email resource!
 
home
news
events
forum
about the website
links
search
contact us




PrivatisationAlternatives / ReformsPublic-Public PartnershipsFinancing Public Water
Case StudiesAnalysesCampaigns




Aug 12 2004
Supplied or written by Adam Al-hassan
Ghana Water: Strategic Investors Turn Strategic Managers By Al-hassan Adam, National Coalition Against Water Privatization, Ghana (August 2004) Ghana is a country in West Africa located between latitude four degrees 45 minutes and 11 degrees 11 minutes North and extends from Longitude one degree 14 minutes east to three degrees 17 minutes west. Ghana shares boundaries with three countries: Burkina Faso to the north, La Cote d’ivoire to the west and Togo to the east, and to the extreme southern is North Atlantic Ocean (Gulf of Guinea). Ghana is divided into 10 administrative regions and 110 district assemblies. The regions are: Greater Accra, Eastern, Western, Central, Volta, Brong Ahafo, Ashanti, Northern, Upper East & Upper West. Ghana is populated by about 20million people. Ghana was quite a loose territory ruled by Chiefs and kings right down from the Gulf of Guinea, through Coastal savannah plains, to high tropical rain forest and terminating at the guinea savannah. The country has experience colonial domination from different European mercantile capitalist powers. The Dutch, Portuguese, Danes, Germans and British have all exerted their power on the land. The reign of these imperialist forces and their merchants meant the plundering of the wealth of the nation. This came in the form of looting gold, timber and human beings. The looters had no headache of investing in the mining of gold nor timber, all that was needed was to round up people and force them to go out to pick alluvial gold when it rains, and with timber, force labour was used for the harvesting. The imperialists were happy with the ease at which they could get gold and decided to christen the country Gold Coast. The name Ghana came after Independence by a nationalist government led by the Convention Peoples Party (CPP) with Kwame Nkrumah as the leader of the party. Ghana got her Independence from Britain on 6th Match 1957 and became a Republic 1st July 1960. The provision of essential services in the then Gold Coast was to meet the needs of the colonial administrators and their priest who where living in fortified Castles and Forts mainly along the coastal towns. Later services like potable water had to live the walls of the castles and forts to meet the needs of the natives who have been enlisted into the colonial administration in the forms of catechist, messengers, guards, porters, cooks and Concubines who have resettled quarters closer to their master’s castles. But class rooms and church were still housed in the castles for a very long time that when the needs of the merchants for natives who can do simply arithmetic led to opening of schools outside the castles. Cape Coast a coastal town was the seat of the colonial government; it is not surprising that this town was the first place to get potable water in 1928. Cape Coast had a pilot system managed by the Hydraulic Branch of the Public Works Department (PWD). This scheme was meant to provide potable water for the colonialists and their local administrators. After meeting the demands of the colonialists water was extended to the auxiliary staff of the colonial administration. It was only after satisfying this class of people that the colonial administration extended water to the public in the form of communal “stand pipes.” Public standpipes are out-door taps located in neighbourhoods mostly in public spaces, such as schools, hospitals and market squares. When the nationalist government assumed power in 1957, in a bid to fulfil the demands of self-rule they made Water Supply an autonomous body under the Ministry of Works and Housing in 1958. By 1965, Parliament created Ghana Water and Sewerage Corporation (GWSC) by an act of parliament (ACT 310) as a legal public entity charged with the responsibility of providing and managing water resources for domestic and industrial purposes. This move was not unusual, but rather most newly independent countries were undertaking state-led development. This arrangement created a massive centralized bureaucratic institution, which made it next to impossible for decision-making at regional levels, not to talk of district and unit levels as well. The state bureaucracy had its own setbacks due to alienation of the general populace from effective participation in policy making. In order to overcome these challenges, the state and its major donors thought it best to decentralize some of GWSC's operations. The donors were guided by neoclassical economic school of thought and saw decentralization as a step towards minimizing the government’s expenditure and influence over water provision. The decentralization took place and rolled through 1970 to 1985; the results did not match the project targets. The political landscape also contributed to the alienation of the services from the consumers. The military dominated political power and decision-making processes, crowding out citizen participation. The military junta (PNDC) dominated the political scene from 1981 to 1992, when it catapulted itself into a political party (National Democratic Party-NDC) led by J.J. Rawlings, and won the election from 1992 to 2000. Not only did PNDC and NDC crowd out citizens’ voices, but they followed the economic agendas laid down by the World Bank and IMF to the letter. Ghana’s economy was celebrated by the IMF and World Bank as a model. Yet, the reign of this military junta brought about unbridled corruption in the public sector. The PNDC/NDC instituted the IMF and World Bank’s Economic Recovery Programme (ERP) and Structural Adjustment Programme (SAP). This corruption engulfed GWSC, as the corporation was restructured purposely for fiscal policies, which meant the sacking of 2000 workers from 1990-93. The private water company Thames (UK) was contracted by the government and donors to strengthen GWSC’s managerial and financial capacity through World Bank’s financial support (Project Credit 1342GH). Ghana supplied Thames with $13.5 million through taking out a World Bank