Page 51 - Risk Report 2024
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IRMSA
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                   RISK REPORT 2024/25










           Pricing and financial sustainability of the water value chain:
           •   About 41% of municipal water does not generate revenue, and 35% is lost through leakages (~1.66bn m3 and
               R9,9bn p.a.), impeding universal access to water and non-conventional solutions (e.g. potable reuse, seawater
               desalination). This ‘utility doom loop’ must be arrested through improved governance, investment, and credit
               control/billing protocols.
           •   Deteriorating financial health of water users, high debt caused by non-payment and economic hardship,
               and changes in municipal administrations, complicate decisions to render services to cash constrained
               municipalities, affecting financial survival of the value chain (including water boards), and affecting bulk
               water treatment to potable standards. Redress includes withholding equitable allocations from non-paying
               municipalities, uniform credit control and debt recovery processes, bulk prepaid meters at non-paying
               municipalities, and rehabilitating dysfunctional water utilities.
           Strategic and policy uncertainty:
           •   Lack of clear policy and strategy on how new water resources will be developed may result in wea market
               response, higher risk premia, and greater cost. A prudent market entry strategy, with a clear policy framework
               is urgently required.
           •   The accelerating rate of change in aquatic ecosystems is overwhelming SA’s institutional response capacity,
               manifesting in an inability to correctly identify root causes and leading to inappropriate solutions to
               misdiagnosed problems (e.g. Vaal River system overwhelmed by water lettuce in 3 years). Technical advisory
               expertise to support authorities to make high-risk decisions in environments characterised by imperfect
               knowledge and rapid change, is urgently needed.



























             Risk Impact on Economic Sectors




                Agriculture, Forestry & Fisheries        2        Mining                                   7
                Communication                            9        Professional Services                   16
                Construction & Real Estate               6        Public Service / Government             14
                Education                               12        Sport & Recreation                       5
                Energy                                  10        Tourism & Hospitality                   4
                Healthcare                               1        Retail, Trade & Commerce                8
                Financial Services                      15        Transport & Logistics                   13
                Manufacturing                            3        Non-Profit / Civil Society / NGOs       11
   46   47   48   49   50   51   52   53   54   55   56