Water boards and indicators of institutional water integrity
28 January 2020
Water boards are key role players in the delivery of water services. Established in terms of the Water Services Act, they are primarily mandated to provide bulk water services to municipalities, mines and industry. In doing so, they also operate water resource infrastructure and manage some water supply and wastewater systems. Given South Africa’s reliance on inter-basin transfers, therefore, water boards are key strategic entities and integral to the distribution of raw and potable water across the country.
Water boards are also often contracted as implementing agents by the Department for bulk water infrastructure projects. As an implementing agent in the construction of capital water infrastructure projects, water boards manage the project and funds on behalf of the Department. They are therefore obliged to follow proper procurement processes and ensure compliance with legislation. The Department, in return, must monitor and exercise oversight to ensure proper performance. Given the large flows of public funds, bulk water projects attract high risks. When institutional governance lacks sufficient transparency and accountability, risks of corruption and rent-seeking are significantly exposed – to the detriment of social objectives. For example, Lepelle Northern Water – one of South Africa’s nine water boards – has been under investigation by the SIU since 2016 for corruption and fraud relating to its role as implementing agent in the infamous Giyani Water project. It has left 50 villages without water services despite a tab of over R3 billion.
INDICATORS OF INSTITUTIONAL WATER INTEGRITY
Water challenges most often flow from poor governance. Good governance and accountability structures reduce the risk of maladministration of public funds. The OECD Principles on Water Governance urges states to enhance trust and engagement in water governance by mainstreaming integrity and transparency practices in water institutions for greater accountability in decision-making. This has often been raised as an issue of “water integrity”. Water integrity refers to “honest, transparent, accountable, and inclusive decision-making by water stakeholders, aiming for equity and sustainability in water management.” Traditionally, it is measured by three indicators: transparency, accountability and participation, or “TAP” for short. Water integrity provides the framework necessary to safeguard institutional integrity.
MECHANISMS SAFEGUARDING INSTITUTIONAL WATER INTEGRITY AT WATER BOARDS
While TAP mechanisms may be used in isolation, they are most effective in practice when used jointly. Transparency improves access to information, which in turn facilitates active stakeholder participation in decision-making, and allows stakeholders to hold decision makers to account for performance. TAP implies adequate internal controls have been established, reliable information is accessible and effective monitoring and oversight mechanisms have been put in place.
Applied to water boards, the Water Services Act facilitates institutional integrity in water boards by providing four instruments that support greater transparency, accountability and participation. While at the outset members of a water board must perform their duties with honesty, care and diligence, these instruments provide the necessary means by which they can be held to that standard – at least at an institutional level.
First, every water board must set conditions for providing its service. The conditions – which may be set generally or are agreed to between certain stakeholders – must address issues of supply that affect the consumer. Included in the list of conditions are the determination and structure of tariffs, the payment and collection of money and the circumstances under which water services may be limited or discontinued. Setting conditions implicates all three TAP indicators. First, as the conditions set out the water board’s operational and procedural requirements – and municipalities, consumers and users are subject to them – an obligation is placed on water boards to invite comments from these stakeholders. Setting of conditions is the only case where the public is empowered to participate actively. Once set, the conditions must be made accessible to the public. In addition, customers are made aware of procedures and are empowered to ensure that they are followed.
Secondly, every water board must prepare and adopt a policy statement which must be revised every five years. The policy statement serves as a declaration of the water boards activities and defines its policies, particularly relating to investments, human resources and the environment. While stakeholders are unable to participate in the process of developing policy, accessing policies enables them to determine whether decisions taken by water boards are in line with their interests.
Third, every water board must adopt a five-year business plan containing the board’s activities, performance targets, tariffs and forecasts of capital expenditure. In short, the business plan lays down strategic goals, objectives and performance indicators that the Minister (and other stakeholders) can use to monitor action against strategic intent.
Lastly, the usual reporting obligations apply. Every water board must report annually on its activities to allow the Minister, Parliament and the public to assess its performance. As national government business enterprises in terms of the Public Finance Management Act (“PFMA”), water boards report directly to the Department of Human Settlements, Water and Sanitation on a monthly and quarterly basis.
The Water Services Act and the PFMA provide mechanisms to ensure transparency and accountability at water boards. But, for a couple of reasons, the public may often feel far-removed from accessing these mechanisms and how water boards operate generally. First, water boards primarily provide services to municipalities, not end-consumers and communities. Many consumers are unaware of their role as water services providers. And secondly, water boards are accountable to the Minister of Water as sole shareholder. There is little room for public accountability or participation in decision-making.
South Africa is suffering from massive water challenges – from water scarcity and drought to failing infrastructure and allegations of corruption. Without mechanisms that support and facilitate transparency, accountability and participation, institutional water integrity will continue to deteriorate. Moreover, this will be to the detriment of quality water services and South Africa’s economic and social objectives.
Michelle Toxopeüs, Legal Researcher, HSF, 28 January 2020
 Section 28 of the Water Services Act 108 of 1997 (“WSA”).
 Principle 9 of the OECD Principles.
 Section 38(2)(a) of the WSA.
 Section 33 of the WSA.
 Section 39 of the WSA.
 Section 40 of the WSA.
 Section 44 of the WSA.
 1 of 1999.