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Social services

News

Privatisation of water not “pro-poor”, NGOs warn

18 June 2001

Local and national resistance to putting the management and supply of water in the hands of profit-making foreign multinationals is detailed in a new review by the Globalisation Challenge Initiative. This shows the Bank and IMF pressing ahead with water privatisation worldwide, sometimes at the expense of the poorest.

NGO representatives from Burkina Faso, Ecuador, Ghana, Mozambique, Nicaragua and Tanzania discussed the issue at a meeting in Washington DC in April. The Ghanaian organisation Integrated Social Development Centre (ISODEC) called for a wider public debate on alternative approaches to improved water supply management, stressing that contracting services to private operators is not “pro-poor”. They referred to the Government of Ghana’s plan to lease the operation, maintenance and management of the urban water supply system to two multinational corporations, using World Bank support.

“The proposal to lease the urban water service to foreign multinational companies should not be the only policy option on the negotiation table,” says Rudolf Amenga-Etego from ISODEC. He suggests strengthening local or municipal management for urban as well as rural water delivery.

“The involvement of small private sector contractors in urban water service delivery could certainly be a part of public/private partnership. However, the proposed leasing of the urban water utility to foreign multinational companies raises a number of important questions” he continues. These questions concern tariff structures, the capacity of regulatory institutions, public accountability, affordability to the poor and volatility of foreign investment.

Bank-supported private sector participation programmes promote full cost recovery – the principle that people should pay the full cost of water, or go without. Yet, ISODEC estimates 50-70 per cent of the urban population in Ghana live in poor shanties dotted around the cities. Most of them earn less than one dollar per day. “The current water tariff rates that the government of Ghana and the World Bank think are ‘below the market rate’ are already beyond the means of most of the population in Ghana,” says Amenga-Etego.

The World Bank’s team leader for the project in Ghana argues that assets will remain in government ownership. The goal of involving private companies, he says, is to minimise operational costs and therefore capital recovery costs. The Public Utilities Regulatory Commission will continue to set tariffs. This includes a minimum guaranteed water “lifeline” for low-income families – something actively promoted by NGOs, including those in the new International Water Working Group.

The NGO working group’s national counterpart in Ghana, the National Coalition Against the Privatisation of Water, consists of a broad spectrum of organisations in Ghana which is seeking to stop the World Bank-backed proposal to privatise the urban water service in the Accra metropolitan area. Commenting on the privatisation of water in his country, Filomeno Sta Ana, Forum for Economic Reform based in the Philippines says “it’s important to have civil society organisations monitor the private utilities and launch vigorous campaigns against unjustified tariff hikes.”

The World Bank is currently conducting a review of issues in the water and sewerage sectors. This will feed into a Water Business Strategy.

Globalization Challenge Initiative briefing

Public Services International briefing

World Bank papers on Public Private Partnerships in Water

Other World Bank material on water issues

Email the World Bank’s Director, Energy and Water – Jamal Saghir