loan. There are similar packages that have been carried through up till 1997. At the end of the day the restructuring failed to deliver potable water to Ghanaians and the corporation was running into crisis. The collapse of the Phase 1 of the neoclassical SAP gave way to deeper and harsher economic models. Phase 2 meant massive deregulation with the focus on transferring public resources to the private purse. In 1993, the NDC government accepted the World Bank's recommendation to re-restructure the water sector in preparation for privatisation. This process saw the de-linking of Sanitation and Rural water sector from GWSC. This worsened the plight of the rural folks, who face the toughest water burden, because the central government relinquished responsibility from providing them with water and gave the responsibility to underfunded local authorities and unreliable philanthropists. Seeking to sell GWSC, the NDC government went into negotiation with the private water company Azurix (subsidiary of ENRON). There were a lot of clouds hanging over the deal with Azurix and it was later found out that a Minister was bribed with $5million by Azurix in 1995. The government could not push through the Private Sector Participation (PSP) deal in 1996 since it was an election year and publicity of the bribery scandal would be detrimental. After winning the elections in 1996, the NDC government continued preparing the grounds for water privatisation. In 1996, the government established the Water Resources Commission which has the oversight of giving water rights and permits, opening the floodgates for selling water bodies to private companies and individuals. In 1998, the government set up the Public Utility Regulation Commission (PURC) as a regulator for utilities, followed by the Community Water and Sanitation Agency (CWSA) with the responsibility of providing potable water and sanitation to the rural folks under the auspices of the District Assemblies, which comprises 110 small town systems and 210 urban systems (Councils). In 1999, the government incorporated Ghana Water Company Limited (GWCL) as a public limited liability company. GWCL assumed responsibility for 100 relatively larger urban potable water supply systems. Under the privatisation process, the 100 urban water systems were reclassified into 69 systems and packaged into two business units (A and B) to be sold to two separate companies. The business units were supposed to be leased out for ten to twenty-five years. The opposition to the neo-liberal policies in 1995 dubbed “Kume Preko” resisted the moves of the NDC to privatise and liberalise the economy through mass demonstration and the state responding by killing four of the demonstrators. At the forefront of the demonstrators were the leadership of the then biggest opposition party, NPP (New Patriotic Party). Who are now ruling government and pushing privatisation to the high heavens. One of the leading members of the NPP, Kan Dapaah wrote in a national daily “In Defence of GWSC: 'Stop the butchering'. (Daily Graphic, Wednesday August 4, 1999, page 7). His article was very critical of the privatisation process, interesting enough, Kan Dapaah is now a Minister who is totally in support of PSP. In 2001 a national water stakeholders workshop was organized by Integrated Social Development Centre (ISODEC ) in Accra - the capital of Ghana - to look at the pros and cons of PSP. At the end of the workshop, the PSP plan which was previously shelved by the NDC, but now being re-invigorated by the new government of NPP led by John Kufour was seen as a proposal that would not deliver water to all, especially the POOR! A declaration was signed and the signatories formed the National Coalition Against Privatisation of Water (NCAP). The coalition membership cuts across civil institutions in the country; Organized labour, students, communities and NGOs are all heavily involved. Ever since the inception of the campaign, the government has come down heavily on the coalition members, calling us terrorists and un-patriotic and all manner of names. Newspaper advertisements by the government to tarnish our reputation did not scare us. The smear campaign was mastermind by "Water Sector Restructuring Secretariat (WSRS). An outfit sponsored by the World Bank (WB) and the UK development agency DFID. The main reasons put forward for the privatisation of GWCL was that there is going to be more utility after implementation of the project. There was the promise of $500million from international donors for the government, which would be made available for the private company to borrow at zero percentage interest rate. The final two private water companies who will win the bids are obliged to contribute $70million each for each business unit. This amount was being challenged by the companies and the amount was dropped to $30million. The ink did not dry when the private companies refused to inject any money into GWCL sighting local currency devaluation, political threats of the aftermaths of September 11. And war conflicts in the West African sub-region have made investments unattractive. According to the World Bank what is on offer now is a 3 years service contract rolled into 5 years lease contract, by which time there will be less political and financial risk in the sub-region. In essence, off-load all risks to the public and all profits to the private operator. According to the new management service contract, 42 months after operation of the service contract, the operator could be served 6 months notice for the termination of contract when it is realised out right lease is possible. Reading in between the lines, what the contract document is saying is that, 42 months after using public money to clear the debt of GWCL the contract would be transformed into “Lease”. This came out clear at one of the meeting for the inspection of the bid document, the private companies asked whether they are expected to service the debt of GWCL and the answer was no from Alex McPhail (WB Team leader for water and sanitation). deposit [a mere] $500,000 as working capital…[which is fully] refundable at the end of the Management Contract” (p.5 of contract document). Additionally, the foreign company is allowed