Research contributed to by Center Director Molly Lipscomb was recently covered in a VoxDev post. A short excerpt and a link to the full coverage can be found below.
The impact of privatising the management of a sanitation utility: Evidence from Senegal
Sludge treatment centres are a key component of the sanitation business. As of 2013, about three quarters of households in Dakar were not connected to the sewage system (Sene 2017), and most of these households have toilets which empty into pits that fill up every 6-12 months. They may then hire a trucker to desludge (empty) the pit, after which the trucker dumps the sludge at a treatment centre before continuing to his next job. Poor management of treatment centres has important repercussions: insufficient operating hours at treatment centres (either due to centres being closed on weekends, having short weekday hours, or being closed for repairs) and delays due to slow lines will reduce the number of jobs that a trucker can do in a day. High costs of dumping at treatment centres may induce truckers to pass on the costs to households, or to illegally dump in public waterways or open spaces rather than at treatment centres. This may result in high prices, unsanitary illegal dumping, and low numbers of jobs being completed, which impose health costs as households switch to inferior (manual) services in which the sludge is disposed of in streets near the house.
Privatisation can directly increase the productivity of treatment centres, and thus indirectly increase the productivity of desludging truckers. However, privatisation is not necessarily a panacea for the problems of the sanitation sector. Privatised management of the treatment centres could lead to market power, particularly if the treatment centres are managed by actors from the downstream trucking market. This could lead to lower quantities of services provided and welfare transfers from consumers to a few connected suppliers.
The case of sanitation treatment centres in Dakar provides an excellent case study for privatisation. In 2013, Dakar’s sludge treatment centres were poorly managed and in disrepair. Centres were open for short business hours and often experienced mechanical issues as they operated substantially beyond their designed processing capacity, forcing them to stop operations for weeks at a time. Desludging truck operators and their Association (AAAS) resorted to helping with the maintenance to keep the centres operational. Given the difficulties in managing the treatment centres, the government decided to privatise them. In November 2013, management responsibility was delegated to Delvic Sanitation Limited, a new venture run by the combined Delta and Vicas trucking companies – two of the largest sanitation truck operators in the city. Delvic was tasked with operating the government-owned treatment centres and was allowed to keep 50% of the revenue from dumping payments after paying the government a leasing fee.