Fitch flags N$3.7bn NamWater receivables crisis

The Namibia Water Corporation (NamWater) is facing a deepening debt collection crisis, with outstanding trade receivables projected to reach N$3.7 billion by the end of the 2027 financial year, according to a new report by Fitch Ratings.

The figure, up from a projected N$3.1 billion at the end of the current financial year, underscores what the agency describes as persistently weak collections, a problem concentrated among local authorities and individual customers, who account for 49% and 41% of outstanding balances, respectively.

Fitch, which affirmed NamWater's long-term issuer default ratings at 'BB-' with a stable outlook on 28 April, said it has taken a conservative approach to its forecasts and assumed cumulative working-capital-related cash outflows of about N$448 million between 2026 and 2030, despite ongoing collection efforts and discussions with government ministries on possible remedial measures.

The agency offered no indication that a breakthrough was imminent.

Frozen tariffs

The receivables problem sits alongside a separate but related pressure: tariffs have remained frozen for six years, except for mining customers. That standstill has pushed NamWater's earnings before interest, taxes, depreciation and amortisation into negative territory, recording a loss of N$244 million in the 2025 financial year, and Fitch projects cumulative negative free cash flow of approximately N$682 million between 2026 and 2030.

NamWater has submitted a tariff revision request for the 2027 financial year, currently under consideration by the relevant ministries. Fitch said its base case, however, assumes tariffs remain frozen in 2027, with annual increases of 5% from 2028 onwards.

For now, the corporation's financial position is cushioned by a strong cash buffer. NamWater holds no gross debt following the repayment of its April 2022 bond, and cash and short-term investments are projected at N$2.1 billion at the end of the 2026 financial year. Fitch expects the corporation to retain a net cash position of N$1.6 billion by 2030, funded through internal cash balances, government grants and new borrowings.

The rating itself is anchored to the Namibian sovereign.

Fitch equalised NamWater's rating with Namibia's 'BB-' sovereign rating, assessing government's decision-making and oversight over the utility as "very strong" and its precedent of support as "strong". Any change to Namibia's sovereign rating would trigger a corresponding move for NamWater.