The Dutch aid and trade policy: Policy discourses versus development practices in the Kenyan water and sanitation sector

Abstract

Recent aid and trade policies reveal a ‘paradigm shift’ in which traditional donors have moved away from a focus on poverty alleviation and returned to an approach firmly aimed at economic growth. In prioritising economic growth in their development agenda, donors encourage the private sector as an active partner in development. Dutch development aid is exemplary in following this international trend. By examining development projects financed by Dutch development aid in the Kenyan water supply and sanitation sector, this article analyses to what extent these projects achieve the policy objectives of increasing private sector involvement and investment in development projects. This analysis reveals that both private sector involvement and investment do not materialise in practice. Instead the policy impacts the landscape of non-profit development organisations by pushing them to adopt and incorporate behaviour and practices usually associated with the private sector or to pursue projects targeting the private sector. Rather than leading to increased private sector involvement, the policy thus stimulates a hybridisation of development organisations in which the boundaries between non-profit organisations and private sector companies become increasingly blurred. This process of hybridisation is supported by the Dutch Government as it needs these hybrid organisations to claim success of its aid and trade policy. What results is a rather paradoxical situation where hybrid non-profit organisations are needed to claim success for a policy fostering private sector involvement.

Keywords

Aid and trade policy development cooperation water supply and sanitation Kenya

Introduction

Over the past years, a noticeable change has occurred regarding international development cooperation. Mawdsley et al. (2013) suggest that the 2011 Busan High Level Forum on Aid Effectiveness represents a significant indication of this change. Mawdsley (2015) places this shift in the context of ‘three interconnected crises [experienced by traditional donors]: ontological (a challenge to their “traditional” monopoly of donor identity), ideational (the erosion of their normative agenda-setting dominance) and material (the relative and absolute rise of the South)’. These ‘crises’ or ‘anxieties’ (Gulrajani, 2015: 154) have largely been brought about by a series of international developments, including a new landscape of development ‘players’ such as the BRICS – Brazil, Russia, India, China and South Africa – countries (Rampa and Bilal, 2011: 1), the replacement of the narrow poverty-focused agenda of the Millennium Development Goals by a broader Sustainable Development Goals agenda that incorporates a ‘triple-bottom line’ of economic, social and environmental sustainability (Fukuda-Parr, 2016: 45), the global financial crisis and fiscal turmoil experienced in EU countries¹ (Gulrajani, 2015), and a shift to more right-wing governments in ‘traditional donor’ countries (Mawdsley, 2015: 341). The result of these crises is a ‘paradigm shift’ in which traditional donors have moved away from poverty alleviation as their main objective and returned to an approach firmly aimed at economic growth (Breman, 2011). Economic growth has, thus, been ‘ideationally and institutionally reinstated as the central and prior condition for development’ (Mawdsley, 2015: 343).

As part of the prioritisation of economic growth on their agenda, donors encourage the private sector as the active partner in development (Breman, 2011). Promoting the private sector as a development partner is a strong reflection of the shift from a focus on aid effectiveness to an emphasis on (economic) development effectiveness and is also linked to traditional donor countries facing increasing pressures of commercial and national interest (Rampa and Bilal, 2011). As such, the ‘development effectiveness paradigm’ is characterised by

a renewed focus on economic growth, enhancing industrial productivity and wealth creation (rather than poverty reduction per se); greater integration between foreign aid and other policy areas, such as trade, investment and migration; and a growing and more visible role for the private sector. (Mawdsley et al., 2013: 4)

Although the emphasis on economic growth and private sector involvement suggests a link with a neo-liberal agenda, the shift is not so much a move towards a neo-liberal agenda. Given that the poverty reduction agenda of the 1990s and 2000s was also ‘firmly embedded within neoliberal ideology’ (Mawdsley, 2015: 343), the shift appears to be a movement within neoliberal ideology.

Dutch international development cooperation policy: Aid and trade

Dutch development aid is exemplary in following this trend among traditional donors. In recent years, the ‘once-successful lobby of aid protagonists gradually lost ground and came face to face with a swelling tide of scepticism’ (Breman, 2011: 833), resulting in a significant reform of the Dutch international development cooperation policy. The Netherlands combined the development aid and international trade agenda in its 2013 development policy. Set within a framework of improving ‘aid effectiveness’ and based on the discourse of economic growth as the engine for poverty alleviation, the merger of development aid and trade is argued to result in a more effective approach for achieving inclusive and sustainable growth. At the same time, the policy incorporates the explicit objective of promoting interests of Dutch companies (Ploumen, 2013). A central tenet of this policy is to promote private sector involvement in development projects. The underlying assumption is that the private sector, through its involvement and investment in development projects, will lead to economic growth and poverty alleviation (Ministry of Foreign affairs of the Netherlands, 2013a).

This research is triggered by the return of the economic growth oriented development agendas, and is concerned about the way this policy unfolds, such as the erosion of national public goods, growing inequalities and concentration of wealth among elites (Mawdsley, 2015). Our interest in the water sector and experiences of water being an uncooperative commodity for private sector involvement (Bakker, 2003) encouraged us to examine how the Dutch aid and trade policy manifests itself with respect to the Dutch water supply sector. In particular, we aim to analyse if development aid has truly led to more private sector involvement in development projects in the water services sector. We focus on the involvement of the private sector as we see this involvement as a necessary condition for possible international trade. Without the involvement of the private sector such trade will not develop.

