Privatising urban water services in developing countries

Improvement of water and sanitation services to the rapidly growing urban population in developing countries is among the key challenges of this millennium. In general, international consensus exists that the private sector has a role in provision of urban water and sanitation services. Although a number of industrialised countries have gained considerable experience in the use of various forms of private sector participation (PSP), experience in developing countries is relatively rare and not widely documented, particularly in the water sector. This paper draws on exploratory research on the experience in the use of various forms of PSP in developing countries, with a focus on sub-Saharan Africa. The paper provides the rationale for using PSP, and presents results of research in the use of PSP in the urban water sector in developing countries. Research shows that in many instances where PSP has been used, there has been considerable improvement in both service delivery and cost recovery. There are, however, some concerns that need to be addressed, in order to enhance the contribution of PSP to improvement of urban water and sanitation services in developing countries. The paper concludes that developing countries can improve urban water and sanitation services by using appropriately structured PSP contracts.