Water sector reforms in urban Africa: a road to mercantalization?
By Davinder Lamba & Ali Memon
Published: Wednesday, May 18, 2005
27/07/2005 4:23 PM
Filename: UCLA conference draft.doc
Conference theme: Global cities: water, infrastructure and environment.
Session V: Globalisation and the mobilization gap
Paper provisional title: Water sector reforms in urban Africa: a road to mercantalization?
Authors: Davinder Lamba & Ali Memon
Note for conference participants: Please note that this is only a very preliminary working draft with many raw edges to it.
The United Nations designated 2003 the International Year of Fresh Water (IYF) on acknowledgement that there was still much work to be done to address the unattained goals of the drinking water and sanitation decade of the 1980s (Robins, 2003). The water crisis in Third World countries continues: 1.2 billion people still have no access to safe drinking water and 2.4 billion are without access to sanitation. Given this crisis a number of economic and political questions surrounding water supply and sanitation provision in poor countries remain pressing, including who finances it, who organises it, and whether it benefits everyone equally. It has been observed that ‘there is no doubt that the problem of water supply…will become more political in the twenty-first century…in an urbanised planet, with nearly 8 billion inhabitants by the year 2020 water will be as strategically vital for living as petroleum’ (De Rivero, 2001 p169).
The above situation poses a number of inter-related questions:
What are the constraints for civil society, household and domestic private sector participation in the provision of water supply and sanitation?
If significant local investment is generated by the informal sector, why has national government failed to develop an enabling policy environment for these local actors to play a central role in the provision of infrastructure?
What has been the response of the urban poor-the superfluous to the requirements of the global economy- to economic and political peripheralization in recent years in terms of how they organise to ensure access to basic infrastructure and services?
How are the informal infrastructure for water and sanitation organised in informal settlements?
Our paper will provide a reflective commentary on these questions, illustrated by an analysis of the Kenyan situation. Our analysis of implications of recent water sector reforms in Kenya is informed by a review of recent literatures on a number of related themes:
the link between water and poverty;
the political economy of mercantilization of water resources;
how the poor gain access to water; and
experience with public private sector partnerships.
2. Link Between Water and Poverty
The Water and Poverty Initiative for the 3rd World Water Forum in Kyoto, Japan in March 2003 focussed attention on the link between water and poverty (Asian Development Bank, 2004a; Asian Development Bank, 2004b; Soussan, 2003 & Soussan, 2004). The Water and Poverty Initiative (WPI) is a partnership of several leading international organisations, coordinated by the Asian Development Bank. It is expected to create a greater awareness of advocacy for and develop strategies to achieve the potential of water as a key element in poverty reduction.
In order to improve the contribution of water management to poverty reduction necessitates actions that make water more accessible to poor people. A thematic framework developed for the WPI identifies six key action areas to improve water security for the poor:
• Pro-Poor Water Governance. Strengthen pro-poor water governance through
water policies, laws, action agendas, and better information management. Introduce pro-poor safeguards in integrated water resources management, improve stakeholder consultation and participation, and mainstream gender and empower women to improve water management. Increase public awareness about and political support for the water security needs of the poor.
• Improved Access to Quality Water Services. Increase the access of the poor to
water services: drinking water supply (with hygiene and sanitation), irrigation
and drainage, and other areas. Put people at the center of viable and affordable services, mobilize funds from all sources, increase public awareness, and improve the accountability of service providers.
• Pro-poor Economic Growth and Livelihood Improvement. Increase investments in agriculture, rural development, and other water-using sectors that generate direct income for poor communities. Strengthen the asset base of the poor and help develop sustainable livelihood diversification opportunities.
• Community Capacity Building and Empowerment. Invest in capacity building
in poor communities to help them improve the management of their water resources, negotiate better access to water services, and improve their livelihoods through income-generating activities. Ensure gender equity in water management.
• Disaster Prevention and Mitigation. Improve the resilience of the poor to water-related disasters through better forecasting and relief and recovery systems, including both structural and non-structural investments in prevention, adaptation, and mitigation interventions.
• Management of the Environment. Introduce sustainable natural resource management arrangements with the participation of the poor, particularly in the upper watersheds, wetlands, and other common property resources.
The conceptual underpinning of this thematic framework is the link between poverty and water security.
Who are the poor?
The approach to understanding poverty has grown in recent years (ref). Poverty issues are now given a higher profile in approaches to sustainable development. The process that culminated in the Plan of Implementation agreed at the World summit on Sustainable Development (WSSD) re-focused the international agenda on sustainable development away from the dominantly bio-physical environmental perspective that was agreed at Rio in 1992, with poverty and development as the main issue. The trend is also reflected in many national policies, where the eradication of poverty is accepted as the main national goal and PRSPs as a key vehicle through which this will be achieved. Finally, it is reflected in the recent policies that many donors and international organisations have adopted and are using to guide funding decisions.
The second trend is the increasing recognition of poverty as being a complex, multi-dimensional phenomenon that includes both material and non-material features of life, that differs in its expression from person to person and place to place, and that can only be addressed where the assets and capabilities that the poor possess are improved. The most widespread single measure of poverty remains per capita income. This income poverty remains a useful measure of poverty, as it is a good indication of the material condition or people’s lives. In particular, it helps us to understand whether people are able to gain access to many basic needs, including food and shelter but also including transport, clothing and other essentials of life.
Understanding the non-material dimensions of poverty is also now recognised as fundamental to understanding poverty itself. There are many ways that these non-material issues can be categorised but some issues are common to most approaches. The first is the significance of other basic needs, and in particular health and education. Ill health, poor life expectancy, poor access to education and high illiteracy rates are now seen as both a cause and a consequence of poverty that directly impact upon the quality of life and prospects of poor people. This is reflected in the importance given to health and education issues in UNDP’s Human Development Index and the Millennium Development Goals.
Closely linked to these are social and political issues, and in particular issues associated with equality (gender, social and cultural), freedom of expression and from oppression and threats to physical safety and fair access to key institutions in society. These issues find expression at different levels, including at the individual level, at the community level and within society as a whole. Although hard to measure or tackle through conventional policies, these are real and tangible dimensions of poverty. Sen’s concept of development incorporates these dimensions.
A characteristic of poverty that cuts across many of the above aspects is vulnerability: the poor are typically far more vulnerable to shocks and trends that disrupt their lives and set back any small progress that the poor do achieve. These factors include both natural events such as floods and human factors such as political and economic events, and can be sudden (shocks) or gradual (trends) in their onset. Although many people are vulnerable to these forces, the poor are far less resilient to their impacts and often suffer from multiple vulnerabilities, the effects of which compound each other (ref).
Finally, the poor are not a homogeneous category even in one place. The form and depth of poverty can vary greatly, including in many societies a group that are the poorest of the poor: those with few or no assets, people who may be socially or politically marginalised (and therefore excluded from most participatory mechanisms), people who have lost everything (for some even their homes) because of sickness, war or a natural disaster. For people with very few or no assets, then the opportunities provided by improved access to household water may be far more significant than for even poor people with some land or livelihood opportunities outside the homestead (ref).
Links between poverty and water security
The concept of water security was highlighted in the Ministerial Declaration of The Hague in March 2000 and is seen as the key to addressing the emerging global water crisis and improving the role of water management in poverty reduction. Water security is a condition where people and communities have reliable and adequate access to good quality water to meet the full range of their needs, are able to take advantage of the opportunities that water resources present, are protected from water-related hazards and have fair recourse where conflicts over water arise. The concept of water security is based on ensuring that the poor have secure and sustainable accessto water resources, which in turn means strong links to the entitlements framework and the governance conditions that dictate this access (ref). The idea of entitlements is particularly important for water resources, as they are a common pool resource, are variable in flows, move over space and have multiple uses. Access is consequently not usually governed by exclusive control. It depends on societal rules that define who can get what, where and when.
A key dimension of water security, and one that is particularly important for the poor, is that the needs of all users, and value and potentials of all uses, of water resources are recognised in decisions over their future. Where scarcity exists, conflicts emerge and the poor and powerless in particular are likely to be marginalised. The idea of water security means that there are mechanisms in place to ensure that this does not happen, and that any potential conflicts are resolved in a fair and transparent manner where the interests of the poor are properly represented. Understanding this idea of water security, along with linked concepts of access, entitlements and conflicts as they relate to water, are fundamental to a full understanding of the role of water resources in the lives and livelihoods of the world’s poor (ref).
The poor are the most vulnerable to water-related hazards: extreme floods, droughts, major storms, landslides, and pollution. This vulnerability can undermine any effort to break the poverty trap and can even cast the not so poor into poverty where the basis of their livelihoods is destroyed by a cataclysmic event. Low resilience to these water-related vulnerabilities is a defining characteristic of poverty where these threats exist.