Following the logic of the aid and trade policy, we should see an increased level of private sector involvement (particularly Dutch companies) and a rise in private sector investment. The findings regarding private sector involvement however lead us to conclude the aid and trade policy has not resulted in fostering the Dutch private sector involvement or in incentivising Dutch private investments in the water supply sector. Rather, we argue that the policy has encouraged the hybridisation of Dutch non-profit organisations, which have started to incorporate private sector logics in their social missions.

Research methodology: Analysing the aid and trade shift in the Kenya water sanitation and hygiene – WASH sector

Our case study focuses on Dutch Official Development Assistance – ODA financed water projects in Kenya. Dutch aid and trade policy qualifies Kenya as a transition country, which means that over the coming years the development aid relationship with Kenya will be phased out, whilst trade relations are intensified. The importance of the country in the East African region makes it a highly interesting trade partner (Ministry of Foreign Affairs of the Netherlands, 2013b). The Kenyan Water Sanitation and Hygiene – WASH sector is a suitable case for three main reasons. First of all, WASH is one of the four main themes (in addition to food security, sexual and reproductive health and rule of law) that Dutch development policy explicitly focuses on. Secondly, the Dutch government has identified improving the access to safe drinking water and sanitation as one of its priorities and has committed itself to contributing to Sustainable Development Goal 6.1² by ensuring access of 50 million people to sanitation services and 30 million people to water supply services (Ministry of Foreign Affairs of the Netherlands, 2016). Thirdly, the water sector has been identified by the Dutch government as one of its nine top-sectors (Ministry of Foreign Affairs of the Netherlands, 2012). Top-sectors are economic sectors in which Dutch companies and research institutes excel and are considered to be globally competitive. Through targeted investments, the Dutch government aims to fully utilise the income generating capacity of these sectors and to strengthen the Dutch economy.³

Our methodological approach is based on the idea that policies are mediated and transformed by the actors during their implementation. Actors and organisations are, thus, active participants that shape the interpretation, implementation and finally the outcomes of the policy. In doing so, the policy outcomes can deviate from the originally proclaimed policy aims. The research started with a thorough analysis of the Dutch development aid. In this analysis, particular attention was given to the official review of Dutch development aid (Less Pretension, more Ambition: Development Policy in Times of Globalization, which was published in 2010) and the main Aid and Trade Policy Document (A World To Gain: A New Agenda for Aid Trade and Investments, which was published in 2013). The analysis of the Dutch policy continued by examining the financial aid instruments that have been developed to implement the new policy.

The case study of Kenya was developed by first identifying and analysing the Dutch development actors that are active in Kenya. Secondly, WASH projects and programmes funded by the Dutch Government were analysed, as were the Kenyan and Dutch actors involved in the implementation of these projects. The list of projects studied is presented in Appendix 1 and represents an exhaustive list of projects funded through bilateral Dutch foreign aid. The WASH projects identified were mainly Water Operator Partnerships (WOPs) and Public Private Partnerships (PPPs) providing technical and financial assistance to local water utilities and/or support of urban and rural communities for increasing their access to water and sanitation services. The actors interviewed in Kenya were predominantly Dutch professionals working in private, public or not-for profit sector and Kenyan experts, including representatives of Kenyan water sector organisations.

The interpretation and implementation of the policy was studied by analysing the practices of the different actors in the Kenya WASH sector. This analysis uses Bueger ‘praxiography’ as a methodology of practice-theory-driven research (Bueger, 2014). This approach implements an in-depth analysis of the practices by first observing them and then developing an additional interpretation of what was observed (Bueger, 2014). In praxiography, while the observation requires listening, watching, recording (or annotating), the interpretation concerns a desk-based activity involving literature review, primary and secondary data analysis (Bueger, 2014). Primary data were collected in November 2015–February 2016 by undertaking a total of 70 semi-structured interviews, of which 10 with representatives of private companies, 8 with representatives of government agencies, 8 with representatives of water operators, 4 with academics and the remaining 40 interviews involved representatives of non-governmental organisations. Of the 70 interviews, 54 took place in Kenya where the project locations of the different WASH projects were visited. In January 2017, a selection of interviewees were revisited for a follow-up interview. This means that the field research was undertaken three to four years after the aid and trade policy was officially introduced in the Netherlands.

In developing this paper, we first explain the Dutch aid and trade policy and provide a description of the financing instruments associated with the aid and trade policy. This is followed by an overview of the main Dutch actors active in the Kenyan WASH sector. The paper continues by analysing the projects developed by these actors in the Kenyan WASH sector and assessing to what extent the achieved policy outcomes comply with the policy goals of increasing private sector involvement. Subsequently, the practical implementation of the aid and trade policy in the Kenyan WASH sector is discussed.

