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Date: Fri, 19 Oct 2001 17:19:54 -0700
From: Charlotte Utting <[log in to unmask]>
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Subject: [WASAN] FW: Africa: Privatization and World Bank
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From: "Africa Action" <[log in to unmask]>
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Date: Fri, 19 Oct 2001 15:55:28 -0500
To: [log in to unmask]
Subject: Africa: Privatization and World Bank
Africa: Privatization and World Bank
Date distributed (ymd): 011019
Document reposted by APIC
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
SUMMARY CONTENTS:
This posting contains (1) a request for organizational sign-ons to
letters from the Ghana National Coalition against Privatisation of
Water, and (2) a background article on World Bank policies on
privatization of public services from the Globalization Challenge
Initiative. Additional related background information and links can
be found in earlier postings at
http://www.africapolicy.org/docs01/wat0103.htm
and
http://www.africapolicy.org/docs01/wat0105.htm
Water in Public Hands: Public sector water management, June 2001,
which presents evidence in favor of strong public sector
involvement as opposed to indiscriminate privatization, is
available, in Word format, at:
http://www.psiru.org/reports/2001-06-W-public.doc
A new factsheet with questions and answers on The World Bank and
Denial of Africa's Right to Health is available at:
http://www.africapolicy.org/action/wb0110.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Ghana National Coalition Against Privatisation of Water
c/o Integrated Social Development Centre (ISODEC), P.O. Box
19452, Accra North, Ghana; Email: [log in to unmask] or
[log in to unmask]; Fax: 233/21 311687; Tel: 233/21 30606
[For additional information in U.S. contact: Globalization
Challenge Initiative (http://www.challengeglobalization.org;
[log in to unmask]; tel: 301-445-5205)]
Request for Organizational Signatures on Letter
[e-mail address for signatures: [log in to unmask] Sign-ons
should be submitted by the deadline of November 15, 2001.]
Dear Sisters and Brothers around the World:
We call upon organizations and individuals around the world to
express their international solidarity with the struggle of the
Ghanaian people to stop the privatisation of the Accra-Tema
water service. World Bank and International Monetary Fund (IMF)
policies require the Government of Ghana to increase water
tariffs (consumer fees for water) and privatise water in order
to gain access to external assistance and soft loans. Five
multinational corporations have bid for the Accra-Tema water
service, most of them with annual sales income larger than the
GDP of Ghana, and some of them with questionable social and
environmental records.
The Christian Council of Ghana, The Trade Union Congress, the
Ghana National Association of Teachers, the Ghana Registered
Nurses Association, the Convention People's Party and many other
groups in Ghana have joined to stop the water privatization.
Express your solidarity! Show your support for the struggle to
stop the world-wide attempt to commodify water for the profit
and benefit of a few. Sign on to the letters below to the IMF,
the World Bank and the President of Ghana by sending your name
and organizational affiliation to [log in to unmask]
Sincerely, Ghana National Coalition Against Privatisation of
Water
LETTER 1
To: Mr. Callisto Madavo
Africa Region Vice President
World Bank
Mr. Peter Harrold,
Country Director for Ghana
World Bank
We, the undersigned citizen's organizations from around the
world, support the right of the citizen's of Ghana to
participate in public debate, discussion and decision-making
about whether the proposed leasing of the Accra-Tema water
system to private transnational corporations (privatisation or
private sector participation) is the best way to promote
accessible and affordable water and to ensure public health,
social equity and environmental sustainability.
There is widespread international concern about privatisation and
cost recovery policies that treat water primarily as a
commodity, or an economic good, to be bought and sold in the
marketplace. There is concern that such policies increase the
obstacles to clean and affordable water to which every person,
rich or poor, man or woman, child or adult, is entitled. Clean
water is essential to human life and a natural resource that
should be held as a public trust for the common good of our
societies and the environment.
We call upon the World Bank, in order to promote safe and
affordable water for all people, and to support sovereign,
democratic and participatory decision-making processes, to
undertake the following:
* Remove water privatization (leasing the Accra-Tema water system
to private transnational corporations) as a condition for access
to World Bank loans. We believe that it is inappropriate for the
World Bank to impose water privatization as a condition for
access to loans, debt relief, or other creditor or donor
resources. World Bank conditionality should not intervene in the
national debate and decision-making process. By imposing water
privatization as a condition for access to Bank resources, there
is a risk that the pressure on the government will reduce
accountability to the concerns and viewpoints of citizens.
