As the people of Gqeberha know all too well, water is a scarce and increasingly scarce resource. They are not alone. Globally, more than two billion people – almost 30% of the world’s population – live in conditions of water scarcity and this number is expected to rise to 50% of the population by 2030.
The problem is compounded by the lack of funding for water infrastructure.
The global financing gap for water infrastructure could exceed $18 trillion by the end of 2030, as highlighted in a 2016-2018 OECD report. This presents a major risk to business and society.
Financing of hydraulic infrastructures
Now, a South African company with an established pedigree in providing global water solutions has developed a financing model for water infrastructure.
A key part of this model is a cryptographic token, called H2ON Token (Water Network)which will be listed on Bitmart, a global cryptocurrency exchange on Monday.
It will be available in secondary markets by Thursday, meaning that for the first time ordinary people will be able to invest in water infrastructure.
The token has been available on decentralized cryptocurrency exchanges for a few months.
“Our initial decentralized listing provided us with evidence of great interest in the concept of a H2O Securities digital token. With an initial listing price of approximately $0.75 and a trading volume of $100,000, it jumped to $5 in just a few hours and topped $11 less than 24 hours later,” says Julius Steyn, CEO and Founder of H2O Holdings.
Steyn was the former CEO of Grahamtek Holdings, the Cape Town company that won a R5 billion tender to design, build and operate a desalination plant in Saudi Arabia in 2018.
The company also helped the Saudi government develop a financial model for the water sector, which the government was in the process of privatizing at the time. This model was later accepted by global financial markets.
The token, H2ON has already attracted investment, with $150 million coming from GEM Digital Limited, a Bahamas-based digital asset investment firm that invests in utility tokens listed on more than 30 centralized and decentralized exchanges across the country. world.
The token is only a means to an end – in this case, raising capital to fund global water projects.
Once in service, the sale of water reimburses the initial financing costs of the project. Water is priced at a fair rate determined by the World Bank. For their trouble, investors can expect a return on investment of around 20% per year.
“The only way to reduce water scarcity in the world is to increase water production and reduce the cost of water,” says Steyn.
“After our experiences in Saudi Arabia, we were looking for a way to exploit our intellectual property and industrialize it.”
Despite the current “crypto winter”, modern financial tools have a role to play.
“There is a big crypto world out there, and most of it is the Wild West. But if you can use this new technology as a means to an end, not an end in itself, then you can achieve incredible efficiencies in the marketplace,” he says.
The result is H2O Water Securities, a company that combines finance, infrastructure and expertise in the deployment and operation of water plants on a global scale. Not all expertise resides within the company.
Steyn said that the H2ON token mainly focuses on financing water projects internationally and not so much on the technical engineering and construction of such projects.
By way of example, he likens the company to SA Homeloans. “They don’t build houses…they finance houses. But they want to know that the the plans are solid, the builder is qualified and your home is insured.
But where SA Homeloans is limited by its traditional methodology, the sky is the limit for the H2O Water Network, created by H2O Securities.
It is actually a blockchain-powered technology platform that allows projects to be reviewed by international experts and engineers from all over the world.
By relying on this network, the approval chain is simplified; funding becomes easier and risk is reduced as the blockchain diversifies exposure across multiple projects in a given portfolio.
There are currently many water projects around the world that are ready for development, but lack the funding to complete, Steyn says. Alternatively, the need may exist, but the local government may not have the capacity or skills to put a project and funding together.
This solution aims to close these loops.
The company inaugurated its first project and will carry out another one this year. “We want to prove the concept to our investors.”
Unfortunately, for the people of Gqeberha, the ground that has been broken is far from them – not for lack of trying, says Steyn. BM/DM