Private sector involvement in the provision of water and sanitation services can take various forms, from private public partnership agreements to fully private ventures. In most cases, it is seen as a solution against the inefficiencies of public sector water utilities. This tool provides an overview of different types of private sector involvement and lists key considerations for a more successful involvement of the private sector.
Private sector engagement in the field of water supply services is a result of several factors. First, there is a crisis narrative around water issues, which creates a call for change and the need to involve new actors beyond government entities (UN Global Compact, 2010). This idea is closely related to corporate stewardship (Tool C5.05) and the fact that enterprises have a shared responsibility in addressing environmental issues. Second, involving the private sectors can also be seen as a direct response to the inefficient performance of the public sector water providers (Tool B2.01). Indeed, throughout the 1980s and 1990, privatisation in the water supply and sanitation sector was increasingly labelled as the solution to the failure of state enterprises (Rees, 1998).
The privatisation “revolution” of public services was conceived by Margaret Thatcher, British Prime Minister, and followed by other nations as the world embarked in neoliberalism. In many developing nations that was also a reaction to failed reforms of the public sector (World Bank, 2006). Moreover, international lending institutions, such as the World Bank and the International Monetary Fund, made development loans contingent upon the adoption of privatisation policies (Greiner, 2020).