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Gap analysis on the status of debt management for water services in municipalities
Expanded Title:Cost recovery for basic municipal services including water has not always been the policy of national and local government in South Africa. The post apartheid South Africa however continued to witness non-payment of municipal services and researchers alludes to number of contributing factors to this phenomenon. Cost recovery has only been isolated as an explicit and widespread policy objective in the mid 1990s after the end to apartheid. Consistent with prevailing prescriptions from international development agencies the Strategic Framework for Water Services (SFWS), set out as part of its goals, the equitable, affordable, effective, efficient, gender sensitive and sustainable provision of water services to all people living in South Africa. The problem faced by the water sector in general is that prices and tariffs are almost universally below the full cost of supply. This implies that there are inefficiencies in the water sector and that prices need to be raised. Recovering reasonable water supply costs from consumers in accordance with the SFWS, aims to ensure sustainability of water provision. This requires a combination of strategies carefully crafted to consider the following aspects: o Investment choices in terms of ownership of assets, planning, asset management, maintenance and rehabilitation, financing and use of grants, etc.; o Choices related to the use of the local government equitable share; o Tariff policy and the setting of tariffs; o Credit control policies and revenue management; o The contract (service delivery agreement) between the water services authority and an external water services provider, specifically the service obligations and the financial conditions of the agreement. In order to comply with the principle of social acceptance, the WHO’s recommended affordability threshold of 7% of total household income should not be exceeded. In conclusion the study has identified critical issues which need to be addressed in order to realize effective and efficient water pricing and debt management in South Africa. Some of the underlying issues include, namely: • The billing policy • Municipal By-laws • The Water Supply • Billing system • The costing policy • Cost recovery and Non-payment of water
Date Published:24/08/2011
Document Type:Research Report
Document Keywords:Policy and regulation, Municipality
Document Format:Report
Document File Type:pdf
Research Report Type:Standard
WRC Report No:1811-2-10
ISBN No:978-1-4312-0029-0
Project No:K5/1811
Document Size:651 KB
Attachments:EXECUTIVE SUMMARY for 1811-2.pdf
Table of Contents 1811-2.pdf
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