The Dutch aid and trade policy: A world to gain

Despite being ‘at the forefront of the development aid business for a long time’ (Breman, 2011: 833), the development aid policy of the Netherlands changed significantly at the end of the last decade. In the Netherlands, this policy change is documented in two publications that reflect the ‘paradigm shift’ to development effectiveness in Dutch development aid policy. In 2010, the Netherlands Scientific Council for Government Policy (WRR) published an elaborate review of Dutch development aid under the name of Less Pretension, more Ambition: Development Policy in Times of Globalization. In this publication, the Council argues that Dutch development policy needs to adapt to the new realities of increased globalisation and changing global relations. The report suggests that the previous paradigm was ineffective and that only market-based policies targeting private sector growth would offer the necessary opportunity for development (Synhaeve, 2015). As such, after suggesting that earlier development aid was synonymous with ‘throwing confetti: well-intended but mainly a matter of potluck’ (WRR, 2010: 230), the report draws a series of bold recommendations. In arguing that the goal of economic development should receive increased emphasis, the report stresses that development aid should be targeted at creating and supporting economic growth and that ‘poverty alleviation should not be seen as a mantra’ (WRR, 2010: 230). The ‘dictum of economic growth first and redistribution later’ represents a fundamental change of course from previous policy as it moves away from poverty alleviation as the main objective and returns⁴ to an approach firmly anchored in ‘promoting economic growth spearheaded by middle class stakeholders, away from prioritizing healthcare and education as well as drastically cutting down on Non-Governmental Organizations (NGOs) funding’ (Breman, 2011: 834). The report formed the basis for the Dutch government to engage in a fundamental revision of development policy (Ministry of Foreign Affairs of the Netherlands, 2011a, 2013a, 2013b).⁵

In 2013, the revision of Dutch development policy was subsequently written down in a policy document entitled A World to Gain: A New Agenda for Aid, Trade and Investment. The Ministry of Foreign Affairs presents the aid and trade policy as ‘a unified agenda that bridges the traditional divide between aid and trade, for boosting trade and pave the way for further economic growth, inclusive and sustainable’ (Ploumen, 2013: 1). In this framework, aid is an instrument that supports the local economy, fosters trade, and at the same time facilitates the achievement of Dutch ambitions by ‘opening the door to trade and investments’ (Ploumen, 2013: 1). As such, the revised policy on development aid and international trade explicitly underscores three seemingly unrealistically ambitious aims. The first involves the eradication of extreme poverty in a single generation. The second is the promotion of sustainable and inclusive growth all over the world. The third concerns the ‘success of Dutch companies abroad’ (Ministry of Foreign Affairs, 2013a: 6). Merging development aid and international trade is argued to be mutually beneficial as larger volumes of trade would benefit both the Netherlands and developing countries: Dutch companies gain ‘rapid access to the markets of low and middle-income countries’, whilst developing countries benefit from the further development of the private sector (Ministry of Foreign Affairs, 2013a: 21).

Criticism of the Dutch aid and trade policy

The aid and trade policy has been subject to considerable criticism for its emphasis on economic growth as the main mechanism to achieve poverty alleviation. According to this critique, benefits of economic growth cannot be expected to automatically ‘trickle down’ to the poor, as profits often depend on keeping wages and the price of natural resources low (Breman, 2011). The new policy falls short in explaining how economic growth actually leads to development of the poorest. In other words, there is no mention of which regulations, incentives and strategies should be considered to encourage and foster development. Without such mechanisms poverty and increased inequities can be the direct outcome of the way in which economic growth takes place (Breman, 2011). This sentiment is echoed by the Director of a prominent NGO (Both Ends) who argues that ‘[i]t’s a myth that trade, as we know it, will ever lead to sustainable and inclusive development’ (Tielens, 2017). Apart from the broader debate about economic growth and how it leads to poverty alleviation, the question is if the involvement of Dutch companies is able to have an impact on the target population (the poor). In a recent interview, for example, the Dutch ambassador to Kenya highlights that Dutch companies have no comparative advantage in the poorest and marginal areas and have little interest or capacity to engage with such areas (Abukar, 2016). The statement of the ambassador concerning the comparative advantage of Dutch companies and the ‘trickle-down’ critique suggests a potential trade-off in the current aid and trade policy between the objective of ‘inclusiveness’ and that of achieving development through the private sector (including expanding markets for Dutch companies).

Implications for the WASH sector

For the WASH sector, the policy means that Dutch development aid will contribute to achieving the targets of Sustainable Development Goal 6 and, on the other hand, promote Dutch companies working in the WASH sector internationally⁶ (Ministry of Foreign Affairs of the Netherlands, 2012, 2016). Although ostensibly linked to the Aid-for-Trade Initiative launched by the World Trade Organization (WTO), the Dutch interpretation of Aid for Trade does differ from the WTO approach. Whereas the WTO mainly highlights the reduction of trade costs for the developing country, the Dutch policy also explicitly focuses on the trade interests of the donor country by accentuating the success of Dutch companies abroad. In the water sector, trade not only involves commercial opportunities but also encompasses the promotion of a Dutch ‘brand’ in the field of water management and water services. By promoting such a Dutch ‘water brand’, the Dutch government hopes to strengthen the position of Dutch companies affiliated with the water industry in the global market.

