SA’s proposed water rules spark outrage: 75% black ownership quota threatens farms, food security

Key topics:Proposed regulations require up to 75% black ownership.Critics warn of threats to food security and investment.Exemptions for mining, SOEs raise equity concerns..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Kerry Lanaghan.Listen to this story instead:.A recent post on X by @AliceVLAuthor gained a lot of traction and brought attention to water regulations established in June 2023. In May 2023, South Africa's Department of Water and Sanitation (DWS) published draft regulations requiring up to 75% black ownership for enterprises applying for specific water use licences. These regulations, framed under the National Water Act, could seriously affect the agricultural sector, food security, and economic stability if adopted.While transformation remains a national imperative, critics argue that this attempt to enforce racial quotas through resource licensing marks a troubling shift in policy, one that prioritises ideology over practicality and threatens the foundation of commercial farming.The draft regulations apply to new applications for water use licences, with ownership thresholds based on the volume of water used or land affected:Enterprises using under 250,000m³ of water or fewer than 100 hectares are exempt.Between 250,000 and 500,000m³ (or 100–500 ha): 25% black ownership required.Between 500,000 and 1,000,000m³ (or 500–1,000 ha): 50% ownership.Above 1,000,000m³ (or over 1,000 ha): 75% black ownership required.Exemptions are provided to mining companies, state-owned enterprises, and 100% black-owned entities.These thresholds disproportionately impact large-scale agricultural producers, particularly white-owned commercial farms, while creating a regulatory advantage for mining and state operations.Agricultural and economic impactsAgriculture accounts for approximately 60% of South Africa's total water use. By conditioning licences on racial ownership, the regulations pose an existential threat to commercial farming. Critics, including Agri SA, warn that the new rules could:Undermine food security by disrupting large-scale farming operations.Deter investment in an already struggling agricultural sector.Force farmers to relinquish control of family-owned businesses to meet compliance requirements.Water is the most critical input in agriculture. Without secure access, farms cannot function. These regulations risk cutting off access not due to environmental or operational concerns but solely based on ownership demographics.Legal concerns and Section 27 of the National Water ActSection 27 of the National Water Act outlines multiple criteria to consider when issuing licences, ranging from efficient use to socio-economic impact and past investment. It also includes transformation as one of many factors.However, the draft regulations elevate BEE ownership to the sole criterion. This may violate both the letter and the spirit of the Act. In the 2012 Goede Wellington case, the Supreme Court of Appeal emphasised the need for a balanced, multi-factor approach to water licensing.By prioritising racial ownership to the exclusion of other factors, the state risks replacing legally sound administrative processes with ideological mandates.Link to broader transformation policiesThese regulations echo concerns raised around Expropriation without Compensation (EWC). While framed as distinct, both initiatives rely on state control of key resources and a redistributive agenda that sidesteps constitutional property protections.Water has been under state custodianship since the 1998 National Water Act. Now, critics argue that the state is weaponising its role as custodian to enforce demographic targets, regardless of impact or feasibility.According to analyst Terence Corrigan, this marks a broader shift in governance: from enabling economic growth to using regulation for ideological transformation, even at the cost of economic stability.Unintended consequences and policy incoherenceIronically, the regulations may fail to achieve true transformation. Rather than creating a supportive environment for new black farmers, they risk destabilising existing enterprises without offering viable alternatives.Moreover, the exemption of mining companies and SOEs - some of the country's biggest water users - undermines the equity rationale behind the regulations. The message is clear: transformation is enforced in agriculture, but not in politically sensitive or state-controlled sectors.The proposed 75% black ownership requirement for water licences represents one of the most far-reaching transformation efforts yet attempted by the DWS. These regulations would destabilise commercial agriculture, undermine food security, and likely result in job losses, reduced productivity, and investor flight from the rural economy.Transformation in agriculture should focus on support and inclusion, not punitive quotas. Without careful revision, these regulations risk permanently harming one of South Africa’s most vital sectors, jeopardising not only farms but also the nation’s ability to feed itself.

SA’s proposed water rules spark outrage: 75% black ownership quota threatens farms, food security

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