April 22, 2004
Public Citizen Report Reveals World Bank Loans Continue to Promote Water Privatization
Ghanaian Civil Society Leader Calls World Bank Policies Inhumane
WASHINGTON, D.C. – As the World Bank convenes for its spring meetings this weekend, Public Citizen today released a new report that highlights how the World Bank continues to promote water privatization despite its assertion that it has modified its stance on privatization policies after a series of failed experiments around the world. A review of World Bank lending from 2000 through 2004 reveals that while the Bank’s public relations rhetoric has changed in the face of increasing global resistance to privatized water services, its loan policies in the water sector have not changed at all.
The World Bank is pressuring governments to privatize water services, thereby ceding control of them to major transnational corporations, as part of the package of policies required before governments can access loans for building and repairing water and sanitation systems. Public Citizen’s report, Will the World Bank Back Down? Water Privatization in a Climate of Global Protest, reviewed 51 countries using World Bank loans in the past four years.
Despite the World Bank’s insistence that it is no longer tying privatization clauses to loans, a review of its lending patterns in the water and sanitation sector shows that approximately 90 percent of the loans included requirements promoting water privatization. These range from requiring governments to consider contracts with private water companies to requiring full-scale privatization of water systems. In 2000, 91 percent of loans included water privatization clauses; in 2004, 100 percent of loans included such clauses.
“This is classic public relations spin. World Bank officials are in the middle of a growing controversy over whether water should be considered a human right or a global commodity, and instead of examining the facts and changing their policies, they are just altering their discourse to appease global resistance,” said Wenonah Hauter, director of Public Citizen’s Water for All Campaign. “An empty promise is worthless. There must be a concrete, documented change in World Bank policies for the water sector.”
In collaboration with governments and regional development banks, the World Bank has pushed water privatization and promoted multinational water corporations in many countries across the world as the answer to water and sanitation problems. As a result, the global water industry has become highly concentrated in the past 10 years, with three major multinational corporations controlling more than 40 percent of the private water market.
But the World Bank’s promotion of water privatization has led to unaffordable water rates, public health crises, weak enforcement of drinking water standards (because private companies are not as accountable as governments), a lack of compliance with contractual commitments for investment, and lost jobs in places where private contractors have replaced government workers. This
has caused fresh waves of protest across Africa, Latin America, and Asia – and in hot spots around the United States such as New Orleans, Atlanta and Stockton, Calif.
Civil society leader Rudolf Amenga-Etego of the Ghana National Coalition Against the Privatization of Water, in Washington, D.C., this week to contest the policies of the World Bank, said that World Bank and International Monetary Fund’s so-called “reforms” in the water sector have more than doubled the cost of water for Ghana consumers over the past three years. Amenga-Etego this week received the prestigious Goldman Environmental Prize for his work in Ghana.
A recent survey by the Ghana-based Integrated Social Development Center (ISODEC) demonstrates that poor households in five communities in Accra – Madina, Sukura, Mamobi, Nima and Ashaiman – spend between 18 and 25 percent of their income on water alone.
“World Bank policies are absolutely inhumane and irresponsible,” said Amenga-Etego, referring to increased cost recovery (billing ratepayers for a portion of infrastructure improvements) and automatic tariff adjustment mechanisms (rate adjustments that fluctuate with inflation) – policies used by the IMF and World Bank to raise the consumer price of water, usually as a prelude to privatization.
Public Citizen’s report says that the World Bank should:
- Fully recognize the human right to water in all Bank policies related to water and sanitation;
- Remove all conditions, implicit or explicit, that demand full cost recovery from household water users;
- Remove all conditions, explicit and implicit, that require public/private partnerships for governments to access loans;
- Cease loans that promote the reform of national water laws to permit and protect private sector participation and increased cost-recovery; and
- Work to strengthen the role of the public sector and encourage meaningful participation of civil society and affected communities.
“As the World Bank turns sixty, it is facing increased opposition to the water privatization policies that have caused such havoc and turmoil around the world,” said Hauter. “This growing social movement, in the face of an institution that refuses to listen or change, continues to tell the World Bank to back down.”