Strongly linked to the increasing emphasis on promoting economic growth through market-based initiatives, is the prominence given by the new policy to new forms of cooperation and partnerships. The policy calls for hybrid alliances between public bodies, private companies, NGOs, research institutions, and philanthropic institutions, with the intention to replace the traditional channels of bilateral or multilateral development cooperation. This shift to hybrid alliances has two important implications. First of all, it promotes the replacement of NGOs as the main implementing entity engaged in the implementation of development projects by private sector companies. Instead of implementing development projects, NGOs are expected to play a lobby and advocacy role.⁷ Secondly, the hybrid alliance is to enable new forms of financing for development initiatives. The underlying idea is that public development funding is used to leverage private investments (Kazimierczuk, 2015). With the assumption that an increased financial contribution to development initiatives by the private sector can be leveraged, public spending may be reduced. In line with this idea, the new approach presented by the World to Gain policy is accompanied by substantial cut of €1 billion in the budget available for foreign aid.

Implementing the aid and trade policy in the WASH sector

The policy shift from aid to trade is perhaps most clearly reflected in the financing instruments used in the WASH sector. Before the aid and trade agenda, the Ministry of Development Cooperation delegated bilateral funds to Dutch Embassies who would finance development projects. Moreover, through a co-financing system (MFS Programme),⁸ it supported NGOs active in the WASH sector and through the so-called ORIO⁹ facility it developed public infrastructure projects. Following the aid and trade policy, the bilateral funding managed by Dutch Embassies was gradually reduced. Simultaneously, the MFS programme earmarked for Dutch NGOs ended, and the ORIO facility was replaced by the Development Related Infrastructure Investment Vehicle (DRIVE) programme. The new facility has the explicit objective ‘to actively involve the Dutch business community’ (Ministry of Foreign Affairs of the Netherlands, 2014: 1) and is primarily targeted to private entrepreneurs (Government of the Netherlands, 2013, 2015; Ministry of Foreign Affairs of the Netherlands, 2011b, 2014). In addition to the DRIVE programme, a new programme called the Sustainable Water Fund (SWF) was created in 2012 ‘with a view to implementing the Government’s agenda for aid, trade and investment’ (Netherlands Enterprise Agency, 2014: 1). Whereas the instruments linked to the previous policy framework focused on poverty eradication, the current SWF and DRIVE programmes target inclusive economic growth, trade and investments. They are not only market oriented, but also have an explicit intention of involving Dutch companies. Although promotion of Dutch interests has always been an implicit component of Dutch development aid,¹⁰ the new policy aims to consolidate and expand the role of the Dutch private sector in development aid.

A key actor in the implementation of this new policy in Kenya is the Embassy of the Kingdom of the Netherlands (EKN). The role of the EKN is rapidly changing as a result of the policy transition towards trade and the associated reduction of Embassy-financed development projects. In a nutshell, the Embassy envisages its future role as that of facilitator, being the matchmaker who makes connections, triggers new opportunities and orchestrates profitable activities. Within the Dutch Ministry of Foreign Affairs building this skill of matchmaker is considered essential to safeguard Dutch interests and leave room for private companies to enter the market (Ministry of Foreign Affairs of the Netherlands, 2013b).

In addition to the Embassy, the non-governmental organisation SNV¹¹ and the international water operator Vitens Evides International (VEI) are the two most prominent actors in the Kenyan WASH sector. VEI is involved in seven of the 14 projects that are linked to Dutch development aid in the Kenyan WASH sector. These seven projects have a combined budget of almost €31.4 million. SNV is involved in six of the 14 projects with a cumulative budget of approximately €26.2 million. The remaining Dutch actors in the Kenyan WASH sector are NGOs, social enterprises and small private companies. Table 1 provides an overview of the Dutch actors leading or managing the 14 WASH projects financed by the Dutch development aid.

Table 1.

Dutch actors in the Kenyan WASH sector.

Organisation	Classification	Role
Embassy of the Kingdom of the Netherlands	Governmental Organisation	Representative of the Dutch Government, which sees itself as a local facilitator to trigger new opportunities and who orchestrate profitable activities for Dutch companies.
Vitens Evides International	Non-Governmental Organisation	International Water Operator established in 2006 and owned by the two largest public water companies in the Netherlands.
SNV	Non-Governmental Organisation	Non-governmental Organisation, originally established in 1965 as the Dutch Foundation of Volunteers. They focus their activities in productive sectors such as agriculture, access to water, sanitation and hygiene, and energy.
Aqua for All	Non-Governmental Organisation	Non-Governmental Organisation established in 2002 by the Dutch Water Sector. With a business-like background, strongly efficient and results-oriented, the organisation refuses the business as usual approach and supports innovative initiatives, which aim to improve the sustainability of the water services.
Water Forever	Private Company/Social Business	For-profit Social Enterprise which started operations in Kenya in 2014. Water Forever is a spin-off of Aqua for All and its main business is the prepaid water meter.
SIMAVI	Non-Governmental Organisation	Non-Governmental Organisation established in 1925 focusing primarily on WASH and Sexual and Reproductive Health and Rights. Their aim has always been to ensure basic health to marginalised communities.
ICS – Driver of Development	Non-Governmental Organisation	Non-Governmental Organisation established in 1980, which evolved into a 'child-focused organisation' in 1990. The organisation works for the creation of sustainable economic and social development by focusing on agriculture, youth employment, parenting and drinking water sectors.
Cordaid	Non-Governmental Organisation	Non-Governmental Organisation established in 2000 through the merger of several NGOs, the oldest of which dates back to 1914. Its aim is to fight ‘poverty and exclusion in the world’s most fragile societies and conflict-stricken areas’.
WASTE	Non-Governmental Organisation	Non-Governmental Organisation aimed at empowering people to improve their environment and livelihood by building sustainable sanitation and solid waste systems.
Susteq	Private Company/Social Business	Small private company that develops water payment and monitoring systems (particularly pre-paid water meters).

