Privatisation has been a widespread failure. This has hampered progress on the MDGs for both water and sanitation, and on many other MDGs dependent on energy. This the main conclusion of a new policy research brief [1] that draws on the findings of a UNDP-supported book, Privatization and Alternative Public Sector Reform in Sub-Saharan Africa (Bayliss and Fine, forthcoming).

Privatisation has failed on several counts. Contrary to expectations, private investors have shied away from investing in such utilities in the region. So it has been costly for governments to motivate them to invest. Moreover, the focus of investors on cost recovery has not promoted social objectives, such as reducing poverty and promoting equity.

Thus, current realities dictate refocusing on building up the capacity of the public sector. It continues to dominate the provision of water and electricity, and will do so for the foreseeable future. But a dramatic scaling up of both external and domestic resources will be needed to finance more extensive public investment in these sectors. This approach is consistent with the current priority of adopting more ambitious MDG-based development strategies in the region.

[1] Bayliss, K. and McKinley, T. (2007). Privatising basic utilities in Sub-Saharan Africa : the MDG impact. (Policy research brief : no. 3). Brasilia, Brazil, UNDP International Poverty Centre. http://www.undp-povertycentre.org/pub/IPCPolicyResearchBrief003.pdf

Tags: financing