* Remove increases in water fees (for low-income and marginalized
populations that will be less able to afford safe water) as a
condition for access to World Bank loans. Increased water fees
can impact negatively upon access to safe and affordable water
for low-income groups. Public subsidies, a guaranteed water
lifeline, progressive tariff structures, cross-sectoral
subsidies, and expanded access to potable water are critical to
ensuring public health, social equity, and environmental
sustainability.
* Support the call to stop the "fast track" toward water
privatisation. The citizen's of Ghana deserve the opportunity to
publicly discuss and debate a wide variety of water management
options. Citizens have a right to effectively participate in the
shaping of national policies that fundamentally affect their
lives such as the control and management of water. Support for
the "fast track" toward water privatisation should be stopped
until a broad and participatory process of debate, discussion and
consultation takes place.
* Support information disclosure to the public. Currently there
are five multinational corporations bidding to lease the urban
water service in the Accra metropolitan area. Information about
the terms and conditions of the privatization, such as the
proposed tariff structure, expansion plans, connection fees, and
possible subsidies should be made available to the public for
open debate and discussion.
* Support measures to discourage corruption in international
business. Support measures that will automatically exclude
companies whose business practices have been known to exert
corrupting influences on public officials anywhere in the world
from participating in any bids.
We hope that you will be able to respond promptly and
affirmatively to these concerns. The World Bank has publicly
committed itself to making poverty reduction central and to
promoting genuine national ownership of policies. This requires,
among other things, supporting genuine processes of national
debate, discussion, and citizen participation in policy
decision-making, even when the policy choices being discussed may
not be in consonance with World Bank opinion.
Sincerely,
Cc: Mr. James Wolfensohn, President, World Bank
LETTER 2
His Excellency Mr. J.A. Kufuor
President of the Republic of Ghana,
The Castle, Osu, Accra
Dear President Kufuor,
We, the undersigned citizen's organizations from around the
world, support the right of citizen's of Ghana to participate in
public debate, discussion and decision-making about whether the
proposed leasing of the Accra-Tema water system to private
transnational corporations (privatisation or private sector
participation) is the best way to promote accessible and
affordable water and to ensure public health, social equity and
environmental sustainability.
There is widespread international concern about privatisation and
cost recovery policies that treat water primarily as a
commodity, or an economic good, to be bought and sold in the
marketplace. There is concern that such policies increase the
obstacles to clean and affordable water to which every person,
rich or poor, man or woman, child or adult, is entitled. Clean
water is essential to human life and a natural resource that
should be held as a public trust for the common good of our
societies and the environment.
We call upon you to support transparent discussion and debate,
and participatory decision making processes regarding the
management of water, by implementing the proposals below:
* Stop the "fast track" toward water privatisation. The citizen's
of Ghana deserve the opportunity to publicly discuss and debate
a wide variety of water management options. Citizens have a
right to effectively participate in the shaping of national
policies that fundamentally affect their lives such as the
control and management of water. The "fast track" toward water
privatisation should be stopped until a broad and participatory
process of debate, discussion and consultation takes place.
* Disclose information to the public. Currently there are five
multinational corporations bidding to lease the urban water
service in the Accra metropolitan area. Information about the
terms and conditions of the privatisation, such as the proposed
tariff structure, expansion plans, possible subsidies, and
structures for accountability should be made available to the
public for open debate and discussion.
* Support measures to discourage corruption in international
business transactions. Develop measures to automatically exclude
companies whose business practices have been known to exert
corrupting influences on public officials anywhere in the world
from participating in any bids. We hope that you will be able to
respond promptly and affirmatively to these concerns.
Sincerely,
LETTER 3
To: Mr. G.E. Gondwe
Director, Africa Department
International Monetary Fund
Washington, D.C.
Mr. Hugh Bredenkamp
West Africa Region
International Monetary Fund
Washington, DC
We, the undersigned citizen's organizations from around the
world, support the right of the citizen's of Ghana to
participate in public debate, discussion and decision-making
about whether the proposed leasing of the Accra-Tema water
system to private transnational corporations (privatisation or
private sector participation) is the best way to promote
accessible and affordable water and to ensure public health,
social equity and environmental sustainability.