The links between poverty, gender and the environment are obvious, as is the importance of the access of the poor to and the rights of the poor over water and other natural resources. This in turn is contingent upon the institutional framework and governance conditions that regulate access to these resources. In defining the key objectives of any strategy that seeks to improve poverty-water security, consequently, the goals need to be specified in relation to the real needs of the poor for water resources.
3. The political economy of water mercantalization
Historically, water has lain at the limit of the sphere of applicability of the market as a social institution for allocating resources. In many cities in developing countries, the public water supply system – typically a network servicing wealthier neighbourhoods in urban areas – coexists with a private, typically informal, small-scale water sector. This public – private balance, which remained relatively stable through much of the 20th century, is currently undergoing a process of mercantilization – the introduction of markets or markets stimulating decision making techniques, and the participation of private companies and private capital in resource development, water supply, and wastewater treatment (Bakker, 2002).
Given the importance of water to human life, its symbolic, economic, and cultural significance and the multiple market failures characterising its allocation and supply water, mercantilization is a particularly revealing lens through which to analyse the political economy of globalisation. Bakker (2002) outlines current global trends in water supply and management and argues that struggles over the role and extent of the state are central to understanding an expansion of this sphere of the market in water allocation. After a period of state dominance for much of the 20th century, patterns of water resource development, regulation, allocation, and supply are currently undergoing dramatic institutional and organisational change. Corporate control of water resource development, allocation, and supply is gradually being ceded by the state to private companies, decision making mechanisms are increasingly market oriented or market mimicking and (to a lesser extent) decisions about water allocation are increasingly being made via the market rather than (or alongside) public policy fora (Bakker, 2002).
This process of mercantilization entails the introduction of the logic of the market to water resource management and allocation and / or water supply, a process which is expressed along (one or both of) two axes of transformation: privatisation and commercialisation. Privatisation entails organisational change, in ownership (from public to private) and in management (from near complete public control of water management functions to the involvement of the private sector). Commercialisation entails changes in the institutions of water management, with application of private sector institutions (markets, efficiency measures, principals of competition, and economic equity) and culture in water sector management (Bakker, 2002).
Mercantilization should be understood not as a complete abrupt conversion from monolithic ‘public’ to ‘private’ control, but rather as an organisational and / or institutional shift along a continuum of water management options towards the market and private sector corporations and away from the state. In organisational terms, this shift does not imply a lessening degree of state control over water resources, but rather a substitution of private for public control. In institutional terms, the process is one of cohabitation, competition, and eventual displacement of allocation principals based on social equity, economic self sufficiency or security of supply by market principals prioritising economic efficiency, and of allocation techniques based on public policy decision making processing by a market led calculus (Bakker, 2001). This process is highly contingent upon the organisational and institutional specificities of water management over time and across space, and is expressed in many organisational and institutional forms: the outsourcing of municipal water supply management in Jakarta to Lyonnaise des Eaux, a French multinational; the introduction of water markets in Chile; the crowding out of publicly run tap water supplies by private bottled water sales in Brittany; the introduction of private partnerships in rural water resource development and supply in South Africa; and, with the removal of cross subsidies in water pricing regimes, the replacement of social welfare goals by the goal of economic efficiency in water pricing by water supply providers around the world (Bakker, 2002).
Likewise, Robins (2003) argues that the ways that water privatisation questions are represented and contested in the public domain, and their links with practices, have important implications for people in poorer countries. A shift occurred in the early 1990s in international development discourse that provided the basis for the involvement of transnational corporations (TNCs) in water supply and sanitation in the third world, supported by the World Bank and the IMF. Key to this change was defining water primarily as an economic good, as opposed to a human right. One of the central assumptions underlying this shift is that the state is unable to deliver the infrastructure needs of its people, due to inefficiency and corruption. The state was traditionally responsible for infrastructure development and maintenance, mainly because such activities were seen as having profit margins and high social importance for meeting the health needs of the entire population. The discourse of privatisation eroded this.
