[stop-imf] Water privatiz. in Africa from Yellow Times

[Robert Weissman]

''Water privatization in Africa''
Printed on Thursday, June 06, 2002 @ 09:02:10 EDT   (  )

By Wole Akande
YellowTimes.org Columnist (Nigeria)

(YellowTimes.org) - Water privatization is a big issue in many
African countries. Investors say it brings efficiency. Opponents say
it hurts the poor. Whatever one believes, the poor have no say in the
matter. In Tanzania, privatizing the Dar es Salaam Water and Sewerage
Authority (DAWASA) was one of the conditions given if the country was
to receive the HIPC debt relief. Recently, the government raised a
credit to fund the $145 (US) million upgrade of DAWASA, needed to
sell off the company at a lower price, effectively increasing the
national debt it seeks to reduce. Accordingly there are concerns that
the privatization will produce higher water bills or even become
another corruption trap.
The African Development Bank (ADB) on May 31st sent out a release
saying it had signed an agreement with Tanzanian Deputy Minister for
Finance, Alhaji Adbisalaam Issa Khatibu, for a loan of approximately
$47 million. The loan was to partially finance the "Dar-es-Salaam
water supply and sanitation project." The shortfall of $98 million
will be borrowed from the World Bank, and, more surprisingly, from
the European Investment Bank and Agence Fran=E7aise de D=E9veloppement.

According to ADB, the "project" consists of improving "in terms of
accessibility, quality, reliability and affordability [the water]
services to the population." Further, the project would "contribute
to poverty reduction and improve the economic and social well-being
of the people of Tanzania by providing them with a better access to
clean water, thereby, reducing the incidence of water borne diseases
among the vulnerable groups."

The concept sounds promising, but critics don't agree that "poverty
reduction" is the real aim of ADB's Dar es Salaam project. The
project's aim, they hold, is merely to make it possible to find a
buyer for DAWASA. Ominously the company, owned by the Tanzanian
Ministry of Water, will need to significantly increase its value due
to the new investment in infrastructure and billing. In view of a
recent privatization scandal many skeptics fear the project only will
enrich the Tanzania's president's family.

The scandalous privatization of the Tanzania Electricity Supply
Company (Tanesco) shocked Tanzanians. The small South African
engineering firm NET Group Solutions on 2 April 2002 beat several
foreign companies to sign a lucrative contract to run Tanesco.

During April, it turned out that NET Group Solution was "a very small
firm" with inadequate capacity to handle Tanzania's national
electricity grid. Then it became known that the firm's Tanzanian
partner was a company owned by President Benjamin Mkapa's
brother-in-law. "Most shocking was the fact that the directorship of
the local firm includes primary schoolchildren," wrote the
Nairobi-based "East African" in an editorial. After the scandal was
out, the government rejected a parliamentary demand to reveal the
details of Tanesco's management contract. The privatization process
now continues secretly.

In the last five years, the International Monetary Fund (IMF) has
been insisting on privatizing DAWASA, as a condition to include
Tanzania in the enhanced Heavily Indebted Poor Countries (HIPC)
initiative. HIPC inclusion provides Tanzania with a significant debt
service relief, theoretically worth billions of dollars.
Unfortunately, conditional structural reforms, including water supply
privatization, however often are a high price to pay.

This is not an IMF demand that is unique to its Tanzania policy. The
fund is promoting water supply privatization all over the African
continent, often causing protests from civil society and
international anti-globalization groups. Although African state-owned
water suppliers mostly are ineffective and run-down, they at least
have provided many urban poor people with cheap or free water.
Protesters claim these international takeovers are excluding the poor
from an affordable clean water supply.

In all fairness, the water supply and sanitation of Dar es Salaam
indeed doesn't have the best of reputations. According to the
DAWASA's "owner" Festus Libu, Tanzanian Minister of Water,
"infrastructure built in the 1970s is deteriorating rapidly." It is
estimated that 50 percent of the water is lost through leakage and
illegal links to the system. Minister Libu insists DAWASA is
suffering "from poor billing and revenue collection and inadequate
water sources both in terms of quality and quantity." Naturally after
privatizing over 300 state-owned enterprises, the Tanzanian
government agrees to the IMF cure of privatizing DAWASA.

Every day 30,000 children in the Third World die of preventable
causes. Many of them could be saved if they had access to safe water.
The World Bank argues that governments in impoverished countries have
to privatize their water supply and distribution systems if they are
to get the efficient delivery of water that is needed.

On the face of it, the argument makes sense. The adequate supply of
water and other public services is too often frustrated by inadequate
funding, inefficient bureaucracy or lack of political will. Promoters
of private ownership say it brings investment and cost-effective
service.

Experience and common sense say otherwise. Private investors aren't
attracted by poor and rural communities. Any improvements that might
come with private ownership are in areas that generate profit.
Private water, telecommunications and electricity companies tend to
focus on efficiency in collecting tariffs, but not on improving
service. Costs usually leap up quickly, annoying middle class and
wealthy customers but leaving the poor without service at all.

According to the Congress of South Africa Trade Unions, privatization
has cost 200,000 people their jobs. In poor Soweto neighborhoods, up
to 20,000 homes a month are disconnected from electric service for
nonpayment.

People in affected communities don't have a voice in how or if they
want their services privatized. People in impoverished countries want
efficient service. In some, privatization may be the way to go. They
need to be allowed to choose if it is appropriate for them.

A May 2001 report by Kate Bayliss, a Research Fellow at the
University of Greenwich, Britain, titled "Water privatisation in
Africa: lessons from three case studies" concluded that "high prices
and disconnections must mean that the poorest segments of society are
likely to be the main losers from the privatisation process. Where
this increases use of unsafe water sources, the consequences will be
disastrous for public health."

[Wole Akande, a former opinion columnist with Ireland's Irish
Examiner newspaper, is a freelance journalist. In addition to his
work with YellowTimes.org, Wole also maintains
http://www.abeokuta.org, a Nigerian community website.]

Wole Akande encourages your comments: wakande@YellowTimes.org

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