There is widespread international concern about IMF policy
conditions that impose full cost recovery as a step toward the
privatization of public water utilities. There is concern that
policies such as full cost recovery can increase the cost of
water for low-income and marginalized populations. Clean water
is essential to human life and a natural resource that should be
held as a public trust for the common good of our societies and
the environment.
We call upon the International Monetary Fund, in order to promote
safe and affordable water for all people, and to support
sovereign, democratic and participatory decision-making
processes, to undertake the following:
* Remove increased cost recovery (for low-income and marginalized
populations that will be less able to afford safe water) as a
condition for access to International Monetary Fund loans. The
third review for Ghana's Poverty Reduction and Growth Facility
loan includes conditions promoting full cost recovery in the
public utilities and automatic tariff adjustment formula.
Increased water fees can impact negatively upon access to safe
and affordable water for low-income groups. Public subsidies, a
guaranteed water lifeline, progressive tariff structures,
cross-sectoral subsidies, and expanded access to potable water
are critical to ensuring public health, social equity, and
environmental sustainability.
* Support the call to stop the "fast track" toward water
privatisation. The citizens of Ghana deserve the opportunity to
publicly discuss and debate a wide variety of water management
options. Citizens have a right to effectively participate in the
shaping of national policies that fundamentally affect their
lives such as the control and management of water. Support for
the "fast track" toward water privatisation should be stopped
until a broad and participatory process of debate, discussion and
consultation takes place.
We hope that you will be able to respond promptly and
affirmatively to these concerns.
Sincerely,
*****************************************************************
Economic Justice News Vol. 4, No.3 October, 2001
http://www.50years.org/ejn/v4n3/index.htm
Service Apartheid: The World Bank's Private Sector Development
Strategy and the PRSP
by Nancy Alexander, Globalization Challenge Initiative
The World Bank is soon likely to adopt a private sector
development (PSD) strategy that will require the inclusion of
the private sector in all infrastructure and social sector
operations in the 78 low-income countries that depend on credits
from the International Development Association (IDA). The PSD
strategy threatens citizenship rights, jeopardizes affordable
basic service provision and promotes a two-tier "separate and
unequal" apartheid of access to basic services.
The World Bank should increase support for social investments by
credits, debt reduction, etc. But in country after country, the
World Bank-supported push to privatize health, education, and
water systems is putting services out of the reach of ordinary
people - and pushing control over public assets into the hands
of multinational corporations. Increasingly, the Bank is
reorienting lending to support private corporations, which means
that its private sector portfolio and profitability grow as its
policy "conditions" are adopted.
Alarmingly, such changes could be irreversible - "locked in"
under trade liberalization agreements such as the General
Agreement on Trade in Services (GATS). Once governments allow
competition in basic service sectors, GATS disciplines apply to
such sectors and to government rules "affecting" such sectors.
These disciplines would, among other things, bar a government
from favoring a domestic provider or providers, from limiting
foreign ownership and control, from limiting expansion of
services or access to basic governmental or regulated "monopoly"
infrastructure, e.g., drinking water and sanitation networks,
power lines, possibly school and hospital systems.
This outcome could come at high democratic, budgetary and
developmental cost. Citizens and governments in poor countries
need more, not less, control over provision of basic needs. Even
in developed countries with sophisticated regulatory systems,
"private-public partnerships" - through contractual and other
arrangements promoted as fostering competition and efficiency in
basic services or key support services have, among other things,
been costly to transact and to finance, have reduced budget
flexibility over long periods of time, and have degraded public
capability and introduced conflicts of interest. In countries
with underdeveloped regulatory regimes, limited financial
resources, and other weaknesses, liberalization of basic
services can lead, not to healthy competition, but to the
replacement of local public monopolies with multinational
private monopolies or cartels such as the foreign for-profit
international water giant Suez des Eaux. Such providers lack
accountability to domestic consumers, citizens and governments.
The PSD strategy could:
1) undermine basic citizenship rights in borrowing countries.
