Japan’s role in global water: big choice ahead
Japanese water companies should avoid investing in for-profit water service ventures abroad, and should focus on non-profit, public-public partnerships instead.
For a number of reasons I was eager to get a chance to talk with the representatives of the Japanese development aid agency JICA attending Stockholm Water Week. JICA has for several decades funded and facilitated technical assistance and training programs that connect Japanese public water companies with partner utilities in Asia and Africa. While the terms were not used, these not-for-profit projects were excellent examples of public-public partnerships or water operator partnerships.
While this commendable international cooperation work continues with JICA's support, there is recently also a very different trend emerging. Japanese private engineering companies are partnering in consortiums with public water utilities in an attempt to enter water markets abroad. The idea is that the companies provide water technology and the utilities bring in their management skills. By operating in consortiums, the utilities can bypass the legal barrier that otherwise prevent them from operating abroad. I am worried about this new approach and find it misleading that is described as ‘international cooperation’; it is driven by commercial interests.
I asked the JICA officials how they see this trend. They were clearly skeptical. Public water companies in Japan are facing decreasing income levels in the future due to the drop in population figures and see international projects as a way to bring income. The JICA representatives, however, pointed out that the new Japanese water business consortiums are already starting to realise that it is extremely difficult to provide good services and make profit at the same time in developing countries where a large part of population have little capacity to pay. Also factors like the deteriorating water quality and lack of investments make this a risky undertaking.
I agree that it makes no sense for Japanese public water companies to engage in risky water business abroad. Instead they should build on their previous achievements and up-scale their not-for-profit partnerships, this way effectively contributing to international development goals and the human right to water and sanitation. To do this they will need legal, political and financial support, as public water companies in general face restrictions limiting their activates outside of their own service area. International aid and a global mechanism (such as the Global WOP Alliance) to support such partnerships are crucial. I encouraged the JICA to upgrade their contribution to international water cooperation by engaging in the development of water operator partnerships (WOPs), the concept that was born and since developed within the UN.