Vol 4 No 4 November 2003 • ISSN 1684-260X EDITORIAL ESR...E-mail: [email protected] Danwood...

Vol 4 No 4 November 2003 • ISSN 1684-260X

A publication by the Community Law Centre (University of the Western Cape)

E S RR E V I E WR E V I E WR E V I E WR E V I E WR E V I E WEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South Africa

SPECIAL EDITIONPrivatisation of basicservices and socio-

economic rights

CONTENTSPrivatisation of basic services,democracy and human rights 2

Socio-economic rights andprivatisation of basic servicesin South Africa 4

Privatising basic municipalservices 7

Water privatisation inSouthern Africa 11

Privatisation versushuman rights 13

Privatisation of basic servicesin Canada 16

Promoting access toaffordable electricity 19

The private sector as serviceprovider and its role inimplementing child rights 21

Seminar on privatisation ofbasic services, democracyand human rights 24

EDITORIALDanwood MzikengeChirwa

This is the fourth and last edi-

tion of the ESR Review for

2003.Privatisation has become a dominant

economic policy, supported by interna-tional financial institutions, donor agen-cies and multinational corporations.However, although several studies havebeen conducted on the topic, few havebeen approached from a human rightsperspective. In this edition, we featurearticles that analyse the implications ofhuman rights generally, and socio-eco-nomic rights particularly, for the privati-sation of basic services.

In her article, Sihaka Tsemo suggeststhat international human rights bodiesare increasingly directing their attentionto privatisation. She analyses the impli-cations of the international human rightsregime for privatisation and provides abrief update on the work of the Officeof the High Commissioner for HumanRights on corporate social responsibility.

Danwood Chirwa explores the linksbetween privatisation of basic servicesand socio-economic rights. He arguesthat although privatisation may not beobjectionable per se, human rights lawestablishes a normative framework withwhich privatisation measures, like otherpublic measures, must comply if they areto be acceptable. He explores the state’ssocio-economic rights obligations in thecontext of privatisation, as generated bythe South African Bill of Rights.

Nico Steytler explores linkages be-tween the competencies of local gov-ernment and socio-economic rights. Heprovides an overview of the processprescribed by the Municipal Systems Act32 of 2000, which a municipality mustfollow in deciding whether or not to usean external provider. He demonstratesthe role that socio-economic rights shouldplay in this process.

Patrick Bond, David MacDonald andGreg Ruiters give an overview of waterprivatisation in Southern Africa and dis-

cuss current debates on its implicationsfor poor people’s access to water.

Jim Shultz offers a stimulating accountof a failed water privatisation initiativein Bolivia, attributing its failure to the factthat it was embarked upon with a totaldisregard for human rights.

In many domestic jurisdictions, ex-isting legal procedures to ensure thatprivatisation measures do not result inthe denial or violation of socio-eco-nomic rights are under-used or notused at all. Elizabeth Drent shows howa limited constitutional and legislativeframework in Canada was used tostop privatisation initiatives that hada negative impact on the enjoymentof socio-economic rights.

Mike Nefale and Theunis Roux cri-tique the draft Electricity Industry Re-structuring Bill from a human rightsperspective.

In the international developmentssection, Godfrey Odongo analyses therecommendations of the Committee onthe Rights of the Child and its newlyadopted General Comment No 5 onthe subject of privatisation.

Annette Christmas summarises theseminar co-hosted at the University ofthe Western Cape in early October2003 by two of the Community LawCentre’s projects.

We trust that this edition will bestimulating and will assist in a rangeof strategies to improve access tosocio-economic rights by disadvan-taged groups in South Africa and else-where.

We would like to thank all contribu-tors to the Review for 2003.

Lastly, the Socio-Economic RightsProject would like to congratulate SandyLiebenberg on her new appointment tothe HF Oppenheimer Chair of HumanRights Law at Stellenbosch University witheffect from January 2004. The Projectwishes her all the best in this challeng-ing position.

ESR Review • Vol 4 No 42

ISSN: 1684-260XA publication of the Community Law Centre(University of the Western Cape)

Editor for this editionDanwood Mzikenge Chirwa

Contact the Socio-Economic Rights Project:

AddressCommunity Law CentreUniversity of the Western CapeNew Social Sciences BuildingPrivate Bag X17, Bellville, 7535Tel (021) 959–2950; Fax (021) 959–2411

Internetwww.communitylawcentre.org.zaESR Review online:www.communitylawcentre.org.za/ser/esr_review.php

Project staffSandra LiebenbergE-mail: [email protected] KhozaE-mail: [email protected] Mzikenge ChirwaE-mail: [email protected] ChrismasE-mail: [email protected] ArieE-mail: [email protected]

ESR ReviewESR Review is produced by the Socio-Economic Rights Project of the CommunityLaw Centre. The Centre receivessupplementary funding from the FordFoundation. The project on privatisation ofbasic services and socio-economic rights isfunded by the Dutch Inter ChurchOrganisation for Development Cooperation(ICCO). The views expressed herein do notnecessarily represent the official views ofthe Ford Foundation or ICCO.

ProductionDesign and layout: Page Arts ccPrinting: Creda Communications, Cape

CopyrightCopyright © Community Law Centre(University of the Western Cape).

2

E S RR E V I E WR E V I E WR E V I E WR E V I E WR E V I E WEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South AfricaEconomic and Social Rights in South Africa

Privatisation has become an in-tegral part of the globalisationprocess. Although traditionally

conceived of as an economic phe-nomenon, globalisation has signifi-cant implications for the social, po-litical and cultural evolution of human-kind.

However, the human rights impli-cations of this phenomenon are onlyjust beginning to be critically exam-ined and comprehensively under-stood.

A vision that considers a triad ofliberalisation, privatisation andglobalisation as the main develop-ment paradigm can be legitimatelyquestioned, especially in the Africancontext where, at long last, a moresolid determination to overcome con-flict and poverty and to achievepeace, democracy and sustainabledevelopment can be discerned.

The formation of the African Un-ion and the adoption of its main pro-gramme, the New Partnership for Af-rica’s Development (NEPAD) are aclear sign of this emerging determi-nation.

It is obvious that privatisation hasbecome more important now thanever before. In fact, Africa needsmore investments to redress the manyproblems that confront its people,such as joblessness and deepeningpoverty. In this regard, private invest-ment can be seen as a means ofrealising the socio-economic andcultural rights of the people.

Private capital is crucial for de-veloping countries. Indeed, the work

Privatisation of basic services,democracy and human rights

Sihaka Tsemo

ethics it promises, especially effi-ciency in management, are very posi-tive. However, as the United NationsSecretary-General, Mr Kofi Annan,has pointed out:

Globalisation has an immensepotential to improve people'slives, but it can disrupt – and de-stroy – them as well. Those whodo not accept its pervasive, all-encompassing ways are often leftbehind.

Where do human rightsstand with respect toprivatisation?Human rights law is neutral on pri-vatisation. It does not prescribe whoshould provide essential services.However, human rights law doesconcern itself with two key questions:

• The process of privatisation – the‘how’. Was the tendering processtransparent? Was there public dis-cussion on the privatisation proc-ess? Was there adequate dissemi-nation of information? Was therepublic consultation on the stand-ard of service delivery, whetherpublicly or privately provided?These questions emanate fromsuch civil and political rights asthe right to take part in the con-duct of public affairs, recognisedunder article 25(a) of the Inter-national Covenant on Civil andPolitical Rights (ICCPR), and theright to seek, receive and impartinformation, recognised underarticle 19 of the ICCPR.

International HumanInternational HumanInternational HumanInternational HumanInternational Human

Rights LawRights LawRights LawRights LawRights Law

ESR Review • Vol 4 No 4 3

• The implementation of service de-livery agreements and their out-comes. For example, is service de-livery discriminatory? Are custom-ers being cut off from the servicewithout due process? Is servicedelivery adequate, affordable, ac-ceptable, adaptable, available,accessible, etc? These questionsemanate from such economic, so-cial and cultural rights as therights to water, health, adequatehousing and education. Thus, forexample, a privatisation initiativethat leads to service delivery thatis better overall but is static orworse for the poor, can be chal-lenged from a human rights per-spective.

Privatisation might work in somecases and not in others. However,some of the human rights concernsthat privatisation raises can be sum-marised as follows:

• the establishment of a two-tieredsupply system, with a corporatesector focused on the healthy andwealthy and an under-financedpublic sector focused on the poorand sick;

• creating a ‘brain drain’, withbetter-trained medical practition-ers and educators being drawntowards the private sector byhigher pay scales and better in-frastructure;

• an overemphasis on commercialobjectives at the expense of so-cial objectives; and

• an increasingly large and pow-erful private sector that canthreaten the role of the govern-ment as the primary duty bearerof human rights by subvertingregulatory systems through politi-cal pressure or the co-option ofregulators.

Sight must also not be lost of the po-tential danger privatisation poses toaspects of democracy, such as ac-countability, popular participation inpublic affairs and access to informa-tion.

It is also important to note thatwhile private sector failures in serv-ice provision are currently the objectof focus, there are also public sectorfailures in the provision of essentialservices to the poor that must be criti-cised from a human rights perspec-tive.

Privatisation and humanrights from the perspectiveof the OHCHRThe Office of the High Commissionerfor Human Rights (OHCHR) viewsprojects and other initiatives onsocio-economic rights as crucial andof the utmost importance. It has al-ways held the view that human rightsare universal, indivisible, interdepend-ent and interrelated.

Every woman, every man, everyyouth and every child has the rightto a secure home and community inwhich to live in peace and dignity.Any discussion and effort that aim tobring to the fore the upliftment ofsuch values must be encouraged.

While admitting that effective andsocially responsible private sectorparticipation in essential service de-livery might be a real alternative formany governments unable to copewith service provision, the role of theOHCHR is to remind states that theymust not abdicate their obligations,under either international or domes-tic law, in the name of privatisation.In particular:

• states must not be locked into pri-vatisation (eg through bilateral, re-gional trade and investmentagreements and the World Trade

Organisation’s General Agree-ment on Trade in Services) butmust respect and promote a hu-man rights approach to privati-sation both at the time the deci-sion to privatise is being madeand during the operation of theinitiative;

• states should, as far as possible,undertake a human rights assess-ment of service delivery prior toprivatisation and again some timethereafter;

• states and civil society should en-sure that companies engaged inservice delivery have a sound hu-man rights record and corporatesocial responsibility strategy; and

• states should ensure that effectivemonitoring and complaintsmechanisms are available – thesecould range from consumer com-plaints tribunals and auditingmechanisms to the justiciability ofeconomic, social and culturalrights through the judiciary.

An update on the OHCHR’s workon corporate social responsibilityOn 13 August 2003, after a four-year consultative and drafting proc-ess involving the private sector, aca-

Though socially responsible

private sector participation in

essential service delivery may

be a real alternative for many

governments, states must not

abdicate their obligations under

international or domestic law in

the name of privatisation.

