In 1998 the ANC took custodianship of all water resources under the National Water Act but denied this amounted to expropriation. Now, it plans to make race the dominant factor in water-use licensing and water allocation. Given past land reform failures, this could result in not redress but more assets “dying in the hands of the poor.”
State “custodianship” for all water resources
In 1998 the National Water Act (the Act) made the government the “public trustee” or “custodian” of all the country’s water resources. This put an end to the riparian and other rights that landowners had previously enjoyed to water flowing through or below their land in rivers or underground streams.
Under the Act, anyone wanting to use water – unless permitted to continue with an “existing lawful water use” – has to apply to the Department of Water and Sanitation (DWS) for a “water-use licence”. This licence remains in force for a maximum of 40 years and is subject to review by the state at five-yearly intervals.
No compensation was paid to landowners for the loss of their common law rights. According to Professor Mike Muller (director general of water affairs from 1997 to 2005), there had been no “direct taking” of water rights and hence no expropriation. Instead, the government had simply introduced state controls that “might limit the use of the property, at the expense of its owner”.
The government was using a phased approach to water reform, he went on. “The first step…was to allow existing lawful use to continue but to serve notice that this was not a permanent property right.” Future use would depend on “how available water was to be shared” in due course.
What the phased approach is intended to achieve is becoming clearer under the National Water Amendment Bill of 2026 (“the Bill”) – currently open for public comment until 30 July 2026 – and other interventions.
Shifting criteria for water-use licences
Under the Act, the state – in issuing a water-use licence – must take account of “all relevant” factors, including the 11 listed in the statute. The need “to redress past racial and gender discrimination” is one listed factor. However, the ten other non-racial factors are equally important, as a judgment of the Supreme Court of Appeal (SCA) in the Goede Wellington Boerdery case in 2012 confirmed. These factors include the extent of “investments already made,” the “socio-economic impact” of allowing or refusing the requested water use, and the importance of ensuring the “efficient and beneficial use of water in the public interest.”
The Bill seeks to overturn the SCA judgment. In doing so, it leaves the ten non-racial criteria in place, but allows them to be trumped by a new clause. This states that the granting of a water-use licence “must…advance the redress of past racial and gender discrimination.” The new clause also says that, “based on the demographic composition of water users” in particular areas, unspecified “volumes of water” may be set aside to “achieve” this redress.
Another new clause empowers the minister of water and sanitation to make regulations “prescribing the criteria that must be considered when redressing the results of past racial and gender discrimination in relation to water use”. This provision could authorise new regulations similar to the draft ones gazetted for public comment in 2023.
The 2023 draft regulations required the state, in granting water-use licences, to “give preference to applications from black people, followed by women.” In addition, applicants for water rights would be obliged to “allocate shares to black people in the proportions stipulated” by the state. These proportions ranged from 25% for relatively small water users to 75% for those taking or storing “up to 250,000 cubic metres.”
In 2023 these draft regulations were ultra vires the Act and could not lawfully be adopted. However, if the Bill is enacted into law, new regulations along the same lines could well be introduced. This could compel farming, mining or other enterprises that are major water users to allocate 75% of their assets or equity to black South Africans. In practice, these deals might have to be done at heavily discounted prices or with the aid of considerable vendor loans that might not be repaid.
Compulsory transfers of this kind would amount to regulatory expropriations, for which the state is obliged to pay “just and equitable” compensation under Section 25 of the Constitution. However, the DWS will doubtless seek to avoid this via the Expropriation Act of 2024, which narrows the normal meaning of expropriation to the “compulsory acquisition” of property by the state. (This 2024 Act has been signed into law but has yet to take effect, while its constitutional validity is being challenged in the courts.)
Existing lawful water use to be curtailed
At present, many commercial farmers are using water under a clause in the Act permitting the “continuation of an existing lawful water use.” This has spared them from having to apply for water-use licences. Under the Bill, however, the scope for using water on this basis is to be reduced. This will give the DWS “the ability….to phase out previous water entitlements in order to achieve the targets for water allocation reform,” as the Memorandum on the Objects of the Bill puts it.
These clauses increase the likelihood that commercial farmers currently relying on existing lawful water use will in time be obliged to apply for water-use licences under the Bill’s new rules. Under these clauses – with their emphasis on racial identity and demographic representivity in water allocation – many commercial farmers could either be denied water-use licences or have their current water entitlements significantly diminished.
The government will no doubt claim that these interventions are needed for land reform and to give black farmers greater access to water. Since 1994, however, between 50% and 90% of the land transferred to emergent farmers has either fallen out of production or seen its yields fall steeply. Intended land reform beneficiaries have thus reaped little or no benefit, while thousands of farming jobs have been lost. The growth of a valuable and export-oriented sector has also been curtailed.
Land reform has failed in these ways because success in farming depends not only on access to land and water but also on a host of other factors. These range from secure ownership rights and adequate working capital to know-how, experience, entrepreneurship, labour, electricity, infrastructure, and markets. Unless all relevant needs are met, the transfer of water and lands to emergent farmers is sure to result in yet more assets “dying in the hands of the poor” (as a former director general of land, Thozi Ngwanya, warned back in 2007).
In practice, however, little has been done to fulfil these important needs. The Bill ignores this major shortcoming in seeking to make racial identity the predominant factor in the issuing of water-use licences.
Ramifications
The racial redistribution the Bill seeks to enforce is likely to bring great harm to the great majority of disadvantaged South Africans. It is likely to reduce investment, agricultural production, and food security, while:
- curtailing the agricultural exports, valued at $15bn or R250bn in 2025, needed to pay for oil and other essential imports;
- pushing up food inflation; and
- worsening already high levels of joblessness, poverty, and hunger.
In addition, a 75% black ownership requirement for major users in agriculture is inconsistent with the 25% requirement in the Agri BEE charter. This inconsistency will increase uncertainty, deter investment, curtail employment and cause still greater economic damage to all South Africans – and especially the poor.
[Image: By Ossewa – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=74343598]
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