Private sector participation in Sub-Saharan Africa: pros and cons

Since the last post discussed some of the ineffectiveness of the community management projects, this post will focus on private sector participation and provide some of my own understandings of a good combination of institutions for sub-Saharan African(SSA) countries. The phrase privatisation refers to various contractual agreements between the government and the private sector, from a management contract through divestiture. The emphasis of development policy has moved from the state to the private sector during the last two decades. In most sections of the SSA, privatisation is now at the core of utility reform.

Figure 1: Water supply and sanitation improved in seven sub-Saharan countries between 1990 and 2008. Source: WHO/UNICEF Joint Monitoring Programme (2010)

Decentralisation-induced improvements have resulted in an overall improvement in water delivery. The good effect is shown in the high number of upgraded water sources, which supply communities with a broader selection of clean water than was previously available. The preservation of natural wells and springs, the installation of boreholes and shallow wells, and the use of various cisterns have all significantly enhanced the quality of life in many rural areas. From figure 1, SSA has made many improvements through decentralisation, even though the rate is still lower than in the rest of the developing world.

Since the early 1990s, about half of Sub-Saharan African nations have experimented with some sort of private sector engagement in the utility sector with World Bank funding. These private sector contracts have had a mixed record. While they have yet to be able to attract considerable private money, some have improved their performance. However, about a third of the projects were cancelled before their projected end dates, such as in Dar es Salaam, Tanzania.

Private contractors have the benefit of being able to complete water projects in less time and on a grander scale than previously understaffed and overloaded regional water agencies. Where the problem is partly the profit orientation of contractors and partly the failure of local authorities and users through their user committees. Another disadvantage of outsourcing is that it does not instil a feeling of communal ownership of the water supply. Contractors want to spend their time on something other than activities that build a sense of ownership in consumers for financial reasons. They tend to complete tasks swiftly and move on to the next. 

Overall, no ideal policy or institutional solution to water delivery exists, and no strategy is without value. The spectrum of results, including triumphs and failures, emphasises the significance of the environment in forming institutional structures at various scales. Therefore, SSA water management must recognise that while emerging alternative arrangements are critical to improving water supply, particularly in low-income areas, their effectiveness depends on institutional support and the policy environment in which they operate. The primary responsibility is then still held by the governments of each country.