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demic institutions, human rights non-governmental organisations and inter-governmental bodies and states, theSub-Commission on the Promotion ofHuman Rights adopted resolution2003/16 (the Norms on the Respon-sibilities of Transnational Corpora-tions and Other Business Enterpriseswith regard to Human Rights, here-after the Norms).

The Norms, together with their com-mentary, form the major product of thework of the Sub-Commission’s Work-ing Group on the Working Methodsand Activities of Transnational Cor-porations.

The Norms help to clarify thatbusiness enterprises have humanrights obligations. In drafting theNorms, the Sub-Commission WorkingGroup stated that it based its workon existing standards. Thus, the Normsstate clearly in article 1 that stateshave the primary responsibility inrelation to human rights.

However, the Norms also statewith equal clarity that business en-terprises have human rights respon-sibilities.

RRRRRRRRRRRRThe Norms require business

enterprises to provide adequate

reparation to people adversely

affected by their activities.

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Socio-economicrights andprivatisation ofbasic services inSouth AfricaA theoreticalframework

Danwood MzikengeChirwa

This article explores the implica-tions of human rights, especiallysocio-economic rights, for pri-

vatisation of basic services in theSouth African context.

In this article, ‘privatisation’ is usedbroadly to encompass a wide rangeof private sector involvements in thedelivery of basic services, and is notlimited to full divesture (completetransfer of a public enterprise to aprivate actor).

A snapshot of theprivatisation of basicservices in South AfricaThe privatisation debate in South Af-rica is not new although it has re-ceived heightened attention in thepost-apartheid era. For example, theprivatisation of water and sanitationservices in three Eastern Cape mu-nicipalities (Queenstown, Stutterheimand Fort Beaufort) in 1992, 1993 and1994 respectively, was a result of theNormative Economic Model adoptedby the apartheid government.

The continuation of the privatisa-tion programme in the post-apartheid era represents a remark-able shift in policy orientation by theAfrican National Congress-led gov-ernment, from a ‘growth through dis-

Among other duties, the Normsstipulate that private enterpriseshave an obligation to respect na-tional sovereignty and obligations inrelation to the rights to equal oppor-tunity and non-discriminatory treat-ment, security of persons, and in re-lation to environmental, consumerand labour rights.

The Norms also set out provisionsfor implementation. They include thepossibility of establishing periodicmonitoring and verification of busi-ness enterprises by the UN and theencouragement of states to set upand reinforce the necessary legaland administrative framework to im-plement the Norms.

Business enterprises are also re-quired to provide adequate repara-tion to people adversely affected bytheir activities.

In terms of resolution 2003/16, theNorms will be transmitted to theCommission on Human Rights for fur-ther consideration at its next sessionin March/April 2004.

Once finally adopted by the UN,the Norms will play an important rolein ensuring that private enterprisesare socially responsible, includingwhere basics services are privatelyprovided.

Dr Sihaka Tsemo is the OHCHRRegional Representative

for Southern Africa.

This article is an abridged version of the keynoteaddress delivered by the author at a seminar on

privatisation of basic services, democracy and humanrights, co-hosted by the Socio-Economic RightsProject and the Local Government Project of the

Community Law Centre on 2–3 October 2003 at theUniversity of the Western Cape. See the events section

for more details.




The South AfricanThe South AfricanThe South AfricanThe South AfricanThe South African

Bill of RightsBill of RightsBill of RightsBill of RightsBill of Rights

tribution’ formula, which envisaged acentral role for the state in redistrib-uting resources, to a ‘neo-liberal ori-entation’, endorsing a restricted rolefor the state in redistribution and suchother market principles as cost re-covery measures, financial and mon-etary stringency, and the restructur-ing of trade and industrial policies.

The reach of privatisation hassince extended to radio stations, thetelecommunications sector, aviation,the mining industry, transportation,tourism and forestry.

The outsourcing of refuse collec-tion has become the most commonpractice of privatisation among mu-nicipalities.

Between 1996 and 1999, theprovision of water and sanitationservices was privatised in Nelspruit.In 1999 similar services in DolphinCoast and Durban were contractedout to multinational companies, SAURInternational and Bi-Water respec-tively, while in 2001 those in Johan-nesburg were contracted out to Wa-ter and Sanitation Services of SouthAfrica.

In 2002 the Igoli programme wasadopted as a roadmap for restruc-turing the delivery of municipal serv-ices in Johannesburg. This programmeentails privatisation and corporatisationof municipal amenities, including solidwaste management.

It is expected that by 2003 Eskomwill be broken up into three opera-tional components: generation, trans-mission and distribution. The plansare to corporatise Eskom and sell30% of it to private companies. Tothis end, the draft Electricity Distri-bution Restructuring Bill was madeavailable for public comment on 24April 2003.

Privatisation in South Africa is thusalready playing a role in how basicservices are delivered.

The link between privatisedbasic services and socio-economic rightsSocio-economic rights aim to ensureaccess by all human beings to theresources, opportunities and servicesnecessary for an adequate standardof living.

What motivates their recognitionas human rights is the realisation thatthe capacity to enjoy other rights –such as the rights of association,equality, political participation andexpression – is intricately linked toaccess to a basic set of social goods.

The delivery of such basic serv-ices as health care, housing, educa-tion, water, food, childcare, electric-ity and sanitation is directly linked tosuch socio-economic rights as therights to water, food, health careservices, a healthy environment, edu-cation and social services.

Many basic services can also beclaimed as rights under the right tohousing.

In Government of the Republic ofSouth Africa and Others v Grootboomand Others (Grootboom), [2000 (11)BCLR 1169 (CC); 2001 (1) SA 46(CC) para 37], the ConstitutionalCourt construed the right of accessto adequate housing broadly as en-compassing the provision of water,sewerage removal, electricity andaccess to roads.

Likewise, the Committee on Eco-nomic, Social and Cultural Rights(CESCR) has stated that adequatehousing implies:

sustainable access to natural andcommon resources, safe drinkingwater, energy for cooking, heat-ing and lighting, sanitation andwashing facilities, means of foodstorage, refuse disposal, sitedrainage and emergency serv-ices (General Comment No. 4,para 8(b)).

The implications ofprivatisation for access tosocio-economic rightsAdvocates of privatisation often con-tend that it has the potential to en-hance operational efficiency, compe-tition, economic growth and devel-opment. The achievement of thesemicro-objectives, the argument goes,can result in the production of morequantity of the privatised service ofa competitive quality at lower costs,hence more access to and the bet-ter enjoyment of socio-economicrights.

The other limb of the argumentposits that privatisation has aredistributive thrust that is consistentwith the ends of socio-economicrights. In South Africa, for example,privatisation is regarded as an im-portant resource for black empow-erment. The redistributive potential ofprivatisation can be realised by in-viting and encouraging employees ofan enterprise, or previously disadvan-taged individuals and groups, to buyshares or participate in the privatisedenterprise.

Others also contend that privati-sation may mean that costs spent onmonitoring and subsidising state-ownedenterprises are saved. These resources

The delivery of health care,

housing, education, water, food,

childcare, electricity and

sanitation is directly linked to

socio-economic rights such as the

rights to water, food, health care

services, a healthy environment,

education and social services.

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plus the proceeds from the sale of theenterprise can be used for settling for-eign debt, balancing the nationalbudget or investing in other priorityareas such as education and childcare.

Whether privatisation does, inpractice, result in increased accessto socio-economic rights or their en-hanced enjoyment is debatable. In-deed, opponents of privatisationcontend that there is little practicalevidence that it does, in fact, resultin increased efficiency, economicgrowth, development or competition.

Where it can be established thatenhanced economic performanceoccurred after privatisation, the dif-ficulty in pinpointing privatisation asthe cause of such performance re-mains.

For the most part, proponents ofprivatisation lay much emphasis onmicro-objectives. The achievement ofthese does not always translate tomore availability, access, quality oracceptability of basic services to allpeople, especially to the poor.

There are a variety of ways inwhich privatisation can underminethe enjoyment of socio-economicrights. As Dr Sihaka Tsemo haspointed out elsewhere in this issue, itcan result in a two-tiered service sup-ply focussed on the healthy and

wealthy, on one hand, and an under-financed public sector focussing onthe poor and sick, on the other. It canalso result in a brain drain, with bet-ter-trained medical practitioners andeducators being drawn towards theprivate sector by higher pay scalesand better infrastructures.

The overemphasis proponents ofprivatisation place on commercialobjectives can undermine the pursuitof social objectives focussed on theprovision of quality health, water andeducation services for those that can-not afford them at commercial rates.

The upshot of the preceding dis-cussion is that arguments that priva-tisation has a positive impact on theenjoyment of socio-economic rightsare, at best, speculative.

‘No single road’ torealising socio-economicrightsHuman rights law does not considerthe state as the sole provider of ba-sic services. Rather, it recognises thatprivate actors can play an importantrole in the realisation of human rights.In Grootboom, for example, the Con-stitutional Court conceded that:

it is not only the state who is re-sponsible for the provision ofhouses, but…other agents withinour society, including individualsthemselves, must be enabled bylegislative and other measures toprovide housing (para 35).

Moreover, human rights do not re-quire a particular political or eco-nomic system within which they canbest be realised. The Limburg Princi-ples on the Implementation of theInternational Covenant on Economic,Social and Cultural Rights stipulatethat “there is no single road” to thefull realisation of these rights.

Successes and failures have beenregistered in both market and



RRRRRRRRRRRRThe overemphasis proponents

of privatisation place on

commercial objectives can

undermine the pursuit of social

objectives such as the provision

of quality health, water and

education services at

affordable rates.

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non-market economies, in bothcentralised and decentralisedpolitical structures (para 6).

Similarly, the CESCR has statedthat human rights can be realisedwithin a wide variety of economicand political systems as long as thesystem recognises the interdependenceand indivisibility of the two sets of hu-man rights.

Thus, human rights do not pre-scribe exhaustive measures to betaken to implement them.

The duties of the state inthe context of privatisationWhile privatisation as a policy can-not be rejected outright, human rightslaw establishes a normative frame-work with which privatisation meas-ures, like other public measures, mustcomply for them to be acceptable.

Significantly, by privatising the de-livery of basic services, the state is notrelieved of its obligation to ensure toall its citizens the socio-economic rightsrecognised in the Constitution. Section7(2) of the Constitution of South Af-rica provides that the state has theduties to respect, protect, promote andfulfil human rights (including socio-eco-nomic rights).

The state has a duty to ensure thatthe advancement of human rights isa paramount objective that privatisa-tion should seek to advance. This dutyemanates from the principle that thehuman person is the ultimate subjectof human development. It is thereforeimperative that developmental meas-ures place human rights at the fore.

