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Water--A Trillion Dollar A Year Privatization Grab

19 April 2001

Dear friends of truth,

I have put together a miscellany of five items, below, about the World Bank and IMF push for the privatization of water supplies in Africa and elsewhere, and the negative impact of this, especially South Africa. My main source of information is the International Labour Resource and Information Group (ILRIG) based at the University of Cape Town, South Africa. ILRIG provides accessible information and analysis in order to promote U.S. and international policies toward Africa that advance economic, political and social justice and the full spectrum of human rights. See

In friendship,

Boudewijn Wegerif
Monetary Studies programme
Folkhogskola Vardingeby
150 21 Molnbo, Sweden

PS: The World Water Day was on 22 March, and appears to have been a PR exercise by the water privatization lobby.


A Public Services International press release by David Boys e-mail: -- 45 avenue Voltaire, BP 9, F-01211 Ferney-Voltaire Cedex, France.

The annual market value of the world's water supplies is estimated at about US 1 trillion dollars. It is this money value that is putting enormous pressure on governments throughout the world to sell supply services to private firms. The pressure is coming from the private firms themselves that are mainly giant multinational corporations chasing opportunities for profit.

Suez-Lyonnaise des Eaux (SLE) is an example of the sort of corporation that now controls water supplies in more and more countries. SLE operates on all five continents and profits from water supply service contracts from Casablanca in Morocco to San Diego in Chile.

The World Bank and the International Monetary Fund are the allies of the corporations in this rapidly increasing takeover. Over the past decade, the Bank and the Fund have been loaning money to cash-strapped governments only on the basis of privatization of public water assets. In the year 2000, for example, 12 countries received IMF loans on the condition that they privatize their water services. Eight of these were in sub-Saharan Africa.

According to Hans Engelberts, General Secretary of Public Services International, the privatization of public water supplies benefits everyone except the most critical groups: those who consume water and those who work in the water industry. Our research has shown time and time again, Engelberts says, that the pursuit of profit and the supply of water services are incompatible.

As a result of consumer pressure, the giant corporations are being forced out of water. Recently SLE was kicked out of Grenoble, France for overcharging and corruption. The same thing happened in Cochabamba, Bolivia where water was wrested from US giant Bechtel and returned to public control.

Engelberts said that recent developments in South Africa, where the government has pledged to ensure 6000 litres of safe water per month to all poor households, are a step in the right direction. But, he said, there is no reason to sell off public water supplies at all. As with most other public services, the real causes of poor public water supply are lack of funding and poor management. Public water should be a top priority for all governments. This means that it should be given both priority funding and top quality management.


Precis of article by Patrick Bond,

With extreme scarcity predicted by 2020, should individuals and firms be reduced to buying and selling water on an open market?

The World Bank "Sourcebook on Community Driven Development in the Africa Region" argues that "work is still needed with political leaders in some national governments to move away from the concept of free water for all."

The Bank has been pressing hard for water privatization in South Africa. In a 1999 review, the Bank praised its own 1995 intervention in the water pricing debate as "instrumental in facilitating a radical revision in South Africa's approach to bulk water management." The damage went even deeper, to the retail level, where the Bank advised Pretoria that privatization "would be much harder to establish" if poor consumers had the expectation of a subsidized water supply, and hence that Pretoria needed a "credible threat of cutting service."

The ANC has found a way of placating private interests while meeting social obligations. The ANC manifesto for the December 2000 municipal elections promises ". . . a free basic amount of water, electricity and other municipal services, so as to help the poor." And continues, "Those who use more than the basic amounts will pay for the extra they use."


by Rainer Chr. Hennig -- 8 February, 2001. May be reproduced freely with source reference to

A review of IMF loan policies in forty random countries reveals that, during 2000, IMF loan agreements in 12 countries included conditions imposing water privatization or full cost recovery. In general, it is African countries, and the smallest, poorest and most debt-ridden countries that are being subjected to IMF conditions on water privatization and full cost recovery.

Ironically, the majority of these loans were negotiated under the IMF's new Poverty Reduction and Growth Facility (PRGF), says Sara Grusky from the Globalization Challenge Initiative []. The reform was announced with great fanfare in 1999 when IMF officials claimed that the new loan facility would re-focus the IMF's controversial structural adjustment measures on activities that borrowing government's would identify as leading to poverty reduction.

