Entering the public water sector market

This reference guide by GreenCape provides a strategic framework for water and wastewater businesses and investors seeking to enter or expand within the South African public water sector. It details the sector's governance structure, the legal requirements for public procurement, various contracting models, and strategies for forming partnerships and trialling new technologies.

• The public water sector is the largest segment of the water market in South Africa, with infrastructure procurement spending totaling R 41.5 billion in the 2019/2020 financial year. Rand Water was the largest spender among entities, accounting for R 10.7 billion (26%) of this expenditure.
• Public water infrastructure is managed by a hierarchy of entities: the Department of Human Settlements, Water and Sanitation (DHSWS), state-owned and multi-national entities, and water boards handle bulk water supply (dams, pipelines, etc.). Water Services Authorities (WSAs), typically municipalities, along with water services providers (WSPs) and intermediaries (WSIs), manage the treatment, distribution, and wastewater collection networks.
• The design-bid-build (DBB) model is the most common procurement method in the public sector for infrastructure, where the public entity signs separate contracts with design consultants and construction contractors. While design-build (DB) and EPC/turnkey models exist, they are less common, and Public-private-partnerships (PPPs) are very rare in the water sector due to high planning costs, lack of technical capacity in public entities, and political pressure regarding the privatisation of public functions.
• Public procurement is governed by the Constitution of the Republic of South Africa, 1996, the Public Finance Management Act (PFMA), the Municipal Finance Management Act (MFMA), and the Preferential Procurement Policy Framework Act (PPPFA). Bids are evaluated based on a functionality assessment followed by a price/B-BBEE scoring system: an 80/20 ratio for bids up to R 50 million and a 90/10 ratio for bids exceeding R 50 million.
• Procurement processes vary by bid value: petty cash is used for amounts under R 2,000, while competitive bidding (tenders) is required for bids over R 200,000 for municipalities (or R 500,000 for other public entities) and for all contracts longer than one year. Tenders above R 30 million must include a minimum of 30% subcontracting to qualifying entities such as Exempted Micro Enterprises (EMEs) or Qualifying Small Enterprises (QSEs).
• Because many businesses cannot bid directly on public tenders, partnering with other private sector firms is recommended. Local content thresholds are enforced to ensure a minimum percentage of contract value is procured within South Africa; for example, electricity and water meters have a threshold of 50-70%.
• There is no prescribed policy for trialling new technologies with public entities, and municipalities are often reluctant to do so due to procurement legislation. However, support is available through the Water Technology and Innovation Forum (SALGA and WRC), the WRC’s Water Technologies Development Programme (WADER), the National Technology Innovation Agency (TIA), and the City of Cape Town's New Technology Platform.

APA

GreenCape (2021). Entering the public water sector market. https://greencape.co.za/wp-content/uploads/2022/10/ENTERING_PUBLIC_WATER_SECTOR_MARKET_31_3_21-3.pdf

Chicago

GreenCape. Entering the public water sector market. 2021. https://greencape.co.za/wp-content/uploads/2022/10/ENTERING_PUBLIC_WATER_SECTOR_MARKET_31_3_21-3.pdf.

Wikipedia

{{cite report |author=GreenCape |title=Entering the public water sector market |date=April 2021 |url=https://greencape.co.za/wp-content/uploads/2022/10/ENTERING_PUBLIC_WATER_SECTOR_MARKET_31_3_21-3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greencape2021entering, author = {{GreenCape}}, title = {{Entering the public water sector market}}, institution = {GreenCape}, year = {2021}, month = apr, url = {https://greencape.co.za/wp-content/uploads/2022/10/ENTERING_PUBLIC_WATER_SECTOR_MARKET_31_3_21-3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }