Bond / Johannesburg
One
of the most painful preventable diseases known to humankind, cholera, continues
to spread in South Africa, affecting hundreds of people a day. More than 80,000
people have been infected over the last eight months, and approximately 180 have
lost their lives, mostly in KwaZulu-Natal province, just north of Durban–where
the UN’s world conference on racism is to be held in August. Four more people
died of cholera a few days ago in Alexandra Township–a few kilometers from the
Sandton site of the September 2002 World Summit on Social Development.
As
the World Bank and IMF convene for their annual spring meeting in Washington at
the end of the month, it’s a good time to consider the fingerprints at the scene
of this crime. Six weeks ago, a major workshop in Kampala, Uganda convened by
the Bank and African allies made explicit the double agenda, namely to increase
loan funding for water systems (at a time Africa’s overall borrowing and
spending capacity remains very low), and to commodify/privatise water through
"Public-Private Partnership" (PPP) arrangements.
According to the workshop’s Kampala Statement, "In view of the limited budgetary
resources in most African countries, external financing should be available to
cover the operational deficit resulting from the lag between improved service
and increased revenue during the initial years of PPP. Improved cost recovery,
to ensure sustainability and improve service, must be one of the cornerstones of
water and sanitation sector reform."
Sounds reasonable, eh? But the devil is in the details, as we’ll see.
The
massive Quebec City protests against the Free Trade Agreement of the Americas
mean that Washington activists who organised last April’s terrific
demonstrations against these same meetings are holding back until the main WB/IMF
annual meetings in late September (be there!). Nevertheless, a late April
seminar will be cosponsored by 50 Years is Enough, the Globalisation Challenge
Initiative and others, to focus on repackaged Bank/IMF structural adjustment
programmes, and especially on the Bank/IMF water strategy. The linkage between
the two is particularly important, given that gaining debt relief crumbs often
requires privatisation (http://www.challengeglobalization.org).
South
Africa’s problem is mainly home-grown, caused by inadequate water access dating
to apartheid times in which millions of people were forcibly removed to
water-scarce "homelands"). But the African National Congress government’s "neoliberal"
(market-oriented) policy has exacerbated matters since liberation in 1994.
Specifically, decisions were made to cut off supplies to people unable to afford
them, and to refuse subsidisation sufficient to allow installation of taps and
sanitation in all low-income households.
The
broader macroeconomic environment is also crucial. In 1996, South Africa adopted
a neoliberal austerity plan: the misnamed "Growth, Employment and
Redistribution" strategy, which has in reality generated economic decline, mass
unemployment and polarisation. The plan was concocted by a team of 15
economists, including two from the World Bank, using an econometric model drawn
in part from the World Bank. It has failed miserably in all targets except
cutting the budget deficit and inflation.
But
what role did the World Bank have in the two main water policy decisions that
caused the cholera outbreak–namely promoting water cut-offs and discouraging
investment in sufficient taps and toilets for low-income South Africans?
The
story starts in the early 1990s. But fast-forward for a moment to August 2000,
when the cholera epidemic erupted in Ngwelezane, north of Durban. Ironically, a
1983 programme of the former KwaZulu homeland government had provided free water
to the area following a drought. The chief executive of the Uthungulu Regional
Council, B B Biyela, confirmed, "It was eventually noticed, and it was decided
to switch off the supply. The people were given sufficient warning and the
supply was cut off at the beginning of August." The R51 ($6) connection fee was
unaffordable for thousands of people, who were forced back to dirty rivers and
streams where they contracted the killer disease.
What
was the basis for cutting off South Africa’s poorest, most dependent people?
Enter the World Bank.
South
African policy and projects have been informed by Bank personnel since
Washington’s "reconnaissance missions" began visiting Johannesburg a few years
before democracy was won. A key Bank official (Piers Cross) even took leave to
serve as the leader of an NGO, Mvula Trust, which began substandard water
delivery prior to the 1994 democratic election. The delivery philosophy was to
construct low-volume infrastructure that limited supplies to 25 litres per
person each day, maximum, in non-hygienic communal taps which often spread more
disease than it abated, charging consumers full cost-recovery for maintenance
and operations. (The ANC had campaigned in 1994 on a promise of medium-term
provision of 50 litres per person per day minimum.)
By
November 1994, Bank staff led by the deputy resident representative, Junaid
Ahmed, had drafted the main sections of the "Urban Infrastructure Investment
Framework," and a final draft was issued by the Bank four months later under the
auspices of the Reconstruction and Development Ministry in the Office of
President Mandela. The framework provided merely for communal water taps and for
pit latrines where households earned less than R800 ($100) per month income.
To
justify such low standards, the option of cross- subsidising from central
government to local authorities was explicitly ignored. The environmental and
public health costs of pit latrines were not factored in, nor were benefits
("positive externalities") that would flow from higher water standards: e.g.,
gender equity, economic spin-offs from higher infrastructure standards (microenterprises,
higher productivity, etc.), and geographical desegregation.
In
October 1995, the Bank’s main water expert active in South Africa and Lesotho,
John Roome, suggested to then-Minister of Water Affairs Kader Asmal several
policy changes. Asmal should be "very careful" about letting small black farmers
have new access to irrigation, Roome insisted. And he must implement a "credible
threat of cutting service" to non-paying consumers.
Municipalities began cutting off water supplies to those who could not afford,
and even– unconstitutionally–to entire neighbourhoods in impoverished
townships (including to those who had paid bills) by chopping off access to
water mains.
