This paper is concerned with understanding how water services are made affordable to the poor in South Africa and what the significance and outcome of subsidies are with regards to improving the access of the poor to water services. The first part looks at the current system for water services provision in South Africa, including a description of the formal subsidy system in place, Free Basic Water, and how it emerged. This section also includes a discussion on whether affordability is still an issue in the South Africa of 2005. A case study of Mbombela municipality was undertaken to determine how water services are made affordable to the poor at the local level. Mbombela municipality is the Water Services Provider for half of the area and the rest of the area has its water supplied by a largely foreign owned private company, the Greater Nelspruit Utility Company. GNUC has entered into a 30 year concession arrangement with Mbombela. This paper allows for a comparison to be made between the municipality and GNUC over tariff structures, level of cost recovery and credit control measures employed and how the formal subsidy system is being operated and financed at this level. The presence, form and scale of informal subsidies is also determined as well as their financial implications.
Manchester, UK, CRC Working Paper, No. 112, 80 pp.