Trends in institutional reforms in the Water and Sanitation Sector in Africa

1. Trends in institutional reforms in the Water and Sanitation Sector in Africa Dennis D. Mwanza, Managing Director Water Utility Partnership for capacity building in Africa

2. The challenge • More than 1/3 without water and worse for sanitation • High urbanisation • Poor or delapidated infrastructure • Low investment –from Government (internal resources), ESAs or multi-lateral Development Banks

3. KEY QUESTIONS : What are we aiming at? • Who? Millions of peoplewith no access to basic/safe/adequate water & sanitation • With? New or upgraded facilities (pump, water kiosk, tap, pit latrine, septic tank etc) providing good services (i.e. well run) • Cost? Affordable, fair (=quality of services) • Paid by? User, Taxpayer • Financed by? Donor grants, Bank loans, Investor equity, users (how to best use it?) • Implemented and run by? (public entities, private companies, NGOs, users/community)

4. Introduction • Whether public or privately operated, water supply, sanitation, and environmental protection services are the responsibility of governments, both national and local • Water services cost money and there are many stakeholders (investment or operational) and someone has to pay. The issue is therefore how to determine who pays what • Whether public or private, there is a need for a system of regulation which is open and transparent and satisfies the community and the other stakeholders

5. The Basic Requirements • Water is taken from and is sent back to the environment, hence environmental concerns • Because of the various uses which affect the quality of the water returned to the environment -a requirement for treatment to protect public health and the environment • The distribution of water and the collection of waste also involves costs • So it is never relevant to say water services should be free • The relevant questions are how should the costs be recovered and who decides on how much, the distribution of cost between the various users and when?

6. The agenda for the water sector Halve the number of people without access to safe water MDGs Halve the number of people without access to adequate sanitation WSSD, Kyoto, NEPAD, Water Vision Poverty Reduction

7. Utilities not delivering (?) • Most public utilities not meeting demand especially the urban poor • Even with decades of Investments in urban water supply and sanitation • Why are utilities not delivering?

8. Utilities not delivering (?) • Poor choices of sectoral policies, institutional arrangements regulatory frameworks • Tariff levels not covering costs • Subsidies (where they exist) not working for the benefit of the poor • Utility inefficiencies as evidenced by high UFW, poor account collections, shortage of motivated and highly skilled personnel

9. Unaccounted for water of Sample Utilities

10. Low cost recovery……..

11. LABOUR ISSUES • Many public utilities overstaffed more than 7 per 1000 connection.

12. Hence the need for utility reform • Little prospect for improvement unless reform • Reforms that recognise the poor as key targets • Government policies need to change for water and sanitation as well as the informal settlements • During reform programme design need to recognise other service providers SSIPs. • Life line tariffs do not benefit the poor who are not connect on most occasions.

13. COMMON ISSUES : Existing systems Poorly run services Low Ufw Low tariffs Revenues from users < O&M costs Not reliable (budget) Political interference Government support No funds for upgrading the systems

14. What are the issues of reforms Clear definition of who does what especially in relation to: Policy, regulation, Investment, provision of services e.t.c • Policy making -the role of the Central Government Dept –usually the sector Ministry • Regulation can either be by Govt Dept or autonomous Govt body or Reg by contract • Investment • Provision of services: Divorce from Govt

15. Policy Investment Regulation Service provision Municipality Public Central Govt Public Utility Management Private Lease Concession

16. Forms of Water Services • There are essentially four forms of water service • State or Municipally-operated utilities • State owned or Municipal owned corporations • Publicly-owned, privately operated utilities • Fully private utilities (Not yet in Africa) • Emotive argument on which is best, although in all cases water sources are government owned • Non-productive argument because all forms of operation have been shown to work • What is required in each case is good governance which incorporates effective regulation

17. Strategies for Accomplishing The Terms of the Contract • Privatize immediately! • Never privatize!

18. Governance & Regulatory Interface Corporate Regulation Informal Economic andService Regulation –through CommunityGovernance Formal Economic andService Regulation –through Regulatoror Contract Health & Environmental Regulation Municipal CorporatizedPublic Concession Private Separation from Gov’t - None ----------------------More ------------------- Complete Asset Owner-> Public -----------------------------------------| Private Svc Provider-> Public -----------------------| Private ------------------|

19. Institutional arrangements for service provision Sharing the experience of reform

20. Improving accessibility –fight against poverty • War against poverty not won without improving on accessibility issue • The poor suffer the most poor services • During shortages or rationing poor most adversely affected • Poor pay far much more than connected • Yet Poor willing to pay for service if in accord with their needs: Flexible service levels, payment terms, alternative service providers, and design of contractual provisions

21. THE CHALLENGE REFORM • No ready to use institutional option • Wide variety of options exist • A CLEAR TRANSPARENT SYSTEM • Reform must benefit all especially the urban poor. • Reform must be clearly understood as targetting performance improvement, increasing accessibility and not synonymous with • Regulation very important

22. Thank you for your attention