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Publication Details

Reference
Bond, Patrick (2001) The World Bank in the Time of Cholera. Z-Mag April 13: -.

Summary
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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