Thus, the 1992 Dublin Conference on Water and Environment statement laid down a new approach to water resources management. With the Dublin Principles, the notion of water as an economic good was embedded in the international debate in the early 1990s. It was argued that the “supply-oriented approaches” that had been pursued up to then had not proved to be financially sustainable and had therefore not reached the poor in particular. An orientation on water as an economic good and the related cost recovery principals for water supply were to achieve a better sustainability and better supply for the poor (Hoering and Schneider, 2004). Principle Four was that water has an economic value, and should be recognised as an economic good, while also maintaining that access to clean water and sanitation at affordable prices are fundamental human rights. The basis on which the argument for private sector involvement in the water sector was built is connected with the Dublin principles. As early as 1986, when the World Health Organisation (WHO) found that water supply in many African countries had not improved, the state was held responsible for the failure to deliver basic services (WHO 1986). The ideological and discursive strategies were positioned by the World Bank to put corporations in place to ‘deliver’ sustainable development. Multilateral agency’s argumentation is based in a neoclassical vision of TNCs’ ability to allocate resources more efficiently than the state. As a result international development agencies such as the World Bank, and regional development banks, shifted focus to the management of water resources through the private sector rather than the development of infrastructure. The fundamental demand of the Dublin Principles for participation and the central role that women play fell by the wayside (Hoering and Schneider, 2004).
The World Bank plays a key role in the global water sector (Hoering and Schneider, 2004). The Bank’s financial contribution is as a whole lower than the subtotal of all the loans and subsidies provided by all bilateral donors. But it does have a crucial influence on the policies of the recipient countries as well as on those of the other multilateral and bilateral donors. It shapes national and international water policy both via its linking the award of loans to strict conditionalities and by its leading role in the formation of opinion in the water debate. The central aspect of the World Bank’s water policy since the beginning of the 1990s is the notion of water as an economic good. It is focused on a comprehensive reform of the water infrastructure sector, which so far has been largely in public hands. According to the World Bank, the role of multilateral and bilateral development corporation in these reforms is to assist the partner governments in putting the framework conditions they require in place, that is creating the institutional and legal prerequisites for change including commercialisation and privatisation. The Water and Sanitation programme funded by the World Bank and other multilateral donors has actively worked to promote the World Bank agenda in Africa and other developing countries by shifting the focus from subsidies and grants for sanitation facilities to ‘funding sanitation promotion and leveraging resources’ (Water and Sanitation Programme, 2004; Mehta and Knapp, 2004).
Since this change took place, both TNCs and communities have struggled with privatisation. TNCs have had problems extracting a surplus from the sale of services to the poor, as well as currency fluctuations and political instability. The years 2000 – 2003 saw the retreat of TNC investment in water due to national economic crisis, social protest, and the difficulties of extracting profit delivering water to indigent consumers. Local communities complain that companies have focussed on lucrative aspects of service, such as water supply to wealthy urban residents, to the disadvantage of poor customers. TNCs are effective at allocating resources efficiently, but for their own purposes. Many agree that there can be a role for private enterprise, and for the pricing of water, but problems occur when an appropriate regulatory framework does not exist in order for this to take place. It ultimately causes problems both for the corporations and for the countries in which they invest (Robins, 2003).
Two recent evaluations conclude that the World Bank’s water supply projects had so far not had any significant impact on poverty reduction (OED, 2002 and OED, 2003). The contribution of the international private enterprises to providing water services to poor sections of the population, in particular in rural and peri-urban areas is found to be meagre. Getting the private sector to focus on the alleviation of poverty and to design tariffs in a way that does not discriminate against the poor has proved hard to achieve in practice. Thus the report recommends that more support again should be given to the public sector (OED, 2003). Where the private sector cannot deliver or sees the risks as to high, there maybe a case for the bank to intervene to improve capacity and policy to upgrade public sector utilities (OED, 2003, item 87).
The latest statements in the World Bank’s circles create the impression that the World Bank is questioning the privatisation concept because it “has been oversimplified, overrated, and finally disappointing as it promised more than has been kept” (World Bank, 2004). The US American Lobby Organisation Public Citizen has accused the World Bank of giving in to critics of privatisation (Public Citizen, 2004, cited in Hoering and Shneider, 2004).
4. How the urban poor gain access to services
The poor in urban slums can be considered to be in a worse situation than the poor in rural communities in terms of access to water supply and sanitation facilities. The rural poor are relatively advantaged in terms of: traditional customary rights to land and water for subsistence, access to a greater choice of water resources, lower population density and therefore lower local demand, traditional community values and support. The situation of peri urban areas lies in between the urban rural spectrum.
