Benchmarking efficiency to support a transition to financial sustainability in the South African municipal water sector

ABSTRACT The Republic of South Africa (RSA) is a water-scarce country that faces technical, governance, and financial challenges that threaten municipal water and sanitation services provision. One approach to solving these challenges is the use of analytical work that can simultaneously activate critical stakeholders to act timeously. The authors propose the use of benchmarking of infrastructure management efficiency (IME) and creditworthiness as a novel and cost-effective approach to contribute to addressing the growing crisis in RSA and build consensus for action. The analysis shows that there is generally poor IME (27%), which leads to poor overall creditworthiness (36%), and this ultimately hinders private sector investment in municipal infrastructure. This is despite there being 33% unused borrowing capacity (debt-to-revenue cap is 45% in RSA). We therefore recommend the use of available borrowing space for investments that will improve efficiency (and consequently creditworthiness). The work demonstrates the value of considered benchmarking for optimised water and sanitation services quality improvement, policy environment enhancement, and the optimal use of limited public resources. Future work needs to integrate tariffs as they are a critical lever for affordable access, consumer behaviour management, reasonable investor returns, and effective infrastructure asset management.