An example is tiny Sao Tome and Principe. The island government has been put under pressure to pursue the implementation of a public enterprise reform through privatization and liquidation of non-performing public enterprises for which buyers cannot be found.

Nine public enterprises will be privatized, including the water and electricity utility. The objective is said to be "to increase access to safe drinking water through rehabilitation of the waterworks system." Some 20 percent of the population does not have access to safe water at present, but this number could rise if market prices are set on the service.

The most immediate impact of reducing the accessibility and affordability of water falls on women and children. Worldwide, more than five million people, most of them children, die every year from illnesses caused from drinking poor quality water. "When water become more expensive and less accessible, women and children, who bear most of the burden of daily household chores, must travel farther and work harder to collect water -- often resorting to water from polluted streams and rivers," says Sara Grusky.

This is confirmed by Ghanaian activist, Rudolf Amenga-Etego of the non-governmental Integrated Social Development Centre (ISODEC), who was in Washington recently highlighting the implications of having the poor pay "market rate tariffs" for water in Ghana. The World Bank has been pushing decentralisation in Ghana since 1988 and Ghana's Water Sector Restructuring Project is expected to be approved by the Bank's Board of Directors this year.

"Where cost-recovery becomes the underlying policy, water will become unaffordable for many poor people in Ghana," Amenga-Etego told the news agency IPS.

The significance of finding such a high number of conditions relating to water privatization and water cost recovery in IMF loans is twofold. First, in the hierarchy of international financial institutions the IMF is at the top. Compliance with IMF conditions enables governments to receive the "seal of approval" that permits access to other international creditors and investors. Thus IMF conditions weigh especially heavily upon borrowing governments. Second, it is quite common that World Bank loans have, as their first condition, compliance with certain IMF conditions. This is known as "cross conditionality." In the division of labor between the two institutions, it is the World Bank that has primary responsibility for "structural" issues such as the privatization of state-owned companies.

Therefore, it can be presumed that in every country where IMF loan conditions include water privatization or full cost recovery, there are corresponding World Bank loan conditions and water projects that are implementing the financial, managerial, and engineering details required for such 'restructurings', says Sara Grusky.

In Ghana, civil society has announced its intention to resist the privatization pushed for by the World Bank. Figures from the Government of Ghana have shown that only 36 percent of the rural population have access to safe water and 11 percent have adequate sanitation within the existing system. Water is also scarce in the capital, Accra. In typical working class areas of Accra such as Medina, it would cost a family 3,000 cedis to use 10 buckets of water a day if prises were to follow market rate tarrifs. Yet, the minimum wage per day is 7,000 cedis.

Also in South Africa, protest is spreading. The South African Anti-Privatization Forum, a collective of community based organizations and labour unions, has mobilized against the privatization of local government services, including water.

Various strikes over social issues have marked the last year. The recent spread of cholera in South Africa is directly linked to the poor water quality in many working class areas. More expensive water could exclude even more people from clean and safe water.


Sourcebook on Community Driven Development Extract from South African Municipal Workers Union (SAMWU) Press Statement -- 14th February 2001 --

The South African Municipal Workers Union condemns today's public launch of Johannesburg Water Pty Ltd, which privatized the city's water to one of the world's worst multinational companies, Suez-Lyonnaise. This took place at a time when Alexandra residents have been forcibly removed from the Jukskei river to areas where there are no services rather than getting the clean water they thought they were voting for.

Suez-Lyonnaise/Johannesburg Water must share the blame for the violence, injuries and trauma that Alex residents were subjected to yesterday. The company's only response to the threat of cholera in Alexandra was to check up on the few chemical toilets in the area. The company showed no sign that they would install even basic taps needed by Jukskei residents in order to escape cholera.

Neither council nor the company have released any detailed plans for extending water to the poor of Johannesburg. It seemed that the company won the contract on the basis of their vague promise to "improve services rendered" to customers.

