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Positioning Umgeni Water for the 21st century.

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Umgeni Water was established through Government Notice No. 114 on 14 June 1974. The establishment was facilitated via the legislation operating at that time, namely the Water Act (Act No. 54 of 1956). The organization has grown to be the largest water utility in KwaZulu-Natal and the second largest in South Africa operating in an area of 27 000 square kilometres. Umgeni Water has now expanded its capabilities to cover the full water management cycle and has geared itself up to offer source to sea and source to tap solutions. All the water utilities in South Africa were operating as monopolies because the Water Act (Act No. 54 of 1956) used a system of assigning areas within which the water utilities were to operate. This means that firstly the water utilities were confined to a specific area, and by default meant that these water utilities had a monopoly in that area because the legislation did not permit other service providers. The situation changed in the late nineties when the water sector underwent major legislative and administrative transformation. A number of laws were promulgated including the New National Water Act (Act No. 36 of 1998), the Water Services Act (Act No. 107 of 1997) and a plethora of municipal legislation. The major difference in the "new era" was the introduction and promotion of competition as a means to improve service delivery and enhance benefits accrued by the customers. For the first time in the history of the water sector, water utilities had to compete with other service providers and prove that they can discharge duties and activities better and more efficiently than anybody else. The municipal legislation also empowered and mandated municipalities to be the official authority and provider of water services to the people within their areas of jurisdiction, hence the term Water Services Authorities. If the Water Services Authority lacked capacity, it could choose a service provider that would meet the need. Against this backdrop, water utilities have had to find ways of generating income to survive and this meant that the water utilities had to somehow become relevant in the new dispensation. This included strategies like customer management, increasing operational efficiencies, building capacity of staff through training and development programmes and commercialisation of certain activities. In other words, the water utilities realised that they had to do something, one such thing that was done by Umgeni Water was to position itself so that it becomes a service provider of choice to the Water Services Authorities. In its effort to sustain itself, Umgeni Water cast its eyes beyond the promulgated operational area to the whole of the developing world. In its strategic session that set the tone for 2001 to 2005, the organization envisioned itself being the No.l utility in the developing world. Before being No.l utility in the developing world, Umgeni Water needed to achieve that status in its operational area and South Africa. To be able achieve this position, Umgeni Water needed to know the perceptions being held by the customers in its operational area. This research was undertaken to establish the position that Umgeni Water currently holds in the minds of the customers. This information will assist and inform the future position that Umgeni Water will need to adopt to ensure that its vision is attained. The sample consisted of all Water Services Authorities within the promulgated operational area of Umgeni Water, namely Ugu District Municipality, Sisonke District Municipality, uMgungundlovu District Municipality, Ilembe District Municipality, uMsunduzi Municipality and eThekwini Municipality. The Water Services Authorities seem to be in agreement and appreciative of the fact that Umgeni Water's service provision has improved over the years and 91% of the customers asserted that the main product of the organization, water, met their requirements. This improvement influenced an overwhelming majority (73%) of the Water Services Authorities to proclaim that Umgeni Water was their preferred service provider. These perceptions were fuelled by a number of reasons including the fact that the Water Services Authorities believed that Umgeni Water has the necessary experience, expertise, capabilities and track record to speak authoritatively on integrated water resource management. The Water Services Authorities also believed that the organization is contributing constructively towards the realisation of their developmental mandate and attainment of the water and sanitation goals set by the South African Government through The Strategic Framework for Water Services and achievement of targets set during the World Summit on Sustainable Development in Johannesburg. The Water Services Authorities also identified Umgeni Water's strengths to lie in the fields of water quality management, water quality monitoring, water treatment and laboratory services. This information is crucial because it validates Umgeni Water's position and vindicates the establishment of the organization by the government, whose primary activity was to provide sustainable and high quality water services. There were however customers who felt that Umgeni Water is arrogant, supercilious and untrustworthy. These strong statements were informed by the business dealings spanning a period of 17 years. The only reason that makes these Water Services Authorities continue to use Umgeni Water even under these circumstances is because of the geographical location of the company and its strong financial muscle. The final conclusion drawn is that Umgeni Water is well positioned in the minds of the customers, and is supplying vital services that are perceived by the Water Services Authorities to be adding value to the businesses that they are involved in. In order for Umgeni Water's position to be sustained and cemented in the minds of the customers, immediate attention should paid to critical issues such as ensuring that the intended position of being the service provider of choice is both meaningful and believable by all customers. Umgeni Water should align its value systems, core beliefs and cultures with those of the Water Services Authorities to enhance the possibilities of building long-term relationships. The organisation should also ensure that its Communication Strategy communicates the intended position as well steps to be undertaken to reach that position. It is also important that customers input into this strategy. Umgeni Water should also gather more information on the customers' businesses to enable them to increase the value adding activities and thus leverage value for customers. Another important recommendation is for Umgeni Water to revisit its pricing strategy because of the perception that the products and services are highly priced. The organization will need to conduct a benchmarking exercise to compare its prices against both the water utilities and the water sector. It has also been recommended that Umgeni Water reposition the professional services offered by the organization. This is because of a revelation by 18% (figure 10) of Water Services Authorities felt that the professional services offered by Umgeni Water do not meet their requirements. To improve this position, Umgeni Water should emphasize non-payment of its services provided unless they meet the required standard. The organization should also identify, amplify and communicate the benefits accrued through the professional services to these Water Services Authorities. Once the Water Services Authorities have realized the immense benefits that are accrued through these services and the insistence of honoring payments only after the quality of the final work produced has been acceptable, chances are greater for repeat business and this will ultimately lead in Umgeni Water being recognized as the preferred provider of services.


Thesis (M.B.A.)-University of KwaZulu-Natal, Pietermaritzburg, 2004.


Positioning (Advertising)., Water utilities--KwaZulu-Natal., Water resources management--South Africa., Water--Management--KwaZulu-Natal., Theses--Marketing management.