Proposed water licensing regulations requiring up to 75% black South African shareholding place tenuous food security at further risk

The Department of Water and Sanitation (DWS) recently published draft revised Regulations regarding the Procedural Requirements for Water Use Licence Applications and Amendments for comment. According to the draft regulations, certain enterprises applying for water use licenses to take or store water, will in the future have to allocate shares of up to 75% to black South Africans in order for such water use licenses to be granted. The consequences for food security and the sustainability of the agricultural sector should these regulations be passed in the current form cannot be understated – they would have a devastating impact on the sector and its ability to provide the country with a secure supply of food. This is because focussing solely on ownership, to the exclusion of all other relevant factors, will mean the loss (or partial loss) of water resources for numerous currently viable commercial farming enterprises.

Similar requirements are also prescribed in the draft with respect to so-called “stream flow reduction activities” (essentially commercial forestry plantations). The regulations also make provision for hydraulic fracturing (which is a further risk and threat to food security).

The prescribed minimum black South African shareholding requirements of 25%, 50%, or 75%, required for a water use license to succeed depends on the volume of water abstracted or stored, or the area covered (in the case of commercial forest plantations). 

The proposed regulations are seen as the DWS’s most radical and sweeping effort to date toward changing the demographics with respect to water use in South Africa. The agricultural and forestry sectors appear to be the primary target of the proposed regulations. The agricultural sector accounts for approximately 60% of South Africa’s total water use. It is worth noting that the proposed regulations exempt mining companies, the state and state-owned entities, as well as 100% black-owned entities. 

“Agri SA is of the view that the proposed regulations will have a devastating effect on South Africa’s commercial agricultural sector if adopted in their current form,” says Janse Rabie, legal and policy executive at Agri SA. “It is well known that the DWS envisages compulsory licensing of existing lawful water uses in the near future (a fact which is emphasised by regulation 13 of the proposed regulations). By far the greatest number of agricultural water uses are exercised in terms of historic existing lawful water uses.” 

Concerningly, the draft regulations would seem to be attempting to replace the current suite of considerations which apply to granting water licenses with ownership demographics. In terms of section 27 of the National Water Act, the DWS must take all relevant factors into account when issuing a water use license. This already includes the need to redress the results of past racial and gender discrimination.

“Section 27 of the National Water Act however also contains at least 10 other considerations that the DWS (as being the responsible authority for granting water use licenses) needs to consider before granting any application for a water use license. What the proposed regulations seek to achieve is to make BBBEE the sole consideration for granting licenses,” says Rabie.

The Supreme Court of Appeal dealt with this issue in 2012 in a matter supported at the time by Agri SA. “In the so-called Goede Wellington case, the SCA specifically stated that all the relevant factors contained in section 27 of the National Water Act had to be considered together in deciding whether to grant an application for a water use license. These include factors such as efficient and beneficial use of water in the public interest, socio-economic impact, and investments already made by a water user in respect of the water use in question.”

These considerations remain important and are especially so when considering the foundational role played by the sector in terms of food security, employment as well as the very significant headwinds farmers are currently facing. Water is the most vital input for the sector and if farmers lose the lawful use of this input, the impact will be catastrophic.

Agri SA acknowledges that water belongs to all South Africa’s people and fully appreciates the importance of achieving an inclusive and fairly representative agricultural sector in our country. “The consequences that the draft regulations in their current form will have with respect to agriculture and food production in South Africa, will be fatal as it will essentially force the transfer of ownership of the ability to lawfully use water, commercial agriculture’s most crucial input factor” said Rabie.

Concerningly, these regulations are also unlikely to achieve the goal of further transformation in the sector. Achieving this will require creating an environment which is conducive to growth and investment in the sector, and which provides meaningful support for new entrants.

By contrast, Rabie stresses that this effort by government cannot have come at a worse time for the sector and the economy, which is already reeling from the impact of load shedding, rural crime and deteriorating public infrastructure.

The commentary period on the proposed Revision of Regulations regarding the Procedural Requirements for Water Use Licence Applications and Amendments will expire on 18 July 2023. 


Janse Rabie

Legal and Policy Executive, Agri SA

C: 076 451 9601