Source: Primary data fieldwork (2016).

Table 2.

Overview of financial contributions in the 14 WASH projects in Kenya.

Type of organisation	Contribution	Contribution in percentage
Dutch Development Aid	26,857,049	32%
International Development Aid	20,635,023	25%
Financial Institutions (banks)	9,167,668	11%
Private Companies and Consultants	5,375,407	6%
Dutch Water Operators (incl. VEI)	3,996,291	5%
Philanthropic organisations	7,923,605	9%
NGOs	7,837,094	9%
Others	2,330,455	3%
Total	84,122,592	100%

Source: Savelli (2016).

Note: Financial contributions are taken from project documents in which project partners specify their contributions. It needs to be noted, however, that these may also be in-kind contributions and do not necessarily concern actual money transfers. As such, this table overestimates the investment of private and non-profit organisations.

The aid and trade policy in practice: Where is the private sector?

Two central tenets of the aid and trade policy are its focus of boosting involvement of the Dutch private sector and increasing private sector investments. These two dimensions are then to result in enhanced trade relations between Kenya and The Netherlands.

Private sector involvement

To stimulate international trade involving Dutch companies, the Government and the Dutch Embassy in Kenya encourage development partners to engage with Dutch companies in their projects.¹² Despite the explicit discourse requiring the engagement of Dutch companies, however, their role in these projects is surprisingly limited. The limited involvement of Dutch companies is explained by a number of interrelated factors.

First of all, a number of projects appear to focus on creating an enabling business environment rather than direct involvement of Dutch companies. The projects thus are geared more towards the establishment of the legal and institutional framework in which companies will be operating, improving their motivation and promoting skills and competences that private companies require to become involved in international water project. For instance, SNV’s Market Assistance Project aims to design and develop new Public Private Community Partnership Models to facilitate the inclusion of private operators in the water service provision in rural areas. The Kenya Resilient Arid Lands Partnership for Integrated Development (K-RAPID project) aims to create an enabling environment for businesses, eliminating the hindrances that the private sector might face in entering the market, and reducing the risk of their investments. One of the main activities of the Performance Enhancement of Water utilities in Kenya or PEWAK project (VEI) is the sensitisation of management teams and Boards of Directors of Kenyan water service providers concerning options for out-contracting of non-revenue water reduction activities through performance-based contacts with private companies. Finally at a larger scale, the Dutch Embassy is geared towards strengthening the ‘enabling environment for businesses’ through economic diplomacy in order to promote Dutch commercial interests. These efforts (of non-profit organisations) are, thus, geared towards developing and strengthening markets for private companies, rather than actually involving these private firms in the market.

Other projects focused on developing local entrepreneurs as opposed to engage with established Dutch private partners. The Financial Inclusion Improves Sanitation and Health In Kenya (FINISH-INK) project, Teso-North project, the WASH Alliance programme, Nakuru Sanitation and Cordaid Urban Matters all aim to develop small enterprises from within the targeted communities. Simavi focuses on building capacity of local small businesses to support the self-reliance of local communities.¹³ WASTE aims to develop local entrepreneurs for sanitation construction and soap making. Cordaid, though facing ‘a lot of difficulties’, is trying to ‘establish private companies for faecal sludge and urine collection and transport’¹⁴ (2016). In these cases, efforts of traditional non-profit development organisations are geared towards the creation of (local) private sector companies.

One of the few concrete examples of private sector involvement in service delivery seemed to be the Market Assistance Programme (MAP). In this project, SNV engages private operators in rural water utilities by establishing lease contracts for the operation and maintenance of the water systems. However, some of the companies that signed these contracts were either made private for this purpose or deliberately converted into water operators. For example, both the Kakamega-Busia Water Company and TAWASCO Ltd were ‘converted into a private company as an experiment’.¹⁵ Breinscope Consultant Limited, which became a water operator just for this project, was originally a multi-disciplinary team of professionals/consultants that provided a wide range of services such as project management, training and capacity development, and project monitoring and evaluation (Breinscope Consultants Limited, 2016). Even though SNV succeeded to engage these private water operators within the MAP project, the question is how commercially sustainable these small enterprises are without the support of the programme. An employee of Breinscope highlighted that they have had to diversify activities because the water business is not sufficiently profitable.¹⁶ The private market created by the project does not appear to be very sustainable.

