Ideologies getting in the way of water & sanitation provision
An article written by Alex Nash in 2007. Well worth a read.
Water Provision for the Poor
Though it is crucial to life, agriculture and the world economy, water is probably one of the most mismanaged goods on Earth. But while current policies have left one billion people without clean water and 2.6 billion without basic sanitation facilities, many oppose practical measures to change this situation – because of ideology.
Activists tend to make broad assertions with regards to water privatisation: that most people do not benefit from it; that the private sector is inefficient; it marginalises the poor; and, most crudely, that privatization is morally objectionable.
Anti-privatisation ideologues are quick to forget that many of the world’s poorest people rely on small private operators for water – or that there are numerous successful cases of market-driven water management. Too often, they obfuscate facts and define terms in a way that suits their ideological stance.
The reality of many state-run utilities is not pretty as, too often, officials see their position as an opportunity – indeed a right – to loot the utility. While privatisation is certainly not guaranteed to be a success in countries with poor governance, publicly managed utilities are not just at risk of failing, they are virtually guaranteed to do so.
Anti-privatisation lobbyists have not helped the world’s poorest people with their ideological aversion to profit. Quite the opposite. By hastening the retreat of the alternative private model and the accountability it brings to the public sector, these well-meaning public provision ideologues have left the poor high and dry.
Some excerpts (biased toward supporting my views - rather read the article than draw hasty conclusions!):
"People in developing countries are no different from those in industrialised ones – all over the world, people really only care about the service’s reliability and affordability."
"The fact that water is necessary for life does not mean it is wrong to profit from it. The same argument could be advanced for food, or indeed any economic activity. If one believes that the private sector should not exist, or that profit is unethical, as some participants in this debate did, then we are no longer talking about the practicalities of water provision."
"Private management will not solve a serious governance problem, or eliminate corruption, or make the poor wealthy. But there is one fundamental difference between a privately and publicly managed utility that is obvious in countries with very poor governance. While public utilities are accountable to no-one and are therefore systematically looted, private management is forced to turn a profit and publish their accounts – it is simply impossible to steal funds, maintain no transparency or accountability and expect to stay in business. Before forced privatisation was attempted, soft loans were extended to publicly managed utilities. Lenders started to impose conditions after decades of public failure, not before. This was misconstrued at the conference when it was claimed that public failure was a result of these changes, rather than the incentive for them. Once again, people manipulated facts to fit their ideology.
I agree that in countries with such poor governance, privatisation is certainly not guaranteed to be a success. Poorly regulated private companies may not always serve the public interest. However under such circumstances, publicly managed utilities are not just at risk of failing, they are virtually guaranteed to do so."
"I was interested to read an article by one of the anti-private participants about the utility he works for in Recife, Brazil. He noted that prior to the threat of privatisation and the resulting political shake-up, the water utility was “untouchable”. It was only when private management was raised as an option that the public management was finally reformed and the utility started to deliver a commendable service. He sees this as proof that public utilities can do a good job and I completely agree with him. But I also see it as proof of the benefits of giving municipal governments (and therefore the people) the choice of provider."
"So yes, it is possible that more will be removed under the private system, but it is also possible that less will be removed, and shareholders will make a loss. By having a variable amount of money which is removed (as distinct from a constant amount under the public model), risk is passed to the shareholders and management as well as incentives to deliver a good service. To state that the private system is inherently worse because of this extraction of “profits” is very misleading and betrays an ideological obsession with public service provision.
A much more sensible discussion would be one about the levels of risk, return and service involved in the equity (private) model. Very simply – what are you getting for your money?"
"Instead of dismissing the number of connections made, it would have been better for private-sector opponents to count connections not made as a result of their lobbying. They’ve done plenty to stop private watercompanies making any money in the developing world, but what have they done to get people connected?" (And I would add, in a sustainable, scalable way)
"The net result of their well-meaning efforts is a staunch defence of the corrupt, lazy or incompetent utility managers and mayors. It is a defence of the comfortable middle classes in developing countries who have cheap water while their poorer compatriots queue and walk all day.
Before these people flit off to their next cause célèbre, I recommend that they actually go out and connect someone to the water network. That they see what’s involved, and how these utilities are run. That they talk to people in slums, gain their confidence and ask the awkward questions about bribes, nepotism and corruption. It’s not all colourful fabrics, funky worldmusic and the heady romance of solidarity against the evil multinationals. They might just learn a few uncomfortable truths which will turn their black and white world into shades of grey."