The changes needed to secure sustainable access to adequate services usually involve various processes of reform that must be carefully planned and implemented in collaboration with a diverse set of stakeholders. This 90 minute face-to-face module presents some of the key considerations and steps for successful reform using practical case studies from Uganda, South Africa and Russia. The intended format is a seminar which incorporates both a lecture and question and answer period.

1. 1
Processes of Reform
Capacity Building Module

2. 2
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

3. 3
Planning reforms
 Identify what the problems are…
∼ Inefficient planning and project implementation
∼ Water availability, water quality, energy supply
∼ Staff motivation, capacity, efficiency
∼ Tariff level and structure
∼ Corruption
∼ Commercial operation

4. 4
Key steps for successful reforms
 Planning the process of introducing reform
 Involving stakeholders
 Setting upstream policy
 Setting service standards, tariffs, subsidies, and
financial arrangement
 Developing institutional model
∼ Utility: public or PSP
∼ Non-utility services: small scale providers
∼ ‘Environment’: policy maker; asset holder; regulator
∼ Legal instruments for the arrangement

5. 5
Involving stakeholders
 Politicians: local and national levels
 Management and staff of public utility
 Consumer associations
 NGO: national and int’l (service to the poor,
environment, governance…)
 Financiers: multi and bi-lateral
 Alternative suppliers (tankers, drilling companies…)
 Media: national and int’l
 Private sector: local and int’l

6. 6
Sustainable utility reform and reform of
the environment have to go hand-in-hand
Our goal
utility
poor good
poor
good
Typical reform path
environment
Possible combinations
environment status/utility
provider status

7. 7
How Uganda combisequenced the reforms
of NWSC, its national utility
Utility reform
Reformoftheenvironment
70s political turmoil
mid 80s new government
end 80s & 90s Major rehab
95 new statute
97 new Board
98 new MD
98-00 service & revenue
enhancement programs
00 ext & int
performance contracts
02 automatic tariff
indexation
03 staff performanc
contracts
97 corporate
plan

8. 8
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

9. 9
South Africa
Mike Muller
Former Director General, South African
Department of Water Affairs &Forestry

10. 10
South Africa
 Total pop - 45.2 Million
(2005)
 Urban pop (% of total) –
59%
 Surface area - 1,221,037 sq
miles
 Life expectancy – 45 years
 GDP (US$ billions) – 240.2
 Access to water supply –
88%
 Access to sanitation – 65%
 Trigger: the end of apartheid
 Vertical unbundling: bulk utilities
and end providers
 Most utilities are corporatized
 Subisidies: Free basic water 25
l/p/d
 Basic water supplies to nearly 15
million people in 10 years;
Sanitation much slower
 ‘applying good old-fashioned
public finance principles’
 Ongoing decentralization process
– after establishment of
democratic municipalities in 2001

11. 11
Uganda
Dr. William Muhairwe
Managing Director, National Water and
Sewerage Corporation, Uganda

12. 12
Uganda
 Total pop - 28.8 Million
(2005)
 Urban pop (% of total) –
13%
 Surface area - 241,038 sq
miles
 Life expectancy – 49 years
 GDP (US$ billions) – 8.7
 Access to water – 60%
 Access to sanitation – 43%
Utility reform
Reformoftheenvironment

13. 13
Russia
Alexander Bazhenov
Vice-Chairman, Eurasian Water
Partnership

14. 14
Russia
 Total pop - 143.2 Million
(2005)
 Urban pop (% of total) –
73%
 Surface area - 17,075,200
sq miles
 Life expectancy – 65 years
 GDP (US$ billions) – 763.7
 Access to water – 97%
 Access to sanitation – 87%
 Trigger: the end of communism
 Subsidies: l’goti and maximum %
expenditure
 WSS part of broader Housing and
Communal Services sector –
centralized billing and collection
 Mostly municipal departments
with little autonomy
 History of focus on infra: low
efficiency
 Regulation is regional ‘oblast’
responsibility
 Boom & bust of PSP in 03/04;
now 2nd
generation PSP

15. 15
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

16. 16
The first challenge: how to trigger reform
Droughts,
floods &
epidemics
Unacceptable
levels of
service
Political
shifts &
pressures
financial
crises

17. 17
The constant challenge to maintain
progress….
time
performance
Pressure to
improve
Broad sector
reform
Utility reform
2
1
Maintain
progress
4
3

18. 18
Triggers and Obstacles to Reform
Click the button to play a 5 minute video clip.
(Windows Media;9,421k)

19. 19
Owners
Customers
Regulators
Policy makers
Financiers
Maintaining progress: Balancing
external accountabilities
The unserved?

20. 20
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

21. 21
Key Success Factors in
Reform
Click the button to play a 5 minute video clip.
(Windows Media; 9,208k)

22. 22
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

23. 23
Taking Care of the
Poor in Reforms
Click the button to play a 10 minute video clip.
(Windows Media; 15,619k)

24. 24
Existing quantity-targeted subsidies are
regressive
%of poor hhs receiving subsidy vs. benefit targeting
performance
India, State IBTs,
0.56
Cape Verde, 0.48
Sao Tome, 0.41
Peru, 0.82
Honduras, 0.49
Guatemala, 0.20
Hungary (S), 0.98
Rwanda (S), 0.35
Kathmandu, 0.56
Bangalore, 0.66
Sri Lanka, 0.83
Cape Verde, 0.24
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.00 0.20 0.40 0.60 0.80 1.00 1.20
Benefit targeting performance indicator
Shareofpoorhhsreceivingsubsidy
Electricity
Water
Source: Water, Electricity, and the Poor: Who Benefits from Utility Subsidies? – Komives et al.

25. 25
Who are the urban poor?
Typically use multiple sources and differentiate drinking from other
uses - purchase small quantities if a free source is available:
 May share a house or yard tap with multiple families – design
standards underestimate number of users
 May purchase from a neighbor – poor households are often
heterogeneous; differentiate demand as slums may have mixed
densities, income levels
 May use a public standpipe/standpost/kiosk – the level of
consumption is constrained by distance traveled, time spent
collecting water
 May rely on small-scale private sector when services do not meet
their needs – choose to have water delivered to house rather than
walking to and queuing at the standpipe
BUT: poor households do pay for water often at higher rate (per
cubic meter) than wealthy households

26. 26
How to improve services for the poor?
 The long term utility solution: a private -
house/yard -connection for all
 Standpipes – from free to paid service
 Augmenting small-scale service providers
 How to deal with self provisioning?

27. 27
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

28. 28
The Role of the
Central Government
Click the button to play a 4 minute video
clip.
(Windows Media; 7,526k)

29. 29
Overview
 Introduction
∼ Key steps in reforms
∼ Balancing progress in utility and environment
 Video interviews with three speakers
∼ Triggers and obstacles to reform
∼ Key success factors in reform
∼ Taking care of the poor in reforms
∼ Role of central government in reforms
∼ Leadership

30. 30
The political economy of reform
 Reforms must provide returns for the political
decision makers who are willing to make the
changes….
 Initiate reform where there is a powerful need, and
demonstrated demand, for change
 Nothing succeeds like success
 Best fit rather than best practice
∼ Realistic goals and timeline
∼ Develop a sequenced, prioritized list of reforms…
∼ Match available human, financial and knowledge resources
∼ Take one step at a time, but lock in progress

31. 31
The Importance of
Leadership
Click the button to play a 3 minute video clip.
(Windows Media; 3,477k)