconomic level,
government level,

193
00:11:15.146 --> 00:11:15.867
right down to the socioeconomic level.

194
00:11:16.167 --> 00:11:20.590
But on the other hand, you've also brought
in an opportunity factor here.

195
00:11:20.926 --> 00:11:22.426
And there's an investment opportunity.

196
00:11:22.947 --> 00:11:26.508
Is it a tale of two stories there, risk
and opportunity?

197
00:11:28.588 --> 00:11:29.288
Definitely.

198
00:11:29.288 --> 00:11:32.969
I mean, you know, any infrastructure
projects,

199
00:11:33.049 --> 00:11:38.271
any infrastructure development inherently
has a risk that it comes with.

200
00:11:38.731 --> 00:11:42.792
And I think the water sector, what I've
spoken to, obviously, it's, you know,

201
00:11:42.892 --> 00:11:48.934
it's the structural risk in terms of the
way municipalities operate or are managing

202
00:11:48.934 --> 00:11:50.934
the system.

203
00:11:50.934 --> 00:11:54.868
So for me, you know, when you consider the
reforms that are coming through,

204
00:11:55.588 --> 00:12:02.131
it's slowly turning that risk into
opportunity for a lot of investors.

205
00:12:02.831 --> 00:12:09.654
And I think, you know, it's something that
91 is keenly following and keenly, you

206
00:12:09.654 --> 00:12:10.094
know,

207
00:12:10.094 --> 00:12:16.637
anticipating that it will start to see a
number of projects coming through from the

208
00:12:16.637 --> 00:12:16.737
market

209
00:12:16.757 --> 00:12:18.798
given as a result of those.

210
00:12:19.018 --> 00:12:20.960
reforms instead of the usual

211
00:12:21.480 --> 00:12:26.685
TCT, air and water type of investment that
were being done in the country.

212
00:12:27.105 --> 00:12:32.229
So I think it's beginning to become
exciting in that, you know,

213
00:12:32.349 --> 00:12:38.615
investors in the private sector will start
to play a bigger and bigger role into

214
00:12:38.615 --> 00:12:40.615
investing in this really

215
00:12:40.615 --> 00:12:42.615
challenged sector in the country.

216
00:12:42.615 --> 00:12:44.615
I don't think it's perfect.

217
00:12:44.615 --> 00:12:47.102
I don't think any sector where you've got
government and it's not entirely...

218
00:12:48.142 --> 00:12:50.264
It's not entirely private will be perfect,

219
00:12:50.404 --> 00:12:56.688
but I think those risks can be mitigated
to an extent where investors can start to

220
00:12:56.688 --> 00:12:58.688
play a role.

221
00:12:58.688 --> 00:12:59.730
Sounds as though we need to do another
podcast quite soon, Jipiri.

222
00:12:59.770 --> 00:13:01.091
Thank you very much for your time.

223
00:13:01.151 --> 00:13:02.072
Interesting subject.

224
00:13:02.552 --> 00:13:07.736
That was Jipiri Mwedi, Managing Director,
SA Infrastructure at 91 in Cape Town.

225
00:13:08.757 --> 00:13:15.701
The views and opinions expressed in these
podcasts are those of Lindsay Williams and

226
00:13:15.701 --> 00:13:17.701
various contributors and do not reflect
the policy,

227
00:13:17.701 --> 00:13:20.215
position, or opinion of any other agency,
organization, employer,

228
00:13:20.536 --> 00:13:24.397
or company associated with Strictly
Business Podcast.com.

229
00:13:24.857 --> 00:13:31.820
Assumptions made on the analyses are not
reflective of the position of any other

230
00:13:31.820 --> 00:13:33.820
entity other than the speaker or the
author.

231
00:13:33.820 --> 00:13:38.003
And since we are critically thinking human
beings, these views are always subject to

232
00:13:38.003 --> 00:13:40.003
change, revision,

233
00:13:40.003 --> 00:13:40.144
and rethinking at any time.

234
00:13:40.464 --> 00:13:42.865
Please do not hold us to them in
perpetuity.
