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.

Source(s):
'New roles, new rules -does private sector participation benefit the poor', WaterAid indepth publication, Februrary 2003

id21 Research Highlight: 10 March 2003

Further Information:
Belinda Calaguas
WaterAid
Prince Consort House
27-29 Albert Embankment
London
SE1 7UB
UK

Tel: +44 (0) 20 7793 4502
Fax: +44 (0) 20 7793 4545
Contact the contributor: BelindaCalaguas@WaterAid.org.uk

WaterAid

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