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Published: 03.02.2016

New Vision: Developing countries look to private investors to solve water crisis


By Fredrick Mugira

Currently, financing for water infrastructure in developing countries comes predominantly from public sources

SOUTH AFRICA  – When Rudy Roberts realised the potential of investing in the water sector three years ago, he patterned with the Danish pump manufacturer Grundfos to launch the Mega Water Corporation in South Africa.

This industrial water company, which Rudy heads as Chief Executive is now credited for revolutionising water supply in South Africa and across the African continent.

Since its inception, the Guatang province-based corporation has implemented various projects in the South Africa’s water sector that range from enabling access to groundwater to rehabilitating hospital water supply among others.

Mega Water Corporation is a perfect example of private investment in the water sector which water professionals and authorities from Bangladesh, India, Kenya, Mexico, Mongolia, Peru, South Africa and Tanzania are advocating for to enable governments tackle water-supply challenges.

The water experts from the eight countries are meeting in South Africa for knowledge exchange organised by the 2030 Water Resource Group (2030 WRG), a global public-private-civil society partnership based in Washington USA in collaboration with Stockholm International Water Institute and the Water and Sanitation Department of South Africa.

Currently, financing for water infrastructure in developing countries comes predominantly from public sources.

But while speaking in an interview after participating in the financing water infrastructure session at Sheraton Pretoria hotel, Rudy said private investment in the water sector will be one of the most important investments in the 21st century.

“It is because I believe water is a very important component of industrialisation; in manufacturing; agriculture; personal hygiene.  It has become a very important commodity. Without water you can’t manufacture. You can’t grow food. You can’t have energy.”

Developing governments face a challenge of financing their water infrastructure. For example, the funding gap for water infrastructure alone in sub-Saharan Africa is over USD11b , according to the Stockholm International Water Institute.

In a country like Uganda, the ministry of water and environment has been receiving only three per cent of the total national budget over the years.  This results into water–supply challenges.

But like other participants at this session, Rudy believes that with more private investors investing in the water sector in developing countries, such challenges would be history in the long run.

But he also acknowledges that it is not ease to invest in the water sector in unindustrialized countries. Why? Because according to Suresh Patel, the governor for Environment, Water and Natural Resources at the Kenya Private Sector Alliance, water is a very low price commodity.

“The cost of water is much lower to make profitable investment. No businessman wants to make losses on an investment.”

Suresh insists that investing in developing countries especially in Africa is generally expensive and the legislative environment is not conducive.

“Investment must be safe, protected and generates sufficient revenue to pay back the loans.”

Contrary, Dr Dana Gampel, the Executive Director for Atum Strategy Consulting based in Johannesburg says investments that focus on profits only have no space in the modern world.

“It is not only about profits. There is need for new approach to business. Investors must focus on sustainability which means long term returns.”

She elaborates that to have healthy consumers of products and services, investors must first address the needs of the communities where their businesses are situated. Such needs, she says, include water.