According to Grootboom, the dutyto respect enjoins the state to “desistfrom preventing or impairing” socio-economic rights. The CESCR hasstated that this duty may be violatedif the state fails to consider its legalobligations when entering into bilat-eral or multilateral agreements with


R

other states or other entities such asmultinational corporations. By implica-tion, the state has a duty to ensure thatservice agreements with private par-ties are structured by the relevant hu-man rights norms.

The duty to protect enjoins thestate to exercise due diligence to pre-vent violations of human rights in theprivate sphere, to investigate themwhen they occur, to punish culpritsand to provide effective remedies tovictims. The CESCR has stated in re-lation to health that the state has theobligation to “ensure that privatisa-tion does not constitute a threat tothe availability, accessibility, accept-ability and quality of health facilities”(General Comment No 14, para 35).In respect of water, the CESCR hasstated that it is the duty of the stateto prevent third parties from “com-promising equal, affordable, andphysical access to sufficient, safe andacceptable water” (General Com-ment No 15, para 24).

In discharging this duty, the stateis required to establish an effectiveregulatory system providing for inde-pendent monitoring, genuine publicparticipation and imposition of pen-alties for non-compliance. The areasof regulation depend on the right im-plicit in the privatised service. In thecontext of the right to health, for ex-ample, the CESCR has stated that thestate has the duty to:

adopt legislation or to take othermeasures ensuring equal accessto health care and health relatedservices provided by third parties;… to control the marketing ofmedical equipment and medi-cines by third parties; and to en-sure that medical practitioners

and other health professionalsmeet appropriate standards ofeducation, skill and ethical codesof conduct (General CommentNo 14, para 35).

It is submitted that, in the case of wa-ter and electricity, regulation is es-sential in the areas of pricing anddisconnections.

Last, but not least, the state has aduty to ensure that everyone has ac-cess to the privatised services. InGrootboom, it was stated that thestate has the duty to take steps toensure that “the basics needs of allin our society (are) effectively met”(para 45). “Accessibility must be pro-gressively facilitated” (para 45). Aprogramme that excludes a signifi-cant segment of society and fails torespond to those whose needs aremost urgent is unreasonable and un-constitutional.

Based on this jurisprudence, thestate has a duty to ensure that pri-vatisation does not result in a qualityservice for the economically privi-leged but excludes the poor fromaccessing basic services. The statemust take measures to assist thosethat cannot afford the services andto ensure that privatisation actuallyleads to better accessibility to theservices by all.

Unless guided by human rightsprinciples, privatisation of basicsservices might not result in more ac-cess to basic services. Conversely, aprivatisation initiative that underminesthese principles can be challengedfrom a human rights perspective.

Danwood Chirwa is a researcherin the Socio-Economic Rights Project,

Community Law Centre, UWC.

The full version of this article can be accessed on ourwebsite: www.communitylawcentre.org

Socio-economicrights and theprocess ofprivatisingbasic municipalservices underthe MunicipalSystems Act

Nico Steytler



The socio-economic rights in theSouth African Bill of Rights bindall organs of state, including mu-

nicipalities. These rights also imposepositive obligations. Through the de-livery of basic services municipalitiesfulfil some of these obligations. In-deed, the very purpose of municipali-ties is to be ‘developmental’ – ad-vancing the living conditions of theircommunities by providing basic serv-ices.

Municipalities have a broad dis-cretion on how basic municipal serv-ices are delivered, including throughprivatisation. While the latter is notin and of itself inconsistent with theConstitution, its processes and out-comes may have significant effectson the realisation of socio-economicrights. It is thus argued that the proc-ess and product of privatising a ba-sic municipal service must complywith the normative framework ofsocio-economic rights.

Local government’s socio-economic obligationsThe principal socio-economic rightsthat may be pertinent to the consti-tutional mandate of local govern-ment are the rights of access to ad-


The MunicipalThe MunicipalThe MunicipalThe MunicipalThe Municipal

Systems ActSystems ActSystems ActSystems ActSystems Act

equate housing, health care services,and sufficient food and water. Theoverall thrust of these rights is pri-marily to assist the poor by protect-ing and advancing their social andeconomic interests. They represent acommitment of the new constitutionalorder that seeks to address theapartheid legacy of poverty and in-equality.

While municipalities are, alongwith the national and provincial gov-ernments, bound by the obligationsimposed by the socio-economicrights, their obligation to take posi-tive steps is limited by the scope oflocal government’s constitutionalcompetencies.

Competencies of localgovernmentThe powers of a municipality are con-fined to its original powers – thosematters listed in Schedules 4B and5B to the Constitution – and the ad-ditional powers gained through as-signments. A municipality is not com-petent to move beyond the demar-cated areas. Its defined areas ofcompetence thus circumscribe a mu-nicipality’s socio-economic obliga-tions. The role of municipalities is thusa function of the intersection of mu-nicipal competencies and the obli-gations of socio-economic rights.

Intersection of local governmentcompetencies and socio-economicrightsWhile some rights fall squarely withina functional area of a municipal com-

petence, their application in otherareas is indirect. The right of accessto sufficient water, for example, in-tersects directly with the functionalarea of ‘potable water supply sys-tems’. The intersection is indirectwhere a municipality plays an impor-tant contributory or supportive rolein its realisation, for example, in pro-viding water and sanitation to giveeffect to the right to housing.

Developmental local governmentThe close connection between localgovernment’s competencies and thefulfi lment of particular socio-economic rights finds expression inthe notion of ‘developmental localgovernment’ as mandated in theConstitution. In the White Paper onLocal Government ‘developmentallocal government’ is directly linkedto the realisation of socio-economicrights, which is concretised in theSystems Act 32 of 2000 (hereafterthe Systems Act).

In giving effect to the constitu-tional mandate of meeting the ‘ba-sic needs of the community’, devel-opmental local government entails,as a minimum, the provision of ‘basicmunicipal services’. The MunicipalSystems Act defines the concept of‘basic municipal services’ as:

a municipal service that is nec-essary to ensure an acceptableand reasonable quality of lifeand [that], if not provided, wouldendanger public health or safetyor the environment.

Government policy on free basicservicesAt a national level, government hassought to meet the basic needs ofcommunities through the policy offree basic services. Announced be-fore the 5 December 2000 munici-pal elections, the aim of the policy is

to ensure that there is at least a ba-sic level of municipal services to allhouseholds. While local governmentis charged with the service deliveryand implementation role, nationalgovernment is responsible for pro-viding the financial resources to lo-cal government, and provincial gov-ernments must monitor the implemen-tation and provide support if neces-sary. In an evolving policy, the gov-ernment classified water and elec-tricity as free basic services. In thepolicy formulations, there is explicitrecognition that the free basic serv-ices policy flows from government’ssocio-economic rights obligations.

Deciding on an appropriateservice providermechanismThe Systems Act prescribes an elabo-rate and onerous process that a mu-nicipality must follow in decidingwhether to use an external provider.The process of externalising a mu-nicipal service entails four steps:

Initial review of service deliverymechanismsA municipality must frequently reviewthe appropriateness of its mecha-nisms for providing a municipal serv-ice. In conducting the review the mu-nicipality must focus on three areas:the municipality as the service pro-vider, general labour issues, andbroad social and economic consid-erations. Having conducted this re-view, the municipality may then de-cide that it is best suited to providethe service. Where it considers thepossibility of using an external pro-vider, a further inquiry must be con-ducted.

Process when considering anexternal service providerIn exploring the use of an externalprovider, the focus of the inquiry is

RRRRRRRRRRRRMunicipalities obligations are

limited by the scope of local

government’s constitutional

competencies.

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on which category of external pro-vider would be the most suitable. Todetermine this, the municipality mustfollow lines of inquiry similar to thosein the initial review: First, it must as-certain the views of the local com-munity on the question. The secondline of inquiry focuses on possibleservice providers. The third line ofinquiry deals with developmental,economic and labour issues, and con-sidering the views of organised la-bour is mandatory. The MunicipalServices Amendment Bill of 2003has further formalised the inquiry byrequiring the conduct of a feasibilitystudy, dealing with the duration, costsand impact of a proposed privatisa-tion decision.

After the second inquiry, the mu-nicipality must make a choice be-tween an internal or external pro-vider.

Competitive bidding for privateactorsIf the choice falls on an external pro-vider that is a private actor (whetherfor profit or not), a service deliveryagreement may be concluded onlyafter a competitive bidding processprescribed in the Act and other ap-plicable legislation.

Negotiating a service deliveryagreementOnce a municipality has selected anexternal provider (whether or notcompetitive bidding was required), aservice delivery agreement must beconcluded with them.

The Act’s point of departure is thatthe municipality cannot divest itselfof its responsibilities for providing thatservice to the community. As its rela-tionship with the provider is contrac-tual, the content of the agreementmust thus reflect the municipality’scontinuous responsibility for theproper delivery of that service. The

Act provides a framework withinwhich the municipality must negoti-ate the agreement.

National and provincialgovernment supervisionThe Municipal System AmendmentBill of 2003 seeks to give the na-tional and provincial government agreater, albeit indirect, role in thedecision-making process. First, thenational and provincial governmentmay, in accordance with an agree-ment with a municipality, assist it incarrying out a feasibility study whenconsidering externalising a munici-pal service or in preparing servicedelivery agreements. Likewise, theymay assist in drafting a service de-livery agreement. Second, the na-tional Minister is given specific pow-ers to regulate the provision of mu-nicipal services, including externalis-ing them. The Minister may makeregulations or issue guidelines oncritical issues raised by privatisation.

Socio-economic rights andthe process of privatisingbasic municipal servicesSince socio-economic rights under-pin some of the basic municipal serv-ices that municipalities must provide,deciding on the delivery mechanismsfor the basic municipal service musttake place within a socio-economicrights framework.

The Systems Act provides a broadframework for service delivery. Manyof the provisions are open ended,giving municipalities wide discretion.Where a basic municipal service hasa socio-economic rights dimension,it is argued, the discretion is narroweddown and directed towards realis-ing that right. In sum, a socio-eco-nomic rights analysis of basic munici-pal services directs municipalities ina particular way when considering

and deciding on an appropriateservice provider.

Initial review of servicemechanismsIn reviewing the delivery mechanismsof a particular service, the first ques-tion must be whether it deals with abasic municipal service. Moreover,is there a socio-economic dimensionto the particular service? If a serv-ice relates to the fulfilment of a socio-economic right, requiring, amongother things, its free provision to thedestitute, the issue of funding be-comes vital. If cross-subsidisation ofservices is one of the key methods offinancing a free basic service, thenthe appropriateness of providing theservice through an internal mecha-nism becomes apparent.