A second explanation of limited involvement of private companies is linked to a mismatch between the description of projects and the way in which projects are actually implemented. Officially, most of the Dutch-funded development projects in the Kenyan WASH sector are labelled and promoted as PPPs and thus suggest a considerable involvement of private companies. In fact, 12 out of 14 projects are advertised as PPPs. However, in 9 out of these 12 projects, the term ‘private’ is stretched to include companies that are essentially non-profit organisations. Vitens Evides International, which figures prominently in seven of these projects, is presented as a private partner in these partnerships. Although VEI is technically a private company that is established and operates under company law, the organisation is owned by six public water utilities. In fact, VEI presents itself as a ‘dedicated non-profit vehicle for six Dutch public water operators’ (VEI, 2018: 5) and describes its activities as being corporate social responsibility (CSR) initiatives. The two parent companies Vitens and Evides, which are the two largest publically owned water supply companies in the Netherlands, annually allocate €4 million to support the development activities of VEI (Vitens, 2016). VEI uses these funds to co-finance international project activities (VEI, 2016). By presenting itself as a private company, however, VEI is able to access additional funds that, for example, an NGO would not be able to access.

Other companies presented as the private partners in the PPPs also do not fit the conventional private model of the aid and trade policy. Water Forever, Susteq, Freshlife and Sanergy distinguish themselves from the traditional profit-oriented businesses. They are rather small social enterprises, which reinvest any profit made for improving and extending their water services with the aim of increasing their social impact. This means their operating style appears more similar to non-profit organisations than to commercial businesses.

A third factor concerns the mismatch between financing instruments under the aid and trade policy and capacities of small and medium scale enterprises (SME). Despite the explicit aim of the aid and trade policy to promote the success of ‘Dutch companies abroad’, Dutch SMEs find it difficult to access development cooperation funds. The director of Water Forever, the small Dutch business operating in Kenya for installing prepaid water meters, illustrates this by explaining how he has spent countless sleepless nights producing proposals that are hardly ever financed. ‘It seems that we are what [the Dutch Government] wants [in this new aid and trade policy]: innovative, Dutch, SME, but in practice we do not match’.¹⁷ Similarly, the small company Susteq producing water meters, complains about the facilities provided through the funding mechanisms of the aid and trade policy. The financial instruments offered by the Netherlands Enterprise Agency (RVO) are not suited for them: ‘I filled in a form and I called the RVO and they basically said to me: come back if you need a bigger project and bigger funding’.¹⁸ The financial instruments under the aid and trade policy target organisations which have a much larger capacity than the small private companies currently active in the Kenyan water supply sector. This focus on large projects, which are not suited for the smaller private companies, can be linked to the goals of the Ministry to enable access to 50 million people for sanitation and 30 million people to water supply by 2030. As highlighted by a representative of the Ministry of Foreign Affairs: ‘We know that small and slow often works better, but donors are under pressure to produce large and fast’.¹⁹ In pursuing these objectives, the Ministry prefers to develop a small number of large projects rather than a wide array of small projects.

A fourth factor concerns the mismatch of the skills and capacities of Dutch companies and the type of projects that are demanded as part of development cooperation. This mismatch is illustrated by a staff member of SNV who highlighted that:

I feel the constraint that I have to work with Dutch private sector. I have no problem to work with the Dutch if they fit in. But some local problems will never be solved by a Dutch private company. I have not found one Dutch company that could be relevant to what I was doing.²⁰

In stating this, the development practitioner largely echoes the observation of the Dutch Ambassador to Kenya, who found that, in general, Dutch companies do not have a comparative advantage in addressing problems and issues concerning the most marginalised and poorest. The capacity and skills of Dutch companies in the water supply sector do not seem to easily match the most acute needs of the water projects. The sentiment was further echoed by a staff member of a Dutch water utility when he explained that Dutch water companies know very little about providing services to the urban poor residing in low-income areas.²¹ The challenges and issues involved in providing such services are not applicable to the Dutch context and, as such, Dutch water companies have very limited experience in addressing such issues.

A fifth barrier to private sector involvement concerns the organisation of the Dutch water supply sector. Dutch water supply companies are public companies, which are established and operate under company law whilst the shares of the company are in hands of national, regional or local government authorities. In addition, the Dutch Water Supply Act mandates that the public task of providing potable water is not to be at risk because of international market-oriented endeavours of these companies. Moreover, these international activities may not be developed at the expense of tariff charged for potable water in the Netherlands.²² The combination of risk-adverse public owners of the water supply companies and the limits raised by the Water Supply Act, mean that few water supply companies are seriously interested in developing commercial water supply projects abroad. As such, it is not surprising that the only Dutch private companies active in Kenya are not water supply companies, but rather small enterprises.

Private sector investments

The Dutch aid and trade policy advocates private sector investment by arguing the need of private sector finance to fill the WASH sector financial gap. Innovative financing with private sector investment is promoted as reducing the risk for the lenders and, in doing so, make repayable finance available to the water sector. The Dutch government encourages such investment by supporting Dutch companies with funds like the Dutch Good Growth Fund²³ and the DRIVE programme.

