October 18, 2004

Tanzania loses billions to 'consultants', says report

Tanzania and Uganda are among countries that lose billions of dollars of aid money through their privatisation processes as donors hire home consultants to "help" in the divestiture of public firms. A study by "War on Want", a UK-based campaigning charity, has revealed details about huge sums dished out to such consultants for privatising state firms with the blessings of the Bretton Woods institutions. Hence, "War on Want" has accused the British government of deepening poverty in the developing countries by giving away billions of pounds of aid money to the consultants, who "advise" the beneficiary governments to sell out their public institutions and services. "War on Want", which was founded in 1951, has links with the labour movement and supports progressive, people-centred development projects around the world. It campaigns in the UK against the causes of world poverty.
According to the report, titled "Profiting from Poverty: Privatisation Consultants, DfID - which is UK government's Department for International Development - and Public Services", the key beneficiaries of privatisation contracts in developing countries included businesspeople. The report names the "Big Five" consultant firms that have been benefiting at the expense of Third World countries as PricewaterhouseCoopers, KPMG, Deloitte Touche Tohmatsu, Ernst & Young and Arthur Andersen. According to the report, PricewaterhouseCoopers held a total of 193 privatisation mandates worldwide during 1999, while KPMG held 153. The annual turnover of such global giants exceeds the economic output of many of the countries in which they work.
The report claims that DfID has channelled large sums of the UK aid budget towards private-sector companies acting as privatisation consultants in developing countries. In the first five years of the current Labour government, DfID agreed new contracts worth over $214 million in consultancy fees to the Big Five accountancy firms alone. PricewaterhouseCoopers recorded a total net revenue of US$14.7 billion for the fiscal year 2003, greater than the GDP of any country in sub-Saharan Africa except Nigeria and South Africa. The report also lists other key players in the field of privatisation consultancy from the financial sector, with many of the world's largest banks now also involved in privatisation consultancy in developing countries, as ABN Amro, NM Rothschild, Credit Suisse First Boston, Dresdner Kleinwort Wasserstein, Morgan Stanley, HSBS and Citigroup. In addition, consultancies such as the UK's Adam Smith International and the USA's Louis Berger Group have established themselves as leading players in the privatisation of public services. Tanzania has in the past decade privatised over 350 state-owned firms out of the 400-plus public institutions using foreign consultants.
According to data from the UK's Official Report (Hansard) House of Commons, Written Answers of January 26, between 1999 and 2003, DfID entered into contracts with Adam Smith International worth US$1.4 million for consultancy fees in support of the public relations unit of Tanzania's Parastatal Sector Reform Commission (PSRC), the Ireland Privatisation and Regulation Study Tour, Lead Adviser to PSRC and PSRC Water Privatisation and Regulation Study Tour in Tanzania. The consultancy company, Adam Smith International, has duly devised a number of ways in which to win over a sceptical Tanzanian public to the merits of privatisation, including a pop video broadcast on local television, a series of short dramas by Tanzania's top comedians and an open house "Privatisation Day" at Dar's Royal Palm Hotel in 2003.
The report also touches on the privatisation of Tanzania's water services as a condition for qualifying for debt relief under the Heavily Indebted Poor Countries facility administered by the World Bank and the IMF. Although the country was required to engage "consultants" for the privatisation of the Dar es Salaam Water and Sewerage Authority (Dawasa), the water supply and distribution of the commodity in Dar es Salaam have not improved. (The East African, Nairobi)

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