Water: Is privatisation the answer?

Privatisation of public water utilities came under intense fire at the week-long Third World Water Forum that ended in Japan last Sunday.

The World Bank and a handful of European corporations want poor governments to put their water utilities in private hands, ostensibly to improve the management of an ever-scarcer resource. They are lobbying for legislation and trade laws that will require cities to privatise their water.

A report by the International Consortium of Investigative Journalists says the World Bank has flexed its financial muscle to “persuade governments to sign long-term contracts with the major private companies”.

These companies include the French Suez and Vivid Environment, and the German-owned Thames Water.

South Africa, Malawi and other African countries have already started privatising their water utilities. But critics say that privatisation of utilities that provide essential services is unsuitable for developing countries, where experience has shown that it leads to increased poverty.


Agnes van Ardenne, The Netherlands’s Minister of Development Cooperation, says privatising public utilities does not solve the problem of providing safe drinking water to millions of poor people in developing countries.

“I believe in public-private partnership in solving these water problems. Selling public water systems will make the poor even poorer,” she says.

Michael Camdessus, former MD of the International Monetary Fund (IMF), and a panel of experts presented a report on financing water infrastructure to the forum, which was rejected. The report calls for drastic changes in the financing of water-delivery systems and billions of public dollars for dams and other “destructive” water infrastructure projects.

The representatives of civil society at the forum believe the proposals are geared more towards using public money to protect investors against risks than providing access to safe, affordable water. They believe that water is a human-rights issue and not a corporate right.

“The World Water Council’s solutions are driven by personal, institutional, corporate and political interests. They have used this forum to push public subsidies for more big dams and other destructive projects,” says Joan Carling of the Cardillera People’s Alliance in the Philippines.

Many of the representatives say they fear that water will remain inaccessible to the poor if the utilities fall in the hands of the private sector. In many developing countries like South Africa the poor cannot afford current tariffs, which usually rise when a private company takes on water distribution.

The forum heard that an estimated 1,4-billion people lack access to safe water and 2,3-billion lack adequate sanitation.

The World Bank argues that governments have failed to manage public utilities efficiently. Van Ardenne responds that donors have provided enough money to supply the poor with water, but “corruption and bad governance” have left them in the lurch.

She says Asia’s economy has improved because of good governance since the Earth Summit in Rio 10 years ago. Though corruption and inefficiency still exist, “only in Africa” have they still kept water from the poorest of the poor.

Van Ardenne is disappointed with Camdessus’s report, mainly because its programme relies on large-scale financing. “There is also a need for small- and medium-scale financing, and this will help bring in employment and reduce poverty.”

Critics say the Camdessus programme does not offer communities enough participation in water projects. This is a disaster, says Jon Lane, an expert in water and sanitation. He says the biggest problem confronting water utilities in developing countries is that government departments do not pay their water bills, so the utilities cannot meet their costs.

He wants governments to be responsible for managing water and says political will is needed “if we are to reduce poverty”.

The World Summit on Sustainable Development called for halving the number of people without access to safe drinking water by 2015, but experts at the forum were sceptical that this could be achieved, saying the goal was too ambitious.

The New Partnership for African Development relies on donors and the multilateral financial institutions to eliminate poverty on the continent. But as their presentations at the World Water Forum proved, for corporations, the World Bank and the IMF that just means business as usual.

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