The Governance Crisis Behind the Water Crisis

The Governance Crisis
Behind the Water Crisis

How accountability, stewardship, and leadership determine water security in an ESG-driven world

Water scarcity is rarely the root problem. The real crisis is how water is governed.

This event challenges the assumption that water crises are primarily environmental or technical problems. It examine sthe governance failures that sit behind water insecurity, from fragmented decision-making and weak accountability to short-term leadership incentives.

Hosted by the Good Governance Academy (GGA) in partnership with the NEPAD Business Foundation (NBF) and the Strategic Water Partners Network, the session brings together senior voices from government, industry, and research to explore why water has become a material ESG risk.

The discussion focusses on how governance excellence enables responsible stewardship, long-term resilience, and sustainable growth and why leadership decisions made today will determine whether water becomes a source of stability or systemic risk.

Why this matters:

Water is rapidly becoming a defining governance and ESG challenge for organisations across sectors. Climate pressures, infrastructure constraints, and rising demand are exposing long-standing weaknesses in decision-making, accountability, and institutional coordination.

For business leaders, regulators, and investors, water risk is no longer a future concern it is already shaping operational resilience, capital allocation, and public trust.

How water is governed increasingly determines whether organisations adapt, compete, and maintain legitimacy in a resource-constrained world.

About the NEPAD Business Foundation

The NEPAD Business Foundation (NBF) is a leading pan-African organisation working at the intersection of business, government, and development to advance sustainable economic growth across the continent. As the private-sector arm supporting Africa’s development priorities, NBF plays a central role in mobilising collaboration around infrastructure, sustainability, and inclusive development.

Through initiatives such as the Strategic Water Partners Network, NBF works to strengthen water governance by bringing together public institutions, private-sector leaders, and civil society to address systemic water challenges. Its approach emphasises accountability, partnership, and practical implementation — translating policy intent into measurable outcomes that support resilience, competitiveness, and long-term value creation.

FIND OUT MORE:

Key discussion points:

Why water has become a material ESG risk and why governance is the determining factor

How fragmented accountability and short-term incentives undermine water security

Lessons from collaborative water governance in practice, including the SWPN model

What effective stewardship looks like across public and private sectors

The leadership decisions required to move from compliance to resilience

Key Questions Answered

Why must water be elevated from a technical issue to a strategic ESG priority?

Historically, water has been “underweighted” in ESG strategies. It is frequently acknowledged as a risk in annual reports but rarely integrated into core governance frameworks or capital allocation models. This oversight creates a dangerous gap between perceived safety and actual exposure. Correcting this requires a shift from a narrow “inside the factory fence” compliance mindset to recognizing water as a development constraint that influences the entire value chain.

As highlighted in the keynote address and opening remarks, water security is now a primary determinant of economic resilience. While compliance focuses on meeting regulatory minimums, strategic elevation focuses on stewardship and long-term viability. The risks are manifesting as immediate disruptions to commerce and community stability, requiring a proactive governance response.

Water Risk Dimensions

Risk Dimension	Description	Business Impact	Governance Response
Climate Pressures	Increased frequency of droughts and extreme floods.	Operational disruption; unpredictable resource availability.	Integrate climate-scenario modeling into long-term strategic planning.
Infrastructure Constraints	Aging systems, pump failures, and systemic lack of maintenance.	Supply chain volatility; increased costs for alternative water sourcing.	Engagement in Public-Private Partnerships to secure regional infrastructure.
Non-Revenue Water (NRW)	High physical losses (leaks) and commercial losses (theft/billing errors).	Financial strain on local economies; reputational exposure via “water waste” optics.	Oversight of municipal performance and investment in loss-reduction technologies.
Water Scarcity	Physical lack of acceptable quantity and quality for production.	Stranded assets; limits on sustainable growth and investment.	Moving beyond compliance to active “catchment-level” stewardship.

The transition from viewing water as a technical utility to a strategic priority is essential, yet it remains obstructed by systemic governance barriers that must be dismantled to achieve true security.

What are the primary governance gaps hindering the integration of water into ESG frameworks?

The complexity of water governance, characterized by overlapping jurisdictions and localized impacts, often leads to a lack of accountability. When governance structures are opaque, even the most well-intentioned ESG initiatives fail to gain traction.

The panel identified three critical gaps that undermine transparency and service delivery:

Institutional Fragmentation: As noted by Petunia Ramunenyiwa, fragmented institutional arrangements lead to blurred lines of accountability and a shifting of responsibilities between national, provincial, and local spheres. So What? If a board cannot identify exactly who is responsible for water service delivery or resource regulation, they cannot effectively hedge risk or hold partners accountable, leading to paralyzed response strategies.
Data Synchronicity: There is a failure to synchronize data across river basin systems and municipal spaces. So What? Without verifiable, real-time data, ESG reporting becomes a reputational liability. Claims of water stewardship are rendered unverifiable, leaving the organization exposed to accusations of “greenwashing” and regulatory scrutiny.
Site-Specificity: Water is inherently local. Martin Ginster emphasized the gap between corporate expectations and the technical/financial limitations of specific sites. So What? A “one-size-fits-all” governance approach ignores the ground reality of local water systems. This leads to ESG strategies that are disconnected from the actual physical risks, resulting in wasted capital and failed sustainability targets.

Identifying these gaps is the necessary precursor to establishing the multi-stakeholder partnerships required to bridge them.

How can Public-Private Partnerships (PPPs) practically reduce non-revenue water and improve security?