The track record of Suez-Lyonnaise across the world is abominable. They have drastically increased water charges in every city or town where they have a contract. In Paris, France water is privatized to a 'partnership' between the city of Paris and Suez-Lyonnaise. Auditors have now been brought in to investigate excessive water prices. The auditors have reported so far that "the administrative, legal and financial arrangements are characterized by an absence of financial transparency". The report estimates that the company's "true profit margin is two and a half times the officially reported figure".

The council's smokescreen set up of the privatization as a public utility is also not likely to deter Suez-Lyonnaise from making a massive profit. EMOS, the water company in Santiago, Chile, was privatized in 1999 to Suez-Lyonnaise, which appoints 4 out of 7 directors of the board, giving it a guaranteed management control, despite only holding 42% of the shares. And the state is guaranteeing EMOS a profit margin of 33%.

In Grenoble, France in 1996, a former mayor and a senior executive of Lyonnaise des Eaux (now Suez-Lyonnaise) both received prison sentences for receiving and giving bribes to award the water contract. Rostock in eastern Germany privatized its water and sewage systems for 25 years to Eurawasser, (owned 50% by Lyonnaise des Eaux). Two years later water charges in Rostock were increased by 24%, and sewage levies by 30%.

SAMWU has been blocked from seeing any of the contract documents. The experience in Fort Beaufort, Eastern Cape, with Suez-Lyonnaise's subsidiary in South Africa, WSSA, is that a secrecy clause has been built into the contract which prevents any member of the public from seeing the contract without the explicit approval of Lyonnaise des Eaux'. "2.2.2: Confidentiality: the documentation contained herein has been developed exclusively by the operator (WSSA) and shall not be disclosed to third parties without the written approval of the operator." The union believes this is unconstitutional and not in the interests of the public or of workers.


Sourcebook on Community Driven Development Extract from SAMWU Press Statement, 20 March 2001

The South African Municipal Workers Union (SAMWU) calls for this year's World Water Day to be declared a day of mourning for the millions of people who are sick and dying as a result of not having access to water. The United Nations chose "Water and Health" as the theme for World Water Day on Thursday 22nd March 2001. Nothing could be more ironic in South Africa and across the African continent. People here are becoming more and more unhealthy and dying prematurely because water is now a commodity that only the rich can afford.

Behind the inevitable glib and cheery public relations turning on of taps for the first time on Thursday, lies the shocking reality that worldwide, more than five million people, most of them children, die every year from illnesses caused from drinking poor quality water.

A shocking new survey has revealed that much of the blame for this must be laid at the feet of the World Bank and International Monetary Fund (IMF). Their water privatization and full cost recovery policies have been imposed as conditions for IMF loans in over 12 African countries. Negotiated under the IMF's new Poverty Reduction and Growth Facility (PRGF), the conditions are leading to people being cut off from water more than ever before.

The Africa Policy and Information Centre has reported that water privatization is making water less accessible and less affordable. People are resorting to unsafe water sources. This is clearly evident in South Africa where the amount of cholera infections is close approaching 70 000!

In Ghana, the result of forcing the poor to pay "market rate tariffs" for water means that most Ghanains can no longer afford water at all. Only 36 percent of the rural population have access to safe water and 11 percent have adequate sanitation within the existing system. Water is also scarce in the capital, Accra. In poor areas of Accra, families are paying almost half the daily wage for 10 buckets of water!

In Angola, there is an agreement that water prices should rise regularly so that the company delivering water can make a "reasonable" profit. In Benin, Tanzania, Guinea-Bissau, Niger and Rwanda water privatization must be completed by the end of this year for governments to qualify for loans. In Sao Tome and Principe, there will be no further government subsidy of water in the run up to privatization.

This is clearly ridiculous. In some of the most poverty stricken countries in Africa, unemployed and homeless people who cannot even afford a crust of bread now and then, are expected to fork out one months food money for a few buckets of water! In the last month alone in Cape Town and Johannesburg, thousands of people have been disconnected from water they could not afford to pay for. Even permanently employed workers are being forced to choose between food, electricity or water. This terrible reality makes a mockery of human rights day.

Even in so-called first world countries like New Zealand, people are being forced to take to the streets against the commercialization of water. Water activists in Auckland will be protesting on World Water Day against the City Council. The demands of the activists are that all commercialization be stopped and water be restored to the public service after hundreds of families were disconnected from water they could no longer afford.

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