Water For All? An Examination of Water Scarcity and Privatization in South Africa

The importance of water cannot be overstated: it allows every form of life to flourish while also fulfilling a role of vital significance within different cultures and religions. In South Africa, it is believed that sacred waters are filled with spirits and mermaids. The Xhosa, a prominent ethnic group in the country, traditionally believe that diviners, or amagqirha, are trained to understand the health of rivers. Yet despite water’s obvious value, whether it be physical or cultural, there are many within the international community who are subjected to water scarcity, a phenomenon that refers to either a physical shortage or the failure of certain institutions to ensure a regular supply of clean water. It should be established that no matter the root cause of a water shortage, the global water supply remains fixed- it is accessibility that mutates throughout time. 

While there are instances of water shortages in specific areas resulting from natural phenomena- such as droughts- human activity has also played a central role in creating and institutionalizing disparities of who can access clean water. These disparities manifest in multiple ways, including along racial lines. South Africa, where diversity of cultural traditions find water to be sacred, is a prime example of the ways in which water access has been racialized. While black South Africans have a tradition of tending to local rivers, this relationship has been severely hindered through the policies of the Apartheid and the post-Apartheid regimes that have made beloved water sources inaccessible. 

The Institutionalization of Water Scarcity 

South Africa is known for having a progressive constitution that goes beyond simply enshrining civil and political rights- for one, it includes a mandate that everyone has the right to sufficient food and water. While outsiders may see this as a unique, or even strange, clause to include in a constitution, it is a product of British colonization and the subsequent Apartheid regime. In 1913, the British implemented the Native Lands Act, which entailed the forcible removal of rural black Africans to designated areas within the interior where the land was less fertile and had a natural scarcity of water. These designated areas were known as reservations and black Africans could not legally step foot outside of them unless they were employed. British riparian law, a subset of property law that relates to the utilization of surface water, specifically stated that only those who owned land adjacent to rivers had legal access to water. This meant that black communities, who were forcibly relocated from these waterways, could no longer legally access water on their own accord. On the other hand, the white settlers, who made up less than 20 percent of the population, had control over virtually all of the waterways. This not only gave them an economic advantage- water is, after all, a boon to agriculture, industry, and trade- but it also gave them the luxury to not have to worry about whether or not they had drinking water.

In 1923, the Native Urban Areas Act stipulated that black Africans could work in urban industrial areas but could not live there. Subsequently, black Africans were relocated to townships and forced to live in government housing whose construction and expenses, which included electricity and water, were meant to be paid back in full by its inhabitants. Many people were unable, or unwilling, to pay for these costs. As a reaction to the government’s racist and exploitative practices, many individuals established “informal settlements,” where water usually came from a rudimentary standpipe and its cleanliness could not be guaranteed. When the Apartheid government officially ascended to power in 1948, these discriminatory policies were exacerbated. As Karen Piper asserts in her book, The Price of Thirst, South Africa is one of the most natural water-scarce regions in the world, yet Afrikaaners, the white minority, were able to enjoy green lawns and swimming pools while black Africans were deprived of a basic necessity as a reinforcement mechanism for the country’s white supremacy. 

The People of South Africa versus Water Privatization 

By the time Apartheid finally came to an end, a majority of the population had access to only a small portion of the country’s water. When President Mandela first began to shape a new, inclusive South Africa, he created the Reconstruction and Development Program (RDP), whose policy objectives included recognizing water as an “indivisible national asset belonging to all South Africans” and making water and sanitation services community-based. The plan that the government created to achieve these goals was meant to be completed in stages. In the short term, all households would be supplied with twenty to thirty liters per capita per day. Furthermore, an access point could not be located more than 600 feet away from every house. In the medium term, households were promised an on-site supply of water, with a subsidy for the poor. Another crucial element was that city limits would be redrawn to include the black townships that were formally excluded. This would increase the tax base, and services, such as proper access to water and sanitation infrastructure, would be available to all. This plan was purposefully designed as a way to end the racialized hierarchy of water access and begin a new era of racial equity. 

While President Mandela had envisioned water for all, these plans were derailed by the International Monetary Fund (IMF) and the World Bank, otherwise known as the Bretton-Woods Institutions. When it was clear that the Apartheid regime was not going to last much longer, these institutions saw an opportunity for investment and implementation of neoliberal policy. When President Mandela’s new government began negotiations with the IMF and the World Bank, it became apparent to the South African representatives that the conditions attached to any potential IMF loan were too similar to the economic policies of the Apartheid regime that solely benefited white people. The IMF’s push for water privatization was especially troubling as it directly contradicted the country’s constitution and would perpetuate water inequity. At the same time that negotiations were taking place, the worst drought in living memory was devastating the country. It was considered to be an economic and public health disaster that needed to be immediately dealt with through an IMF loan, thus severely reducing any leverage the South African team could wield at the negotiation table. Although the IMF was willing to grant the necessary funding for disaster relief, there was an important stipulation: the drought relief money would only appear if the African National Congress, the new ruling party, would follow its economic policies. 

