PRIVATE SECTOR PARTICIPATION IN LAGOS WATER SUPPLY

Access to water is a basic human right - but how to manage water supply in practice, and at what cost to ordinary people?

In order to secure funds for urgently-needed investments in public water supply, various forms of "privatization" - from commercialization of parastatats through private sector participation (PSP) to outright sale of public utilities - are practiced world-wide. However, private sector engagement in the water sector is a contentious issue. Many ask why and how responsibility for providing a basic public good can be given to private profit-driven interests.

In Nigeria, various initiatives are under way to improve public water supply systems in major cities by some form of PSP. Metropolitan Lagos is the most important and advanced case. The Lagos State Water Corporation (LSWC) has been re-structured as an independent entity, commercializing its activities and getting private sector actors into the boat.

Despite considerable public relation efforts by LSWC, there is still little awareness in Lagos public about the on-going changes. In order to throw the debate open, on May 10, 2004, HBF organised a roundtable discussion that brought together representatives of the LSWC, the media, and civil society organisations interested in water policy issues.

First Engagement: Roundtable on May 10, 2004

Mr. Olumuyiwa Coker, the CEO of LSWC, presented his corporation's rationale and strategy. He provided background information, illustrating the the decay experienced by Lagos water supply up to 1999. He recalled the improvements which the re-organised LSWC has achieved in the meantime, and explained LSWC's strategy for future development by means of PSP.

Mr. Coker was joined on the panel by Prof. Ademola Ariyo (Centre for Public-Private Co-operation, Ibadan) and by Mr. Anthony Akpan (Pan-African Vision for the Environment, Lagos). Both of them had visited the "Third Forum on Development Policy" in Berlin in March 2004 that brought together experts and activists from several continents who discussed strategies to sustain the availability of water globally, as well as the problems and perspectives that arise from PSP in the water sector. Prof. Ariyo and Mr. Akpan provided feed-back information from the Forum in Berlin, bringing in the experiences made with PSP in the water sector in other parts of the world.

In the ensuing discussion, it became clear that the "Lagos Model" of PSP in the water sector is quite different from the cases of wholesale "privatization" of communal water companies that have been undertaken in some other cities of the world. Large-scale privatization would hardly be acceptable in Lagos, poltically and socially; and given the peculiar conditions of the city, it would also be difficult to find an investor. Instead, Lagos aims at water-sector PSP on a much smaller scale, preferably through local entrepreneurs. While scepticism from civil society groups remains, the roundtable helped to bring about a better understanding of issues at stake. HBF Lagos hopes that it provided a basis for a more fruitful engagement of Lagos water policy by the civil society of the city.

The papers presented at the roundtable are available here:

Reforming the Water Sector in Lagos State: The Lagos Model
by Olumuyiwa O. Coker, CEO, Lagos State Water Corporation

[download Mr. Coker's HTML-Presentation as .zip-file, 1.24 MB]

Water and Privatization: An Overview of Case Studies from around the World: What Lessons for Nigeria? by Anthony Johnson Akpan, President, Pan-African Vision for the Environment (PAVE), Lagos
[.pdf document, 48 kB]

Water and Privatization: The Policy Issues. A Discussion Note by Prof. Ademola Ariyo (Dept. of Economics, University of Ibadan, Nigeria & Director, Centre for Public-Private Cooperation, Ibadan)
[.pdf document, 16 kB]

On May 20, 2004, LSWC organised a tour of LSWC facilities in which several NGO representatives participated.

Consultative Forum on October 20, 2004

As a follow-up to the roundtable on May 10, 2004, and in view of the need for Civil Society to make constructive input into the ongoing process, Mr. Anthony Akpan (PAVE), the South-West Coordinator of the National Civil Society Network on Water and Sanitation, with the support of HBF organized a Consultative Forum for Lagos-based Civil Society Organizations (CSOs) active in the Water and Sanitation sector. The Forum provided a basis for a more fruitful engagement of Lagos water policy by the civil society of the city.

The Consultative Forum addressed fundamental principles and values for the smooth engagement of CSOs in the private sector participation (PSP) process in the Lagos water sector. Emphasis was on key factors for PSP processes such as accountability, customer orientation, poverty responsiveness, power-balanced partnership, proactive risk management, resource conservation, results orientation, shared incentives, socially responsible financing and transparency.

The Consultative Forum aimed at helping to determine the role of Lagos-based CSOs active in the Water and Sanitation sector and involving them in the implementation of the actions envisaged to achieve these targets in Lagos State. It was a step toward involving Civil Societies to play an active role in the implementation of the principles and objectives of the Lagos PSP process. It allowed to make a comparison of the opinions of CSOs with regard to the Lagos PSP process issues, and to create activities to increase awareness followed up by practical actions such as effectively monitoring the process and playing a watch dog role.

Mr. Coker, the CEO of LSWC, discussed with Lagos NGOs, stressing the need for continued engagement between all stakeholders. He maintained that water supply in Lagos can only be secured if provided on an economically sound, business-like basis. He also stressed once more that Lagos State does not intend a wholesale sale of the Lagos water supply to private investors. Instead, separate aspects of Lagos water supply will be offered to private investors, with the State government keeping the oversight and overall control. He announced that LSWC will soon publish an invitation for "expression of interests" by private investors. Mr. Coker furthermore drew attention of participants to the on-going legislative process for a new Lagos State Water Sector Law.

Papers presented at the roundtable:

Understanding Basic Values, Key Factors, and the Importance of Role Definition and Institutional Separation for PSP Processes in Water Supply: Lessons for Lagos State Water Corporation (LSWC)
by Anthony Akpan (PAVE)
[.pdf document, 61 kB]

Public-Private Sectors Linkage in Water Supply Provision: Role of Civil Society Organisations in Lagos State, Nigeria
by Owolabi Ajayi (Dept. of Geology, Obafemi Awolowo University, Ile-Ife)
[.pdf document, 32 kB]

NGO Brainstorming Roundtable on November 11, 2004

As a follow-up, Lagos-based groups met to discuss the new Water Sector Law for Lagos currently under consideration by the Lagos House of Assembly, largely without public attention.

If ongoing plans by the Lagos State Government the parastatal should sail through, the Lagos State Water Corporation (LSWC) may be acquired by a 'core investor'. This possibility, at least, is provided for in an executive-sponsored bill - the "Lagos State Water Sector Law', which has been presented by the House Majority Leader, Honourable Jide Omoworare, for a second reading on July 20, 2004. The House at that sitting set up an ad-hoc committee to study the bill and report back. The Lagos House of Assembly is presently on recess, but expected to reconvene soon.

The roundtable gave Civil Society Organisations the opportunity to analyse the bill and to come up with a position that is communicated to all relevant institutions, including the office of the Governor, the House of Assembly, LSWC, media etc. before the third reading.

Read the roundtable's communiquè for observations and recommendations.