Citizens have a right to determine their government's role in
service delivery. Citizens also have rights to basic services,
such as health, education and basic levels of water, sanitation
and energy. Cash-strapped borrowers should not be coerced,
especially in ways that short-circuit domestic decision-making.
2) widen the gap between rich and poor.
The PSD strategy seeks to attract investment capital to poor
countries by carving out lucrative markets. "Cherry picking"
richer customers would leave the poor to be served by an
impoverished public water, power, health or school system. This
could create systems of separate and very unequal services. The
same is true of long-term service contracts that give discretion
to the contractor where to cut cost, reduce service or impose
fees. And contracts for specific services that guarantee
attractive rates of return by guaranteeing long-term demand for
services creates obstacles to healthy competition. Auctions to
provide services are rarely a winning strategy - whether the
service is water quality or airline security - given the
built-in incentives to reduce service quality.
Finally, replacing universal service systems with segregated
for-profit and subsidized loss-making systems ignores the fact
that, as a rule, subsidy and exemption systems have failed to
reach their targets - the people who need them. Even so, the
Bank directs that "targeted subsidies are, if feasible,
preferable to free provision." (World Bank Group, "PSD:
Entrepreneurship, Markets and Development," May 9, 2001) This
recommendation flies in the face of the U.S. Congress's demand,
articulated in legislation last year, that the U.S.
representatives at the World Bank and the regional development
banks oppose any loans for basic services such as primary health
care and primary education if they require "user fees" - charges
that even the impoverished must pay. "Exemption systems," which
aspire to locate the worst-off and certify them for free
services, have almost never worked.
3) undermine efforts to foster homegrown development planning in
borrowing countries. Since 1999, the IMF and World Bank have
required each IDA borrower to prepare a development plan called
a "Poverty Reduction Strategy Paper" (PRSP) that is acceptable
to the Boards of the IMF and World Bank. Governments are asked
to prepare their PRSP (preferably with input from citizens'
groups) in order to qualify for concessional loans, grants, or
debt reduction. Among other things, the PRSP demonstrates how
fiscal resources (including resources freed up through debt
reduction) are channeled into poverty reduction efforts, such as
effective social service provision.
In PRSP processes, citizens' groups invariably call for
universal access to high-quality public services. But they are
discovering-as in a recent water-privatization loan for Uganda
and a privatized education loan for Burkina Faso - that the
World Bank sees privatization as the answer to nearly every
infrastructure or social sector problem. This raises serious
doubt about the genuineness of the public consultation process
for PRSPs.
4) endanger service provision and risk lives and livelihoods.
In the past, the World Bank has insisted that privatization
should be undertaken under the conditions that promote
competition, discourage monopolies and where a strong regulatory
system exists. Now, the World Bank has changed its tune. Its
draft PSD strategy suggests that, in many cases, the weaker the
regulatory structure in a country, the stronger the argument for
free entry [by foreign corporations]. Privatization in an
unregulated environment is a recipe for disaster. Low-income
countries generally lack the competitive and well-regulated
markets that are required to prevent rampant abuses (e.g. in
Eastern Europe and the former Soviet Union, robber barons
transformed public monopolies into private monopolies.
Even where regulatory mechanisms are in place, the IMF and the
World Bank do not always encourage protection of poor and
vulnerable populations. Surveys of borrowers and Bank staff
alike rank IDA as relatively ineffective in improving the status
of the poor. This is clear in the case of Ghana where water
tariffs have doubled in mid-2001 and are due to increase
further. Still, the IMF and World Bank insist that Ghana's
economy does not have the luxury of raising prices gradually or
shielding consumers from price hikes: rates must be adjusted
immediately to restore equilibrium.
Action Needed
Donor governments are currently finalizing policy directives for
IDA as they prepare for a new round of contributions. IDA
deputies - usually officials in finance or foreign ministries -
should reconsider the PSD policy and call for small-scale
experimentation. With IDA having already found that PSD projects
do not effectively reduce poverty and are hampered by
inattention to regulatory structures, the IDA deputies should
insist that the World Bank thoroughly recast the proposed PSD
strategy. See http://www.challengeglobalization.org for a list
of IDA Deputies and details on how to contact them.
************************************************************
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Africa Action (incorporating the Africa Policy Information
Center, The Africa Fund, and the American Committee on Africa).
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