A number of recent studies have examined how the urban poor in African cities gain access to urban services. The following points are based on a recent review of how water markets work in African cities (Collignon and Vezina, 2000)
a. Low-income households access water supply and sanitation services through a
broad range of service delivery arrangements (see Figure 1). The nature of services
available to them varies greatly from city to city and country to country. While in
some urban centers utility or municipal services currently reach a majority of
households (e.g. Côte d’Ivoire and Addis Ababa), in others, small-scale private
providers are the predominant service providers (e.g. Mali and Mauritania).
The following characteristics of low-income service delivery were identified through
• Most low-income urban households purchase between 5 and 30 liters of water
per capita per day.
• Many low-income urban households prefer to pay for water on a daily basis.
• Many low-income households rely on more than one source to obtain the water
they need to survive. This may include point sources (wells and boreholes) and
public or private outlets/kiosks connected to the piped network.
• A small and declining number still obtain water ‘free of charge’ from public
• A majority of households purchase water from intermediaries including: landlords
(through yard taps), community or private outlets/kiosks or vendors who deliver
door to door on a daily basis.
• Due to the prevalence of on-site sanitation systems in sub-Saharan Africa’s urban
centers, small-scale providers play an important role in the delivery of these
• Pit latrines are the predominant form of on-site disposal reaching up to 80% of the
population in many large urban centers, however waterborne on-site systems
such as septic tanks are also used.
Source: From: Source to Household: How the Water Market Works in African Cities (Collignon and Vezina, 2000)
b. There is a need for review and reform of relevant policies and strategies to focus
attention on the needs of low-income communities and to create an enabling
environment for service delivery. The multi-sectoral nature of the problem requires a
collaborative approach that involves key stakeholders in identifying constraints and
in developing a framework for action.
c. Lack of demonstrated political will has contributed to the lack of appropriate
policies and strategies. While voters in low-income settlements are significant in
numbers, their strength as a unified voting block does not translate into a
development agenda that addresses their needs. Although a growing number of
countries are developing strategies to address poverty, further advocacy work and
technical support will be required to translate growing awareness into action.
d. Inappropriate institutional arrangements and unclear organizational mandates
greatly hinder service provision. This applies to utilities, local authorities and other
water supply and sanitation agencies. Service delivery institutions require clear
strategies and actions for reaching low-income households. Furthermore a lack of
inter-agency coordination (particularly between governmental and nongovernmental
organizations) leads to duplication of effort, contradiction or inconsistency. This is most notable in relation to sanitation.
e. Inadequate or inappropriate human resource capacity in both the utility and
local authorities has contributed to low prioritization and limited knowledge of the
issues involved in service delivery to low-income households. In addition, weak
management practices are evident in the lax enforcement of regulations as well as
the noticeable lack of attention and support to community-based initiatives.
f. Given the complexities that often surround the delivery of water supply and
sanitation to low-income communities, the involvement of users or communities in
the planning and management of services is urgently needed. Although poor
consumers are often perceived by utilities as being ignorant and apathetic, in many
instances they have proven able and willing to help bring about change that
responds to the needs they define. The misuse of utility facilities (e.g. vandalism, illegal
connections) and non-payment of bills can only be addressed with their
participation. Poor organizational capacity and lack of legal status marginalizes
many community groups, and may be further undermined by political interference in
g. Across the continent, the informal or unplanned nature of many
low-income settlements is perhaps a bigger constraint to service delivery than land
tenure, and remains the key bottleneck to service delivery in all countries. While the
actual nature of the service problem differs from country to country, haphazard
layout, lack of road access, high densities and overcrowding are also closely
associated with the difficulty of service delivery to these areas.
h. Limited availability of internal and external financing for extending services
to informal or unplanned areas is a further constraint. Most utilities direct their
resources to formal or planned areas as financing agencies are not willing to risk
their resources in informal or unplanned settlements. Inappropriate payment
arrangements, pricing policies and tariff structures, combined with socio-economic
factors such as low and/or irregular incomes, have further compounded the
problem. This has led to a general perception that service delivery to low-income
settlements is a loss-making activity.
i. Finally, communication between the utility and low-income urban communities
on a wide range of issues (e.g. planning and design, operation and maintenance) is
not given sufficient attention, and/or inappropriate information channels/messages
are used to reach low-income communities. The development of effective strategies
to sensitize the public on key issues (such as paying for water, raising hygiene
awareness, reducing vandalism and misuse of facilities) is uncommon and public or
customer relations programs are not tailored to users in low-income areas.
In conclusion, the authors argue that delivering an effective service to the urban poor requires efforts to balance technical, institutional, social, financial and economic constraints and
requirements. With regard to technical aspects, attention must be paid to the
appropriateness of the technology chosen for the consumers in question. Standards
may need to be revised and specifications adjusted to deliver an output that
responds to local needs (e.g. flow rates, quantities and materials). Institutional issues
include: identifying the right actors and delivery arrangements; creating incentives
for extending services to poor consumers; and establishing a suitable regulatory
framework. Efforts should be made to address social aspects by ensuring that an
accurate assessment of consumer demand is available, by consulting with users on
the type and level of service desired and improving overall convenience (such as
distance/proximity, time, price and volume requirements).
These shifts in approach should be captured in well-considered and resourced
policies, strategies and business plans which provide utilities and other service
providers with the mandate and incentive to improve service delivery to the urban
poor. The challenge is to develop a comprehensive strategy that ensures that
solutions are formulated to suit local circumstances and that the approach explicity
directs service to the poor.
Mehta and Virje (2003) highlight the importance of finance and access to credit by small scale suppliers. They discuss the development of the micro finance sector in services in sub-Saharan Africa in relation to the potential demand for financial services by small water and sanitation service providers. Governments and development partners have an important role in facilitating the finance and credit for small providers. However, the importance of water supply and sanitation for poverty reduction is inadequately represented in the development of poverty reduction strategy papers (PRSPs) in sub Saharan Africa (Mehta and Fugelsnes, 2003). This is especially true of sanitation.
5. Public private sector partnerships and the urban poor
The literature on public private partnerships based on large scale state owned or private water companies focuses on the corporate contract model for service delivery (Nickson and Franceys, 2003). An important question here is the implications of this model for meeting water needs of the urban poor and for the regulatory role of the state. Some authors emphasise that full privatisation of formally publicly owned entities is not the only option for improving performance of water and sewerage authorities in third world cities (Hukka and Katko, 2003). There are numerous other forms of “Public-Private Partnerships” (PPP) as alternatives to full privatisation of water utilities. One option is state owned enterprises or local authority trading enterprises. There are also examples of state owned water and sanitation institutions that are efficient. Privatised services actually reduce competition. There maybe some notional competition in the bidding for concessions in the first place, but once the winner is chosen the private monopoly with shareholders to satisfy needs more revenue than the public one with consumers’ interests as its primary driving force. When the objectives have been defined properly, a public monopoly is more efficient than a regulated private monopoly.
There is growing African literature on small scale private sector participation in water and sanitation services in response to the drive to privatisation and decentralisation by international donor driven neo-liberal policies. Given the relative recency of WSS privatisation policies in Africa, it is too early to draw firm conclusions as to its efficiency and effectiveness from the perspective of the urban and rural poor. There has been a significant growth in reported public private partnerships in water in developing countries, particularly those which also have civil society involvement through community based rrganisations (CBOs) and NGOs. Since one of the critical characteristics of poverty is powerlessness, not simply very low incomes, unless that aspect of poverty is also addressed through participatory development, it is unlikely that the poor will benefit long-term (Franceys, 2003). Experience demonstrates that the more such relationships can be developed as real stakeholder partnerships in a creative, innovative situation, the better will be the outcome, particularly for the urban poor. The range of stakeholders involved includes the poor, the CBOs and NGOs who act as the facilitators and enablers of the poor, and private entities (national and international private operators, the SMEs, the service contractors, small scale independent providers, the micro enterprises and individual vendors) ref).
The findings from a recent review of private sector delivery by small sector enterprises of water and sanitation services in rural Uganda are also relevant to this discussion (Danert et al., 2003). The locally owned private sector businesses are often referred to as the potential ‘engine of growth’. The authors list eight factors which have a significant impact on the effectiveness of the small scale private sector and on the likelihood of infrastructure sustainability: corruption and abuse of office; limited community mobilisation and participation and their role in maintenance of water services; inability of NGOs to tender for contracts in competition with commercial organisations; limited links between water sector enterprises and business development and credit services; water sector contractors do not have a formal voice to express their views on issues such as tendering and payment procedures; inadequate local government procurement procedures (for example award of tenders); poor construction quality; poor viability of businesses. The authors ascribe these problems to structural factors related to Uganda’s socio-economic, cultural, and policy environment. They conclude that private sector participation in the rural water sector does not provide a panacea for improved infrastructure sustainability (even though a far greater rate of physical outputs has been achieved since privitisation due to enhanced donor funding). In fact, privitisation seems to threaten that goal, at least in the short term. A sector strategy requires a limited number of focus areas in order to avoid overwhelming the institutions and local ownership. The strategy should lie between the extremes of descriptive and process oriented approaches. Monitoring mechanisms should balance quantitative with qualitative data. Finally a balance is needed between the drive for short term impact through physical outputs and the long term sustainability of water and sanitation services so delivered (Danert et al., 2003).