to repatriate 100% of the profits made and has no obligation to re-invest in GWCL. Even the World Bank’s “Fact Sheet on the Management Contract” admits that the company is not required to invest in or expand the water sector. Therefore, whether the reform is a success or a failure, the private operator will come out with a profit, while the GOG will come out deeper in debt. In 1990-1995 there was a similar reform that attracted $125 million from the World Bank, DFID and OECF (Japan) and $15 million from GWCL for a five-year development plan, totally $140 million. The figures were collaborated by Mr. Lamptey, Managing Director of GWCL, who also estimated that GWCL requires US$100 million per annum to be fully functional in providing safe water on a sustainable basis. Currently, GWCL is operating on a budget of only $45 million. With the onset of the Management Contract, GWCL is earmarked to operate on a budget of $135-145 million over a five year period. Therefore, there will be a significant de-investment in GWCL, as it will be running on a budget of only $27-29 million per annum within the PSP Framework. The de-investment in GWCL of about $17 million per annum is bound to cause far-reaching damage to the water sector. In order to raise the necessary funds to keep GWCL functional, the private operator will not provide the capital, but rather potable water consumers will bear the cost as the PURC will increase the already high water tariffs. The government and the donors are finding it difficult to come to tell the public that the so-called strategic investors (Private water companies) are now strategic managers. The bank has adopted a ploy to use tribal chiefs to win Ghanaian citizens to PSP, Wolfensohn, WB President, has pledge a $ 30 million loan to the Ashanti chief to enable him provide water and sanitation services to some communities in the country. Incredible! Who is this chief accountable to? No body! What is his experience in water and sanisation? Nil! Divide and Rule tactics of the World Bank. Ever since government and donors have been pushing hard to sell GWCL to Suez, Veola, Biwater and their cronies in like WaterAid who hide behind civil society participation for water, investment into GWCL has dwindled. Rampant water shortages are the norm, private water vendors are cashing in on this situation by drawing water from filling points with trucks and selling it at 600% of the original price. The worst affected areas are the rural folks. There has been the insurgence of guinea worm infections, which is a water borne disease. Ghana is the second highest country of guinea cases even though it was almost eradicated 10 years ago. The calling for active citizenry participation in water and sanitation delivery. This is the sure way to bring about an equitable and efficient system, not huge state bureaucracy and private corporate greed. It has been demonstrated that community control of water resources is feasible by examining the outcome of a project in a guinea worm infested community called Savelugu in Northern Ghana. Savelugu has a population of 20,000 with 600 cases of guinea infections, the highest case in the country. World Vision International (WVI), Global 2000 Inc., Carter Center and UNICEF adopted this community to help in solving the situation. Their first attempt was the introduction of water filters and education on the need to boil water in order to kill guinea worm (protozoa) and other water borne disease. This was not very effective, and through the recommendations of a Consultant (Gariba Development Associates) they decided to provide running water instead of the stagnant water holes that the community depends on. UNICEF provided 60% of the finance while WVI was instrumental in the drilling of the mechanized borehole, the District Assembly and Community contributed 10% of the cost, GWCL donated an overhead tank of 20,000-gallons (Glass re-enforced tank) and Guinea Worm Eradication Programme (GWEP) also contributed in kind and cash. These organizations in collaboration with the community approached GWCL to sell water in bulk to the community who will then distribute the water to its citizenry. The GWCL supplies the community with 95% while a mechanized borehole takes care of the remaining 5%. The Township has been zoned into six areas, and each has a water management committee, comprising equal numbers of men and women. The water management committee has an overseer who ensures discipline and a treasurer who collects money for water fetched. A liaison person on the committee reports faults and malfunctions of the water system to the district assembly. Water is available to the different zones of the township in turns. For any amount of water supplied to each area, the water board allows up to 5% losses at the fetching points. Thus, water committees account for up to 95% of water supplied to their respective sections. Sales are rendered daily to the accountant. During the first year (2000), the Water Board managed the system directly, but in 2001, the community decided to hire a technical person to manage the system on behalf of the water board, as a Water Supply Manager. The works engineer of the District Assembly is responsible for the technical supervision of the system. The Water Board pays the Water Works Manager, from revenue accrued from the sale of the water. To strengthen the capacity of the above officer there are plans to sponsor him for training in a suitable training institution. As at the time of writing guinea worm cases are virtually non-existing in Savelugu. Time spent on looking water (which is point of infection) is save, crippling effects of guinea worm is gone! But the frightening news is that guinea worm infection is rising in other towns within the same district due to lack of investment in water and sanitation by the central government. They are waiting for philanthropists like Carter Center and World Vision International. All though this module do not address all the challenges, but is a good start for active citizens participation!


Welcome to the resource section. Here you can find a wealth of analysis about (alternatives to) privatisation, public-public partnerships, financing public water and other key topics.