INTERNATIONAL ECONOMY: US aid agency wades into South African water controversy By Alan Beattie in Washington and James Lamont in Johannesburg
The US Agency for International Development (USAid) has sponsored a report that backs the idea of water privatisation in South Africa, sparking complaints that it is interfering in domestic politics.
The report by Padco, a Washington-based consultancy under contract to USAid, has been circulated at donors' meetings in South Africa, where controversy surrounds private sector participation (PSP) in domestic water supply. About 7m South Africans do not have access to clean water.
The report targets critics of water privatisation - particularly within South Africa's strong trade union movement - in a bid to persuade municipalities of the merits of private involvement. The unions have criticised sharp rises in water tariffs and lack of delivery of water and sanitation in poor rural communities.
The South African Municipal Workers' Union, an affiliate of the largest union federation, has vehemently opposed the privatisation and private management of water resources over the past eight years. Its opposition has restricted private sector management of water utilities.
The Padco report avoids an overtly political position. But it rejects the claim that water privatisation has caused higher prices across the developing world, citing controversial cases in Buenos Aires, Guinea and Ivory Coast. "While there have been failures, the PSP-sceptics' reports are most often than not incomplete, incorrect, or ignore the unforeseen changes that took place after the contract," it says.
War on Want, a UK-based campaigning group that backs anti-privatisation lobbyists in South Africa, said the report showed that rich donor countries were interfering in a domestic political dispute.
"Aid money should go to help the poor and not to fund Washington-based consultants who are ideologically wedded to the concept of privatising public services in developing countries," said Steve Tibbett, War on Want's head of policy.
USAid said its advice was given at the request of the South African authorities. "We provide technical analysis, not policy advice," said Rebecca Black, housing and municipal affairs officer for USAid in Pretoria.
The Padco report was produced for the government-sponsored Municipal Infrastructure Investment Unit (MIIU) in South Africa, which brings together private and public sector experts to identify opportunities for partnership. Last year, it concluded 13 partnerships worth about R3.4bn ($370m, $367m, #234m). Marlene Hesketh, a representative of the MIIU, said the unit had requested the study, but had made little use of it since it was not what it had expected.
But a copy of the report, in the Financial Times' possession, shows it was circulated at a meeting of UK government and private sector water officials - including representatives from the Thames Water and Severn Trent Water companies - seeking to identify municipalities in South Africa for private investment.