Thursday, April 25, 2024

Water shortage to impact Q3 GDP growth- AfDB

A report from the African Development Bank (AfDB) says Botswana’s economic performance during the third quarter of 2013 is expected to remain subdued, mainly due to the adverse effects of the severe water shortage on virtually all sectors.

Meanwhile, the Water Utilities Corporation (WUC) has opened talks with the Tunisia-based bank to seek funding that would enable it to make more real its slogan – “we keep it flowing for you.”

The shortage notwithstanding, the water and electricity sector posted a growth of 2.2 percent in the third quarter. This is in contrast to this sector’s performance in recent quarters when it registered massive declines due mainly to adverse weather. However, the situation remains precarious with the Gaborone Dam, the main dam in the country, down to 21 percent of capacity due to drought.
The report notes anxiety among both members of the public and analysts about heavy subsidies (up to 40 percent) that the two major consumers of water – agriculture and mining, continue to get from the government.

“This has elicited concern from analysts and the public that this is unfairly high and disadvantages the ordinary people who have to bear the burden of the subsidy. The debate over water comes at a time when Botswana is faced with severe water stress. Reports indicate that the Gaborone Dam is down to less than 21 percent of capacity, which translates to only about nine months’ water supply if there is no rain,” the report says.

“The situation is further compounded by the operations of the Water Utilities Corporation (WUC), which made a massive loss of P482.5 million in 2012. This underscores the need to restructure the water sector, and it is commendable that the government is doing the right thing by trying to consolidate all of the water activities into one organisation rather than have water supplied to villages from various agencies and urban water supplied by WUC”.

It attributes part of this loss to WUC inheriting “poor, old, and dilapidated infrastructure” from district water authorities and having to spend a substantial amount of money fixing it. In addition to adverse weather conditions, the current water shortage is reportedly exacerbated by old, leaky pipes that require millions of pula to replace.

AfDB lauds WUC for being unlike other parastatals which, facing similar financial difficulty, have been unwilling to engage with key stakeholders who might help.

“Notably, the WUC has met with the Bank and has initiated discussions to explore the ways in which the best critical support can be provided to address the severe water stress in order to counteract the adverse impact this is exerting on other sectors and on overall economic performance,” the report says.

The government plans to implement water sector reforms through the National Water Policy which is to be tabled before the current sitting of Parliament. The reforms are expected to take about three years to complete. The government’s water subsidies to mining and agriculture, which are viewed as unsustainable, will also be spotlighted during this exercise.

AfDB recommends that going forward, Southern African countries need to maintain adherence to strong macroeconomic and structural reforms as the key to accelerated and inclusive growth.

“In particular, the development of a dynamic private sector remains essential to accelerated and sustained growth,” it says.


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