6. Recent water sector reforms in Kenya
Kenya’s economy has been stagnant during the last decade, with a real GDP growth rate of only 1.5 percent per annum. The per capita GDP is estimated at US $301. The Kenyan population is expected to increase dramatically over the next 2.5 decades, doubling by 2025. A significant proportion of this increase will be in urban areas. The incidence of poverty in rural and urban areas has grown during the post-colonial period as a consequence of a mismanaged capitalistic political economy. In this section, we describe recent policies to comprehensively restructure the water and sanitation sector in Kenya. The reform process embraces the principles of commercialization and private sector participation as responses to problems of delivery of water services in urban areas.
Half of Kenya’s population lacks access to safe drinking water. To meet the Millennium Development Goals by 2015, an additional 8 million of the countries 32 million people need to gain access to safe drinking water. An estimated Kenya Sh 114 billion, which is 40 percent of the national budget is needed to finance the immediate rehabilitation and medium term expansion of the water supply and sanitation system (The Nation, 24/3/2005).
The situation is particularly grim in urban areas, as graphically illustrated in the attached newspaper article (Appendix 1). The current infrastructure in cities such as Kisumu was developed before independence. The municipal council was then charged with water supply and collecting latrine buckets from houses. In colonial times, households were forced by the colonial administration to dig it pit latrines under threat of jail, and the Public Health Act was enforced through the chief’s authority (based on the chief’s Act) primarily during disease outbreaks. This was reinforced by missionaries who preached to their congregations on how cleanliness (hygiene) was godly (Jackson, 2004). The urban population exploded following independence. There was minimal investment in infrastructure as the council to meet other needs channelled the water revenue elsewhere. Due to neglect and mismanagement clogged sewers and ruptured asbestos pipes became a common site as the entire network caved in under pressure. It is the poorer residents and those in the slums that, in general, suffer the lack of piped water supply most. They make do with freelance vendors or by making illegal water connections. This same group suffers disproportionately because the third party sellers they rely on charge much more than the tariff paid by those who are directly connected to
the municipal water supply. The irony is that Kisumu town is located on the shores of the second largest fresh water lake in the world.
In the 1990s international donors were alarmed by the high incidence of water borne diseases such as typhoid, dysentery, cholera, and bilharzia in Kenya. However, calls for privatisation of water services were opposed by councillors and staff some of whom facilitated illegal water connections or received kick backs from suppliers of water treatment chemicals (Otino and Ogada, 2005)
The Kenya government has recently initiated wide ranging reforms in the water, sanitation, and sewerage sectors through the Water Act 2002. The water and sanitation sector reform strategy is based on the assumption that the public sector should determine policy, regulate and plan while the private sector and communities will carry out direct service provision. The key principles underlying the reforms are: separation of policy, regulation and service provision within the water and sewerage sector; separation of water resource management from provision of water and sewerage services to avoid conflict of interest in resource allocation and management; devolution of responsibilities for water resource management and water service provision to the local level to create a sense of ownership and responsibility; and enhancing the sustainability of service provision.
The objectives of the new Act are better management of water resources, improving access to water and sanitation services, enhancing accountability, and decentralizing provision of services. Under the Water Act, new institutionshave been set up and the roles of various actors redefined. Following the recent general elections in which the National Alliance - Rainbow Coalition (NARC) party won, a new Ministry of Water Resources Management and Development was created The new Ministry brings water and sanitation services together. Waste-water treatment and disposal is a new mandate for the Ministry, inherited from the Ministry of Local Government and the Ministry of Health. Hygiene and sanitation, however, remain an inter-ministerial concern. To date (May 2005), all statutory bodies envisaged in the Act have been set up, apart from the Water Appeals Board.
