Does Infrastructure Reform Work for the Poor? A Case Study on the Cities of La Paz and El Alto in Bolivia
29 Pages Posted: 20 Apr 2016
Date Written: December 10, 2003
From 1994 onward, Bolivia undertook a major reform of its infrastructure sectors. Foster and Irusta examine the impact of the reforms from the perspective of poor households in the adjacent cities of La Paz and El Alto, particularly in terms of access to services. Different policies adopted across the infrastructure sectors led to diverging outcomes.
In the water and sewerage sector, the concessionaire was placed under legal obligation to meet connection targets in low income neighborhoods, while customers were given the facility to spread payment of connection charges over a two year period and opt for a lower cost "condominial connection." As a result the rate of expansion of services increased by 70 percent relative to the pre-reform period.
In the telecommunications sector, fixed and cellular services tell very different stories. On the one hand, fixed line services remained inaccessible to the poor due to the membership fee of US$1,500 charged by the cooperative, or the alternative nonmember option of paying a US$23 monthly rental fee. On the other hand, cellular coverage increased tenfold from 1996-99 as the advent of competition led to huge reductions both in connection and calling charges, while the introduction of prepayment cards greatly facilitated the control of expenditure.
The expansion that took place did not bypass the poor. While first quintile households saw barely any improvement in access to utility services in the period leading up to the 1994 reforms, in the five years that followed coverage rates for these households rose by more than 20 percentage points for water and sewerage, and more than 10 percentage points for electricity and telephones. Overall, 80 percent of new water and sewerage connections and 65 percent of new electricity and telephone connections went to residents in the poorest neighborhoods of La Paz and El Alto.
This paper - a product of the Finance, Private Sector, and Infrastructure Unit, Latin America and the Caribbean Region - part of a larger effort in the region to understand and evaluate the social impacts of the infrastructure reforms that took place in the 1990s.
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