Considering an external serviceproviderThe duty to ascertain the views ofthe community takes on a specific fo-cus where the municipal service tobe externalised is a basic one. Thesocio-economic rights dimension ofa basic municipal service would re-quire that the municipality engageswith the beneficiaries of that righton the specific question of how ex-ternalising that service may impacton its realisation.

The rights dimension is againparamount when the municipalitydecides between an appropriate in-



If a service relates to the

fulfilment of a socio-economic

right, requiring, among other

things, its free provision to the

destitute, the issue of funding

becomes vital.

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ternal or external provider. Withsocio-economic rights focusing on thepoor and those who cannot helpthemselves, the critical question iswhich service provider can best rollout services to the ‘unserved’ andprovide a subsidised service for thosewho cannot pay.

Competitive biddingWhen competitive bidding precedesthe appointment of a private actoras the external provider, the tenderprocess must also be geared towardsrealising the basic municipal service.The human rights dimension must beoutlined in the tender specificationand followed up in the bid evalua-tion criteria.

Negotiating the contents of aservice delivery agreementCommunity consultation prior to theconclusion of an agreement exter-nalising a basic municipal serviceprovides an important vehicle for fo-cusing on the socio-economic rightdimension of a particular service. Theobject of the consultation process isto examine how the detail of provid-ing a basic municipal service by anexternal provider may affect theservice received by a community. As



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Waterprivatisation inSouthern AfricaThe state of thedebate

Patrick Bond, DavidMcDonald and GregRuiters

Privatisation as defined by theWorld Bank includes privatesector involvement in financing,

operating and, in some cases, own-ership. Aspects of private sector in-volvement range from contractingout to reducing or discontinuing theprovision of a service by governmentand introducing commercial princi-ples or market criteria.

Privatisation is most often seen asa necessary political choice becauseof fiscal constraints (reducing publicborrowing, taxes and outlays). It seeksto depoliticise services with a viewto improving the services and in-creasing the productivity of assets.Its other unstated aims include reduc-ing trade union power.

Private sector participation in thedelivery of water services can takea variety of different forms rangingfrom a single person fixing waterpipes in a small section of a town-ship, to a large multinational corpo-ration providing bulk water supplyand bulk sewerage treatment.

The size and types of contractscan also vary from a one-year, fee-for-service, renewable contract to athirty-year license. Ownership ofassets varies, too, with the state re-taining ownership in some cases and

a basic municipal service may havea socio-economic rights dimension,the beneficiaries of such rights mustspecifically be consulted.

As it remains responsible for serv-ice delivery, a municipality must struc-ture the service delivery agreementin the light of its own constitutionalobligations. It cannot divest itself ofany obligation merely by outsourcinga service, let alone a basic munici-pal service.

ConclusionThere is increasing recognition thatthe function of providing basic mu-nicipal services takes place within ahuman rights paradigm. A policy toprovide free basic services is nolonger at the state’s discretion, but isdone in fulfilment of the state’s obli-gation to realise socio-economicrights. At the same time the humanrights paradigm structures the provi-sion of basic municipal services evenwhere the state is no longer the pro-vider of a service. The changing ofits role from a ‘provider’ to an ‘en-surer’ of services does not deflect thebinding nature of the Constitution’ssocio-economic rights obligations.While it does not prevent the priva-tisation of services, the Bill of Rightsprovides a framework in terms ofwhich the difficult choices of an ap-propriate service provider can bemade.

Nico Steytler is Professor of Lawand Director of the Community

Law Centre, UWC.

RRRRRRRRRRRRA policy to provide free basic

services is no longer at the state’s

discretion, but is done in

fulfilment of the state’s obligation

to realise socio-economic rights.

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The full version of this article can be accessed on ourwebsite: www.communitylawcentre.org


structured in 1996 as Water andSanitation Services of South Africa,WSSA) could boast that it operatedwater and sewerage systems for apopulation in excess of two millionpeople.

Private water schemes are also inoperation in Namibia and Mozam-bique. Processes leading to privatesector involvement in the delivery ofwater are also underway in Angola,Malawi, Mauritius, Tanzania andZambia.

The pro- and anti-privatisation lobbiesWater is, quite literally, the source ofall life. Debates over its treatmentand delivery thus merit the intensityand scope of discussions that arenow taking place.

Those in favour of privatisationtend to see water as an economicgood that must be commodified if itis to be managed properly. They ar-gue that open access to a scarceresource like water will inevitably re-sult in its over-exploitation. Givingwater an economic value, the argu-ment proceeds, allows for rationalbehaviour by self-maximising indi-viduals in a regulated environment.

The anti-privatisation position isthat there is a need to see water con-sumption mainly as a basic humanright, with important biological, cul-tural and symbolic values beyond themarket. This is not only a differentway of understanding the econom-ics of water but it is also symptomaticof an entirely different value systemwhich challenges fundamental neo-classical assumptions about humanbehaviour.

There are notable institutional andresource differences between thetwo lobbies. The pro-privatisationlobby has huge financial and human

resources that enable it to conductresearch, publish materials and lobbygovernments in a relatively coordi-nated fashion around the world. Per-haps the most important manifesta-tion of this lobby is the World Bankand allied organisations, includingthe Urban Management Programmeand the United Nations DevelopmentProgramme. There are also corporatelobby groups, multilateral and bilat-eral donor agencies, governmentsand nongovernmental organisations(NGOs) that are driving the privati-sation agenda.

By contrast, the anti-privatisationlobby, which includes academic re-search groups, public sector unions,NGOs and civic bodies, tends to beless well endowed, although such net-works are increasingly becoming co-ordinated and global in scope.

The anti-privatisation lobby alsotends to be less consistent in its linesof argument because of the complex-ity of the debate on questions of con-crete alternatives to PPPs. Many op-ponents of privatisation are reluctantto return to the bloated and unac-countable bureaucracies of the past.Instead, they seek a radically differ-ent form of ‘public-public’ partner-ships and ‘public-people’ partner-ships, where other governmentalagencies, communities, labour andother citizens groups play a moreactive and informed role in service

WaterWaterWaterWaterWater

privatisation inprivatisation inprivatisation inprivatisation inprivatisation in

Southern AfricaSouthern AfricaSouthern AfricaSouthern AfricaSouthern Africa

RRRRRRRRRRRRThose in favour of privatisation

tend to see water as an economic

good that must be commodified

to be managed properly.

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the private company retaining it inothers.

Most of the private sector dealsin the water sector in Southern Af-rica – and indeed, in other parts ofthe world – are public-private part-nerships (PPPs), with continued gov-ernment involvement and oversightin service delivery.

The status of waterprivatisation in SouthernAfricaThe privatisation and commercialisa-tion of water and sanitation is be-coming widespread in Southern Af-rica, with especially powerful Frenchcompanies leading the way and withthe region’s largest cities (Johannes-burg, Cape Town and Maputo) al-ready firmly committed to privatisa-tion and enhanced private sectorparticipation in municipal services.

But many small towns and largeurban centres have one or other formof private sector involvement. Thecompany Suez Lyonnaise, for exam-ple, started out with service contractsin towns in the former apartheid‘homelands’, before it undertook along-term 25-year contract inQueenstown, and ten-year contractsin Stutterheim and Nkonkobi (formerlycalled Fort Beaufort) in the mid1990s. Nkonkobi’s contract cameunder attack in October 2001, whenthe mayor of the municipality suedfor cancellation due to overcharging,lack of transparency and unafford-ability.

However, in 2000 the same com-pany won the Johannesburg contract– which is Africa’s largest – servingover 600 000 households.

Between 1992 and 1995, SuezLyonnaise took over three EasternCape towns’ water and sanitationsystems. By 2001 the company (re-


delivery decisions. In the end thedebate reaches an impasse, turninglargely on the role of the market, thepotential for effective state partici-pation and the value to be attachedto water itself.

Ultimately, however, it is govern-ment officials that make the final de-cision to use a private company forservice delivery, and there is grow-ing evidence of a pro-privatisationbias among senior civil servants andpoliticians at the national, regionaland local government level in SouthAfrica and the Southern African re-gion.

The costs, benefits andprices of public andprivatised waterAccess to water in Southern Africa isincreasingly determined by the ex-tent to which consumers can pay a‘price’ – often called the ‘tariff’ – thatcovers the full cost of the service.

This includes the initial cost of in-stalling water infrastructure (capitalcost) and the expenses associatedwith operating and maintaining theinfrastructure (marginal costs).

If consumers cannot pay this price,then subsidies are required or theconsumer faces a cut-off of supply.

Low-income consumers who usesmall volumes impose higher marginalcosts on a typical water system, be-cause of more complex billing re-quirements (including lack of ad-dresses), difficulties in making pay-ments, more leaks in the infrastruc-ture, and the tendency to consumeat peak periods (morning and earlyevening).

However, the ‘long-run marginalcost’ of water may be driven higherby big consumers, who waste waterand drive up the costs of the systemfor everyone.

Full cost recovery, in the contextof privatisation, is criticised on thegrounds that privatised water sup-pliers have absolutely no incentiveto incorporate the broader socialcosts of not having water.

Critics of privatisation contendthat it is only the public sector thathas such an incentive to supply a verypoor household with water, using asubsidy, since the costs of treating dis-eases like cholera or diarrhoea canbe so high as to pose a danger tothe economy and society at large.

Assuming a coherently co-ordinated government, only a statewater supplier with close ties to otherstate health, environmental, economicand planning agencies can realisethe benefits of holistic service deliv-ery.

If contracted out to the many in-dependent suppliers with localisedcontracts and with their own nar-rowly defined profit strategies, thesebenefits will typically not be realised.

Does privatisation changethe way that cost-recoveryoccurs?A privatised water supplier will, un-der most operating concessions, havean incentive to ‘get the prices right’

WaterWaterWaterWaterWater

privatisation inprivatisation inprivatisation inprivatisation inprivatisation in

Southern AfricaSouthern AfricaSouthern AfricaSouthern AfricaSouthern Africa

As water services tend to be

natural monopolies, suppliers

are often tempted to

underinvest, overcharge

consumers, cut off supplies to

those who cannot pay, and

underperform – hence the

imperative of regulation.

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by pricing water according to itsmarginal cost plus a mark-up. Thus,if water conservation is a goal, thenthe price of water should be put atvery high levels for individual house-holds or companies, when they reachhigh levels of consumption.

This technique (a progressiveblock tariff) is used across the world.It is currently under attack becauseit includes a subsidy from the largeuser to the small user.

Any privatised water supplier willattempt to identify ‘inefficiencies’ inits pricing system, and cross-subsidiesare among the most obvious ‘distor-tions’ of price, from cost.

Hence, a privatised water sup-plier will avoid pricing water in a waythat maximises social justice (by giv-ing a free lifeline to all consumersfor their first block of consumption,eg 50 litres per person each day),and environmental justice (by forcinglarger users to conserve).

