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In Tanzania, less than 40% of the rural population and 70% of the urban population have access to piped water. The rest of the population must seek water from untreated sources. Women often walk up to 15 kilometers to fetch water of dubious quality. Cholera outbreaks are common.
Chronic underfunding of Tanzania's water infrastructure due to World Bank structural adjustments left the utility in need of almost US$600 million in order to provide water for all citizens. Lacking the backing of the World Bank the government was forced to privatize the water in the capital city of Dar es Salaam in 2003. The move was supported with a World Bank loan of US$61.5 million designed to pass enabling legislation and prepare the water utility for sell off. Additional funding was raised from other sources, such as the European Investment Bank and Agence Française de Développement; institutions not normally engaged in Tanzania. Money that the local population has to pay along with increased water tariffs in the new privatized utility. Unfortunately, it will still be Tanzanian taxpayers who repay the money that the government lent - and worse still, they will have to pay increased water rates.
The private contract was awarded to a consortium consisting of Biwater International and Gauff Ingenieure of Germany which is also vying for the water utility in Uganda. Biwater is already involved in a controversial privatization in Nelspruit, South Africa. The contract is a 10-year lease and included a cost-recovery clause that would undoubtedly harm access to clean water for the poor who cannot afford to pay the full costs for infrastructure and rising water fees. According to the lease, unprofitable areas are given to non-governmental organizations' assistance.
However, in a victory for Tanzanian citizens who have been working to oppose the contract for two years, on May 24, 2005, the Tanzanian government announced that it had killed its contract with Biwater because the company had failed in its promise to provide clean drinking water to millions of people in Dar es Salaam.
The US$140 million contact was a flagship project and one of the most ambitious in Africa. Privatization proponents hoped it would be a model for how to deliver water to the world's poorest communities. Instead, it's proven to be a failure, highlighting once again that privatization is not the answer to the global water crisis.
According to a story in the UK’s Guardian, Tanzania accused Biwater of failing to install domestic pipework, not spending the money the company had promised, declining water quality, and decreased revenues. "The company has failed to produce the goods," said Edward Lowassa, Tanzania's water minister.
A coalition of NGOs and citizens' groups, including TANGO and the Tanzania Gender Networking Programme, had repeatedly expressed concerns that multinational water privatization could worsen what is already a grave situation. It appears the Tanzanian government finally agreed with them.
Read ActionAid's report: Turning off the Taps: Donor conditionality and water privatisation in Dar es Salaam, Tanzania [637 KB]
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