The adoption of special purpose vehicles (SPVs) as a new model for water and sanitation service delivery at the municipal level will enable South Africa to build “utilities of the future”.

In addition to ensuring entities are digitally enabled, financially sustainable, operationally excellent and socially inclusive, the move will support climate resilience, ensure transparency and attract domestic and international investment in water infrastructure.

The Association of Water and Sanitation Institutions of Southern Africa (Awsisa) called for the urgent adoption of SPVs amid the mounting pressure faced by municipalities owing to ageing infrastructure, billing inefficiencies, increasing water losses, weak governance and a deteriorating culture of payment for services.

“Municipalities currently owe water boards over R28-billion. This level of dysfunction cannot be corrected through incremental reform. It requires a paradigm shift in how services are structured, governed and financed,” Awsisa said in a statement on Tuesday.

Awsisa’s proposed model incorporates the creation of ring-fenced SPVs that combine the strengths of municipalities and water boards, and include private-sector players in a “public-public-private partnership”.

“These entities will operate independently, be professionally governed and deliver water and sanitation services at the reticulation level with clear performance contracts.”

The association highlighted key features of SPVs, such as ring-fenced financing to protect grants and user fees from diversion; merit-based board appointments with no political interference; professional management with performance-based contracting; service level agreements with municipalities to drive accountability; and community participation and local economic empowerment to rebuild trust and stimulate inclusive growth.

Awsisa’s approach is informed by global successes, such as the Netherlands’ regional water boards, which provide autonomous and efficient regional management, Chile’s water concessions that combine private-sector efficiency with State regulation; India’s hybrid SPV model for water and sanitation infrastructure; and the blended finance strategies in Ghana and Uganda that attract capital for public infrastructure.

In line with this, Awsisa called on the National Treasury and the Department of Water and Sanitation to urgently formalise the SPV framework, as well as urged municipalities to embrace this new model and commit to transparent partnerships, the water boards to support implementation through technical and governance leadership, and the private sector and development finance institutions to invest and collaborate in building inclusive, sustainable utilities.

This call follows growing national consensus, including resolutions of the recent Presidential Water and Sanitation Indaba, which acknowledged the deep structural challenges in municipal service delivery and endorsed new, accountable institutional models.

“Water cannot be held hostage to institutional failure. South Africa can turn the tide with professional governance, targeted investment and strong community partnerships. Awsisa is ready to lead the development, piloting and scaling of this model – with urgency, integrity and impact,” the association concluded.