The role of regulationWater services, especially at munici-pal level, tend to be natural monopo-lies. As a result, suppliers are oftentempted to underinvest, overchargeconsumers, cut off supplies to thosewho cannot pay, and underperform– hence the imperative of regulation.

Today, as powerful private com-panies increasingly take over utilitiesacross the world, the interactions be-tween different levels and types ofgovernments, different publics, cul-tures and societies are growing in-creasing complex.

Anxieties increase about theabuse of monopoly power and theintegrity of regulation, and the pos-sibility for ‘captive regulation’.

Concerns about social needs, bal-anced urban development and pri-vate company goals intensify ques-


Water is a limited natural re-source and a public good funda-mental for life and health. Thehuman right to water is indispen-sable for leading a life in humandignity. Water, and water facili-ties and services, must be afford-able for all. (UN Committee onEconomic, Social and CulturalRights, November 2002.)

Over the past half a century,the world has successfullyestablished an interna-

tional regime of human rights law. Inaccords such as the Universal Dec-laration of Human Rights, the Inter-national Covenant on Economic,Social and Cultural Rights, the Inter-national Covenant on Civil and Po-litical Rights, and the Convention onthe Rights of the Child, states haveagreed that our basic human digni-ties include not only civil and politi-cal rights but also economic, socialand cultural rights. Among the latterare included the right to food, shel-ter, health, education and water.

At the same time, however, a verydifferent set of global rules is underconstruction aimed at binding theworld to a collection of economicpolicies that often violate humanrights. These rules can be found ininternational trade accords such asthe World Trade Organization, theNorth American Free Trade Area,and the proposed Free Trade Areaof the Americas; and in the economicpolicies issued to poor countries byinternational financial institutions

such as the World Bank and the In-ternational Monetary Fund (IMF).

The privatisation of the public wa-ter system of Cochabamba in Bo-livia and the civic revolt that endedit is not only an inspiring story of lo-cal people taking courageous action,but also a cautionary tale of howglobal economic rules can sometimesreduce international human rightslaw into nothing but pretty words onpaper.

A deliberate stepbackwards in realising theright to affordable waterInternational human rights law rec-ognises that states, especially thepoorest, cannot realise economic,social and cultural rights overnight.Rather, it requires these rights to berealised ‘progressively’. Governmentsare required to take ‘clear and de-liberate, concrete and targeted steps’towards meeting their obligationsand are expressly prohibited from tak-ing any ‘deliberate steps backwards’.

It is argued that the privatisationof Cochabamba’s water was a de-liberate step backwards in terms ofmaking water affordable for the city’spoorest people. The Bechtel Corpo-ration (Bechtel), after taking over thewater system, increased water pricesby between 40% and 50%, and insome cases by more than double.Families were literally forced tochoose between feeding their chil-dren and paying their water bills. Thisprivatisation project was a violationof their right to affordable water.

The BolivianThe BolivianThe BolivianThe BolivianThe Bolivian

ExperienceExperienceExperienceExperienceExperience

Privatisation versus human rightsLessons from the Bolivian water revolt

Jim Shultz

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tions about the economic and socialregulation of private providers ofpublic goods.

Regulation has a crucial role inadjudicating quality, quantity ofgoods and services and price. It mayextend to profits, consumer charters,codes of conduct and rules of trans-parency.

However, regulation has also re-cently applied to private monopolyfirms to cushion them against ‘unac-ceptable’ risks to their capital.

From the point of view of privateinvestors who have long-term sunkcosts (since infrastructure is long-last-ing, capital intensive and immobileand investment is lumpy), the needfor regulation is tied to predictabilityand risk minimisation.

The choice of areas that are regu-lated and the efficiency of the regu-latory framework are therefore criti-cal to facilitating a service deliverysystem that advances social justice.

Patrick Bond, David McDonaldand Greg Ruiters are Co-Directorsof the Municipal Services Project.

This article is adoptedfrom a booklet written incollaboration with LianneGreeff and funded by the

EnvironmentalMonitoring Group (Waterprivatisation in Southern

Africa: The state of thedebate, December 2001).

The website of theMunicipal Services Project

is accessible atwww.queensu.ca/msp


Allocating responsibility forthe violation of the right towaterIt is submitted that Bechtel, the Bo-livian government and the WorldBank, the three main actors in thewater debacle, each contributed tothe violation of the right to water.

Bechtel violated this right by rais-ing prices far beyond what poorfamilies could ever afford. The priceincreases were effected partly to fi-nance an enormous 16% profit rate,which the corporation managed toinclude in its 40-year contract.

The Bolivian government violatedits people’s socio-economic right toaffordable water by negotiating andsigning the Bechtel contract withoutregard to its international humanrights obligations, and by approvingthe giant price hikes.

Later, when the Bechtel contractcame under fire, the government vio-lated a range of the people’s basiccivil and political rights. When Boliv-ians sought to exercise their right toassemble and demonstrate peace-fully against the privatisation deal,the government sent armed troopsinto the streets to break the protests.More than 170 people were injuredand a 17-year-old boy, Victor Hugo

Daza, was shot in the face and killed.Protest leaders were arrested in theirhomes in the middle of the night andflown to a remote jail in Bolivia’s jun-gle. In the era of economicglobalisation, these are the lengthsto which poor governments feel com-pelled to go in order to protect theinterests of foreign corporations.

The World Bank implicitly violatedthe Cochabambinos’ right to afford-able water by coercing Bolivia intowater privatisation to begin with(though the Bank argues that it op-posed the ultimate deal because itincluded a dam project that the Bankdid not favour). In 1996, the Bank’sofficials told Cochabamba’s mayorthat privatisation of the city’s waterwas a condition of assistance forwater development.

Again, the Bank’s officials told theBolivian President in 1997 that pri-vatising Cochabamba’s water was acondition of the country receiving$600 million in international debt re-lief.

It is argued that the Bank knewor, at least, should have known thatthe privatisation of Cochabamba’swater would have a dramaticallynegative effect on prices for the poor.Corporations do not come to poorcountries like Bolivia to provide char-ity. They come to seek a profit (andin Bechtel’s case, an excessively highone). Bolivia’s government was no-toriously both incapable and unin-terested in negotiating a deal thatwould protect the poor and it wasnot surprising that the contractsigned by the government failed todo this. The World Bank only madematters worse in 1999 when it toldthe government, in the midst of itsnegotiations with Bechtel, that “nopublic subsidies should be given toameliorate the increase in water tar-

iffs in Cochabamba”, a policy thatvirtually guaranteed higher rates forthe poor. In short, the World Bankbacked Bolivia into a corner wheredramatically higher water prices anda violation of the right to water wasa predictable result.

Today the same three actors areengaged in a new dance with oneanother that could once againthreaten the right to affordable wa-ter in Cochabamba. Bechtel is suingthe government of Bolivia for $25million, a portion of the profit thecorporation had hoped to make butdidn’t. The case is being heard by asecret trade court operated by theWorld Bank (the International Cen-tre for the Settlement of InvestmentDisputes).

The process is so secret that mem-bers of the public and the media areneither permitted to attend, nor evento know when meetings are held,where, who testifies and what theysay. If the Bank’s panel grantsBechtel’s demand, those costs will falldirectly on Cochabamba water us-ers and will force a dramatic increasein water prices once again.

Economic globalisation vhuman rights: Shifting thebalanceFor poor governments, faced with achoice between honouring humanrights accords and complying withthe commands of international eco-nomic institutions, the choice is sadlyclear. If they violate human rights,governments may face complaints orat worst international investigation.In contrast, the World Bank and IMFcan cut off millions of dollars in aid.Decisions by international tradecourts can extract hard cash.

Such actions reduce the resourcesthat governments have available to



For poor governments, faced

with a choice between

honouring human rights

accords and complying with the

commands of international

economic institutions, the choice

is sadly clear.

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fulfil the socio-economic rights of theirpeople.

Nevertheless, even if outgunnedby economic accords and the WorldBank/IMF commands, internationalhuman rights accords are vital. Theygive profound global legitimacy tothe notion that all human beings areendowed by birth with certain fun-damental rights.

However, the real defence ofthose rights lies not only with legalprocess, but also, and more impor-tantly, with the willingness of peopleand communities to take action todemand those rights.

The Bolivian water revolt cap-tured world attention as a tale of ahumble people rising powerfully towin back their right to water. In do-ing so, they faced down soldiers, bul-lets, tear gas, a declaration of mar-tial law, and one of the most power-ful corporations in the world.

It is also a compelling tale of howthe citizen defence of human rightswent global, something that will be-come even more crucial as theserights come under increasing pres-sure from the countervailing winds ofeconomic globalisation.

An insider’s account of theBolivian revoltIn the early months of 2000, whenBechtel took over Cochabamba’swater system, the Democracy Cen-tre sent news of the events in Bo-livia worldwide through its e-mailnewsletter.

These dispatches were then pub-lished in newspapers and magazinesacross the US, Canada and in theUK. Project Censored named theCentre’s reporting as the top storyof the year.

These articles inspired additionalreporting by major media such as the

R



New Yorker, the US Public Broadcast-ing System Network and the BritishBroadcasting Corporation.

The next task was to investigateand expose the role of the two maininternational actors that had pushedBolivia into the crisis – Bechtel Cor-poration and the World Bank.Bechtel, a Californian engineeringgiant, had come to Bolivia under anassumed name, Aguas del Tunari.Few people knew that it was actu-ally Bechtel that owned a 55% con-trolling interest in the Cochabambawater company.

The Democracy Centre re-searched the Bechtel/Bolivia connec-tion and publicised it worldwide, fur-nishing readers with the personal e-mail of Bechtel’s CEO, Riley Bechtel.Within hours he received hundreds ofmessages from all over the world de-manding his company’s withdrawalfrom Bolivia.

The Democracy Centre alsodocumented the role of the WorldBank in coercing Bolivia to privatiseits water. The Cochabamba waterprotests took place during the sameweek that thousands of people in theUS were preparing to travel to Wash-ington for protests against WorldBank and IMF economic policies.

As the Democracy Centre’s dis-patches spread, the water revoltquickly became a popular exampleof the negative effects of the WorldBank’s push for privatising water andother services. Days after the waterrevolt ended its most visible leader,Oscar Olivera, was invited to Wash-ington, to retell the Cochabambastory to thousands of people.

ConclusionThe world needs rules to protect hu-man rights and also to guide the ac-tions of the new global economy. Theimportant issue is what will those rulesvalue most – the right of the poor towater they can afford, or the rightof a corporation to maximise its re-turn on investment – human rights orinvestor rights?

The answer to that question liesin our willingness and our effective-ness to demand that human rightscome first. The Cochabamba waterrevolt provides a model for how wecan do that: a combination of streetpressure, solid analysis, and creativestrategies for removing the anonym-ity of the corporations and institutionsresponsible, and for turning a localissue into an international story.