These policies included not increasing wages, completely opening up the country to trade, and reducing the government’s debt by cutting public services. This was exactly what President Mandela’s team had been trying to avoid throughout the negotiation process, yet the severity of the drought gave them virtually no choice. In 1996, a new economic plan known as the Growth, Employment, a Redistribution (GEAR) program was implemented. It was problematic from its very conception. It did not mention the country’s economic history of race and Apartheid, prompting the question: How can economic policy rectify horrendous inequality when it doesn’t even recognize its existence?

GEAR’s economic policies perpetuated the inequitable water access system of the Apartheid regime. The public had to pay the full cost of water and sanitation infrastructure; this cost was often levied on poor, black communities. For example, in 2003-2004, these communities faced a 30 percent price increase versus a 10 percent price increase for “high-end” users (i.e. corporations and the wealthiest communities). Suez, the private water company in charge of water distribution, essentially inherited a similar role as the Apartheid government. Since Suez has taken over distribution, the poor have been presented with high bills which they cannot- or even will not- pay. As a result, Suez typically shuts off the water supply. Though not unique to any city, in Johannesburg, water bills are a part of monthly housing payments. When residents did not pay their water bill, they were evicted. According to Piper in The Price of Thirst, by 2007, more than two million people had been evicted from their homes for not paying their water bills. The brutal irony of it all was that residents, who had previously fought for better water access, began to protest having water connections installed as they now saw it as a threat to their livelihood. 

Water Privatization as the New Apartheid? 

Since 1994, black residents perceive that their quality of life has declined, which is astonishing considering the Apartheid government specifically existed to maintain white supremacy, yet black South Africans continue to be denied basic goods. Service delivery protests, which are often attributed to xenophobia, are actually due to a lack of basic services, such as sanitation and clean water, and often manifest in violent ways. The number of protests that had taken place by June of 2019 had already eclipsed the total for 2016 which indicates that the problem is only getting worse, not better.  

Throughout South Africa’s modern history, water has been utilized as a marker for power within a racial hierarchy. Beginning with British colonial rule, white people’s ability to access clean water represented a political, economic, and social power that black natives had been violently deprived of. Furthermore, water was not only used as a way for whites to extract power, but it was also weaponized to protect it. The threat of having a basic necessity taken away is an easy way to ensure compliance; this is something both the Apartheid government and Suez have done, albeit for slightly different reasons. The Apartheid regime shut off the water when they wanted to quell anti-Apartheid protests, while Suez does so in order to elicit payment. It is easier for Suez to maintain superficial innocence as they are not a government explicitly subjecting its citizens to racist and violent policies. However, that veneer of innocence is stripped away as it becomes clear that both are responsible for producing and maintaining racial inequities, particularly when it comes to water. 

President Mandela’s economic plan sought to equalize a country whose foundations were rooted in white supremacy. However, this plan was compromised by the Bretton-Woods institutions whose policies did not address the country’s history. The implementation of water privatization was emblematic of this ignorance: it was neglectful of the needs of black, low-income communities who needed to be empowered the most and instead perpetuated a white hegemony over water. In order to make water truly accessible to all people, it is necessary that policy leaders return to President Mandela’s original vision of water being a public good. Water is a necessity for political, economic, and social prosperity, and its privatization means that specific groups would be disconnected. Although many would argue that privatization is meant to eliminate the inefficiencies of the government, the case of South Africa has made it clear that it has done quite the opposite. By making it a collective good, the government would be honoring its own constitution and would be forced to ensure that everyone has access to clean water. This makes institutions, and its representatives, more accountable and South Africans would have a better say in water policy, thus equalizing one facet of a notoriously unequal society. 

The Impact of Brazilian Privatization and Economic Reform

“Privatização,” despite the word's unpopularity even across polarized Brazilian party lines, has been one of the cornerstones of President Jair Bolsonaro’s administrative efforts to stimulate Brazil’s sluggish economy. Despite being unpopular, the administration’s privatization of state-owned enterprises (SOEs) has proven to be immensely successful, yielding a total net gain of US$23.5 billion within the first nine months, surpassing the government’s expectations by nearly 20 percent. 

The Bolsonaro Administration has over 12 privatization projects in progress, with more to be announced in the coming year. Most of these projects focus on energy, transportation, and production infrastructure. Authorities of the Brazilian government cite the lack of investment funds for Brazil to maintain, expand, and operate facilities, resulting in a push of neoliberalism (market-oriented reforms) to open Brazil’s economy. 

