JOHANNESBURG—South Africa’s government has no immediate plans to allocate funds for drought alleviation in the water-deprived Western Cape Province, Water and Sanitation Minister Nomvula Mokonyane told reporters in Cape Town.
Cape Town, the continent’s top tourist destination, is in the throes of the worst drought on record, with the winter rainy season still about four months away.
The city has made a little progress in staving off the dreaded Day Zero, the date when it might have to turn off most taps because of water shortages.
The country’s main opposition leader said last Tuesday that Day Zero had been pushed back by four days, from Apil 12 to April 16, because of efforts to save water by residents.
Mmusi Maimane, whose Democratic Alliance party runs Cape Town and the surrounding province, says residents must use fewer than 50 liters (13.2 gallons) per person daily to avoid the tap closure altogether.
Maimane says aquifer drilling is accelerating and that authorities will reduce water pressure in the municipal system in coming weeks.
Experts say causes of Cape Town’s water shortages include climate change and huge population growth.
The metropolis could be the world’s first major city to run out of water.
The city’s 4 million residents may find themselves lining up for a daily allocation of 25 liters (6.6 gallons) each.
“Urban and agricultural water users have exceeded their water use for the hydrological year already,” Trevor Balzer, deputy director general in the Department of Water and Sanitation, said at the same briefing the other Sunday. “That is why we have switched off agricultural water users already.”
Water crisis is credit-negative
As Cape Town’s dam levels fall, the city may see borrowing costs rising.
The water crisis afflicting Africa’s top tourist destination is credit-negative, as it will reduce revenue at a time when the city has to boost spending to ensure supplies, Moody’s Investors Service said in a report last Monday.
The report does not constitute a rating action, said Moody’s, which has an investment-level rating on Cape Town’s bonds. Municipal water revenue contributed about 10 percent of Cape Town’s operating income in 2017, a proportion that is set to dwindle as the city restricts water usage.
At the same time, spending on crisis management and water-supply projects will increase, Moody’s Associate Analyst Daniel Mazibuko said in the report.
Two main industries—tourism and agriculture—will feel the effect, leading to lower employment and tax income, he said.
“Other effects include threats to public health from poor sanitation and, more generally, to social order, which is significant given Cape Town’s marked income inequality,” Mazibuko wrote. “If the crisis persists, it remains to be seen how the city will cope with the unfolding crisis’s potentially wide-ranging consequences on the city’s finances and economy.”
Cape Town is in the throes of the worst drought on record, and water levels in its six main supply dams have plummeted to an average of 26.3 percent, from more than 90 percent four years ago.
With the winter rainy season still about four months away, residents may find themselves lining up for a daily allocation of 25 liters (6.6 gallons) each from April 12, unless water usage declines sharply. The city last accessed the bond market last July, when it sold 1 billion rand ($84 million) of sinkable securities maturing in 2027. It has a total of 5.2 billion rand outstanding in four bonds, according to data compiled by Bloomberg.
Moody’s rates the debt “Baa3,” the lowest investment level and on par with South Africa’s sovereign rating.
Cape Town’s policy of maintaining a strong liquidity ratio and conservative debt management, with a debt burden of only 11 percent of operating revenue, will help mitigate the effects of borrowing required to implement capital projects over the next three years, Mazibuko said.
Bloomberg News and AP
Image credits: Waldo Swiegers/Bloomberg