Until quality became a real issue for the middle and upper income classes, the most vocal unhappy user group tended to be the non-residential users. Not only did they not get the quality they needed to be competitive but in addition they were often subject to higher average and marginal tariff rates than residential users. Indeed, cross subsidies tended to be common—favoring mostly the middle class rather than the poor-- and generated significant economic inefficiencies since average tariff levels were increasing with decreasing production costs.

The poorest segment of the population were also quite unhappy because they were largely excluded from the delivery of public services by public enterprises, relying instead on alternative (often high costs) small and medium private providers. However, they had, and still have, little political clout. In a forthcoming study of the evolution of public service delivery in Africa, Estache (2004), reviewing the evidence, shows that for a large sample of African countries, the bottom two deciles of the population are essentially not connected and rely on alternative sources of energy and water. In other words, unless the reforms could generate affordable new access, the poor were not really concerned by the utility privatization wave. In fact, many were already dealing with private small scale providers in rural areas and secondary cities and there was no hope for a bigger public participation in the financing of their private provision.

Individually the various unhappy groups had little leverage on policymakers. Overtime, however, the inclusion in the coalition of the supporters of reform of the middle class--unhappy with the deterioration of service or increasingly demanding—made the demands for reform viable. Collectively, although with very different motivations, a fairly wide accumulation of frustrations of these heterogeneous groups of interests managed to provide the political support needed for reforms. A 1995 UN financed survey suggested that about 75% of the Latin American population actually supported privatization policies then.<sup>3</sup> The main residual vocal group against the reform were the public sector workers (and their families) who lost jobs, and often associated privileges. They were not too concerned either that their jobs were financed by taxes paid by the contemporary population, or bonds to be repaid by the following generation.

To conclude this quick overview of the baseline situation, it may be useful to point out that all of these reforms were taking place in an environment in which the cost of private funds was at an historical low levels. Indeed, there was an unusually high excess supply of funds on the international capital markets favoring FDI and other forms of international of capital flows. This eased PPPI in politically committed countries. The necessary commitment was in fact relatively easy to obtain because the 1990s also saw a wave of ideological changes favoring market oriented reforms among leaders of all political sides. Many of the leaders elected on left leaning platforms (e.g. Menem in Argentina, Cardozo in Brazil or Wade in Senegal) during the 1990s were in fact among the strongest supporters of these reforms.

It may also be useful to point out that in almost all countries, privatization and infrastructure reforms were actually part of a wider reform agenda and that when some of the reforms did not work out as planned, many of the successful ones saw their effectiveness eroded. For instance, Benitez et al. (2003) provide a test of the relative impact of PPPI and of financial markets reforms on the macroeconomic performance. They show for Argentina that

> 3 UN (1999)

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