World Bank and IMF forcing privatisation: new report

21 July 2003

Privatisation imposed by the World Bank and the IMF can be harmful to the most vulnerable, says a report published in July by Halifax Initiative and Social Justice Committee in Canada. They argue that “the winners in privatisation of water are private companies” and say the World Bank and the IMF are “forcing [governments] to attempt large-scale privatisation regardless of their capacity to ensure that this is in the best interests of the people they serve.” As a result, “privatisation often leads to the loss of jobs. It often results in lower quality service to the poor and in higher costs for communities at large in impoverished countries.”

The authors use case studies to show the adverse effects of privatisation such as price hikes: “Even though low income people cannot afford current rates for piped water, tariffs in Ghana are considered by the World Bank to be below market rate.” They denounce the insistence of the IFIs on such measures, despite evidence of failures: “In the end, the privatisation of mining in Zambia has not gone well for the country or for the investors. (…). The World Bank response was to call for more privatisation in other sectors, saying this would help shift the economy away from its reliance on one commodity.”

The reports criticizes not only the outcome of privatisation, but also the process: “The people affected have not been a part of the design and implementation of the processes, and have not been a part of the decision-making that accompanied them.”

In conclusion, the authors call for the abandonment of privatisation as a condition: “Given the negative impacts that too frequently accompany privatisation in these countries, it follows that privatisation should not be a condition for assistance and debt relief and the financial institutions should cease incorporating privatisation requirements into their programs.”