No Money, No Service: South Africa's Attempts to Recover Service Costs for Water and Power Are Harming Its Poorest Citizens. (Sustaining Livelihoods)

By McDonald, David A. | Alternatives Journal, Spring 2002 | Go to article overview

No Money, No Service: South Africa's Attempts to Recover Service Costs for Water and Power Are Harming Its Poorest Citizens. (Sustaining Livelihoods)


McDonald, David A., Alternatives Journal


In early 2000, the Department of Water Affairs and Forestry in the province of KwaZulu Natal, South Africa, introduced cost recovery on water. Rural households that were accustomed to free potable water at communal standpipes were charged a registration fee for a yard tap and/or a monthly rate for water usage. The registration fee and volumetric charges proved too expensive, however, for thousands of low-income households struggling to survive on unpredictable incomes and meager state pensions. Paying for water would mean giving up other essential goods and services.

As a result, households were forced to use nearby rivers and stagnant ponds for drinking water, cleaning and bathing. Within weeks a cholera epidemic had broken out, and by mid-August of 2001, 105,297 people had contracted the infection and 224 people had died, with new reports of illnesses and deaths being reported on a daily basis. (1)

This is not the first time that South Africa has experienced cholera outbreaks. There were several epidemics in the 1970s and 1980s. But this time the reasons for the outbreak are very different and can be linked directly to policies of cost recovery - characterized here by efforts to recoup the full or partial costs of service delivery from end users. In other words, services that used to be provided for free or at a highly subsidized price are now charged according to the full (or near full) costs of delivering them, and in this case have contributed directly to the cholera crisis.

This is not to suggest that methods of cost recovery should never be employed. In highly inequitable and resource-scarce countries like South Africa, there are good financial and ecological reasons for introducing some forms of cost recovery on services. If used simultaneously with progressive block tariffs - a pricing system whereby the per-unit price of a service increases when more of that service is consumed - then cost recovery can actually help pay for the services of the poor by charging wealthy people more than the actual costs of delivery. This subsidy can then be used to provide free or very cheap "lifeline" supplies to the poor.

The problem in South Africa is the manner in which cost recovery has been implemented and the double standards that are employed - particularly with respect to water and electricity. From the historical injustices of who receives subsidies to unfair tariff structures, cost recovery on basic services in South Africa has largely been counter-productive to the goals of equity and environmental sustainability and threatens to undermine post-apartheid reconstruction and development efforts in the country.

FROM SUBSIDIES TO COST RECOVERY

Cost recovery has not always been the modus operandi of the South African government. During apartheid, many South Africans received subsidized services and infrastructure. White suburbanites and white-owned industry benefited the most from these subsidies, with service levels and subsidies in white areas that equaled, and often surpassed, European and North American standards. (2) Much of this subsidization came at the expense of black workers and consumers who generated the economic surplus and paid the taxes necessary for lavish state spending in white areas, but even black South Africans - to the extent that services were delivered to the townships and rural "homelands" - received some subsidized service delivery. (3)

These racially biased service subsidies were one of the key targets of the anti-apartheid lobby, and the African National Congress (ANC) promised to create a single municipal tax base and more redistributive rate structures once they were in power. Indeed, the ANC's first major policy paper - the Reconstruction and Development Programme (RDP) of 1994 - made the redistribution of municipal resources and the provision of basic municipal services to black South Africans a major policy focus.

The RDP was quickly superseded, however, by the much more fiscally conservative Growth, Employment and Redistribution (GEAR) policy framework in 1996, which put the emphasis on economic growth rather than redistribution or government subsidies.

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No Money, No Service: South Africa's Attempts to Recover Service Costs for Water and Power Are Harming Its Poorest Citizens. (Sustaining Livelihoods)
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