An Appraisal of Water Infrastructure Projects’ Financing Challenges in South Africa

Abstract

Purpose-Targets set out by state institutions, with respect to supplying water to deprived communities, seem to be idealistic and not realistic. Study envisioned to assess challenges of financing water infrastructure projects, and determines the role of the state towards infrastructure development by holistically planning and engaging with the private sector. Design/Methodology/Approach-The study adopted a quantitative approach, whereby a questionnaire survey was conducted among different stakeholders involved in water infrastructure projects in South Africa. Data gathered were analysed using percentages, mean item score and standard deviation. Findings-The study revealed that most challenges affecting the success of the financing of water infrastructure projects in South Africa are corruption, hostility towards private participation, cost recovery constraints, high fiscal deficits by state government, unreliable planning and procurement processes, and a rapid increasing number of municipalities that lack technical and administrative capacity to plan implement, operate and maintain water assets. Research Limitations/Implications-This research paper investigates projects' financing challenges with a broad inspection on the role of the public sector. The apparent role of the international structures such as OECD, IMF and World Bank had no influence in the study. From the findings, it is clear that the central government and state institutions lack the necessary resources to accelerate infrastructure development, water infrastructure in particular. The study, thus, recommends a complete expansion and development of state capacity as well as improved collaborations with the private sector to drive the success delivery of services to the public. Originality/Value-Improved and flexible regulations and legislative guidelines are required to ensure that both sectors fulfil their side of the bargain, with an ultimate goal of meeting the predetermined targets of supplying adequate water to the deprived communities.

Exploring constraining factors for use of private sector finance in delivery of public sector infrastructure in Tanzania: A qualitative study

“…Several studies (Dithebe et al, 2019a;Fay et al, 2021) have reported on the importance of infrastructure development and how public-private partnerships (PPPs) might be used as a vehicle for delivering SI in both developed and developing economies. However, to date, the majority of the studies have focused more on the critical success factors, (Osei-Kyei and Chan, 2015), drivers ((Janssen et al, 2016;Babatunde andPerera, 2017), andbarriers (Osei-Kyei, andChan, 2017) to the implementation of the PPPs.…”

“…Similarly, a number of studies have been undertaken in developing countries aimed at exploring the constraints or barriers facing the lending institutions in the quest for funding infrastructure projects (Dithebe et al, 2019a;Dithebe et al, 2019b;Bolomope et al, 2021;Sinha and Jha, 2021). For instance, within the Indian context, a study by Sihna and Jha (2021) aimed at identifying the problems (constraints) faced by banks, lenders, financial institutions, public authorities, developers, and concessionaires in the course of financing PPP road projects established that whilst the commercial banks in India dominated in providing debt to the PPP infrastructure projects, especially in the road sector, the financing problems faced by the developers resulted in unwarranted time and cost overruns emanating from delay in land acquisition and grant of approvals, hence discouraging private sector participation.…”

“…Besides, there is a paucity of studies in this subject area, particularly in the SSA. The majority of recent studies focused on studying how to mobilize PSF (Bielenberg, et al, 2016); the involvement of the private sector in water projects (Chan and Ameyaw, 2013); infrastructure financing challenges (Dithebe et al, 2019a); and the joint use of private financing (Fay et al, 2021). Studies related to barriers/constraining factors have been undertaken in other countries such as the Netherlands (Janssen et al, 2016), India (Sinha and Jha, 2021), and the Middle East (Tamošaitienė et al, 2021).…”

Maintenance of Municipality Infrastructure: A Case Study on Service Delivery in Limpopo Province at South Africa

“…In addition, other issues including inadequate and variable rainfall, unequal water supply management and the absence of drinking water, bulk water and irrigation facilities, are further factors rendering it impossible for rural villages to distribute water as expected [13]. Ensuring rural water security has become a major challenge for sustainable development due to a growing population, deteriorating water conditions and climate change impacts [14]. This calls for new, imaginative approaches that are ecologically sustainable and cost-effective [15], and also the need to make sure that the municipal water infrastructure is well maintained [8].…”

“…[17] despite the importance of water to livelihoods, over 783 million of the world's population has no access to clean water. Challenges encountered concerning the delivery of water to the public include but not limited to miscommunication between different water agencies, limited resources, leakages in official spending and lack of monitoring progress of different water projects, [14]. A government body's delivery of a service can be considered as a process of producing value for a number of different stakeholders, [12] furthermore, the stakeholders will participate at different points in the value-network and therefore will interact with different government systems [12].…”