Donors claim that aid tied to neoliberal policies has given way to poverty reduction strategies that emphasise poor people’s ownership of and participation in projects. Research on water privatisation in Tanzania shows little has changed.

Over the last two decades, donors have imposed neoliberal strategies such as privatisation of basic services in exchange for aid and debt relief to developing countries. Today, donors stress that such ‘conditionality’ has been replaced by ‘ownership’ of projects by poor people.

A report from ActionAid in the UK argues that a donor-led water privatisation project in Dar es Salaam, Tanzania, reproduces such donor pressures and has ignored the needs of poor people. In 2003, the Dar es Salaam Water and Sanitation Authority – a poorly-functioning public utility serving only 90 000 households in a city of 2.5 million – was leased to City Water, part-owned by the UK-based company BiWater. The UK, a significant supporter of privatisation in Tanzania, insured BiWater against risk.

As one of the world’s most donor-dependent states – aid accounts for 41 percent of all government spending – Tanzania is weakly placed to resist policy advice. The report argues that the World Bank used the promise of a US$ 143 million loan to push through an inappropriate project in the face of public opposition.

Key research findings include:

• Donors are still applying pressure, and this has been crucial in Tanzania’s water privatisation: ‘hard’ pressure, in the form of conditions attached to aid, and ‘soft’ pressure, in terms of advice and consultancies that favour privatisation.
• Widespread public opposition was ignored, and in fact very little consultation and participation on the part of civil society (including women, with primary responsibility for providing water) or parliament took place.
• Risk is largely carried by the public sector, as City Water contributes only a fraction of the money needed for repairs.
• Costs have increased, but quality remains poor.
• Poor people are being marginalised: what little attention poor people received was merely symbolic, and higher rates mean that people living in poorer areas without water connections are likely to face higher water bills from their neighbours and water vendors.
• Donor resources, and the Tanzanian government’s current and future tax revenues, will be used to fund a project in which 98 percent of the money will be spent on the richest 20 percent of the city’s population.

BiWater itself has a reputation internationally for failed concessions and breaking the terms of its contracts.

Donors are urged to:

• stop the practice of tying loans, aid and debt relief to risky and unproven policies
• restrict loan conditions to what is necessary to ensure that aid is spent on those it is intended to benefit
• give countries the opportunity to develop locally conceived, appropriate solutions.

The experience of Dar es Salaam highlights the need for donors to stop using their influence to push poor countries into privatising basic services without regard for public opinion or the needs of poor people.

NB: Since the publication of this report, the Tanzanian Government has cancelled City Water’s contract.

Source(s):
‘Turning off the taps: donor conditionality and water privatisation in Dar es Salaam, Tanzania’ by Romilly Greenhill and Irene Wekiya, ActionAid, September 2004 Full document.

Funded by: ActionAid

id21 Research Highlight: 25 July 2005

Further Information:
Romilly Greenhill
Hamlyn House
Macdonald Road, Archway,
London N19 5PG
UK

Tel: +44 (0) 20 7561 7561
Fax: +44 (0) 20 7272 0899
Contact the contributor: rgreenhill@actionaid.org.uk

Actionaid, UK

Other related links:
'Will water privatisation deliver the services?'

'Water privatisation fails to fulfil its promises'

'Private sector participation in water supply: too fast, too soon?'

'‘Pro-poor’ water privatisation: ideology confounded in Bolivia'

'Water privatisation in Africa: how successful is it?'

'PPPs, PWUs or PUPs? Alternatives to private sector water delivery'