Making Space for the Poor….

…in Institutional Reforms

Clinic: Building Partnerships to Extend Services to the Urban Poor, May 7, 2001

Presented by R. Mukami Kariuki

Overview

Current trends and future directionsWhy focus on serving the poor?Key issues in Pro-poor reformIncluding the poor in PSP reform

Current Trends and Future Directions

Current Trends

Rapid urbanisation and growing poverty… Urban areas - increasingly unplanned and unserviced Urban poverty - growing and deepening

Declining utility coverage (access, availability, reliability, affordability) 18% in Bamako are served through the utility alternative providers… a fast growing sub-sector

Increasing complexity of issues to be addressed what to do about sanitation ….and hygiene… cholera in some countries is endemic

Future Directions

PSP is not enough…the pace of reforms is slow…an accumulating backlog how many more big towns? what about small ones and medium ones? one town or all towns?

Decentralisation - a municipal public sector model what role for the public sector - deliver, regulate, etc? the local small and medium private sector?

what to do about urban sanitation? Whose responsibility is it…household, municipal, utility

Why Focus on Serving the Poor?

Some reasons...

The bulk of future new utility customers will be low income urban households….many are currently served by small scale private providers or have provided for themselves…

Conventional approaches and standard solutions have not made enough impact - serving the poor is a complex problem that requires specific actions and special attention - ‘ one size does not fit all ’

The poor are paying customers…they pay more per unit than others…to alternative providers who understand the market for WSS

Key Issues in Pro-Poor Reform

A seat at the table….. Informal or illegal status of low income

communities is a long term and complex problem but requires immediate action allow a moratorium/temporary licence (20 years)

for delivery of services to the poor reform technical/service standards, focus on

outputs rather than inputs innovate, (e.g. condominial systems, above

ground networks, flexible delivery arrangements) reduce/relax requirements for access (title deed)

…illegal/informal status increases risk for investors - small/big.

One size does not fit all…...Low income communities - a complex

market for water and sanitation that requires a range of options/service levels offer a range of services that respond to

demand from different segments of the market enable communities cross subsidise internally

(contributions according to ability) competion and the market (regulatory

framework for all - water quality focus) build customer outreach capacity - in/out house

….and leads to gap filling/alternative approaches - illegal connections signal unmet demand?

The last mile…..

A connection…for whom and at what cost? many households obtain water through intermediaries - neighbour, landlord, vendor, etc lower the entry/connection costs by allowing for

financing/subsidy, installments increase access to network (infilling, extensions,

multiple (individual) taps in yards) count group/community/bulk connections towards

performance targets innovate e.g. to get around the “limits to access”

…financing connection costs is difficult for daily wage earners...

Missing the target….

The primary targets of social blocks, lifeline tariffs - the poor - are often not connected…and buy second or

third hand…in small quantities adapt block tariffs to accommodate multiple family

dwellings, domestic vendors, etc (volumetric tariffs) introduce bulk rates for non-conventional retailers

(domestic vendors, tanker filling stations) allow for smaller payments made more frequently

(billing/collection cycle, prepayment) enable utility to offer/facilitate credit for

in-house/yard installations

… the challenge: to understand the market…customer demand

CBOs/NGOs and small scale private operators are primary service providers to the poor - they fill a gap the utility cannot meet in the short term and reach customers utilities are often unable to

count alternative providers in coverage targets legitimise and regularise activities of alternative

providers (contracts, leases) offer better terms and conditions (bulk rates, smaller

deposits, shorter billing periods) fora for dialogue/discussion (vendors association) incorporate SSIPs in service delivery plan

If you cant beat them...

…join them - partner/co-opt/compete…..

Nobody’s business….

Whose responsibility is sanitation? - Utilities are often best placed to facilitate financing of improvements in on-site sanitation, hygiene… integrated management of water and sanitation

(management contracts, leasing public toilets, sludge/wastewater dumping permits)

mobilise financing for sanitation/hygiene education through water supply (surtax)

consumer awareness programs -commercial and hygiene aspects (private sector)

…..public financing for sewers… latrines? hygiene?

Policy does matter!!

“WATER FOR ALL” objective not supported by clear strategy and legislation - PRSPs still demonstrate a rural bias..

mandate the utility to work in unplanned/informal areas - directly or through others

Remove exclusivity/monopoly clauses in legislation and/or establish a legal framework for SSPs, CBOs

Establish an enabling policy, legal, regulatory framework…the contract alone is not sufficient

Develop pro-poor utility policy/service delivery plans

..policy void = lack of MANDATE for utilities to serve the poor...

Including “the Poor” in PSP reform

Preparing for PSP….actions to take

Assess implications/potential/requirements for desired PSP model to improve services to the poor (obligations of Govt., Private Operator)

Develop information/knowledge base on customers, demand, service delivery arrangements early in the reform process

Strategise when, where and how to incorporate services in the reform process (before, during, after PSP)

Identify potential winners and losers/accommodate realities (SSPs) Specify desirable outputs/outcomes and allow innovation and

incentives to deliver a best fit solution Tailor solution to particular situation…learn and adapt to working

in “brownfields” Design regulatory arrangements to include views/representatives

of low income consumers (NGOs)

Don’t assume the poor will benefit along with others…….

Preparing for PSP…some examples

sample tools for working with alternative providers (training materials, financial management, agreements) - Regulator

tariff reforms to ensure that poor are adequately understood and accommodated - Government

poverty focussed performance targets (develop baseline information, delivery modes - SSPs) - Transaction advisors

business/Service Delivery Plans that specify activities/financing requirements to extend services to LICs - Utility

in-house or out-sourced Consumer services/Outreach Services for reaching consumers in LICs - Utility

WTP assessments, consumer/market surveys, poverty mapping/baseline data, user consultations, - Government,Transaction Advisors

guidelines on output/outcome oriented standards - Government, Regulator

Conclusions

Don’t assume one size fits allUnderstand the marketEnable access by the poorest households Forge partnerships for wider coverage Create a firm policy and legal foundationDon’t forget hygiene and sanitation

…learn from the rich experience of recent PSP Transactions……..

Thank You