“Many people say it is impossi-ble to fight against these policies”,says Leny Olivera, a Cochabambauniversity student who was activelyinvolved in the water protests. “Butwe showed that you can, not just inBolivia but also in the world. Thehumble people are the majority andare more powerful than multinationalcorporations.” Bolivia, that little-thought-of country in the Andes, givesus an inspiration about what is pos-sible.

Jim Shultz is Executive Directorof the Democracy Centre in

Cochabamba, Bolivia and authorof The Democracy Owners’ Manual,

Rutgers University Press.

Visit the website of the Democracy Centre atwww.democracyctr.org


the role it may have played in adeadly outbreak of E. coli infection.This outbreak, the result of contami-nated wells that were not identifiedor simply ignored by authorities, re-sulted in some 2 300 people falling illand in the death of seven.

In early May 2000, heavy rain-fall caused flooding in the small com-munity of Walkerton. Water contami-nated with E. coli bacteria enteredthe system through one of the com-munity’s three wells. Residents of thetown became exposed to the con-tamination on May 12. For theprevious ten days, one well had beenoperating without a chlorinator. It wasalso common practice for employeesof the Public Utilities Commission (PUC)to either falsify test results or fail to testthe water altogether.

On May 17, the private testinglaboratory reported to the PUC thatwater samples had high levels of E.coli bacteria. However, the resultswere not reported to the Ministry ofthe Environment or local health offi-cials because the PUC’s general man-ager was concerned that the irregu-larities in chlorination procedureswould become public knowledge.Once people began to fall ill, he alsodenied that there was a problem withthe water when asked by local medi-cal authorities. A ‘boil water’ advisorywas only issued several days later, af-ter the local hospital had performedits own tests on the water.

The provincial government set upa public inquiry with the mandate toexamine the events in Walkerton, in-

cluding the role, if any, played by gov-ernment policies. The operating prac-tices of the PUC were found to havecontributed to the disaster. However,the report placed the greater part ofblame on the government, particularlythe Ministry of the Environment. It con-cluded that the Ministry’s inspectionprogram ought to have detected thedeficiencies in the Walkerton PUC, in-cluding the inadequate training andsupervision. The extent of budget re-ductions in the Ministry had made thismuch less likely.

A key element of the breakdownof adequate water monitoring, ac-cording to the inquiry, occurred withthe privatisation of water testing in1996. The government had failed toenact regulations to protect publicsafety by ensuring quality of testing,proper reporting of results, auditingand inspection of facilities by thegovernment, and the staffing of pri-vate laboratories by qualified person-nel. According to the inquiry, this fail-ure to enact an adequate regulatoryscheme resulted, in part, from theanti-regulatory attitude of that par-ticular government.

The province subsequently tooksteps to implement improved watermanagement practices. Approxi-mately $CDN 57 million was spenton various initiatives in Walkerton,including investments to improve thewater system and the settlement ofa class action lawsuit started byWalkerton residents. Comprehensivelegislation was passed concerningwater management, giving what hadpreviously only been a guideline theforce of law.

Privatisation ofhydroelectricityAttempts to privatise hydroelectric-ity have not yet had the same dra-matic impact on public health as

The CanadianThe CanadianThe CanadianThe CanadianThe Canadian

experienceexperienceexperienceexperienceexperience

Elizabeth Drent

The past decade in Canada hasseen several major initiatives toprivatise services previously ad-

ministered by the state. The extent ofprivatisation has not been as extremeas in some other Western democra-cies, such as the United Kingdom.Nonetheless, provinces have priva-tised such important services as so-cial assistance, public transportationand electricity. The success of theseprojects, and the prospects for fur-ther involvement of the private sec-tor in service delivery across thecountry, are presently the subject ofvigorous debate in Canada.

This article reviews three high-pro-file cases of privatisation in Canadaand addresses the legal strategiesemployed to oppose them. The casesinvolve the microbiological testing ofwater, hydro-electricity, and certainaspects of health care.

Privatisation of watertesting in OntarioIn 1995, a new Conservative Partygovernment was elected in the prov-ince of Ontario. Included among itsearly initiatives was the discontinua-tion of routine microbiological testingof municipal water systems by govern-ment laboratories. In consequence,municipalities contracted out watertesting to private laboratories. No newregulatory regime accompanied pri-vatisation; instead, existing non-bind-ing guidelines on water safety contin-ued to apply.

Within five years of this restruc-turing, questions were raised about

Privatisation of basic services inCanadaSome recent experiences


the water-testing example. Nonethe-less, the blackouts and runaway billsassociated with the privatisation ofelectricity in some US states haverecently become part of the Cana-dian experience too.

Ontario Hydro, the province’selectrical utility company, was pub-licly owned from its creation in 1906.The Conservative government’s ini-tiative to restructure and privatise itsparked a fierce debate in the legis-lature and the media. Legislation di-viding the utility into three entities (gen-eration, transmission and retail, and amarket operator) was passed and be-came law in 1998 (Electricity Act, RSO1998, c-15).

In late 2001, the province an-nounced an initial public offering(IPO) of shares in Hydro One, thenew entity involved in transmissionand energy distribution. Trade unionsbrought an application in the On-tario Superior Court for a declara-tion that the IPO contravened theElectricity Act, because the legisla-tion did not authorise the dispositionof the shares in issue.

The Court agreed with this argu-ment and granted the declaration re-quested (Payne et al v Wilson et al,[2002], OJ No 1450, Ont. SCJ). Itreasoned that an objective as impor-tant as privatisation of the province’sutility company should have beenclearly set out in the Act as one ofthe purposes of the legislation. Itsabsence suggested that privatisationcould not have been the legislator’sintention. Other provisions of the Act,statements of the responsible Minis-ter in the legislature when the legisla-tion was introduced, and a governmentWhite Paper tabled concurrently withthe Act, were all consistent with thatinterpretation.

Subsequently, the governmentpassed legislation that did clearly al-

low for privatisation of the utility. Italso appealed the decision of the Su-perior Court to the Ontario Court ofAppeal. However, the appellatecourt refused to be drawn into theprivatisation debate, ruling that theissue was moot in light of the newlegislation (Payne et al v Wilson et al,4 July 2002, Docket No C38122,Ont. CA).

The unions had achieved their pur-pose, however: with public opinionstrongly against selling the utility, thegovernment announced soon thereaf-ter that the IPO was cancelled. Mean-while, the opening of the market tocompetition from private electricityproviders in the same year resulted inskyrocketing prices. In the face ofstrong public discontent, the govern-ment froze rates at pre-competitionlevels only six months after the marketwas opened.

Strategic litigation to stall or haltthe process of privatisation of elec-tricity has also been undertaken inBritish Columbia, Canada’s western-most province. There, the provincialLiberal government split the electricityutility, BC Hydro, into three constituentparts. A contract was concluded witha Bermuda-based management com-pany to operate the customer servicecomponent.

In September 2002, a class ac-tion lawsuit was filed with the pro-vincial Supreme Court on behalf ofresidents of British Columbia, alleg-ing breach of fiduciary duty, breachof contract and unjust enrichment ofthe defendant, BC Hydro, as a resultof the privatisation initiative. The suitis in the early stages and has not yetbeen certified as a class action orheard by the court. In their statementof claim, the plaintiffs argue that asthe ‘owners’ of the province’s water,the main power source, and Hydrocustomers, BC residents had contrib-

uted to the payment of BC Hydro’sdebt, funded development of facilitiesand borne business risk, in addition toincurring the indirect costs of environ-mental degradation and reduced landvalue due to damming. They allege thatBC Hydro owes the province’s residentsa fiduciary duty, stemming from thecustomer-provider relationship, andfrom legislation regulating electricityprovision. Further, they argue that BCHydro would enrich itself unjustly bythe sale of its assets to private owners.

Health careThe Canada Health Act, (RSC 1985,c-6), sets out five principles withwhich provincial health insuranceschemes must comply in order to re-ceive federal funding: public admin-istration, comprehensiveness, univer-sality, portability and accessibility. Al-though some provinces have at-tempted to introduce a parallel fee-paying system for certain services,the federal government has taken theposition that the Act prohibits thelevying of additional fees for serv-ices otherwise available under theprovincial health insurance scheme.This approach has assisted in fore-stalling the development of a sepa-rate, private health care system.

RRRRRRRRRRRROpening the market to

competition from private

electricity providers led to

skyrocketing prices and following

public discontent, the

government froze rates at pre-

competition levels only six months

after the market was opened.

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However, reduced federal fund-ing in the 1990s constrained publicproviders and led to the incrementalprivatisation of aspects of service de-livery in several provinces.

In 2001, the federal governmentappointed a Commission of Inquiryinto the Future of Health Care inCanada. The Commission reportedthat Canadians did not want to movetowards a privatised or partially pri-vatised health care system. However,it cautioned strongly that confidencein public health care would wane,and willingness to explore alterna-tives would increase, if action werenot taken to address the shortcom-ings of the current system.

Although some of the Commis-sion’s recommendations, includingsubstantial funding increases, havealready been implemented, privati-sation of aspects of health care de-livery continues.

In response, unions and public in-terest groups have brought variouslegal challenges. The British Colum-bia Supreme Court recently rejecteda challenge by health care workersalleging that the government’s planto privatise certain health care serv-ices violated their equality rights andtheir right to freedom of association,

protected under the Canadian Char-ter of Rights and Freedoms (The HealthServices and Support Facilities SubsectorBargaining Association et al v HerMajesty the Queen et al, 2003 BCSC1379).

Meanwhile, unions representinghealth care workers and public in-terest groups recently initiated anaction in the Ontario Superior Courtchallenging the authority of the pro-vincial Minister of Health to approveplans to operate two hospitals on thebasis of public-private partnerships(Ontario Council of Hospital Unionset al v Ontario [Minister of Health],Court File No. 586/03).

The applicants argue that plansto privatise hospital managementwould violate the Public Hospitals Act(RSO 1990, c-40). The case has notyet been heard.

Several organisations havestarted an action in the Federal Courtof Canada, claiming that the na-tional Minister of Health’s failure tocomply with the principles and re-quirements of the Canada Health Act(CHA) is resulting in the incremental pri-vatisation of health care by the prov-inces (Canadian Union of Public Em-ployees v Canada [Minister of Health],Court File No T-709-03 [FCTD]).

The applicants allege that, byproviding insufficient informationabout the compliance of provincialinsurance schemes with CHA princi-ples, the Minister is not meeting theAct’s requirements regarding report-ing to Parliament.

Further, it is alleged that she hasfailed to ensure accountability withrespect to administration of thehealth care system by not investigat-ing complaints. The case has also notyet been heard.

Some commentators have specu-lated that an argument might suc-cessfully be made that the Canadian

Charter of Rights and Freedomsguarantees a right to accessiblehealth care.