Despite being the world’s eighth-largest economy, Brazil’s economy lags greatly in competitiveness, placing 72nd of 140 countries, the United States ranks first, followed by Singapore and Germany. Brazil also struggles with the World Economic Forum’s “business dynamism pillar,” which accesses the private industry’s ability to adapt to changing markets, new business models and risks, and technological advancements. A contributing factor to such a low ranking, and frankly, a comparatively weakened private sector, is due to Brazil’s dependence on the public sector to develop, maintain, and safeguard national industries. 

The nation’s 418 SOEs, one of the highest in the world, ranges from energy, transportation, and manufacturing infrastructure, to financial and health services. To note, Brazil has more SOEs than that of the 34 member nations of the Organization for Economic Cooperation and Development (OECD). Through the privatization of inefficient and non-profitable SOEs, the government can reduce its operational burden, increase market efficiency, and create a more robust private sector. Currently, many of the SOEs are unable to cover their operating expenses, and rather than generating profits, they generate more than US$3.8 billion in losses annually, furthering their dependence on government funding. which takes away from the country’s ability to invest in other social initiatives. In the Bolsonaro Administration’s detailed plan, the government plans to keep SOEs that provide critical public social services, while privatizing those that attract investors or generate losses. 

Planned for the second half of 2020, the utility giant, Eletrobras (NYSE: EBR.B), is one of the largest SOE privatization projects (PL 5877/2019) taken on by the administration. In the reported 2019 third-quarter earnings, Eletrobras reversed its 2018 loss of R$2.26 billion (US$) by an increase in net profit of 132 percent to this year’s R$716 million (US$) profit. The drastic increase is a direct result of the concession of underperforming divisions and news assets beginning operations. 

During his campaign, President Bolsonaro admitted to only understanding the basics of economics, putting his full backing in his Minister of the Economy, Paulo Guedes. Minister Guedes, a popular free-market economist, earned his Ph.D. from the University of Chicago. It is also important to note that in an effort to reduce harmful bureaucracy, President Bolsonaro merged several government ministries cutting the number from 39 to 22. Under this simplification, Minister Guedes became dubbed as the “Super Minister” of the Economy, as his ministry absorbed the Ministry of Agriculture (MF), the Ministry of Planning (MP), Ministry of Development, Industry and Foreign Trade (MDIC), and Ministry of Labor and Employment (MT). 

The administration’s most recent political victory comes after Congressional approval for the highly controversial pension reform bill, which passed with a vote of 60-19 in favor, late October. The much-anticipated bill will save the public nearly a trillion reals (USD$200 billion) in the next decade. Among other measures, the bill raised the retirement age for men to 65 and women to 62, raised workers' pension contributions, and reduced burdensome regulations for businesses. Special rules will apply to teachers, police, and rural workers. The Brazilian Stock Exchange Index (INDEX: IBOV) rose 1.1 percent after the vote, to an all-time high of 107,197 points, and this growth continued to reach an all-time high on November 7th at 109,580 points. Pension reform has been a pressing and intractable topic that has been relevant for several decades, passing the reform is truly seen as an accomplishment. 

The Brazilian Treasury reported that the public sector’s debt-to-GDP will reach 79.7 percent by 2022 and then decline, however, some estimates indicate that if the reform had not been passed then the ratio would have surpassed 100 percent. This would have increased Brazil’s fiscal risk and directly dampened investor’s outlook, a sentiment that the country’s market cannot afford. Moreover, Brazil’s Constitution mandates nearly 90 percent of all current public spending, providing limited flexibility in ensuring the nation’s 

With the pension reform passed, Congress will now focus on the administration’s next priority: tax reform. In an interview, the Brazilian speaker of the lower house, Rodrigo Maia, explained that there is “no other reform is more important than the tax reform,” which is expected to be sent by Minister Guedes in the coming month. Like many aspects of the Brazilian government and doing business in Brazil, tax policy and filing taxes are extremely complicated due to excessive government bureaucracy. On average, it takes Brazilian employers nearly 2,000 hours to file taxes for businesses on account of the heavily bureaucratized system. Meanwhile, for the same task neighboring Argentina and Chile take 312 and 296 hours, respectively, while OECD (Organisation for Economic Co-operation and Development) members take about 161 hours. To note, Brazil is in the process of joining the OECD and secured the Trump Administration’s support earlier this year. The process is also helping Brazil push the necessary reform to create sustainable economic growth. 

Brazil’s economic reform success continues abroad as Reinaldo José de Almeida Salgado, Brazil’s Foreign Ministry’s secretary for bilateral negotiations with Asia, stated that Brazil does not “intend to be selective in relation to trade opening,” a centerpiece of Bolsonaro’s market-friendly administration. It has already begun the process of signing trade protocols and agreements with nations globally.

Ultimately, by developing a stronger private sector, Brazil’s domestic industries can continue to push for greater productivity and efficiency and compete in the international markets. Although controversial, the Bolsonaro Administration continues to push for reforms to make Brazil more attractive to investors and to control the government’s quickly rising debt which limits its capacity to improve the quality of life.