To date, however, the projects examined in the Kenyan WASH sector show few examples of private sector investment. In fact, as it is showed on table 2, the K-RAPID project appears to be the only project with private investment. Although the project partners claim that half of the project budget (€31.4 million) will be provided by the private sector the actual financial contribution suggests that this claim requires a rather broad interpretation of private sector investment. When the financial contributions are broken down by the type of organisation providing the funds only three private companies actually contribute. These funds amount to only 17% (€5.4 million) of the total projects budget. More than half (€17.9 million) comes from public development cooperation agencies. NGOs and philanthropic organisations contribute the remaining 26% of the budget (Aqua For All, 2016; Millennium Water Alliance, 2016; USAID, 2016).²⁴ Only by taking the contributions of philanthropic organisations and NGOs as representing private sector investment does the private investment component approach half of the project budget.²⁵

The PEWAK project incorporates an innovative financing mechanism, which resembles Output Based Aid. In practice, VEI grants 60% of the budget to the water service utilities undertaking investments for non-revenue water management activities. In this way, water utilities have resources to invest and the utilities would still require obtaining 40% of investments from other sources. However, this additional funding is not necessarily from private sources, but comes from the donors upon which the water service providers are relying.

Another example of investment leverage is illustrated by the WOP in Mombasa where, since 2012, VEI works with the local water utility Mombasa Water Supply & Sanitation Company Limited (MOWASCO) to improve their service provision. VEI was able to involve the World Bank to assist MOWASCO by providing €30 million for the expansion of their services. At the end of 2014, an MoU was signed between the Kenyan and Dutch Governments, the Mombasa County, VEI and the World Bank. In this framework, VEI supervises the execution of the World Bank project and ensures the capacity building of MOWASCO. The inclusion of the Dutch added value within a multilateral project with the World Bank certainly contributes to the worldwide promotion of the Dutch water brand. Yet, also in this case does it not leverage any private investment. The lack of private sector investment also means that the reduction of public funds for development aid, which accompanied the introduction of the aid and trade policy, is not matched or replaced by private sector funds.

The blurring of boundaries

As a result of the paradigm shift promoted by the new policy and the (financial) consequences that this new agenda entails, most development organisations find themselves ‘in the middle of a transition’.²⁶ In this transition, the development organisations try to adopt an image that matches better with the current policy. This is done by placing emphasis on the level of professionalism of the organisation and staff. The emphasis on professionalism is seen as a break from the past. It is thus used as a way to contrast the current (market-oriented) organisation with the development organisations under the previous development aid policy.²⁷ Employees of VEI highlight how the organisation ‘went professional’, becoming a ‘company’ with social purpose.²⁸ As one employee explains: water supply and sanitation projects, are ‘not a hobby of social workers, but a real professional business and we need to keep it like that’ (Akvo, 2013). Staff members of SNV, which once started as the Foundation of Dutch Volunteers, now formally introduce themselves as a team of ‘professional advisers’. Noteworthy here is that professionalism is used in a particular way, which adds a value to the term that it does not appear to have in most literature on the topic²⁹ (Noordegraaf, 2007; Schinkel and Noordegraaf, 2011). Going professional became the process of adopting ‘business-like’ identities and/or institutionalising ‘business-like’ conducts. By mimicking such terminology and behaviours, these organisations aim to project values (result-orientation, efficiency, etc.) mainly associated with the private sector (Burki and Perry, 1998; Kernaghan, 2000; Lane, 1994; Pollitt, 2003). Although the adoption of terminology and behaviour may seem innocent, it can have an important impact on how the organisation operates and, ultimately, can sharpen the competitive dualism between the organisations’ commercial and social interests (Alnoor et al., 2014).

In addition to the emphasis on professionalism, these Dutch development organisations also follow the new aid and trade policy by seeking alliances with the private sector. The SNV Kenya country director was proud not to have to tell donors ‘the same old history of the poor farmer’, but rather to propose an innovative ‘inclusive business approach’.³⁰ Similarly, the NGO Simavi appears ready to pursue ‘the new opportunities arising from this combination of trade and aid’ (Simavi, 2014: 4). The organisation acknowledged the importance of the private sector. Cordaid as well, ‘had to reinvent itself’.³¹ The NGO now shows a more social entrepreneurial attitude and believes that sustainable solutions can only be developed with the help of the private sector (Cordaid, 2015).

