Water privatization in Tanzania

Water privatization in Dar es Salaam began with the award of a 10-year lease contract signed in 2003 for Dar es Salaam, the largest city and former capital of Tanzania. It was signed between the government of Tanzania and City Water, a consortium consisting of the former British firm Biwater, Gauff Engineers from Germany and a Tanzanian company called Superdoll. The government terminated the lease contract in May 2005 amid mutual allegations of breach of contract, and deported the three top executives of City Water.

According to a report of ActionAid, before privatisation "the water system in Dar es Salaam was hardly a model of public sector efficiency." Until 1991, water was provided for free, except for some high income areas. The system was characterized by "disrepair, a lack of investment, high levels of wastage, and very poor levels of service coverage". In 1997 the semi-autonomous utility DAWASA was created and water tariffs were introduced for all users. According to the report, "DAWASA proved to be no better than its predecessor, and the wastage and disrepair reached crisis levels." By 2003 "only 98,000 households in a city of 2.5 million people had house connections. Only 26% of water was being billed, 60% was lost through leaks, and a further 13% through unauthorised use, illegal taps and non-payers. Even those with connections only received water irregularly, and the water quality was poor. In low-income areas, the vast majority of households had no water connection at all, relying instead on buying water from kiosks, water vendors or their neighbours, at more than three times the price."

External donor investment produced the lease contract through soft loans worth US$145.5 million for a Dar es Salaam Water Supply and Sanitation Project approved by the World Bank in 2003. The African Development Bank contributed US$48m, the European Investment Bank US$34m and the World Bank US$61.5m. The private company was supposed to contribute US$8.5m from its own funds and the Tanzanian government was supposed to contribute US$12.6m.

The World Bank and the International Monetary Fund set conditions for further loans to Tanzania contingent on the privatization of state-run organisations. According to research by ActionAid, in 2000 the "signing of a concession agreement assigning the assets of DAWASA (the public utility for Dar es Salaam) to private management companies" was included as a condition for debt relief under the HIPC initiative. When lack of investor interest meant that Tanzania was unable to comply with this condition, donors agreed to waive it. They then asked for a lease contract instead of a concession, implying a shorter contract duration and less responsibilities transferred to the private company. Still according to ActionAid "there has been very little meaningful public participation or consultation, limited public debate, and no transparency around the privatisation process. Even the country’s elected MPs have been kept largely in the dark."

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Wikipedia