Publication: The Welfare Effects of Private Sector Participation in Guinea's Urban Water Supply
Loading...
Files in English
1,116 downloads
Date
2000-06
ISSN
Published
2000-06
Author(s)
Editor(s)
Abstract
In 1989 the government of Guinea enacted far-reaching reform of its water sector, which had been dominated by a poorly run public agency. The government signed a lease contract for operations and maintenance with a private operator, making a separate public enterprise responsible for ownership of assets and investment. Although based on a successful model that had operated in Cote d'Ivoire for nearly 30 years, the reform had many highly innovative features. It is being transplanted to several other developing countries, so the authors evaluate its successes and failures in the early years of reform. They present standard performance measures and results from a cost-benefit analysis to assess reform's net effect on various stakeholders in the sector. They conclude that, compared with what might have been expected under continued public ownership, reform benefited consumers, the government, and, to a lesser extent, the foreign owners or the private operator. Most sector performance indicators improved, but some problems remain. The three most troublesome areas are water that is unaccounted for (there are many illegal connections and the quality of infrastructure is poor), poor collection rates, and high prices. The weak institutional environment makes it difficult to improve collection rates, but the government could take some steps to correct the problem. To begin with, it could pay its own bills on time. Also, the legislature could authorize the collection of unpaid bills from private individuals.
Link to Data Set
Citation
“Clarke, George; Menard, Claude; Zuluaga, Ana Maria. 2000. The Welfare Effects of Private Sector Participation in Guinea's Urban Water Supply. Policy Research Working Paper;No. 2361. © http://hdl.handle.net/10986/21455 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Future of Poverty(Washington, DC: World Bank, 2025-07-15)Climate change is increasingly acknowledged as a critical issue with far-reaching socioeconomic implications that extend well beyond environmental concerns. Among the most pressing challenges is its impact on global poverty. This paper projects the potential impacts of unmitigated climate change on global poverty rates between 2023 and 2050. Building on a study that provided a detailed analysis of how temperature changes affect economic productivity, this paper integrates those findings with binned data from 217 countries, sourced from the World Bank’s Poverty and Inequality Platform. By simulating poverty rates and the number of poor under two climate change scenarios, the paper uncovers some alarming trends. One of the primary findings is that the number of people living in extreme poverty worldwide could be nearly doubled due to climate change. In all scenarios, Sub-Saharan Africa is projected to bear the brunt, contributing the largest number of poor people, with estimates ranging between 40.5 million and 73.5 million by 2050. Another significant finding is the disproportionate impact of inequality on poverty. Even small increases in inequality can lead to substantial rises in poverty levels. For instance, if every country’s Gini coefficient increases by just 1 percent between 2022 and 2050, an additional 8.8 million people could be pushed below the international poverty line by 2050. In a more extreme scenario, where every country’s Gini coefficient increases by 10 percent between 2022 and 2050, the number of people falling into poverty could rise by an additional 148.8 million relative to the baseline scenario. These findings underscore the urgent need for comprehensive climate policies that not only mitigate environmental impacts but also address socioeconomic vulnerabilities.Publication Exports, Labor Markets, and the Environment(Washington, DC: World Bank, 2025-07-14)What is the environmental impact of exports? Focusing on 2000–20, this paper combines customs, administrative, and census microdata to estimate employment elasticities with respect to exports. The findings show that municipalities that faced increased exports experienced faster growth in formal employment. The elasticities were 0.25 on impact, peaked at 0.4, and remained positive and significant even 10 years after the shock, pointing to a long and protracted labor market adjustment. In the long run, informal employment responds negatively to export shocks. Using a granular taxonomy for economic activities based on their environmental impact, the paper documents that environmentally risky activities have a larger share of employment than environmentally sustainable ones, and that the relationship between these activities and exports is nuanced. Over the short run, environmentally risky employment responds more strongly to exports relative to environmentally sustainable employment. However, over the long run, this pattern reverses, as the impact of exports on environmentally sustainable employment is more persistent.