The implication of privatising water supply in Sub-Saharan Africa: a qualitative study on urban water supply public-private partnerships in Ghana and Tanzania

Master Thesis


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Since the 1990s, neo-liberal theory has suggested that privatisation is the panacea for public sector inefficiency. Many sub-Saharan African countries have subsequently undertaken varying degrees of privatisation because of pressure from donors and financiers such as the World Bank and the International Monetary Fund. These international institutions have often attached this policy suggestion to loan and debt restructuring conditions, when interacting with developing countries. Specifically, developing countries have been advised to take on publicprivate partnerships which can be seen as an application of privatisation theory. These publicprivate partnerships have been said to increase financial efficiency, managerial efficiency and increase capital investment. Despite such expected long-term benefits, privatization – which has been operationalised through private sector participation - has not yielded positive outcomes for many sub-Saharan African countries. Many public-private partnerships have been cancelled or litigated for not achieving their objectives. Public-private partnership has also not been successful at stimulating critically needed capital investment. The study therefore tests the validity of the theory of privatisation through the examination of the experiences of public-private partnerships in urban water supply utilities in Ghana and Tanzania. I suggest that the characteristics of water supply infrastructure, and the associated risks diminish the prospects of success of public private partnerships. Poor data on water supply infrastructure, water supply capabilities, and water users limit efficiency objectives. These aspects, particularly the risk-related ones, also discourage private investors who subsequently opt for short-term and low risk contracts. This makes subsidies and operational loans from the state necessary in order to incentivise private participation. Alongside diluting the risks for private firms, the incentives for private participation also become diluted. The paper suggests that preoccupation with private or public ownership in the sub-Saharan African context is undue and that more focus needs to be assigned to capacitating local human resources and institutions.