South Africa’s National Water Amendment Bill is taking direct aim at water hoarding, private trading, and racial inequity.
The new legislative provisions also give the Minister of Water and Sanitation sweeping powers to reallocate water across provinces and sectors, and review water prices.
A broken system that outlived its fix
South Africa’s water crisis runs deeper than drought. It is structural.
Under the Water Act of 1956, landowners adjacent to rivers were permanently entitled to water by virtue of owning the land, whether they used it or not.
The National Water Act of 1998 sought to break that legacy by nationalising water and making it a public good, but the Director General of Water and Sanitation, Dr Sean Phillips, told Parliament’s Portfolio Committee on Tuesday that the current law has left the state with limited tools to enforce its promises.
The core problem, Phillips said, is that existing lawful water use has no time limit.
These entitlements only fall away when replaced by a formal water licence during a compulsory licensing process, meaning unused water cannot be quickly freed up and reallocated.
Under the current licensing framework, all considerations in granting a licence carry equal legal weight, creating another structural obstacle.
“A licence cannot be declined on the basis of the application failing equity as one consideration,” Phillips told the committee.
Water being treated as a private commodity
The most damaging consequence of the current system, according to Phillips, is the treatment of water rights as a tradeable business asset.
Licence holders are sitting on allocations they are not using, knowing those entitlements carry commercial value.
“Water use exercised through existing lawful use is normally hoarded, even if it is not used, since this use is viewed as a possible business tool associated with water trading and in doing so, the water use is withdrawn from economic use and subjected to undue control by an individual, which is inconsistent with the purpose of the National Water Act,” he said.
Despite three decades of post-apartheid legislation, the racial skew in water allocation has barely shifted.
Phillips was direct about the failure. “Insufficient progress has been made, and the status quo could persist due mainly to specific provisions of the legislation that militate against the transformation in water use.”
Use it or lose it, and the end of private water deals
The bill’s most consequential interventions address these failures head-on.
A “use it or lose it” principle would allow water licences to be revoked if they remain unused for a defined period, with the entitlement reverting to the Department of Water and Sanitation for reallocation.
The bill also provides for a licensee to voluntarily surrender their entitlement under conditions of non-use.
“This will enable scarce water to be freed up for reallocation, which in turn will assist the Department to achieve its objective of increasing greater equity in water use allocations,” Phillips explained.
Private water trading between individuals would be banned.
“The water trading provision in the current legislation subverted the public good nature of the water resource and subjected it to the highest bidder,” Phillips said.
Under Section 25 of the amendment bill, any temporary transfer of water use would be capped at 24 calendar months.
Where a licensee surrenders their water entitlement, for instance, to facilitate a licence on another piece of their land, the water connected to that surrender is prohibited from being traded privately and must be handed back to the national government through the Minister of Water and Sanitation.
The bill leaves no grey area: unused or surrendered water goes back to the state.
Minister gets new powers to move water across provinces
One of the more significant additions in the bill, captured in Section 25A, gives the minister the authority to reallocate water between sectors, provinces, or catchments.
This is not a unilateral power: the minister may only act after consultation, and all the relevant factors listed in Section 27(1) of the National Water Act must be considered before any reallocation takes place.
Still, it represents a meaningful shift in the state’s ability to intervene when water is concentrated in the wrong hands or the wrong regions.
Alongside this, Section 26 of the bill provides for regulations that would prescribe the specific criteria to be used when redressing past racial and gender discrimination in water use, giving legal teeth to transformation targets that have, until now, remained aspirational.
The last key amendment introduces a “fit and proper person” test: the responsible authority would be empowered to refuse to even consider a water use licence application from anyone who has committed a gross transgression of water legislation.
Phillips framed this as a necessary accountability measure that would not allow bad actors to simply reapply for access to a resource they have previously abused.
Too little progress, too much time lost
The data underpinning the bill’s urgency is stark.
Of the 21 billion cubic metres of water currently allocated, agriculture holds 54%, and 84% of that goes to commercial agricultural companies, many listed on the JSE.
Historically disadvantaged individuals account for just 3% of agricultural water use overall. Since 1998, 19% of new agricultural water licences have gone to historically disadvantaged individuals.
Phillips acknowledged this improvement but said it was not enough. “Further improvement is still required,” he said.
The validation of existing lawful water use, a nationwide audit designed to identify allocations that can be freed up, is approximately 50% complete.
The department also reported that 80% of water use licence applications were finalised within 90 days in 2025/26, up sharply from 35% in 2022/23.
Progress, but the amendment bill signals that administrative efficiency alone will not be enough to undo what Phillips described as decades of causal factors actively “hindering the Department from properly regulating the use of water, protecting and developing the resource.”
