Corruption in the water sector

Transparency International has just released its annual corruption report, and this year's focus is on corruption in the water sector. Undoubtedly, the 398-page tome will draw a lot of attention to what Transparency International makes clear is a crisis:

In developing countries, about 80 per cent of health problems can be linked back to inadequate water and sanitation, claiming the lives of nearly 1.8 million children every year and leading to the loss of an estimated 443 million school days for the children who suffer from water-related ailments.

The report takes a relatively agnostic view on public versus private provision of water (at least the parts I managed to read - did I mention it's almost 400 pages?). Much of it is devoted to looking at how corruption in the water sector, whether publicly or privately organized, deprives the poor of access. According to the report, "[i]n developing countries, corruption is estimated to raise the price for connecting a household to a water network by as much as 30 per cent." I'd say that's a pretty serious problem.

Transparency International includes a lot of its usually bromides about macro-level changes in governance and participatory policymaking. I agree with them all, more or less - the main problem is that they tend to be difficult to implement in practice. There is one suggestion that particularly caught my eye, though. The report points out that many poor in developing countries access water through informal vendors. The authors suggest that clamping down on these vendors would be a bad idea. Instead, they suggest that:

Bringing informal providers into the legal fold - through licences, 'light touch' regulations and their formal recognition as alternative suppliers - is a more viable strategy...Authorities in countries as diverse as Senegal, Vietnam, Mozambique and Ghana have already licensed informal vendors...

This strikes me as one of the most important recommendations in the report. It seems to be far more actionable than other recommendations, and it dovetails significantly with the work of Hernando de Soto in The Mystery of Capital and the more recent report of the Commission on the Legal Empowerment of the Poor. Since a number of countries have already embarked on this path, it might be worth formulating a corpus of good practice in this domain that other countries could draw on.