IFC helping Western multinationals exploit Ghana's water crisis

Comment|Alhassan Adam|13 September 2011|update 77|url
print|email |bookmark

The water supply crisis in Ghana is being exploited by all manner of pro-market corporate bodies ranging from the World Bank to Coca-Cola. While the World Bank is licking its wounds from failed private water management initiatives, such as the Aqua Vitens Rand Limited management contract in Ghana, the International Finance Corporation (IFC), its private sector arm, is investing in small-scale private water ventures via WaterHeath International (WHI)

WHI’s business model involves constructing small micro-utilities that disinfect local water and sell it to the rural and semi-urban poor in developing countries. Communities are loaned start up costs, and revenue from selling the water is used to pay this back and cover operating costs, with communities eventually taking ownership of the facility. The IFC has supported the company since it was founded in 1995. Most recently WHI received a $25 million IFC loan in 2010 to fund the company’s expansion beyond India, into West Africa and Bangladesh.

The extent to which this model is driven by massive water-using corporations should not be underestimated. WHI boasts of corporate partnerships with the Coca-Cola Company and UK drinks giant Diageo. WHI’s scheme in Ghana was initiated by NGO the Safe Water Network, of whom Pepsi Co is a major funder. WHI is a new Trojan horse used for the purpose of introducing “market solutions” as the panacea for the current water crisis in developing countries.

This scheme looks excellent at project inception, with its low maintenance requirement, but five years after handing over to the community, the infrastructure’s maintenance needs vastly increase. Usually the amount required for repairs and maintenance is larger than the revenue generated from the system. Communities at this stage will be at the mercy of market forces who will exploit their misery. The danger of such a move is to open the flood-gates for greedy speculators to begin the race of exploiting unserved rural and urban populations.

These stand-alone initiatives end up increasing the costs to governmental departments, who are called upon to rectify the defects when the project sponsors have packed their baggage after the pomp and pageantries are over. There are a number of such projects dotted across the country. It is evident that “markets” cannot be trusted to deliver even non-essential non-public goods such as banking services, so how will they guarantee access to water? It would be a tragedy to allow the IFC to continue financing these projects.

What is needed is for the World Bank to scale up their grants to the state-owned enterprise, the Ghana Water Company Limited (GWCL) to expand its capacity to deliver potable water to such communities. It is curious to note that one of the partners of WHI is Coca-Cola, which bottles and retails water in Ghana drawn from GWCL. If the IFC thinks that “market solutions” are the way forward in water supply, why not persuade the Coca-Cola Company to establish their own treatment plant to feed their bottling plants? That would free up plenty of water from the public water company to supply poor and vulnerable people.

At best, WHI may help to provide a short term solution for the communities to access water, but in the long run it will run aground. The purpose of this initiative is to cleanse the image of partnering private companies who, through using so much of the public water supply, effectively exploit the public system at the expense of the poor.

Alhassan Adam, alhassan.adam[at]gmail.com

Africa Water Network

This text may be freely used providing the source is credited.

This page is: <http://brettonwoodsproject.org/art.shtml?x=568911>

Published: 13 September 2011 , last edited: 3 October 2011

Viewings since posted: 301393