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication The Asymmetric Bank Distress Amplifier of Recessions(Washington, DC: World Bank, 2025-07-11)One defining feature of financial crises, evident in U.S. and international data, is asymmetric bank distress—concentrated losses on a subset of banks. This paper proposes a model in which shocks to borrowers’ productivity dispersion lead to asymmetric bank losses. The framework exhibits a “bank distress amplifier,” exacerbating economic downturns by causing costly bank failures and raising uncertainty about the solvency of banks, thereby pushing banks to deleverage. Quantitative analysis shows that the bank distress amplifier doubles investment decline and increases the spread by 2.5 times during the Great Recession compared to a standard financial accelerator model. The mechanism helps explain how a seemingly small shock can sometimes trigger a large crisis.Publication Impact of Heat Waves on Learning Outcomes and the Role of Conditional Cash Transfers(Washington, DC: World Bank, 2025-07-14)This paper evaluates the impact of higher temperatures on learning outcomes in Peru. The results suggest that 1 degree above 20°C is equivalent to 7 and 6 percent of a standard deviation of what a student learns in a year for math and reading tests, respectively. These results hold true when the main specification is changed, splitting the sample, collapsing the data at school level, and using other climate specifications. The paper aims to improve understanding of how to deal with the impacts of climate change on learning outcomes in developing countries. The evidence suggests that conditional cash transfer programs can mitigate the negative effects of higher temperatures on students’ learning outcomes in math and reading.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication A Transitory Regime : Water Supply in Conakry, Guinea(World Bank, Washington, DC, 2000-06)Both consumers and the government benefited from reform of the water system in Conakry, Guinea, whose deterioration since independence had become critical by the mid-1980s. Less than 40 percent of Conakry's population had access to piped water - low even by regional standards - and service was intermittent, at best, for the few who had connections. The public agency in charge of the sector was inefficient, overstaffed, and virtually insolvent. In several ways, the reform introduced to the sector in 1989 under a World Bank-led project was remarkable. It showed that even in a weak institutional environment, where contracts are hard to enforce and political interference is common, private sector participation can improve sector performance. The authors discuss the mechanisms that made progress possible and identify factors that inhibit the positive effects of reform. Water has become very expensive, the number of connections has increased very slowly, and conflicts have developed between SEEG (the private operator) and SONEG (the state agency). Among the underlying problems: a) The lack of strong, stable institutions. b) The lack of an independent agency capable of restraining arbitrary government action, regulating the private operator, and enforcing contractual arrangements. c) The lack of adequate conflict resolution mechanisms for contract disputes. d) Weak administrative capacity.Publication Institutions, Politics, and Contracts : The Attempt to Privatize the Water and Sanitation Utility of Lima, Peru(World Bank, Washington, DC, 2000-11)The main reason Lima failed to implement a concession was geographical: the scarcity of water sources meant high marginal costs, partly for pumping water from deep wells and building adequate storage for dry periods. High extraction costs were compounded by years of neglect; much of the system needed to be replaced. Attracting private investors meant setting prices high enough to recover these high costs and provide a reasonable return on capital. But the government had subsidized costs for years, so a concession would have required a sharp and sudden price increase to cover marginal costs. Moreover, any forward-looking investor would want to slow the pace of future investment by curbing demand through more effective (meter-based) bill collection. And cross-subsidies, which reduce the incentive to conserve water, would also have to be reduced. The ultimate cause of the concession's failure was geographical but the proximate cause was political. Privatizing a utility is politically tricky if it involves higher prices and the controversial ceding of monopoly powers to private parties, especially foreigners. Private participation in water is further hampered by the social importance of water and by the lack of international experience and the technical difficulties in designing privatization reform in the sector. At the same time, water offers fewer benefits than other utlities--few revenues to reward supporters or compensate losers-- and the price increases likely in Peru would especially hurt the urban poor, who were important to the president's support base. After a favorable start, the political equation shifted against privatization. The concession's failure was costly, in access goals not fully met, in adverse effects on health, and in the failure to curb consumption through metering--and hence in continued depletion of the aquifer and its increasing contamination by ocean salt. Peru's institutional weaknesses, especially its lack of an autonomous judiciary, might have limited how much could have been achieved. But considering the net gains from private operation in the much weaker nstitutional settings in Africa, Lima would probably have been better off with a concession.Publication Reforming Water Supply in Abidjan, Côte d'Ivoire : Mild Reform in a Turbulent Environment(World Bank, Washington, DC, 2000-06)Compared with other urban water systems in West Africa, the water supply system in Abidjan performs very well. Documenting the recent history of that system, the authors try to answer three questions: What motivated reform in a system that was already performing well? How and why did the reform affect sector performance, and what additional changes might improve performance further? And what explains the relatively strong performance of Abidjan's water system? Is the success attributable primarily to an efficient contractual arrangement or more generally to Cote d'Ivoire's institutional environment? In a region plagued by political instability, Ivorian political institutions were remarkably stable for close to 40 years. In part, the success of the Ivorian model is the result of these institutions' stability and credibility. The single-party system in place at the time of reform might suggest that there were few restraints in place to prevent the government from behaving