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The World Bank in the time of cholera


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

pbond@wn.apc.org)

 

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