The cost of 'total cost recovery'

South Africa is leading the way in Africa in terms of privatising its water sector and is therefore a useful case study for other sub-Saharan countries considering the private sector as a solution to their issues with water provision.

In 1991, apartheid in South Africa was abolished, putting an end to a system of racial discrimination and segregation that had split the country for almost 50 years. Three years later, on the 27th of April 1994, the country held its first democratic election and voted decisively to give power to the African National Congress (ANC); a party that promised to create a more equal society by restoring the rights of those previously oppressed. To do this, one of the ANC's central policies was to provide every person with access to adequate health facilities, sanitation, and a clean, safe water supply. Not long after, in 1996, these policies were successfully enshrined in the constitution;

South Africa is one of the only countries in the world to make access to clean water a constitutional right and yet today, many of the poorest people in the country remain without continuous access to safe, clean water supplies. Soon after the election of the ANC, local municipalities were urged by the government to increase the cost recovery of water utilities. To do this, some municipalities turned to the private sector; granting long-term contracts to private multi-nationals. One such case was the Mbombela municipality, which awarded a 30-year concession agreement to a subsidiary of the British water company Biwater in 1999. Other municipalities decided to reorganise their utilities as profit-driven, publicly owned enterprises (Pauw 2003).

However, this policy of cost recovery has attracted major criticism. Many argue that while water and sanitation services have been dramatically expanded since 1994, access to these services remains a problem in poor communities because many people cannot afford to pay for them. This issue came to a head in 2003 when hundreds of people in South Africa died and many thousands more were hospitalised during an outbreak of cholera. The cause of the epidemic was blamed on the fact that many people had been cut off from their water supplies because of their inability to pay, and therefore had been forced to use unsafe sources of water (Pauw 2003). Between 1994 and 2002 as many as 10 million South Africans had their water supply cut off for various amounts of time.

Today, water provision remains a big social problem in South Africa. Since 2012 there has been almost one protest per day linked to water provision, deriving mainly from complaints about tariff prices and water quality in urban and peri-urban areas (WRC 2016, Aljazeera 2014).  The process of cost recovery in many municipalities can therefore be said to have undermined the original aims of privatisation. Some have even compared the emerging disparities in provision between rich and poor as a new form of apartheid (New York Times 2003).

Gauging Province, SA, saw 500 delivery protests in just a few months in 2014. Though few made the news.

It therefore seems irresponsible of the World Bank and developed countries such as the UK to be pressurising sub-Saharan African countries into adopting private sector models of utility provision. In 2001 for example, the Department for International Development in the UK gave Ghana a loan of £10 million on condition that it privatised its urban water supply (WSWS 2003). Other countries including Benin, Angola and Guinea Bissau have been given similar propositions by the IMF and the World Bank leading to a widespread shift towards privatisation across sub-Saharan Africa. Further cause for concern stems from the fact that there are only a few private water companies currently operating in sub-Saharan Africa and almost all of these are foreign - most of them either British of French.  

The water issues in South Africa should serve as warning to those considering private sector models of utility provision. Sub-Saharan Africa is home to many millions of people in similar situations to those that cannot afford to pay for running water in South Africa. These people would likely best be served by a government-subsided supply of water and could be devastated if the current wave of privatisation forces them to turn to unsafe sources of water.