Privatisation of water

Development policy has had a significant shift from the state to the private sector over the last 20 years (Bayliss 2003). Water services have been no exception to this shift. My last couple of posts analysed community management and its role in the water and food dynamic. This community control can in fact be seen as part of this wider shift to privatisation, due to how the management involved responsibility being taken away from the state. A major driver of this shift has been the poor performance of utilities under public ownership- in Tanzania just 8% of water produced under public ownership was being billed (Bayliss 2003). Despite the rise in popularity of privatisation, whether it has significantly improved water utility usage is not clear. For instance, privatisation is argued to lead to greater productivity and therefore lower costs and prices. Bayliss (2003) investigates case studies of privatisation in Africa and although in the case of Gabon water prices had fallen after privatisation, prices were risen prior to privatisation to attract investors, therefore the actual effect on prices is unclear. Outside of Africa privatisation has arguably yielded positive outcomes, such as in UK, where water services had been transferred to the private sector in 1989. The difference is however, that weaker institutions in Africa make effective regulation significantly harder to achieve (Carter et al. 1999). This is significant because, without this regulation the private sector enterprises can become monopolistic, resulting in limited productivity and efficiency (Bayliss 2003).

Even if privatisation does deliver on its potential to improve efficiency it odes not address certain constraints to water utilities in Africa (Bayliss 2003).  Private firms began to be involved in water service provision in Uganda in 2000, such as through implementing water sources, such as shallow wells. However, water provision has remained poor, as direct water departments are understaffed and therefore have been unable to carry sufficient supervision and monitoring (Golooba‐Mutebi 2012).

However, privatisation is a broad term and can have different forms other than simply community management. This can range, from commercialisation where the private sector consults on the management incentive structure to divestiture, where investors are responsibility for all operations (Pierce 2015). As such, greater research is required to assess the strengths and weaknesses of each form, rather than just privatisation in general. As has I have highlighted throughout my posts, appreciating complexity is crucial. 

Privatisation and community management have both become popular in Africa, but both have perhaps not  yet delivered results to justify this popularity. Therefore further assessment of their outcomes is required, before these are seen as the go-to approaches for Africa. In my last few posts I have analysed the current trends in African water utilities and the supposed merits to the methods being used, while challenging the assumptions underlying this methods. This assessment is important for food in Africa, as in order to provide sufficient water for agriculture for example, we must understand first understand the best form of water services more generally.