Although the Charter contains noprotection for socio-economic rightsper se, a right to health might befound in section 7, which guaranteesthe protection of life, liberty and se-curity of the person.

Although the jurisprudential sup-port for this argument is limited, therecent decision of the Supreme Courtof Canada in Gosselin v Quebec(Neutral citation 2002 SCC 84) maysignal the court’s openness to this kindof argument in the future. (See alsoChaoulli c. Québec [Procureur general][2002] JQ No 759 [Cour d’appel]).

ConclusionsPrivatisation initiatives over the pastfew years in Canada have drawn at-tention to the potentially catastrophicimplications of state withdrawal fromthe provision of basic services with-out putting adequate measures inplace to ensure public safety and ac-cessibility.

Notwithstanding the Walkertonand Ontario Hydro debacles, how-ever, provincial governments havecontinued the process of privatisingpreviously state-administered serv-ices. In response, unions and publicinterest groups have employed vari-ous tactics to raise public awarenessof the implications of privatisation.

While litigation strategies basedon socio-economic rights argumentshave limited availability in Canada,the creative use of other legal argu-ments has been effective in drawingthe attention of the public to theproblems that can result from priva-tisation of basic services.

Elizabeth Drent is a CIDA internin the Local Government Project,

Community Law Centre.

RRRRRRRRRRRR

While litigation strategies based

on socio-economic rights

arguments have limited

availability in Canada, the

creative use of other legal

arguments has drawn the

public’s attention to the problems

that can result from privatisation

of basic services.

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The draft Electricity DistributionIndustry Restructuring Bill (thedraft Bill) was published for pub-

lic comment on 24 April 2003. It pro-vides for the restructuring of the Elec-tricity Distribution Industry (EDI)through the establishment of six Re-gional Electricity Distributors (REDS).

Until now responsibility for elec-tricity distribution in South Africa hasbeen spread across a range of dis-tributors, with some consumers receiv-ing electricity directly from Eskomand others receiving it from their mu-nicipality. The draft Bill envisages thatthe REDS will take over the distribu-tion function of both Eskom and themunicipalities, thereby eliminating thedual delivery system.

This article explores the constitu-tional context within which the EDIrestructuring process is taking placein South Africa, and the lessons thatcan be learned from similar proc-esses elsewhere in the world. We alsocomment on certain provisions relat-ing to service delivery and access topremises in the draft Bill.

The right to affordableelectricityPolicy formulation in the electricitysector cannot proceed without re-gard for the Constitution.

The 1996 Constitution of SouthAfrica does not contain an expressright of access to electricity. How-ever, this right can be implied in the

ElectricityElectricityElectricityElectricityElectricity

restructuring inrestructuring inrestructuring inrestructuring inrestructuring in

South AfricaSouth AfricaSouth AfricaSouth AfricaSouth Africa

right to housing. In Government ofthe Republic of South Africa vGrootboom 2001 (1) SA 46 (CC)(Grootboom), the Constitutional Courtheld that the right to housing entailsmore than bricks and mortar. Accord-ing to the Court, this right may alsoentail provision of such services as“water sewerage, electricity androads” (para 37). This interpretationis supported by the UN Committeeon Economic, Social and CulturalRights (CESCR), which monitors theimplementation of the InternationalCovenant on Economic, Social andCultural Rights. The CESCR has con-strued the right to housing broadlyto include the right of “sustainable ac-cess” to “energy for cooking, heat-ing and lighting” (para 8(b) of Gen-eral Comment 4, 1991, on the rightto adequate housing). Furthermore,the CESCR has underlined in its vari-ous General Comments that eco-nomic accessibility or affordability isone of the essential elements of therights to such basic services as wa-ter, housing, food, education andhealth.

In the South African context, allpolicy choices made by governmentin relation to the EDI restructuringprocess must also be analysedagainst the backdrop of the right toequality recognised under section 9of the Constitution. Given South Af-rica’s legacy of unequal municipalservice provision, this right would re-

quire that the provision of electricitybe underpinned by the twin princi-ples of equity (in the sense that eve-ryone receives an equal standard ofservice provision) and fairness (in thesense that there should be no dis-crimination between groups on anyground, including the grounds listedin section 9(3)). In addition, section9(2) enjoins the state to take “legis-lative and other measures designedto protect or advance persons, orcategories of persons, disadvan-taged by unfair discrimination”. Inrelation to the EDI restructuring proc-ess, this means that government mustensure not only that there is no ad-verse impact on poor (mostly black)consumers, but also that positivemeasures are taken to make electric-ity more affordable.

Section 6(5) of the Eskom Con-version Act 13 of 2001 provides that,in the process of converting Eskomto a public company, regard shouldbe had to the possible impact of suchconversion on poor consumers. TheWhite Paper on the Energy Policy ofthe Republic of South Africa, 1998,also states that “energy should beavailable to all citizens at an afford-able cost”. According to the Depart-

Promoting access to affordableelectricityComments on the draft Electricity DistributionIndustry Restructuring Bill

Mike Nefale and Theunis Roux

The CESCR has underlined in its

various General Comments that

economic accessibility or

affordability is one of the

essential elements of the rights

to such basic services as water,

housing, food, education and

health.

RRRRRRRRRRRR

RRRRRRRRRRRR


ment of Minerals and Energy in its2000–01 Annual Report, the aim ofthe Electricity Basic Services SupportTariff is “to alleviate the negativeimpact of poverty on our communi-ties” (p 99). Together, these legisla-tive and policy commitments suggestthat the restructuring of the electric-ity distribution industry is already tak-ing place against the background ofan implied right to affordable elec-tricity.

Electricity is a basic necessity andaccess to it has a wide range of posi-tive developmental benefits for com-munities. Increased usage of electric-ity improves the level of welfare, de-creases health expenditures and im-proves opportunities for low-incomefamilies, and women in particular.Poor communities should have accessto electricity, and should be enabledto afford it without sacrificing otherbasic necessities.

Learning from internationalexperienceExperience of the impact of EDI re-structuring initiatives elsewhere in theworld indicates that they may leadto a reduction in the cost of electric-ity, given certain conditions.

According to Michael Trebilcock,deregulation of the electricity gen-eration and retailing sector, and re-regulation of the transmission anddistribution sectors by the introduc-tion of price caps in the United King-dom and New Zealand, led to “av-

erage real electricity prices [falling]by 13% by the beginning of 1997compared to 1990” and about 25%from 1985 to 1995 respectively.

However, none of these reduc-tions in price was attributable exclu-sively to EDI restructuring of the kindcontemplated in the draft Bill. Theseresults are also not necessarily repli-cable in less developed countries,where the economic and politicalprerequisites for successful deregula-tion may not exist. Trebilcock givesfour economic prerequisites for suc-cessful deregulation:

• a healthy private sector;• efficient regulatory structures• macro-economic stability; and• a lack of corruption.

The political prerequisites are the‘desirability’ of deregulation (on thepart of policy-makers) and ‘feasibil-ity’ (in terms of the need to overcomeopposition from stakeholders, includ-ing labour and consumers).

Applying these lessons to SouthAfrica, it is apparent that the majorchallenges to the EDI restructuringprocess are not the economic pre-requisites, which are largely in place,but the political prerequisites, mostnotably opposition to the restructur-ing initiative from organised labourand consumers.

It was the Congress of SouthAfricas Trade Union’s (COSATU) ini-tial objection to the privatisation ofEskom that resulted in the insertionof section 6(5) of the Eskom Conver-sion Act mentioned above during theAct’s enactment by Parliament. Onthe consumers’ side, the role of theSoweto Electricity Crisis Committeein opposing increased electricitycharges and the installation of pre-paid meters in Soweto has receivedmuch recent publicity.

The problem of thin capital mar-

kets is also very real in South Africa.Although there is no ideological re-luctance on the part of governmentto attract foreign investment intoderegulated industries, the currentreticence on the part of internationalinvestors to invest in such industries iswell known. Together, these factorssuggest that the EDI restructuringprocess needs to be well managedpolitically. It also needs to be welltimed in the sense that a final com-mitment to it should be delayed untilgovernment is confident that domes-tic and international capital marketswill be able to support the level ofcompetition required.

The need for municipalcontrol over REDSChapter 6 of the draft Bill providesfor municipalities to contract out theprovision of electricity to REDSthrough a service delivery agree-ment.

The role of municipalities willchange over time from direct serv-ice delivery to overseeing the distri-bution of electricity by the REDS. Thischange in role is not, on the face ofit, incompatible with the rights andduties of municipalities as set out insections 4, 6, 7 and 95 of the LocalGovernment: Municipal Systems Act32 of 2000.

However, a more deliberate at-tempt to integrate municipalities’ re-sponsibilities under the draft Bill withtheir obligations under the SystemsAct would improve the Bill. For ex-ample, to the extent that municipali-ties will no longer be responsible fordistributing electricity, it is uncertainwhether the provisions for customercare and management in section 95of the Systems Act will apply.

As section 95 is currently worded,it appears to apply only to the charg-ing of fees for municipal services di-




RRRRRRRRRRRR

The economic and political

prerequisites for successful

deregulation may not exist in

less developed countries.

RRRRRRRRRRRR


Whether outsourced or not, all ac-tions undertaken in relation to thesupply of a basic service such as elec-tricity amount to administrative ac-tion as defined in the Promotion ofAdministrative Justice Act 3 of 2000.Section 3 of this Act requires admin-istrators to adopt fair proceduresbefore taking any action “which ma-terially and adversely affects therights or legitimate expectations ofany person”.

An occupier of premises has aright to know when and why thepremises are being visited.

The amendment of clause 40(1)along these lines would make elec-tricity consumers more inclined topermit authorised representativesonto their premises for the purposesof reading meters, which may in turnimprove the accuracy of the billingsystem.

ConclusionUnless attention is given to how theEDI restructuring process will resolve(rather than exacerbate) existingproblems relating to the affordabilityof electricity, international and localexperiences suggest that the SouthAfrican EDI restructuring initiative isunlikely to succeed.

Mike Nefale is a Researcher in theLaw and Transformation Programme

of the Centre for Applied Legal Studies,University of the Witwatersrand.

Theunis Roux is a Reader in Lawand Society and Head of the Lawand Transformation Programme,

Centre for Applied Legal Studies,University of the Witwatersrand.

rectly supplied by municipalities. Theprinciples in this section should notbe abandoned merely because thedistribution of electricity is to behanded over to the REDS.

If properly implemented, the serv-ice delivery agreements contem-plated in Chapter 6 of the draft Billmay allow municipalities to asserteffective democratic control over theREDS, and thereby to ensure efficientand affordable service delivery. With-out effective municipal control of theREDS, the EDI restructuring processmay lead to increased prices, thetightening of cost recovery measures,and deteriorating standards of serv-ice delivery.

