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Neither Public Nor Private: Unpacking the Johannesburg Water Corporatization Model

1 Jun 2006



Local authorities across South Africa have undergone an enormous transformation in the post-apartheid period. Ten years into democracy, most local authorities are contending with the difficulties of providing and improving the quality of water and sanitation services in areas that historically received service of abysmal quality, if any.

As part of a major restructuring process in the late 1990s that sought to resolve Johannesburg’s financial and organizational problems, a strategy known as iGoli 2002 was implemented to address five key problem areas: financial stability, service delivery, frameworks of accountability, administrative efficiency and political leadership. In terms of service delivery, iGoli 2002 had to address a situation in which, by the late 1990s, 24 per cent of African residents lived in informal dwellings, 17 per cent had no access to electricity, 15 per cent were without flush toilets and 13 per cent were without tapped water.

The first part of the paper provides a brief overview of the service delivery history in Johannesburg during the 1990s in order to understand the reasons it chose the corporate model in 2001.

The second part of the paper focuses on the institutional transformation of the water and sanitation sector, with particular attention to the governance framework that shapes the accountability mechanisms between Johannesburg Water (Pty.) Ltd. (JW) and the city authorities.

Third, the paper outlines the main challenges facing JW and the efficiency mechanisms it has put in place to address them. Fourth, the paper looks at the equity challenges facing the utility and how it has chosen to address low-income service users. This section presents the findings from household surveys in four township areas in order to highlight some of the key service delivery issues that low-income households are struggling with.

Corporatization is gaining currency in many countries around the world as an institutional model that promises efficiency gains that are comparable to those of privatization of service delivery, while also permitting greater state involvement that can mitigate the negative social risks inherent in privatization.

In South Africa, Johannesburg is the first and only local government in the postapartheid period that has corporatized through the legal establishment of a water and sanitation utility. The autonomy, authority and capacity issues of the regulator have created a difficult environment for the city to develop enforcement mechanisms for its contractor, JW.

These governance difficulties are part of the growing pains of a very young institutional arrangement between the city and its newly created utilities. Johannesburg city council is fortunate to have an array of politicians that are committed to improving the lives of the poor. The challenge that lies ahead is how to translate this good political will into practice, given the private sector operational style of Johannesburg Water.

Laila Smith is Director of Research and Evaluation in the Contract Management Unit, City of Johannesburg Metropolitan Municipality, South Africa.

Order PP-SPD-27 from UNRISD, 60 pages, 2006; US$ 12 for readers in industrialized countries and US$ 6 for readers in developing and transitional countries and for students.