Politics of Privatisation

This week I will be looking at the politics of privatising water and whether it can be a viable alternative to mismanaged state water supplies.

Background

The privatisation of water supplies in Africa began arguably as ‘ideological enthusiasm driven by State Failure in the Washington Consensus Era’ (Pierce, 2015). It can be viewed as a neoliberal solution to failed government attempts to provide clean and safe water to populations. Privatisation attempts were furthered spurred on by institutions such as the World Bank and IMF who support market-approaches and include privatisation of water supplies as conditionalities to loans. ‘IMF loan agreements in 12 countries included conditions imposing water privatization or full cost recovery’ (Ratical, 2015), however arguably this makes water less accessible and affordable for poorer communities.

However it is important to note that privatisation ‘encompasses a spectrum of contractual agreements’ (Bayliss, 2003) and interventions vary between countries. This can include small-scale management by private sector organisations all the way to full ownership transfer of water provision.

                                                                                                   

Water Privatisation Protests in Lagos, Nigeria

Source - http://www.brettonwoodsproject.org/wp-content/uploads/2015/07/Civil-society-protest-against-water-privatisation-March-2015-credit-Corporate-Accountability-International-p3.jpg

         

Successes

Cote d’Ivoire’s water privatisation can be seen somewhat as a success story. Privatised in 1960 it was far ahead of many other African countries and a contract was given to French firm SAUR to run the water company ‘SODECI’. Between 1960-87 water was high quality and there were low levels of unaccounted for water (Bayliss, 2003). Cote d’Ivoire highlights a hybrid system, where whilst SODECI supply water – producing, distributing, managing, maintenance etc., the state still own the network, provide financing for investment and sets the tariffs.

In 1987 the contract was re-negotiated and the state managed to reduce the fees paid to SODECI by 20% by threatening to allow other companies to bid for the contract (ibid). This highlights the benefit of competition within privately operated water provision in reducing costs, however also suggests that SODECI would have been receiving considerable profits. Thus it can be difficult to decide whether privatisation has really benefitted Cote d’Ivoire, certainly there is room for improvements and less profit. In spite of this the connection rate has increased (38 towns in 1974 to 411 in 1966), however water quality has declined since 2002 (ibid).

Interestingly, SAUR who manage Cote d’Ivoire’s water also manage water supplies in Guinea, Central African Republic, Senegal, Mali and parts of South Africa. Due to this large multinational water companies have been accused of accruing monopolies over water supply in Africa in a ‘neo-colonial’ manner (Vidal, 2015).

A satirical cartoon about water privatisation

Source - http://www.herinst.org/BusinessManagedDemocracy/government    

Failures

Conversely, water provision on the Dolphin Coast, South Africa, arguably highlights a case study of mismanagement and the negative impacts of privatisation. In 1999 the water concession was given to SIZA water company (majority owned by SAUR) (McDonald, 2002). Water plays an important role in South Africa as it was entrenched in their constitution that all private companies must provide at least 25 litres of water per day to every resident (Megaloudi, 2013). This stemmed from the 2000-2002 cholera outbreaks in Johannesburg where slum residents couldn’t afford increased bills and thus were disconnected from supplies and forced to drink contaminated water. This resulted in illness for around 100,000 people and the deaths of 100 (ibid). Thus in 2001, the Dolphin Coast contract was re-negotiated to include the free-water policy.

However the movement from subsidies to cost recovery models of water provision had negative implications for much of the Dolphin Coast’s poor. The notion of cost recovery suggests that everybody must pay something to access water. In the Dolphin Coast pre-payment systems were implemented as well as connection fees to access the network (McDonald, 2002). However high poverty and unemployment rates meant that many couldn’t afford these and were thus cut off for non-payment. This resulted in around 90% of residents in some areas accessing water from elsewhere (ICJJ, 2016) – often unsafe water supplies. Critiques of this cost-recovery model are as follows

‘It Makes perfect sense in equitable society, but excludes poor from access to a basic commodity’ Mike Muller, Director General of Government Water Department

"The cost recovery program sounds good, but…it forced people to go back to the original sources of water, polluted streams and rivers and the like.” David Hemson of South Africa’s Human Sciences Research Council (McDonald, 2002)

McDonald (7) highlights that cost recovery in fact undermined its own economic rationale, for example the cholera outbreak in 2000 ended up costing far more in medical bills and emergency water supplies than simply providing free water would have. Thus clearly, despite well-intentioned to provide increased funds for re-investment this private experiment failed. Furthermore it is estimated that around 43,000 people die every year in South Africa – mostly poor black children under 5 – from diarrhoeal diseases (Moodley, 2000). This statistic highlights that its not just an argument of private vs. public and economics, but the realities of water supply are life vs. death.

This example raises a lot of moral questions and I feel David McDonald (2002) sums up the water as a commodity vs. water as a human right debate well stating

‘Just because someone can afford to pay the cost of filling their swimming pool or washing their cars every day, should they have the right to do so when others are struggling to survive with no water at all?’

Conclusion

Clearly then, water privatisation success is context-dependent. Whilst mainly improving things in Cote d’Ivoire, it had drastic and devastating impacts within South Africa. I feel that the whole private vs. public debate can mask the true implications of water provision which for many people is life or death, exemplified by the cholera outbreaks in south Africa.

List of References

Bayliss, K. (2003) ‘Utility privatisation in Sub-Saharan Africa: A case study of water’, The Journal of Modern African Studies, 41(4), pp. 507–531.

ICIJ (2016) Metered to death. Available at: https://www.icij.org/project/water-barons/metered-death (Accessed: 28 December 2016).

McDonald, D. (2002) ‘No money no Service’, Sustaining Livelihoods, 28(2), pp. 16–20.

Megaloudi, F. (2013) ‘When water is for sale: What water Privatisation really means’, Huffington Post, 4 June. Available at: http://www.huffingtonpost.co.uk/fragkiska-megaloudi/water-privatisation-what-it-really-means_b_3381233.html (Accessed: 28 December 2016).

Moodley, S. (2000) Investigating Total Economic Burden: South Africa’s Diarrhoeal Disease Burden in 1995 (Johannesburg: Group for Environmental Monitoring, 2000)

Pierce, G. (2015) ‘Beyond the Strategic Retreat? Explaining Urban Water Privatization's Shallow Expansion in Low- and Middle-income Countries’ Journal of Planning Literature 30(2) 119-131.

Ratical (2015) IMF forces water privatization on poor countries. Available at: https://ratical.org/co-globalize/waterIMF.html#table (Accessed: 28 December 2016).

Vidal, J. (2015) Water privatisation: A worldwide failure? Available at: https://www.theguardian.com/global-development/2015/jan/30/water-privatisation-worldwide-failure-lagos-world-bank (Accessed: 28 December 2016).