The Welfare Effects of Private Sector Participation in Guinea's Urban Water Supply

40 Pages Posted: 20 Apr 2016

See all articles by George R. G. Clarke

George R. G. Clarke

Texas A&M International University - A.R. Sanchez Jr., School of Business

Ana Maria Zuluaga

World Bank

Claude Menard

Université Paris I Panthéon-Sorbonne

Date Written: November 30, 1999

Abstract

Private sector participation in Guinea's urban water sector has benefited consumers, the government, and, to a lesser extent, the new foreign owners. Performance will improve further when the government starts paying its own water bill on time and when the legislature authorizes the collection of unpaid bills from private consumers.

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 Côte d'Ivoire for nearly 30 years, the reform had many highly innovative features.

It is being transplanted to several other developing countries, so Clarke, Ménard, and Zuluaga 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.

This paper - a joint product of Public Economics and Regulation and Competition Policy, Development Research Group - is part of a larger effort in the group to promote competition and private sector development. The study was funded by the Bank's Research Support Budget under the research project Institutions, Politics, and Contracts: Private Sector Participation in Urban Water Supply (RPO 681-87). The authors may be contacted at gclarke@worldbank.org or menard@univ-paris1.fr.

Suggested Citation

Clarke, George and Zuluaga, Ana Maria and Menard, Claude, The Welfare Effects of Private Sector Participation in Guinea's Urban Water Supply (November 30, 1999). World Bank Policy Research Working Paper No. 2361. Available at SSRN: https://ssrn.com/abstract=630733

George Clarke (Contact Author)

Texas A&M International University - A.R. Sanchez Jr., School of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

Ana Maria Zuluaga

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Claude Menard

Université Paris I Panthéon-Sorbonne ( email )

12, place du Panthéon
Paris, IL
France

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