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Urban water supply and private sector in Africa

 fOR THE RECORDS

Input prepared for the Infrastructure Consortium of Africa Private Sector Involvement in provision of Water and Sanitation, 27 November 2008, Dakar , Senegal

By Simphiwe Nojiyeza

 

My main arguments are the fact that private sector involvement in countries such as Burkina Faso, Central Africa Republic, Chad, Republic of Congo, Cote d’Ivoire, Gabon, Mali, Mozambique, Niger, Senegal, South Africa managed to improve tariff collection, but failed to enforce payment by government departments and entities, created confusion with regards to the role of government as a regulator. In fact staff members employed in the private sector earn more than those in regulatory bodies and weakens the ability of the government to regulate the private sector.

As a result of that we have the private sector that is so powerful and unregulated that it poses threat to the government and have more bargaining power when concessions are renegotiated. They have more capacity than the regulators, in such a manner that we have a service provider that has resources and a water authority that has resources constraints and this leads to corruption and the poor become the victims of the situation when they do not get access to amenities such as water and sanitation.

The other challenge is that high prices and disconnections meant that the poorest segments of society are likely to be the main losers from privatisation process and there is also an increase in the use of unsafe water sources by the poor which make them vulnerable to diseases.

In most countries it has been difficult having separate bodies responsible for investment and maintenance and also there is competition and role confusion between public utilities and private providers, unclear responsibilities, weak regulation, political influence and lack of independent regulators as public entities are failing to regulate private sector profit accumulative motives which they hide behind the invisible hand of Adam Smith ( Wealth of Nations) now called corporate social responsibility.

The campaigns against privatisation that were prevalent in Ghana, South Africa and Kenya at the beginning of this decade were informed by concerns that communities were not involved as discussion takes place in higher levels. The shooting of anti privatisation protesters in Mali weeks ago are clear indications that the private sector involvement is taking place without the blessing of the poor who are meant to benefit.

It is also a clear indication that private sector involvement could result in civil disobedience if not managed properly as a case in point in Mali where police opened fire to protesters, killing one and injuring some of them.

The latter part of my arguments is that in countries where contracts were withdrawn such as Gambia, Guinea, Kenya, Mozambique, South Africa and Zimbabwe, it was the companies themselves that unilaterally decided to withdraw because feasibility studies were not approved by local authorities such the case of the Kibera Urban Environmental sanitation project that was rejected by Mayor of Nairobi Dick Waweru, tense relations between VIVENDI and the state company called Management service Gambia, the liquidation of Azurix a subsidiary of Enron which coasted Ghanaian taxepayers $800,000 when they opted out of the contract because the World Bank refused to co-finance a project, the cancellation of the ViVENDI contract in Guinea because it was expensive and also because Vivendi was not going to make maximum profits, disgruntled shareholders that were concerned by less return on investment called for cancellation. All these case studies highlight the fact that the private sector require a climate where the returns are expected to be high and their motives are not the same as those of the state actors.

It is therefore imperative to focus on strengthening state utilities, local government and regulatory bodies. The statements postulated by the private operators that state institutions are inefficient, lack capacity and corrupt is propaganda that is ensuring that the richer continue to be rich and the poor continue to lack resources.

There are public utilities that are very efficient in most African states and this need to be scaled up and make sure that there is a mix of public providers as well as private providers. Public providers will fill the gap that private providers create when they put prices so high that they undermine the right to water. Private provision should take into cognizance the right to water.

Water could not be sold like bus coupons where an individual could take a bicycle if buses are expensive. There is no substitute for water, therefore it is a human right and private provision has to a greater extent undermined this basic human right when poor people are denied this right if they are unable to pay, they are cut off or restricted.

The existence of public water supplies depends on a political commitment to deliver clean water to all and on public authorities with capacity to deliver services. Political activity is positively important in order to strengthen this commitment and improve public accountability and transparency.

Donors can assist this by avoiding imposing external policy conditionalities, and by offering public-public partnership to support capacity-building. In Africa we do have municipalities that buy bulk water from public utilities and reticulate it to the users at an affordable tarrifs. The private sector skills could be included to strengthen public –public partnerships e.g. installation of treatment plants, assist municipalities with credit control mechanisms such as billing, performance appraisal systems etc.

 Some of these functions could be performed by private operators without taking over the state ownership and management of water resources that may have adverse impacts on the poor.

Private sector involment is also failing to acknowledge the importance of the 3 factors of production.

Labour-

There is a need for training programmes to develop a competent workforce at all level, from senior management to line staff, for greater recognition of the importance of workers relationships with communities, for involvement of workers in reform processes, and for adequate levels of pay. Donors need to re-develop policies for supporting training and capacity- building. Suitable trained employees will be in a position to regulate private providers. Poor paid state employees will be vulnerable to take bribes from private providers. This is the missing link in creating an enabling environment for private sector participation in provision of the water and sanitation infrastructure.

The Natural Resource

Capital

is needed to build new systems for capturing, treating and distributing water and treating sewage. The needs must be assessed locally and through democratic processes, and then public finance mechanisms need to be used to raise this finance, through central or local governments. Donors can help build capacity for taxation and borrowing, and provide matching financial support for water services, and assist northern investors in southern water services. of water itself needs to be captured at the same time as conserving and allocating its use, and protecting the environment is imperative. Public mechanisms for evaluation and decision-making are needed, and should be supported by donors. I do not foresee private providers acting as champions of IWRM, pro poor policies, environmental impact assessments and resettlement schemes which are one of the policies that informs the AfDBs and other state actors involvement in the sector. These are important responsibilities that governments could not delegate to private operators. Workers are the first to become jobless when private sector involvement replaces a public provider. In most schemes where water was privatised workers were retrenched and those that remained in public providers do not get capacity building , career pathing and actually remunerated far less than those employed by private providers. Labour is required to build, maintain, operate and manage the system and its finances.In conclusion the private sector involvement is imperative, but it is not a substitute for state ownership of water resources, the role of state institutions in championing the human right to water which must be realised by the poorest of the poorest. The most critical enabling environment for private sector participation is strong regulatory capacity of state institutions to defend the rights of those that do not have the means to realise this fundamental right that is being undermined by commodification and corporitization of water and state institutions.

Private sector involvement should enhance and support the state institutions in realising the right to water. The desire of African citizens to get access to clean water cannot be realised through the invisible hand of the private sector, but by strong state institutions that has a mandate to realise Africa water vision, deliver water to the poor.

Amandla!

About the Speaker

: Simphiwe Nojiyeza is a researcher at the Centre for Civil Society of the University of KwaZulu Natal, Durban, South Africa, a member of Earth life Africa which is an NGO that is hosting the South African Water Caucus, a member of the Steering Committee Member of NAWISA (Network of Water and Sanitation NGOs in the SADC Region, a member of African Network on Water and Sanitation (ANEW) and former Advisory Group Member of FAN (Fresh Water Action Network). He is speaking in his personal capacity as a researcher and his views are not necessarily the positions of any of the organisations that he is associated with. For more information on this and related topics do not hesitate to contact Simphiwe at nojiyeza@ukzn.ac.za / nojiyezais@yahoo.co.uk / +27835595959 / +27787058425 (Mobile) +27 31 260 3374 (Office)