- In a landmark decision, the government of Burkina Faso has decided to remove its water and electricity utilities from the list of state companies to be privatised. Defying the IMF, government rather decided it would be enough to restructure the companies' management.
Burkina Faso had, under pressure of the International Monetary Fund (IMF), decided to privatise its state companies. This included the vital water and electricity utilities, which originally should have been privatised already in the 2004-06 period.
At a cabinet meeting in Ouagadougou this week, the Burkinabe government however decided to halt the process of privatisation of the national electricity company SONABEL and the national water and sanitation office (ONEA).
The official statement from the cabinet meeting says government had looked at the results of SONABEL and ONEA and "decided to subject them to a private management style, coupled with a performance contract, and therefore remove them from the list of enterprises to be privatised." No further explanation was given.
Water and electricity privatisation has been highly controversial in Burkina Faso, and in Africa at large. Since the 1990s, privatisation of all state companies and utilities has been an IMF demand, coupled to the financing of so-called poverty reduction programmes.
Many African countries have already sold their water and power utilities to multi-national companies after restructuring and recapitalising them. While this has cut government costs on the long run and led to cost-effective companies, especially water privatisation has mostly come at the cost of consumers. Water prices mostly have increased, poorer segments of population have seen water supplies shut and the building of new infrastructure has focused only on wealthy neighbourhoods. Finally, large revenues from the local water resource have ended up in foreign company headquarters.
These social problems stemming from especially water privatisation, and also to some extent electricity privatisation, caused a wave of protests during the last decade. Still, the IMF kept pushing for privatisation of all state utilities until around 2009, when social effects of IMF programmes started getting more attention.
So also in Burkina Faso. The Ouagadougou government together with IMF experts defined a poverty reduction programme in accordance with IMF standards. Privatisation had great priority.
Still in the 2004-06 "Poverty Reduction Strategy Paper" - a fundament for imbursements of IMF grants and loans and for debt reduction programmes - these aims are clear. "The water sector will also be opened to private sector participation with the privatisation of the water supply and sanitation authority, ONEA," the document clearly states. Also SONABEL is to be "aimed at privatisation."
In particular the aimed privatisation of the country's water utility caused uproar in Burkina Faso. Trade unions repeatedly urged government not to cede the "strategic enterprises of water, electricity to private interests," reminding that still less than 60 percent of the Burkinabe had access to clean potable water.
While the two state utilities were not removed from the privatisation list, Burkinabe officials showed no hurry to offer them to buyers. Instead, less strategic state companies including the telecom provider ONATEL and the national oil company SONABHY, were reorganised for privatisation.
Quietly, the government of Burkina Faso tried to influence the IMF to be more flexible about privatisation of socially strategic utilities. During the last few years, the Fund has experience a slow policy change allowing for such flexibility in order to avoid negative social effects of its programmes.
Interestingly, in the last thorough IMF assessment of Burkina Faso's implantation of its IMF-sponsored poverty reduction programme, neither SONABEL nor ONEA are mentioned. The IMF's October 2009 review, registering a government "investment in the water and sanitation sector," there is no reference to ONEA's privatisation.
This week's cabinet meeting thus ends a decade of conflicts over the possible water and electricity privatisation in Burkina Faso, seemingly with the acceptance of the IMF.
Other privatisation schemes were however promoted at the Burkinabe cabinet meeting. Six percent of the shares of ONATEL were transferred to the telecom's workers; the oil company SONABHY was being prepared for private capital; the commercial division of the mines office BUMIGEB was ready to be sold; and the privatisation of the vehicle testing agency CCVA and the hotel Silmandé was now finalised.
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