Consequently, water distribution and wastewater infrastructure is falling apart and the municipal debt is building up. Controlling the level of non-revenue water and achieving full cost recovery is crucial for any water authority. In South Africa, however, the challenges are not only technical but also socio-economic with a huge indigent segment of the population with limited ability, and unfortunately also limited willingness, to pay for water with reference  to the constitutional right to water and the ‘free basic water for all’ policy. This has made it difficult to make consumers aware and accept that every drop of water comes at a price and that with no revenues, the taps will stop running.

The government-supported South African - Danish Strategic Water Sector Cooperation has  focused on restructuring the revenue chain both at the national and municipal level. The programme has worked with the South African Water Ministry on the policy for financing and tariff setting and is working in a number of municipalities on full cost recovery by applying the Danish revenue cap model.