Access to premisesClause 40(1) of the draft Bill givesthe REDS and municipalities the rightto enter private property in order toread, inspect, install or repair any me-ter, or service connection, or to stopthe provision of any service. How-ever, the Bill does not make any ref-erence to the service providers’ liabil-ity for damage caused to thepremises.

This is unfortunate because therecognition of service providers’ li-ability for damage is an importantguarantee to consumers that theirproperty will not be unnecessarilydamaged in the course of electricityinstallation or disconnection work.

Furthermore, clause 40(1) doesnot impose any obligation on theREDS or municipalities to notify theoccupier of the premises of their in-tention to access the premises.

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This article is based on a submission made by the Lawand Transformation Programme to the Department of

Minerals and Energy on the draft EDI Restructuring Bill.

The privatesector as serviceprovider and itsrole inimplementingchild rightsThe views of the UNCommittee on ChildRights

GodfreyOdhiambo-Odongo

At its 31st Session held inSeptember and October2002 the Committee on the

Rights of the Child (the Committee)devoted its day of general discussionto the theme, ‘The private sector asservice provider and its role in im-plementing child rights’. The Commit-tee monitors the implementation ofthe Convention on the Rights of theChild (CRC). It hosts a day of gen-eral discussion periodically focussingon a specific article of the CRC or achild rights theme “in order to en-hance understanding of the contentsand implications of the Convention”.

The recommendations adopted bythe Committee at the end of the dis-cussions can therefore serve as im-portant aides to the interpretation ofthe provisions of the CRC and theobligations they generate.

The main objectives of the day ofdiscussion were to:

• explore the scope of action of pri-vate actors and its negative andpositive impact on the full reali-sation of the rights of the child;


• specify the obligations of stateparties and private actors in thecontext of privatisation;

• assess the implications of privatesector involvement in service pro-vision on governance issues, par-ticularly on participation, ac-countability, transparency and in-dependence; and

• identify possible models of imple-mentation of the obligations.

As with previous thematic discussions,the Committee invited representa-tives of the UN organs, bodies andspecialised agencies, and such othercompetent bodies as non-govern-mental organisations (NGOs), re-search and academic organisationsand individual experts to contributeto the discussion.

In addition, representatives of theprivate sector, including internationalfinancial institutions were invited toparticipate. A variety of backgroundpapers by NGOs, academic institu-tions, independent experts and UNagencies were submitted.

The Committee’srecommendationsBased on the plenary discussion andthe findings of the working groups,the Committee adopted a range ofrecommendations to state partiesand private service providers on both

dren extend beyond the state andinclude individuals, parents, legalguardians and other non-state ac-tors.

Recommendations to statepartiesHaving outlined in general terms thelegal obligations that arise from theCRC in the context of privatisation,the Committee made a range of rec-ommendations to state parties, includ-ing to:

• establish a permanent monitoringmechanism aimed at ensuringthat non-state service providersrespect the CRC. In particular,governments must ensure thatbeneficiaries, particularly chil-dren, have access to an inde-pendent monitoring body and,where appropriate, judicial re-course;

• provide a supportive and protec-tive environment which enablesnon-state actors – whether non-profit or for-profit – providingservices to children to do so in fullcompliance with the CRC;

• undertake a comprehensive andtransparent assessment of the po-litical, financial and economic im-plications and the possible limi-tation of the rights of beneficiar-ies when considering contractingout services to a non-state pro-vider (whether for-profit or non-profit); and

• ensure independent monitoring ofthe implementation and the trans-parency of the process.

Recommendations to non-stateservice providersThe Committee called upon all non-state service providers to respect theprovisions of the CRC especiallywhen conceptualising, implementing

RRRRRRRRRRRRThe best interests of the child

should be a primary

consideration in all actions

concerning children, whether

undertaken by public or

private actors.

RRRRRRRRRRRR

InternationalInternationalInternationalInternationalInternational

developmentsdevelopmentsdevelopmentsdevelopmentsdevelopments

general and specific legal obliga-tions.

Legal obligationsThe Committee emphasised thatstate parties were primarily respon-sible for compliance with the CRCby all persons within their jurisdic-tion.

State parties are not relieved ofthe obligations imposed on them bythe CRC when the provision of serv-ices is delegated to non-state actors.In particular, the Committee statedthat the obligations of state partiesunder article 4 of the CRC remaineven when states rely on non-stateservice providers. These obligationsare to:

undertake all legislative, admin-istrative and other measures forthe implementation of the rightsin the Convention and to devotethe maximum amount of avail-able resources to the realisationof economic, social and culturalrights of the child.

The Committee re-emphasised thatthe best interests of the child shouldbe a primary consideration in all ac-tions concerning children, whetherundertaken by public or private ac-tors.

Consequently, state parties areenjoined to set standards in conform-ity with the CRC and to ensure com-pliance by appropriate monitoring ofinstitutions, services and facilities, in-cluding those of a private nature.

It stated that state parties havethe obligation to ensure that privati-sation does not threaten accessibil-ity to services based on criteria pro-hibited under the principle of non-discrimination.

Furthermore, the Committeenoted that the responsibilities to re-spect and ensure the rights of chil-


In order to fully capture the na-ture and scope of the obligations ofstate parties under the CRC, theGeneral Comment must be read asa whole. Referring to the day of gen-eral discussion, the Committee de-fines the term ‘private sector provid-ers’ broadly to encompass businesses,non-governmental organisations andother private associations, both for-profit and not-for-profit.

Essentially, paragraphs 42–44 ofthe General Comment reiterate theCommittee’s recommendations men-tioned above.

Among other things, while ac-knowledging that “enabling the pri-vate sector to provide services, runinstitutions and so on does not in anyway lessen the State’s obligation toensure for all children in its jurisdic-tion the full recognition and realisa-tion of all the rights in the Conven-tion”, it emphasises that in any de-centralisation or privatisation proc-ess, the government remains clearlyresponsible for ensuring respect ofthe CRC. This obligation includesensuring that non-state providersoperate in accordance with the pro-visions of the CRC. It is important tonote that the primary responsibilityof the state in this regard extends toall levels of government (paragraph40).

The need to establish a perma-nent monitoring mechanism aimed atensuring that all state and non-state

service providers respect the CRC isalso reiterated.

ConclusionIt is clear that international humanrights monitoring bodies are takingthe issue of privatisation of basicservices more seriously. The Commit-tee on the Rights of the Child musttherefore be commended for beingthe first to dedicate its attention tothis important issue. Other monitor-ing bodies are urged to focus on thisissue as well.

If service provision is structuredby human rights principles, it is pos-sible to guarantee sustainable andprogressive access to the basic serv-ices by all.

Godfrey Odhiambo-Odongo isan intern in the Children’s Rights

Project of the Community LawCentre and a doctoral

candidate at UWC.

InternationalInternationalInternationalInternationalInternational

developmentsdevelopmentsdevelopmentsdevelopmentsdevelopments

RRRRRRRRRRRRIf service provision is structured

by human rights principles, it is

possible to guarantee sustainable

and progressive access to the

basic services by all.

RRRRRRRRRRRR

General Comment No 5 can be downloaded fromwww.unhchr.ch/tbs/doc.nsf

The recommendations of the Committee on the Rights ofthe Child on the private sector as service provider and its

role in implementing child rights can be downloadedfrom

www.unhchr.ch/html/menu2/6/crc/doc/days service.pdf

R

and evaluating their programmesand when subcontracting to othernon-state service providers. In par-ticular, the four general principles ofnon-discrimination, the best interestsof the child, the right to life, survivaland development, and child partici-pation, must be respected. Further-more, the Committee encouragednon-state service providers to de-velop self-regulatory mechanisms,which would include a system ofchecks and balances. It also encour-aged these actors to engage in acontinuing process of dialogue andconsultation with the communitiesthey serve and other stakeholders inorder to enhance transparency andaccountability.

General Comment No 5At its 34th Session (19 September–3 October 2003), the Committeeadopted General Comment No 5on the general measures of imple-mentation of the CRC. Paragraphs42–44 of the General Comment di-rectly address the subject of priva-tisation.

General Comments have beenfound to be persuasive in interpret-ing constitutional and regional hu-man rights provisions. In South Af-rica, the Constitutional Court hasconsidered the General Commentsissued by the Committee on Eco-nomic, Social and Cultural Rights(CESCR) when interpreting the socio-economic rights provisions in theSouth African Constitution. Similarly,the African Commission had recourseto the CESCR’s General Commentswhen construing the provisions of theAfrican Charter on Human and Peo-ples Rights in Social and Economic RightsAction Centre and the Centre for Eco-nomic and Social Rights v Nigeria (Com-munication No 55 of 1996).

EventsEventsEventsEventsEvents

Seminar on privatisation of basic services, democracyand human rights

Annette Christmas

On 2–3 October 2003, theSocio-Economic RightsProject and the Local

Government Project of the Com-munity Law Centre, University of theWestern Cape, hosted a seminarentitled “Privatisation of basic serv-ices, democracy and human rights”.The seminar drew international andlocal participants from the govern-ment sector, the NGO community,social movements, trade unions andthe academic community.

The objectives of the seminarwere:• to share international and South

African perspectives and expe-riences on the privatisation ofbasic services;

• to explore the links between pri-vatisation, human rights anddemocratic norms;

• to explore the implications of hu-man rights and democraticnorms for law and policy reformrelating to the privatisation ofbasic services; and

• to identify areas for further re-search.Presentations focussed on the

meaning of the concept of privati-sation and current debates aroundit, its implications for human rightsand democratisation, current expe-riences of privatisation in Africaand Canada, and case studies ofthe privatisation of water and sani-tation, and electricity in South Af-rica.

It emerged from the seminar thatprivatisation of basic services hashuge implications for human rightsand democratic norms. In mostcases, service agreements withnon-state providers are concludedwithout due regard to these norms.However, existing legal proceduresto ensure that privatisation does notresult in denials or violations of hu-man rights are often not utilised orare under-utilised.

It was agreed that more re-search must be conducted into theimplications of privatisation for hu-

man rights and democratic norms.Social movements, NGOs and hu-man rights organisations wereurged to use the existing constitu-tional and legislative framework inSouth Africa more fully to ensurethat privatisation of basic servicesdoes not undermine democraticnorms and human rights. Govern-ment representatives were alsourged to take human rights princi-ples more seriously in making policydecisions on using private serviceproviders and during the implemen-tation of the service agreementswith them.

Annette Christmas is a researchassistant with the Socio-Economic

Rights Project, Community LawCentre, UWC.

The report of the seminarwill be posted on:

www.communitylawcentre.org

This and previous issues of the ESR Review are available online.

Please visit our website at:http://www.communitylawcentre.org.za/ser/esr_review.php

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Vol 4 No 4 November 2003 • ISSN 1684-260X EDITORIAL ESR...E-mail: [email protected] Danwood...

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