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Monday Sep 29, 2014

Gauteng water crisis threatens new investment, says JCCI

The water crisis in several parts of Gauteng was a threat to new foreign investment, the Johannesburg Chamber of Commerce and Industry (JCCI) said on Friday as Minister of Water Affairs and Sanitation Nomvula Mokonyane met the leadership of Rand Water in an effort to solve the problem.

Gauteng is South Africa's most populous province with more than 12 million people, and is the country's economic hub. It accounts for a third of the country's gross domestic product (GDP) and 9 percent of the GDP of the whole African continent.

A shortage of resources, including water and power, to Gauteng threatens to put pressure on the country's economic growth and investment, according to analysts.

'Business needs a stable environment in which to thrive. Problems... with utilities make operating a business very difficult and increasingly unprofitable,' JCCI chief executive Joan Warburton-McBride said.

'Gauteng is becoming an unattractive and expensive place in which to do business for existing companies and the uncertainty regarding water and electricity supplies is a deterrent for any new foreign investments into the region.'

Colen Garrow, a Meganomics economist, said at the weekend that water was a critical catalyst for driving the economy.

When big business associations were contacted on Friday they had not yet assessed the cost of the crisis.

Water is reflected in the electricity, water and gas component of GDP. This utilities component accounts for roughly 5 percent of GDP and the sector contracted in the second quarter despite the broader economy managing to narrowly escape recession.

'It would probably register a contraction in the third quarter as well, consequent to the problems being experienced. The impact of the crisis will probably also be reflected in a number of confidence indices,' Garrow said.

The crisis is more than a week old. It has hit Ekurhuleni, Midrand, the West Rand and the City of Tshwane, leaving communities and businesses scrambling to get by without water.

At the meeting, Mokonyane called for the development of a Gauteng water master plan to prevent a repeat of the crisis.

Mokonyane, who recently completed her first 100 days at the helm of what is a new portfolio - water and sanitation - said there was a need to move beyond the 'blame game', according to a statement released by Rand Water on Friday.

Rand Water backtracked on its statement that it would roll out 'load shifting', which means shifting water supply from an area where there is supply to one where there has been no supply.

The water crisis is bad news not just for big business but for home-operated businesses, from bakeries to hair salons.

Businesses in Bedfordview, east of Johannesburg, have been affected.

Many resorted to bringing containers of water from their homes or relatives' homes to ensure their businesses were able to continue operating. There has been no water in the suburb since September 20.

Virgin Active Bedfordview club manager Shelley van Wyk said the gym had been adversely affected. 'Members in the area don't have water at home and they come here and there's still none.'

Van Wyk said there had been no water on Thursday from 10am until the close of business at 9pm. On Friday there was some water but she was not sure for how long. The gym had locked some toilets for hygiene reasons.

Between 2 500 and 3 000 people went to the gym every day and the lack of a consistent water supply was becoming a problem, she said.

Business Report with additional reporting by Sapa


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