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New roles, new rules: does private sector participation benefit the
poor?
The involvement of the private sector in the provision of water and sanitation
services is currently one of the more contentious development debates.
The issue provokes heated discussions, from international conferences
in The Hague, Bonn and Johannesburg to the city streets of Cochabamba
or Manila where governments increasingly rely on the private sector involvement.
In collaboration with Tearfund, another UK-based development non-governmental
organisation, WaterAid examined the impact of this reorganisation on the
rural and urban poor in 12 developing countries. A number of areas of
concern emerged where private sector participation (PSP) may either jeopardise,
or fail to promote, reliable, affordable and sustainable access to safe
drinking water for the poor.
The study found that:
- As state agencies are scaled down and private companies take over
their roles, there is a danger of losing public sector capacity in water
and sanitation provision, permanently. Ultimately it is the government's
responsibility to ensure that there is universal access to these essential
services.
- While responsibility for service provision changes from public sector
to the private sector, the poor generally remain in their old roles
as invisible, passive recipients of development. Decisions and contracts
are made for them, not with them and they frequently lack access to
contract information.
- Calculations of the costs and financing of water and sanitation services
often ignore the complexities of poverty. Increased tariffs to cover
costs ignore the fact that poor households may spend proportionately
100 times more of their income on water expenditure compared to the
better off. The costs of not having access to water and sanitation services
are rarely examined.
- Although non-interference from political authorities in decision-making
can be an advantage, mechanisms of accountability are needed to prevent
corruption and inefficiency, whether the operator is public or private.
PSP is not yet as desirable as it could be because, in most developing
countries, there is insufficient capacity for regulation, community participation,
and enforcement of rights and entitlements. Markets are under development
to control monopolistic practices.
A critical analysis of the new roles and new rules created by PSP is
needed. A multi-stakeholder review of PSP, similar to the recent World
Commission on Dams, should begin. A basic divide remains: opposition to
the increasing PSP in water and sanitation services delivery versus the
nearly universal promotion by donors of PSP policy. Only a multi-stakeholder
review can definitively answer whether PSP benefits the poor.
Further recommendations include:
- Build government capacity to shape policy reform according to the
interest all of their citizens, to regulate services (public or private)
and to process grievances. With political will and institutional commitment,
locally-made solutions are possible.
- Develop the readiness and capacity of civil society to engage in
private sector contracting processes and encourage the private sector
to be open to meaningful engagement with civil society and to understand
their roles as businesses in the context of extreme poverty.
- In urban areas, water utilities may be more flexible than municipal
governments in delivering services to the poor, with less political
interference. But community organisations acting on behalf of the poor
are key to successful partnerships. In Dar es Salaam, the Keko Mwanagan
water user committees accessed piped water after negotiating with the
Water and Sanitation Authority.
- Consider cheaper technology and less expensive financing schemes
to widen the choice.
- Change the current precondition for PSP in the awarding of loans
and grants to developing countries, to one that ensures the poor are
served and included in decision making processes.
Belinda Calaguas, Eric Gutierrez, Joanne Green and Virginia Roaf
Belinda Calaguas
WaterAid
Prince Consort House
27-29 Albert Embankment
London SE1 7UB
UK
T +44 (0) 20 7793 4502
F +44 (0) 20 7793 4545
BelindaCalaguas@WaterAid.org.uk
www.wateraid.org.uk
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