Until 1991, the Tanzanian government provided water at no cost, except in high-income areas, but this led to poor service, neglect, high wastage, and lack of investment (Greenhill & Wekiya, 2004, pp. 5-7). In 1991, the government introduced a new National Water Policy to eliminate subsidies and push utilities towards self-financing. As part of this, the semi-autonomous DAWASA was established in 1997. However, there was rapid population growth and economic collapse in the 1970s and by 1997, only 27% of residents had direct uninterrupted access to water (Greenhill & Wekiya, 2004, pp. 5-7). DAWASA continued to perform poorly, and by 2003, only 98,000 of the city's 2.5 million people had direct water connections. Around 60% of water was lost through leaks, and 13% was lost through illegal use. Even connected households faced irregular water supply and poor quality, while low-income areas had no water connections, relying on expensive alternative sources (Greenhill & Wekiya, 2004, pp. 5-7).

The IMF and World Bank have been pressuring Tanzania to privatize public utilities since 1997 by attaching conditions to their various loans. Most importantly, in 2000, World Bank and IMF officials decided to include a concession agreement for the privatization of DAWASA as a condition for HIPC debt relief. They claimed that this would reduce Tanzania’s debt by $3bn (Greenhill & Wekiya, 2004, p. 19).

While the initial proposal was to transfer all DAWASA assets and functions to a private operator, there was no bidder willing to take the risk (Greenhill & Wekiya, 2004, p. 6).  The World Bank made it clear it would only lend money for a project involving private sector participation. Along with the EIB and ADB, the World Bank provided Tanzania with a $143m loan for the Dar es Salaam Water Supply and Sanitation Project (DWSSP) to create a lease contract with a private operating company  (Greenhill & Wekiya, 2004, pp. 4-6). Without any competition, City Water Services Limited (CWS), a joint venture of BiWater (UK), Gauff (Germany) and Superdoll (Tanzania) was subcontracted for 10 years at $40m in 2002 to undertake specific delegated works, mainly providing clean water to Dar es Salaam and its surrounding areas by installing new pipes within five years (Greenhill & Wekiya, 2004, p. 12). In desperate need of money to rehabilitate and expand the water sector, the Tanzanian government had no alternative but to accept the Bank’s money and terms. Thus, the Dar es Salaam water system became a mix of public and private service provision. 

• The goal of the $143 million donor loan was to make DAWASA and its assets more appealing to private investors and easing the government budget.

• Enhancing water system management to boost service efficiency

• Expanding access to water, particularly for low-income populations

Efficiency

CWS prioritized increasing revenues and rehabilitating infrastructure. It focused on reducing unaccounted-for water, fixing existing connections, and connecting new customers. To improve billing, CWS introduced a new consumer database and billing software. To address non-paying customers, CWS offered an amnesty for those who came forward to regularize their accounts (Global Partnership on Output-Based Aid, n.d, pp. 33-34; World Bank, n.d.).

After taking over operations in August 2003, CWS faced several challenges and poor financial performance. It failed to secure agreed equity contributions from shareholders, low collection rates, and slow installation of new water meters. The amnesty's effect was limited as only 2,500 out of an estimated 40,000-50,000 non-payers participated. The software rollout was slow. The company also inherited many disputed and unverifiable connections, which led to a backlash when their water supply was disconnected. Additionally, CWS failed to pay rental fees and accumulated nearly USD 12.3 million in losses by March 2005 (Global Partnership on Output-Based Aid, n.d, pp. 33-34; World Bank, n.d.).

Public Support

While some government officials supported privatization, the public largely opposed it, fearing foreign dominance and higher water costs. As a result, the government and donors limited public consultation, focusing on promoting the reform rather than discussing alternatives. There was also a lack of transparency in the reform process and the final lease agreement (Greenhill & Wekiya, 2004, p. 2).

General Access

While the public was being billed for water, they complained that access was irregular and unreliable. Water would often flow at night or for a few hours a week, forcing households to pay private vendors for additional supplies at exorbitant prices, doubling their water costs. If they could not pay their water bills, households and even entire areas were threatened with disconnection. This forced people to sacrifice other essential goods like healthcare, education, and food (Greenhill & Wekiya, 2004, pp. 12-17).

Impact on the Poor

Rehabilitation efforts were focused on wealthy areas where CWS can recover costs, leaving poor areas with insufficient access. While some argue that the poor did not have direct access even under DAWASA, they could often rely on others with connections or water vendors. However, when prices increased, charged on a meter rather than a flat price, then even those access points become cut off.  Many poor people had to spend longer finding water (Greenhill & Wekiya, 2004, pp. 12-17).

Amid declining public support for privatization and an upcoming election, the Tanzanian government intervened, eventually leading to the expulsion of CWS’s managers and the dissolution of the contract within 18 months. The government cited the $140 million World Bank-funded project as a failure, stating it "failed to produce the goods." In June 2005, the public corporation Dar es Salaam Water and Sewerage Company (DAWASCO) assumed management of CWS. While DAWASCO encountered similar challenges, its operational performance improved over five years. In 2018, DAWASA and DAWASCO were merged to enhance water and sewerage services for the citizens of Dar es Salaam.

So, looking back at the goals of privatization...

• Privatization did reduce government spending because it was financed by external donors. 

• However, there was barely any cost recovery. CWS not only lost the donors' money but also ran at a loss. This made it economically inefficient. It was also an inefficient service provider as it failed to rehabilitate and expand the majority of the city's water system. 

• Finally, it worsened levels of access for low-income and marginalized communities.

While privatization was not successful, there was also little evidence that DAWASA or the Tanzanian government prioritized public accountability or the interests of water consumers, despite the significant concern about water supply in Dar es Salaam. The government could have used its own funds to address the water crisis, especially after receiving debt relief.