Covid-19 & Water in Metros: A National Treasury discussion about key issues and financial impact: 29 April 2020

Summary

 

This CSP (IGR-NT) convened discussion was attended by 67 participants from metros, sector departments and other organisations -receiving inputs from all 8 metros on the financial impact on municipalities of water and sanitation responses to COVID-19. The meeting identified areas of immediate support to cities to address: (1) the imperative to rapidly improve water and sanitation services in informal settlements, a key risk for the rapid spread of COVID-19, with devastating health and economic consequences; and (2) The very serious financial impacts of COVID-19 on the viability and sustainability of water services as a result of the economic impacts of the shut-down and recovery periods.

Preliminary remarks

  • Discussion not about more money.
  • NT overview & guidance
    • Economic and financial context very difficult and will get worse.
    • This is a marathon and not a sprint
    • Carry on billing, but anticipate reduced revenues & reduced cash flow
    • Anticipate additional spending, but can repurpose conditional grants
    • Stay on core mandate and don't spend on unfunded mandates
    • Be careful of decisions with long-term consequences (eg. recruitment, additional service obligations, service choices)
  • NT CSP role limited to technical assistance



    Short term/immediate issues
  • Existing stresses are made worse
    • E.g., drought, NRW, poor payment levels, under-maintenance
  • Service standards in IS are very low
    • One toilet per 10 households
    • Cleaned/emptied once per week
  • IS are not a permanent feature in metros (not going away, but growing)
  • Short-term response in metros in IS appears to depend largely on
    • Chemical toilets for additional services. These are expensive, what happens later on?
    • Water Tanks and tankers for short term response. These are expensive, what happens later on?
  • Reallocation of resources
    • Substantial additional budgets in some metros in 2019/20, but what about 2020/21, and is this sustainable?
    • In short term, most can be funded by reallocations, but outlook for 2020/21 is unclear.
    • Anticipated reduction in staffing availability was a risk mentioned only in some metros. Is this risk being addressed adequately?

      Medium term issues
  • Managing in a much more difficult economic and financial context
    • Higher expenses
    • Lower affordability
    • Reduced revenues (initial estimates look very significant, even for 2019/20)

Higher costs of borrowing (still to come)

 

Documents

NT - metro water covid financial impact


For more information please contact:

Anthea Stephens: CSP-NT

Anthea.Stephens@treasury.gov.za