Richard Moore

From: "Boudewijn Wegerif" <•••@••.•••>
To: <•••@••.•••>
Date: Thu, 19 Apr 2001 17:56:00 +0200

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 Africa Policy
Information Center (APIC) in Cape Town. APIC 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 http://www.africapolicy.org; and write
to •••@••.••• if you wish to be added to the APIC email

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: •••@••.••• -- http://www.world-psi.org
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

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


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

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


by Rainer Chr. Hennig - 8 February, 2001. May be reproduced
freely with source reference to http://www.afrol.com

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 [http://www.challengeglobalization.org]. 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

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.


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

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.


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

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.


[errata by same author...]

In my posting on Thursday, 19 April, about the global
trillion-dollar water privatization grab I wrote that I had
had the information from the Africa Policy Information
Center, APIC, in Cape Town. In fact, only one of the items
in my miscellany of five news items was from APIC, and APIC
is based is Washington DC. In a typical journalist error, I
confused this fine NGO for ILRIG, the International Labour
Resource and Information Group (ILRIG) based at the
University of Cape Town, through whom I had received all the
new items.

With the admission of the error comes the opportunity to
recommend a visit to the ILRIG website at


Richard K Moore
Wexford, Ireland

    A community will evolve only when
    the people control their means of communication.
    - Frantz Fanon

    "One cannot separate economics, political science, and
    history. Politics is the control of the economy. History,
    when accurately and fully recorded, is that story. In most
    textbooks and classrooms, not only are these three fields of
    study separated, but they are further compartmentalized into
    separate subfields, obscuring the close interconnections
    between them" -- J.W. Smith, The World's Wasted Wealth 2,
    (Institute for Economic Democracy, 1994), p. 22.

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