• Richard

Freetown 5 The donors are being very generous

The Managing Director had just returned from a working visit to China with the Minister. During the visit an MOU was signed with a Chinese Engineering firm ‘to carry out the Orugu and Congo Dams and Water Treatment Plants projects’ – for approx. $150m from memory. Another paper’s headline suggesting ‘Sierra Leone may soon get $500million Millennium Challenge Compact for water access.’

Along with the AfDB supported $180m programme this is a lot of much needed finance being made available (mixture of grants and soft loans apparently) to an institution which has been unable to share a set of accounts or annual financial statements.

A lot of discussion in the sector about finance has been driven by the understanding that 'no finance is available’ and therefore there has to be ‘innovative’/’blended’/’hybrid’ financing which includes commercial financing in order to achieve the capital investment targets. "The availability of financing and safe management of water and sanitation for all (SDG 6) cannot be achieved by public sector funding and management alone" (Water Finance Facility website)

But GVWC is being offered at least $600m and likely upwards of $800m: some coming from the Government of Sierra Leone but rather more from DFID, MCC, AfDB, OFID, IsDB, SFD, KFED, NEA/RVO, GCF, AF, ECOWAS etc.

So what effect will all this ‘free’ money have on what has until recently been a failed institution? It seems to me that public utilities can so easily end up as rent-seeking opportunities for staff and their patrons ('producer capture' as well as isomorphic mimicry etc.) … who together deliver a 'just-enough' service to avoid too much challenge; whilst private utilities which have to access private capital for capex are too expensive; also because as operators they are apparently more expensive because they actually have to deliver an acceptable level of service - that service being more costly than governments normally allow; but also because private utilities have to generate profit to reward their shareholders (and senior managers) for the risk they are undoubtedly taking …. ; private utilities without a concession contract (unaffordable as it includes capex responsibilities) do not have the power to make a long-lasting difference … ; unless the government allows the contractor to access national wealth and deliver capex (big political risk). So the system ends up rewarding public sector failure. And the poorest continue to get sub sub standard services. Hoping that GVWC will prove this prognosis wrong.

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