The myth of ‘healthy’ competition in the water sector: The case of small scale water providers

Small-scale independent water providers are perceived to be more suitable in complicated service areas, and, contrary to the ‘formal’ water services sector, these providers are assumed to be truly competitive. Because competition theoretically results in lower prices and improved service, water consumers will subsequently reap the benefits. There is, however, little documentation supporting this claim in practice. Based on field research in Maputo, Mozambique in 2009, we analyze the degree and nature of competition between these providers. We show that the idea of ‘healthy competition’ with ‘free market entry’ is an oversimplification of the function of the market, and in particular the complexities of service provision in this specific sector. Given the inequities between providers, the case demonstrates that the theory behind private sector incentives has little empirical value for improving affordable and high quality water provision.

► Small Scale Informal Providers in Maputo Mozambique are highly diverse in scale as technology used.
► ‘Healthy competition’ with ‘free market entry’ is an oversimplification of both the function of the market and the complexities of water service provision.
► Competition between water providers does not translate into improved lower prices or higher quality service for water consumers.