Whereas Dutch companies struggle to access development funds, two organisations appear to have managed to benefit greatly from the new policy. SNV and VEI are involved in eight of the 14 projects in the Kenyan WASH sector through which they manage the biggest part of the Dutch development aid budget in Kenya. The success of these organisations is linked to their ability to operate or perform as hybrid organisations that simultaneously incorporate public, private and non-profit characteristics (Skelcher and Smith, 2015). Their hybrid nature allows the organisations to shift between their public and private identity, depending on which identity is most suitable for a given situation. Their hybrid arrangement enabled these two organisations to respond effectively to the aid and trade logic by offering the desired professionalism and emphasising efficiency and performance in their projects. The SNV’s ‘team of professional advisors’³² showcase a private logic through their emphasis on developing local ‘organisational and leadership capacities, catalysing market-based solutions and supporting enabling environments’ (SNV, 2016). This market-orientation, however, is blended with a not-for-profit and a public connotation. The organisation started as a parastatal and until 2015 benefited from a substantial public subsidy which secured their financial resources (Brinkman and Hoek, 2005; IOB, 2013). Similarly, ‘VEI has different hats: sometimes it is public, sometimes it is private, according to the necessity’.³³ Despite being the private partner in many of the PPPs funded by Dutch development aid and emphasising their professionalism, the organisation is mainly an instrument to carry out non-profit CSR activities on behalf of the two Dutch public water utilities which own VEI.

Conclusion: What does private entail?

The limited involvement of the private sector and the prominence of hybrid organisations like VEI and SNV suggest a blurring of the public and private sectors as a result of the aid and trade policy. This, we argue, represents a ‘leakage of meaning’ (Douglas, 1973: 13) in what distinguishes private and public organisations. Leakage of meaning happens when ‘[m]eaning in the form of legitimised discourses, arrangements, symbolic authority and values, leaks or is borrowed from one domain to another’ (Cleaver and De Koning, 2015: 6). Despite being not-for-profit and publically owned, VEI, at times, is presented as a private company. Public entities are incorporating private sector characteristics by emphasising professionalism and a pursuit of efficiency and results³⁴ (Burki and Perry, 1998; Kernaghan, 2000; Lane, 1994; Pollitt, 2003).

For VEI and SNV, this tendency to emphasise professionalism and entrepreneurship is important as the private has become the legitimised symbol of the aid and trade agenda, and associating with it allows these organisations to gain the legitimacy this symbol provides (Lund, 2006). In order to develop and grow, these organisations have translated official narratives, like the aid and trade policy, into official representations but only loosely couple them with their actual practices (Rottenburg et al., 2009). This allows the organisations to access funds it would otherwise not be eligible for.

However, not only SNV and VEI have an interest in presenting themselves as private partners. Also the Dutch Ministry of Foreign Affairs has a strong incentive to accept these organisations as ‘private partners’. The Ministry has committed itself to ensuring access to water supply services for 30 million people and access to sanitation services for 50 million people by 2030. It requires the involvement of VEI and SNV to achieve this objective as these organisations are realistically the only Dutch organisations with sufficient capacity to contribute to this aim. The presentation of VEI and SNV as private parties then allows the Ministry to claim success of its aid and trade policy. The Strategic Plan published by the Netherlands Embassy in Nairobi highlights how, by 2015, 1.2 million people will have gained access to safe water through the assistance of VEI (Ministry of Foreign Affairs, 2016). Such claims of success of the aid and trade policy are only possible if the Dutch government presents VEI and SNV as ‘private’ partners. In the Kenyan water services sector, the paradoxical situation arises that the Ministry thus strongly depends on two non-profit organisations to make its private sector-oriented aid and trade policy a success.

Footnotes

Acknowledgements

This research was conducted with the support of all the people interviewed in the Netherlands and in Kenya. We are thankful in particular to the Dutch Ministry of Foreign Affairs’ staff for their time and availability, to the academics, to VEI, VIA-Water, NWP, WAVIN, Susteq, Water Forever, the NGOs Bothends, Simavi, Aqua for All, ICS, Cordaid, WASTE, SNV and their people that provided a significant contribution to this work. A great appreciation goes as well to the Embassy of the Netherlands, the SNV office in Nairobi and the VEI resident managers for their local support in Kenya. A special mention to all the development actors encountered in Kenya.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Elisa Savelli is an experienced practitioner in the international development sector and her main area of expertise concerns the provision of water and sanitation services in developing countries. In particular, she has been involved in researches on pro-poor water services and policy implementation in East Africa and she managed water, sanitation and hygiene interventions in West Africa and Middle East. Presently she studies the mutual interactions between hydrological extremes (droughts and floods) and human societies at the Uppsala University Department of Earth Science.

Klaas Schwartz is associate professor of Urban Water Governance at IHE Delft Institute for Water Education in The Netherlands. His main research interests concern the reform of public water utilities, service provisioning to low-income areas and informal water services provisioning. In his work a strong emphasis is placed on trying to understand the provisioning of services from the perspective of service provider and how these decisions impact access to water services by different users. He has been involved in research, education and training activities in the field of water services management and governance in various countries in Asia, Africa, Europe and Latin America.

Rhodante Ahlers works on how social, ecological and technological interaction produces uneven and contested landscapes. She holds a PhD from Cornell University in International Planning. Previously she taught at IHE Delft Institute for Water Education in The Netherlands, led research projects at the International Water Management Institute in Sri Lanka and Mexico, and did research in Cambodia for a consortium of NGOs. Her current publications concern the political ecology of large-scale hydropower development, the financialization of water infrastructure and urban informality. She has also widely published on water governance and gender.

Appendix 1. Overview of the projects

Appendix 2. Interviews’ reference codes

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