Kate Bayliss

Privatization and Poverty: The Distributional Impact of Utility Privatization

This article examines the effects on poverty of privatization, an impact to which donors have given little attention in their concern with efficiency and markets. The analysis of the distributional impact of privatization activities draws on empirical cases in the utilities sector in a wide range of developing economies, principally in Africa and Latin America. After a critical consideration of the World Bank position on privatization strategies, and the arguments presented by donors on the pro-poor effects of these economic reforms, the article turns to the negative distributional effects. It is argued that privatization has demonstrably damaged the poor, whether through loss of employment and income, or through exclusion from, or reduced access to, basic services. This is mainly because private firms are principally concerned with profits, prices and costs, and are highly selective as to sectors and types of consumer. Meanwhile, the weakness of governance and regulatory capacity in many developing countries lead to poor control of market abuses. The article concludes by proposing that donors should take more account of local variations in state-market relations, and be prepared to give consideration to alternative economic strategies where privatization is not working as intended. Copyright 2002 CIRIEC.

Utility Privatisation in Sub-Saharan Africa: A Case Study of Water

Over the past twenty years, the focus of development policy has shifted from the state to the private sector. Privatisation is now central to utility reform in much of SSA. This paper sets out developments in water privatisation and reviews the evidence regarding its impact. Water privatisation has been carried out to some degree in at least fourteen countries in the region, and many other governments are at various stages in the privatisation process. However, in some cases privatisation has been difficult to achieve, and a few countries have successfully provided water under public ownership. Evidence on the impact of privatisation indicates that the performance of privatised utilities has not changed dramatically, but that enterprises have continued to perform well, or not so well, depending both on their state when they were privatised and on the wider economic context. The evidence points to internal improvements in terms of financial management. However, governments face considerable difficulties in attracting investors and regulating private utilities. Furthermore, privatisation fails to address some of the fundamental constraints affecting water utilities in SSA, such as finance, the politicised nature of service delivery, and lack of access for the poor. A preoccupation with ownership may obscure the wider goals of reform.

The Financialization of Water

This paper aims to locate developments in water delivery within broader financialization trends by considering three aspects of water management. First, despite clear failings of privatization over the past twenty years, state support for the private sector continues. Second, innovations have emerged so that water consumption generates wealth for private investment finance. Finally, private enterprises have gained increasing influence in sector policy. The paper demonstrates that financialization is incompatible with social objectives in water delivery.

Privatization and Alternative Public Sector Reform in Sub-Saharan Africa

This book documents the growth in privatization in the delivery of water and electricity in SSA over the 1990s and 2000s, showing how numerous governments have gone to considerable lengths in an effort to attract investors into these sectors. The book dismantles the theoretical and empirical arguments to show that the donor-driven growth in privatisation was based on little substance beyond frustration with the state. The book goes on to reveal that what is considered to be a new approach is the same policy modified to increase the likelihood of it being implemented rather than the radical rethink that is required.

Beyond Bureaucrats in Business: a critical review of the World Bank approach to privatization and public sector reform

This paper provides a critical review of the World Bank Policy Research Report, Bureaucrats in Business, commenting on its position relative to the previous reports in the series and on the new privatization synthesis-the theoretical basis underlying the Banks approach. The detailed critique focusses on three main areas of the Report: the narrow analytical framework which inevitably supports predetermined conclusions; the selective and biased use of evidence which ignores possible alternative interpretations-particularly the influence of country-specific factors; and the narrow view of industrial policy which leads to inappropriate policy prescriptions. Copyright

Introduction to special issue on the material cultures of financialisation

ABSTRACT This paper offers a wide-ranging introduction to the symposium on the material culture of financialisation. It begins by addressing the nature of financialisation itself, drawing on a tight definition in order to distinguish the phenomenon of financialisation from its effects and from the looser associations prevalent within much of the literature such as the presence of credit or even simply (more extensive) monetary relations. In order to locate financialisation within economic and social reproduction, of which material culture is a part, close attention is paid to the distinctive forms of financialisation arising from commodification, commodity form and commodity calculation. The differences in the extent to which, and how, these prevail are addressed through the system of provision approach and its framing of material culture through its use of 10 distinctive attributes of such cultures, known as the 10Cs (Constructed, Construed, Conforming, Commodified, Contextual, Contradictory, Closed, Contested, Collective and Chaotic). The analysis is then illustrated by reference to the papers that follow in this volume which demonstrate the diverse ways in which shifting cultures have served to embed financialisation in our daily lives. The first is on the material culture of financialisation itself and this is followed by a number of case studies that include the promotion of financial literacy and financial inclusion, well-being, the media and finally two sector examples are provided on housing and water.

Unpacking the Public Private Partnership Revival

Abstract This paper examines the recent resurgence of interest in public-private partnerships (PPPs) to provide infrastructure in developing countries. First, the paper demonstrates that there has been a revival of support for private sector participation in infrastructure. Second, the paper argues that this revival differs from earlier attempts to increase the involvement of the private sector in public service provision in a number of respects. In particular, the current support for PPPs is related to an increased availability of global financial capital. Third, the paper considers the implications of this distinct feature of the revival for development.

Material cultures of water financialisation in England and Wales

ABSTRACT The ownership structure of the water and sewerage sector has changed substantially in England and Wales (EW) since the 10 companies were listed on the London Stock Exchange in 1989. The majority of firms are now delisted and a number of companies are now owned by financial investors via special purpose vehicles. In some cases, revenue streams from customer water bills have become securitised for decades into the future not only to raise funds for investment, but also for finance distributions to shareholders. The high financing costs associated with these highly leveraged corporate structures are passed on to customers. The regulator, Ofwat, tasked with protecting the interests of consumers, operates largely within a system of price controls intended to mimic a competitive market in the absence of financial speculation. This means that regulation steers away from intervening in the financialised corporate structures that have emerged around some of the water utilities. These manifestations of financialisation are considered to be ‘market outcomes’. This paper explores the discourses and narratives that have developed in the provision of water in EW to create a situation where such rentier transfers are normalised. Using the systems of provision approach, the paper shows that the material culture of water finance has been constructed along narrow lines with superficial consumer consultation, while extensive financial engineering to increase shareholder returns continues unimpeded.

Conclusion and Alternatives

A number of general conclusions can be drawn from our study. In point form, these can be summarized as follows: The rise of privatization both reflected and promoted a shift in thinking about the economic role of the state as an aspect of the simultaneous rise of neo-liberalism and the Washington Consensus. There is neither theoretical nor empirical evidence to favour private over public provision of public services. The transposition, if not imposition, of privatization from developed to developing countries has been especially unfortunate. Much of this is borne out by the (World Bank) rethink, mea culpa even, that is accompanying the acknowledged failures both to privatize and of privatization, especially in sub-Saharan Africa (SSA). Despite the rethink, state provision of services is not encouraged and privatization is still a goal, albeit in the more diluted form of short-term management contracts, at least as an interim measure, in much of the region.