Frost: Public-Private Partnerships Key to Development of South African Water, Wastewater Markets
October 13, 2008 // Published as a news service by IHS
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South Africa is a water-stressed nation and private sector participation in water management services will contribute significantly to the preservation of natural water resources.
According to Frost & Sullivan, improved water efficiency is becoming increasingly critical in South Africa, and public-private partnerships (PPPs) will be the lynchpin in attaining this objective.
Recent analysis from Frost & Sullivan of the procurement processes and outsourcing in the South African water and wastewater market found the treatment equipment market earned revenues of $157.1 million in 2007, with estimates to reach $265.5 million in 2014.
The water and wastewater outsourcing market earned revenues of $140.1 million in 2007, with estimates to reach $237.6 million in 2014.
"PPPs enable a synergy between the best that government and the private sectors have to offer," said Frost & Sullivan industry analyst David Winter. "They harness the energies of both partners to achieve an unprecedented, and much desired, outcome."
Analysts said Africa's Durban Water Recycling Project is an outstanding example of a PPP that demonstrates an innovative approach to several challenges relating to water resource management. The project has not only contributed to the effective management of industrial effluent, but has also helped reduce the demand for water by industries, thereby freeing potable water for about 300,000 people in the Durban metro area.
Privatization is a very sensitive issue within the South African labor market, analysts said. Labor unions have a fundamental ideological opposition to PPPs, viewing them as a threat to job creation, which remains one of South Africa's biggest challenges.
"Official unemployment figures are estimated to be around 26%," said Winter. "Hence, labor unions, who have always been against privatization, will view any PPP formation as a form of privatization of state-owned assets and a serious threat to job creation."
Competent employees are crucial for effective project implementation, analysts said, especially in an environment where old and new technologies have to function in unison. Technical competence is central to high-class service delivery and industry players will need to demonstrate dedication to skills development with sound black economic empowerment credentials.
Source: Frost & Sullivan.