When
questioned about the cholera disaster in January 2001, the director-general of
the Department of Water Affairs and Forestry, Mike Muller, finally admitted to
SA Broadcasting Corporation, "Perhaps we were being a little too
market-oriented." However, even after this extreme understatement, reports
continued of municipal water cutoffs due to consumer inability to pay, with
Muller and the new water minister, Ronnie Kasrils standing idly by.
The
prize-winning Western Cape municipality of Hermanus, once famous for water
access and conservation, began evictions and attachments of poor people’s homes
to offset their water arrears in February. The next month, Johannesburg
officials began cutting water services due to electricity account arrears. The
impact of Bank- think on bureaucrats proved extremely durable.
Indeed, the Bank’s 1999 Country Assistance Strategy had explicitly bragged that
Roome’s 1995 "power-point presentation" to Asmal was "instrumental in
facilitating a radical revision in South Africa’s approach to bulk water
management."
In
March 2000, the World Bank’s "Sourcebook on Community Driven Development in the
Africa Region– Community Action Programs," which cites Roome as a contributor,
again addressed the problem of affordability. According to the sourcebook, "work
is still needed with political leaders in some national governments to move away
from the concept of free water for all."
This
sentence appeared one month after Kasrils first announced his intention to
provide free water, in February 2000.
In
addition, the sourcebook continued, African governments should follow the
neoliberal approach to water financing: "Promote increased capital cost recovery
from users. An upfront cash contribution based on their willingness-to-pay is
required from users to demonstrate demand and develop community capacity to
administer funds and tariffs. Ensure 100% recovery of operation and maintenance
costs."
When
major delivery NGOs like Mvula Trust tried 100% cost recovery during the
mid-1990s, they discovered that it led to systematic project breakdown.
Pretoria’s own community water projects only achieved around 1% cost-recovery,
and most of the taps Kader Asmal had unveiled from 1995-99 ran dry.
The
pressure to recover 100% of operating and maintenance costs comes in large part
from the push to privatise. As Muller explained, "a decision was taken in 1997
that the use of the private sector for water service provision should be
regulated within a structured framework, designed to ensure that all South
Africans have access to water services."
But
lower tariffs for poor people would disincentivise private sector involvement.
Roome had, in October 1995, criticised the ANC’s "Reconstruction and Development
Programme" promise of a free lifeline (low-consumption) supply of water needed
by poor people, to be paid for by more expensive prices to large-volume users.
Such a "rising block tariff" was inadvisable, Roome told Asmal, because
privatisation contracts "would be much harder to establish" if poor consumers
had the expectation of getting something for nothing. (This was a correct, if
inhuman, line of reasoning.)
A
recent study confirms that since South Africa’s liberation in 1994, most of the
cities surveyed have been flattening the block tariffs, by charging relatively
higher rates for the lower-consumption blocks, and relatively lower rates for
the hedonistic users. Water ministers have done nothing to prevent such a
reverse-Robin-Hood pricing strategy, until Kasrils’ announcement of a free
lifeline block.
In
the meantime, in May 1997, the World Bank’s private-sector investment
subsidiary, the International Finance Corporation (IFC), announced it would take
a $25 million stake in the Standard Bank "South Africa Infrastructure Fund."
That fund anticipated gaining a return on investment of more than 30%–in US
dollar terms (more in local currency)–in 90% of its projects. Notably, the IFC
made no explicit effort to invest in a manner that either assured infrastructure
access on a lifeline basis, or that would directly broaden ownership to the
black majority.
While
the IFC was looking for privatisation investments, the World Bank risked charges
of conflict-of-interest by continuing to promote privatisation as public policy.
In one major city, Port Elizabeth, Ahmed spent a week in 1996 building water
pricing models that included only one institutional option: privatising the
city’s water works. Various claims about likely efficiency enhancements were
made, some of which–such as the feasible reduction of staff from 6.5 to 3.5 per
1,000 water consumers, and a 1.2% interest rate advantage on capital-related
borrowing for a private firm in contrast to the municipality–were based on
highly dubious assumptions.
Evidence of World Bank intervention in South Africa’s multiple water disasters
is clear. The agenda seems obvious enough: * privatise South Africa’s water; *
change tariffs to lower the price to the rich and raise it for low-volume
consumers; * deny low-income people access on grounds they cannot pay for full
operating and maintenance; and * maintain extremely low standards of
infrastructure (communal taps and pit latrines) even in dense urban areas.
(This
list does not even include the Bank’s indefensible promotion of large dams, such
as those that have caused enormous damage in Lesotho, paid for
disproportionately by many low-income Johannesburg residents whose water
services have not improved since apartheid.)
It is
only the combination of several factors in 2000, including the cholera epidemic,
that may crowd out World Bank advice–but six years too late for many who have
died or suffered preventable disease due to neoliberal water policy and
practice.
A
decade ago, just before the UN Conference on Environment and Development in Rio
de Janeiro, World Bank chief economist Lawrence Summers (now Harvard president)
signed an internal memo- -leaked and then published by The Economist magazine in
February 2002–that includes the most famous sentence in development history: "I
think the economic logic of dumping a load of toxic waste in the lowest wage
country is impeccable and we should face up to that."
The
World Bank has been partially responsible, in recent years, for the dumping of
toxic neoliberal water policy in South Africa. Fouling the world’s water is yet
another reason to close that institution down forthwith. (http://www.worldbankboycott.org)
(Patrick Bond is at
[email protected])
