IN JULY, THE WORLD BANK APPROVED a new $110 million structural adjustment loan for Ghana. Before disbursing the loan, however, the Bank forced the government of Ghana to implement seven "prior actions," including a requirement to "increase electricity and water tariffs by 96 percent and 95 percent, respectively, to cover operating costs."

The effort to attain "full cost recovery" is a prerequisite to privatization. Private companies want to operate systems where consumers meet the expenses of running the systems and pay enough for company profits, too.

Pressured by the World Bank, the government of Ghana plans to lease the Ghana Water Company to two as yet undetermined multinational water companies to provide urban water service. The World Bank included water privatization as one of many conditions that determined the extent of Ghana's access to the portfolio of loans in the World Bank's Country Assistance Strategy (CAS).

In May 2001, a broad coalition of groups in Ghana responded by forming the National Coalition Against the Privatization of Water (National CAP of Water), which is committed to conducting a broad campaign to ensure that all Ghanaians have access to safe and affordable water.

Rudolf Amenga-Etego of the Integrated Social Development Centre and one of the founders of the National CAP of Water, says most people in Accra do not earn the minimum wage of less than US$1 a day, while a significant number have no regular employment. In April, the average price for a bucket of water, which used to be 400 cedis, was raised to 800 cedis (US$1 equals 7,000 cedis) to comply with the Bank's required "prior action" for accessing the structural adjustment loan approved in July. The proposed water privatization is expected to increase water tariffs even further.

"The current water tariff rates that the government of Ghana and the World Bank think are 'below the market rate' are already beyond the means of most of the population in Ghana," says Amenga-Etego. "How will the population possibly be able to absorb a so-called 'open market' price for water in the context of Privatization? As water becomes less affordable, it is highly likely that there will be a corresponding increase in diseases stemming from reduced access to clean water."

COST RECOVERY AND PRIVATIZATION

The Ghanaian case is representative of an increasingly common policy recommendation of the World Bank, along with the International Monetary Fund (IMF), to increase consumer fees for water and sanitation and to force privatization of water utilities.

The Bank argues that developing country governments are too poor and too indebted to subsidize water and sanitation services. World Bank structural adjustment loans and water and sanitation loans routinely include conditions requiring increased cost recovery, full cost recovery or "economic pricing" for water services.

These requirements mean that user fees paid by water consumers must cover all water system costs, which usually include the costs of operation, maintenance and capital expenditure, and sometimes the cost of servicing past utility company debt.

Increased consumer fees for water can make safe...