Solving systemic infrastructure challenges requires “coordinated partnerships” rather than isolated corporate actions. The Nelson Mandela Bay Municipality (NMBM) case study, presented by Lyle Francis, provides a blueprint for successful public-private intervention.

This partnership between NMBM, SWPN, and private funders (SAB/AB InBev) demonstrated several critical governance components:

The Memorandum of Understanding (MOU): This was the foundational governance tool. Approved by the Council in July 2022, the MOU provided the necessary “legal/governance air cover” for private sector involvement in municipal infrastructure.
The “No Funding Transfer” Model: Crucially, the private sector provided technical support and professional service providers rather than a direct transfer of cash to the municipality. This approach avoided internal administrative bottlenecks and red tape, ensuring that funding was applied directly to engineering solutions.
Professional Oversight: The use of local consulting engineers ensured that designs were sound and construction was monitored to high standards, bridging the municipal technical capacity gap.

Quantitative Project Results: A Value for Money Summary

The NMBM partnership demonstrates that targeted investment, when properly governed, yields high-impact results:

Total Funding Utilized: 2.5 million Rand.
Phase 1 Savings: 3.3 ML/day via five District Metered Areas (DMAs).
Phase 2 Savings: 2.2 ML/day.
Total Impact: 5.5 Megalitres (ML) per day saved.
Strategic Outcome: This represents a significant return on investment, proving that partnerships can effectively scale local solutions and reduce real losses while improving billing accuracy.

This model encourages a shift in corporate responsibility, where businesses move beyond being merely “good citizens” to becoming “active citizens” who intervene strategically to protect the shared resource.

What is the role of corporate stewardship in the "Public Policy Universe"?

The distinction between “Good Citizen” and “Active Citizen” models is vital for corporate leadership. Mike Müller introduced a critical framework for Boards to evaluate their risk: the distinction between “Rivers and Lakes” (Water Resource) and “Taps and Toilets” (Water Services). A resource risk is a supply-side, natural issue; a service risk is an infrastructure and delivery issue. Boards must understand which of these specifically threatens their operations.

Müller highlighted that corporate water stewardship occupies only a small fraction of the wider public policy universe. To protect their own interests, corporates must engage as active citizens:

Participate in Policy Development: Corporates should contribute expertise to policy implementation, speaking the language of the public sector to promote wider security.
Support Regulatory Strengthening: Active citizens support the strengthening of regulatory authorities to ensure a level playing field and reliable service.
Strategic Intervention: Participating in the wider water security framework is not altruism; it is a strategic intervention to prevent a failing watershed. A company cannot be resilient in a failing ecosystem; a degraded watershed eventually leads to stranded corporate assets.

What single governance shift should leaders prioritize in the next 12 months?

In the face of the “Water-Energy-Food Nexus,” leadership must abandon siloed thinking.

The expert panelists provided a synthesis of five strategic mandates for the coming year:

Internal Systems Understanding: Leaders must move beyond high-level reports to understand exactly where their water originates and the specific technical limitations of those local systems (Rivers/Lakes vs. Taps/Toilets).
Nexus Thinking: Breaking the “silo mentality” is mandatory. Leaders must coordinate activities across water, energy, and agriculture to avoid duplication of effort and maximize resource efficiency.
Board-Level Integration: Water must be elevated from an environmental footnote to a core strategic risk, integrated into all capital allocation and risk management plans.
Demographic Empowerment: Governance must prioritize the empowerment of Youth and Women. This is not only a core “Social” pillar of ESG but a prerequisite for the economic stimulation required for regional stability.
Accountability & Consequence Management: Governance must have “teeth.” This includes clear performance metrics and support for consequence management, such as the potential revocation of licenses for persistent non-performance.

Water is not merely a resource to be managed; it is the foundation of human dignity and the primary catalyst for economic stimulation. Elevating its governance is no longer optional; it is the prerequisite for an organization’s future in an increasingly water-constrained world.

Glossary of Key Terms

Catchment Management Agency (CMA): A regulatory institution involved in the management of water resources within a defined water management area.
Common Pool Resource: An economic term used to describe water, suggesting it is a resource shared by many where exclusion is difficult, necessitating a compromise between public and private management.
CPD Certificate: Continuing Professional Development certificate; a document provided to participants of the webinar to prove engagement and professional learning.
District Metered Area (DMA): A defined zone in a water distribution system that can be isolated and monitored to measure water flow and identify real losses or leaks.
ESG (Environmental, Social, and Governance): A framework used by organizations to manage risks and create long-term value by focusing on sustainability, social responsibility, and ethical leadership.
Infrastructure Leakage Index: A technical scorecard used to measure the efficiency of water infrastructure and the extent of real water losses within a system.
Memorandum of Understanding (MOU): A formal agreement between parties—such as a municipality and a private network—outlining roles, responsibilities, and the framework for a partnership.
Non-Revenue Water (NRW): Water that is produced and “lost” before it reaches the customer, either through physical leaks (real losses) or through theft and inaccurate billing (apparent losses).
Strategic Water Partners Network (SWPN): A collaborative platform housed at the NEPAD Business Foundation that brings together government, business, and civil society to deliver water solutions.
Water-Energy-Food Nexus: An integrated approach to resource management that recognizes the interlinkages between water, energy, and food sectors, rather than treating them as isolated “silos.”
Water Security: The availability of an acceptable quantity and quality of water for health, livelihoods, and production, coupled with an acceptable level of water-related risks.
Water Stewardship: Moving beyond internal compliance to actively participating in the sustainable management of shared water resources and engaging in public policy for wider security.