Hadiya Atheuman, mother of 11 children, was yesterday drawing dirty water from a shallow, hand-dug well in the western outskirts of Dar es Salaam. The coastal city is one of the fastest growing in the world and its water system has utterly failed to provide for the roughly three million people who now live there. Installed in the 1950s, two-thirds of its water leaks from broken pipes or is stolen, and only 60,000 people are connected to the mains.

With no pipes within 30 minutes' walk of Mrs Atheuman's home, everyone must pay water sellers. As in every poor country, the poorer you are, the more you pay for water.

Mrs Atheuman pays up to 12 Tanzanian shillings a liter [about 1.2 US cents]. The middle classes, who buy 10,000 liters of fresh water at a time and have it delivered by tanker, pay less than half that per liter"The result is that the poor are financially penalized, get ill and stay poor," says Rose Mushi, director of ActionAid Tanzania.

Water privatization was meant to solve a world crisis that has left more than two billion people without clean water or sanitation.

In the 1980s and 1990s, the private sector was seen by the World Bank, the International Monetary Fund, and governments like Britain and France as the only way of raising the money needed, and international companies such as Suez, Thames and Biwater, encouraged by the IMF, rushed to privatize the water of the poor.

Many negotiated contracts which gave them monopolies for up to 30 years and guaranteed profits of up to 30-40%. Some companies ended up in the courts, accused of paying bribes to government officials.

Companies were also frequently accused of not delivering on their contracts. Prices shot up, people lost jobs, the poor often did not get the water promised, and discontent grew.

In the past decade there have been riots in Bolivia, after which western water companies were thrown out. There has also been discontent in Trinidad, Argentina, Ghana, South Africa and the Philippines.

Water privatization has become a subject of political debate in most developing countries - fiercely opposed by unions but widely backed by most governments.

The role of the IMF, World Bank and governments lobbying for their own companies is being questioned widely.

According to such development groups as ActionAid and the World Development Movement, many countries like Tanzania have been forced to privatize their water against their will when the IMF has demanded economic reforms, or countries have applied for loans from the World Bank.

Tanzania has cancelled its contract with Biwater, which has been working in Dar es Salam with the German engineering firm Gauff under the name City Water, claiming it has failed to deliver.

"It's a political project. We still have the World Bank and IMF imposing privatization conditions on poor countries," said Peter Hardcastle, policy director of the World Development Movement, in London yesterday. "Donors countries like Britain are piling cash into the private sector. The public sector is not seen as an option."

In some cases, debt cancellation has been made dependent on water and electricity privatizations.

The UK government has paid pro-privatization consultants such as the Adam Smith Institute to advise developing country governments on how best to privatize, and to persuade people that privatization is a good idea.

"The IMF and World Bank, which were responsible for the Dar es Salaam privatization, should listen more to people in developing countries. Privatization is not addressing the poverty situation," said Ms Mushi yesterday.

Water companies are becoming wary of taking on contracts in developing countries, because of political uncertainties, and because poor countries have learned to negotiate better deals.

Roughly 5% of the world's water is privatized, but new models are clearly needed. Both the water companies and the protesters are agreed on that.

"There are clearly no big profits to be made in Africa," said Cliff Stone, the chief executive of Dar Es Salaam's water company, City Water, yesterday.

"Our intention was to bring water to the poor. Whatever happens now, the problem of how to provide water for them remains a problem."

Scarcity and high prices

• The UN estimates that 2.7 billion people will face water scarcity by 2025. Some 40% of the world's population now live in countries with water shortages, and tens of millions of children die because of water-borne diseases that could largely be eliminated with improved sanitation.
  
• Bolivia has been the scene of many protests over the privatization of water services. Earlier this year, unrest almost brought the country to a standstill. One of the main causes of resentment is the French company running the water services. Privatization was effectively imposed by the World Bank, say campaigners. Five years ago at least six people died in riots caused by a hike in water prices following the privatization of supplies in Cochabamba, the country's third largest city. The company involved, Aguas del Tunari - a joint venture between the British contractor United Utilities and America's Bechtel - was trying to increase revenues to pay for a £240m investment program which the government had imposed on them. The demonstrations succeeded, forcing Aguas del Tunari out of Cochabamba.
  
• In Ghana, west Africa, fierce protests and accusations of high-level corruption forced the World Bank to withdraw from a contract to provide water for the capital city, Accra.
  

© Guardian Newspapers Limited 2005

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