Developing Countries

International Development written question – answered on 17th January 2007.

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Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Patricia Hewitt, Secretary of State), Department of Health

To ask the Secretary of State for International Development what recent assessment he has made of the cost and benefits of water privatisation in developing countries.

Photo of Hilary Benn Hilary Benn The Secretary of State for International Development

The track record of the private sector in delivering water in developing countries has been mixed which is why DFID is interested in what works. And what works varies from place to place so the public versus private debate is not a straightforward one. The UN Human Development Report recognises that "the most obvious lesson from any review of public and private provision is that there are no hard and fast cross-country blueprints for success".

Successful public water utilities include ONEA in Burkina Faso, SANASA in Brazil and the National Water and Sewerage Corporation in Uganda (NWSC). The NWSC provides consultancy and advisory services to other utilities in East Africa. The formation of this business unit has been partly due to the strength of the private sector environment in Uganda. On the other hand the UN Human Development Report also notes that "many publicly owned utilities are failing the poor, combining inefficiency and lack of accountability in management with inequity in financing and pricing."

In Cochabamba, Bolivia, the failure of private sector water provision led to rioting in the streets and the cancellation of the contract with the private provider. In Senegal on the other hand, private sector involvement helped create 81,000 new water connections and increased the country's water supply by 10 per cent. between 1996 and 2003.

The failure and success of both public and private utilities depends on more than ownership structure. Factors such as the level of inherited debt, the quality of regulation and the engagement of civil society are highly significant. The conclusion that DFID draws is to support what works best in each context in for the world's poorest people.

DFID's policy is that—where we can—we respond to requests from developing country governments for assistance to help improve the efficiency of their water utilities. Usually this involves DFID providing support to public bodies. In some cases, where the developing country government has a policy for participation of the private sector in service delivery, DFID may be asked to advise on how this might best be done.

Nevertheless, the public sector continues to play the leading role in providing water and sanitation throughout the world. This is why most of DFID's aid (about 95 per cent. of our bilateral country programme expenditure on water and sanitation) supports the delivery of water and sanitation through governments, not-for-profit or humanitarian agencies.

Assessments of public and private provision have been completed by a range of international and research organisations including the World Bank. These studies (including a DFID-funded assessment by WaterAid of the impact of private sector involvement on the poor) reinforce DFID's view that the polarised debate about public and private utility ownership fails to grasp the complexity of the current situation. DFID believes that different approaches work best in different contexts.

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