opportunistically. But several features of the institutional environment protected against such opportunism. Because of this, and because reform was based on a system already performing well, the contractual arrangement with a private operator proved exceptionally capable of adjusting even in the face of dramatic changes in the external environment. Institutional environments are not as favorable in other countries in the region, so similar contractual arrangements might be less successful elsewhere. Reform in Cote d'Ivoire was motivated primarily by a macroeconomic crisis, which reduced the resources available for public investment. Without either a sector crisis or a realignment of political forces, the will for reform was weak. Consequently, opportunities for improvement were missed and some problems remain. Among other ways in which the system could be improved: Splitting the water system into autonomous subsystems in different cities, and allowing bidding for investment contracts, would increase the chances of competition for investment, which does not currently exist.Publication Reforming Urban Water Utilities in Western and Central Africa : Experiences with Public-Private Partnerships, Volume 2. Case Studies(World Bank, Washington, DC, 2009-06)The Western and Central Africa has one of the longest experiences with public-private partnerships (PPPs) in the developing world, both for water supply and for combined power and water supply utilities. Cote d'Ivoire has a successful partnership dating from 1959, and over the last two decades as many as 15 countries (out of 23 in the region) have experimented with PPPs: eight for water supply operations alone and seven for combined power and water supply operations. This discussion paper documents the region's experience with PPPs for urban water supply in a comprehensive manner to help inform the current debate about the benefits brought by PPPs, in the context of helping Africa to achieve the Millennium Development Goals (MDG). Eleven PPPs have been studied, and detailed performance indicators are reported for six large cases - Cote d'Ivoire, Senegal, Niger, Mali, Burkina Faso, and Gabon, with at least four years of private operation. Through its successes and failures, the Western and Central African experience offers interesting lessons that other developing countries could reflect upon as they strive to improve the quality of urban water supply services, increase the efficiency of operations, and establish the financial credibility of the sector.Publication Reforming Urban Water Utilities in Western and Central Africa : Experiences with Public-Private Partnerships, Volume 1. Impact and Lessons Learned(World Bank, Washington, DC, 2009-06)The Western and Central Africa has one of the longest experiences with public-private partnerships (PPPs) in the developing world, both for water supply and for combined power and water supply utilities. Cote d'Ivoire has a successful partnership dating from 1959, and over the last two decades as many as 15 countries (out of 23 in the region) have experimented with PPPs: eight for water supply operations alone and seven for combined power and water supply operations. This discussion paper documents the region's experience with PPPs for urban water supply in a comprehensive manner to help inform the current debate about the benefits brought by PPPs, in the context of helping Africa to achieve the Millennium Development Goals (MDG). Eleven PPPs have been studied, and detailed performance indicators are reported for six large cases - Cote d'Ivoire, Senegal, Niger, Mali, Burkina Faso, and Gabon, with at least four years of private operation. Through its successes and failures, the Western and Central African experience offers interesting lessons that other developing countries could reflect upon as they strive to improve the quality of urban water supply services, increase the efficiency of operations, and establish the financial credibility of the sector.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Women, Business and the Law 2024(Washington, DC: World Bank, 2024-03-04)Women, Business and the Law 2024 is the 10th in a series of annual studies measuring the enabling conditions that affect women’s economic opportunity in 190 economies. To present a more complete picture of the global environment that enables women’s socioeconomic participation, this year Women, Business and the Law introduces two new indicators—Safety and Childcare—and presents findings on the implementation gap between laws (de jure) and how they function in practice (de facto). This study presents three indexes: (1) legal frameworks, (2) supportive frameworks (policies, institutions, services, data, budget, and access to justice), and (3) expert opinions on women’s rights in practice in the areas measured. The study’s 10 indicators—Safety, Mobility, Workplace, Pay, Marriage, Parenthood, Childcare, Entrepreneurship, Assets, and Pension—are structured around the different stages of a woman’s working life. Findings from this new research can inform policy discussions to ensure women’s full and equal participation in the economy. The indicators build evidence of the critical relationship between legal gender equality and women’s employment and entrepreneurship. Data in Women, Business and the Law 2024 are current as of October 1, 2023.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication World Bank Annual Report 2024(Washington, DC: World Bank, 2024-10-25)This annual report, which covers the period from July 1, 2023, to June 30, 2024, has been prepared by the Executive Directors of both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)—collectively known as the World Bank—in accordance with the respective bylaws of the two institutions. Ajay Banga, President of the World Bank Group and Chairman of the Board of Executive Directors, has submitted this report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors.