The Telegraph
Since 1st March, 1999
Email This Page

Only about five per cent of the world’s people (about 300 million) receive their water from private companies. Most privatization of water and sanitation services has occurred through public-private partnerships in urban areas, with almost all occurring in the Nineties in highly urbanized countries.

Private companies are unlikely to be interested in providing water services in rural areas in low-income countries — because rural areas are generally considered unprofitable. In sanitation, public-private partnerships sometimes also view poor people as being unprofitable. Reflecting such biases, some private water companies have found ways of excluding poor people from service even in urban areas...Moreover, in some countries the extension of connections has been limited...

International private sector involvement in water and sanitation remains limited in the urban areas of low-income countries. Even in middle-income countries, where most people live in urban areas, international private firms may be discouraged by the scale of investments required. Sustained service provision is best achieved through the efforts of local communities and firms (private and public), and building this capacity is an important role for government.

Public-private partnerships in water and sanitation — which have grown from almost none in the early Nineties to more than 2,350 today — have a mixed record of performance. One of the main arguments for privatization is that it provides new capital, enabling public-private partnerships to mobilize additional resources for basic services. But since peaking in 1996, international private financing for water and sanitation has declined. And that decline is expected to continue.

The private sector’s reluctance to fund less profitable investments in poor rural areas hurts users. But public-private partnerships often do the same, even more directly-through charges that hit poor people disproportionately more. This fact has to be balanced against the even higher prices that poor people previously paid for water from small vendors. Public-private partnerships are based on the assumption that customers pay for services...

Many activities in the social sectors produce public goods or have many externalities, requiring state involvement to provide basic services to all. The recent push to privatize basic social services has ignored the past experiences of rich countries — as well as of many developing countries today — which relied on state systems to provide basic social services to most (if not all) of their people when they were developing. Private actors played only a limited role...

Many of today’s high-performing developing countries managed to improve health indicators early in their development-providing universal healthcare paid out of government revenues...

Regulatory capacity in developing countries has to be built up so that public and private provision works for all services and users. A key policy recommendation is to retrain government staff. This does not necessarily mean rich countries providing more technical assistance or technical cooperation — it means paying for transfers of skills and exchanges of experience among poor countries...

Accreditation can be used to inform consumers about which private medical providers are registered. A professional body that offers accreditation and training to unregistered providers would benefit both providers and the public. It would build on the desire of providers for social recognition and prestige. And it would help promote the use of essential medicines through public campaigns. Improving consumer behaviour is also important for healthcare regulation. This can involve improving consumer knowledge or providing subsidies to make quality services more affordable. Governments can also create institutions that enable consumers to challenge private providers who offer poor care.

Regulation of education and water services is often equally weak. In water privatizations public water authorities often assume the role of regulator. But international private providers rarely adhere to their agreements with host governments. Much more international support is needed to build regulatory capacity in these and other infrastructure areas...

Social service provision by non-governmental organizations has been viewed as the “middle way” between market and state provision. For some analysts it provides a rationale for increasing the role of civil society organizations in providing these services. NGOs are often quite successful at filling gaps left by the public system...They are also useful in articulating community concerns, especially for poor people, to make institutions perform better. In water and sanitation, rural areas have been best served through user committees supported by NGOs.

Email This Page