One of the key intents of water sector reforms in Kenya is to decentralize and devolve the management of water services, and empowering new entrants to shape the playing field. The challenge of managing national water resources and maximising the availability of potable water to the majority of Kenyans has faced successive governments since independence in 1963. In the early seventies, an ambitious water master plan was launched to ensure availability of water to all households by the year 2000. However, it became quickly apparent that the government could not, on its own, deliver water to all Kenyans by 2000 since it lacked the resources to directly finance or subsidize these services. Despite ambitious water supply development programs, only one of every three Kenyans could access potable water by the turn of the millennium The focus then shifted to ‘handing over’– a process of finding ways of involving others in the provision of water services in place of the government. Through this process, provision of basic services – including water and sanitation, education and health – could be achieved by involving beneficiaries through cost-sharing. However, only piecemeal reforms were achieved in handing over of ownership and management of water supplies to communities.
The impetus for water sector policy reforms was largely influenced by the rhetoric that good governance was critical for ‘handing over’ the water sector to new managers. Good governance is a dominant theme in the current water policy – Sessional Paper No.1 of 1999 – and subsequent Water Act of 2002. The role of the government is redefined to focus on regulatory and enabling functions, rather than direct service provision. The policy paper argues that in a liberalized socio-economic framework, it is unwise to continue spending public funds on utilities whose operational costs could not be sustained. Instead, the government places emphasis on supporting private sector participation and community management of services. Communities are also to be involved in all stages of water projects development, including water resources investigations, planning, implementation and operation and maintenance.
The new water managers
At the national level, the government is responsible for strategic planning and inter-sectoral
coordination, including collaboration efforts with development agencies, civil
society and the private sector. This portfolio is under the Ministry of Water
and Irrigation. The Water Services Regulatory Board (WSRB) is responsible for regulating of water and sewerage services provision, including issuing licenses, setting service standards and guidelines for tariffs and prices, and providing mechanisms for handling complaints. Responsibility for provision of water services is vested in Water Service Boards (WSBs), under the regulation of the WSRB. Seven Water Service Boards have so far been established across Kenya to manage provision of water services in Nairobi, Coast, Central, Lake Victoria, Rift Valley, North and Lake Victoria North regions.
Direct provision of water services is to be undertaken by Water Services Providers (WSPs) that operate as licensees of the water service boards.These service providers may be private firms, community groups, non-governmental institutions or local authority owned companies. The Nairobi Water and Sewerage Company, recently weaned from the Water and Sewerage Department of the City Council, is the principal services provider to the city’s three million people. Other water services providers have been licensed in Eldoret, Nyeri, Nakuru and Kisumu towns.
To assist in financing the provision to areas without adequate water services, a Water Services Trust Fund has been set up to tap funding potential from the government, donations or grants. Regulation of the sector is the responsibility of the Water Appeals Board, a tribunal of appeal on disputes within the sector.
The influence of development partners – including the World Bank, SIDA,
KfW, AFD, Finnida, the Netherlands, Belgian Administration for Development, GTZ,
Austria, the African development Bank, JICA, among others – has been most
profound throughout the reforms process. Besides providing financial support, the development partners have played a key role in shaping the reforms agenda, refining policy objectives and the methods for pursuing them, and influencing the pace of the reforms. For example, SIDA supported the development of the national water policy and drafting of the Water Act 2002. Other institutions, including GTZ, WSP-Africa and the World Bank are providing financial and technical support in strategy development and in reviewing sector
With an expanded field of water managers, the challenge facing the reforms process is how the institutions are financed and run; their acceptability to various stakeholders including the urban poor and, how to respond to mounting pressure for increased private sector and community participation in direct services provision.
A major shortcoming of the reforms agenda is its failure to provide realistic solutions for improving access to water supply provision for the poor. The tasks of service delivery within informal settlements, and need to create room for small scale providers as well community groups still remain to be addressed. There are fears that reforms would result in increased cost of water; loss of revenue by local authorities; job losses within municipal and city councils, reduced access to water by poor people; and exploitation by the private sector.
Africa has the lowest water supply and sanitation coverage of any region in the world. More than 1 in 3 Africans residing in urban areas currently lack access to adequate services and facilities. In the year 2000, coverage levels for water supply and sanitation were 62% and 60% respectively. Africa is also urbanizing faster than any other region. Between 1990 and 2025, the total urban population is expected to grow from 300 to 700 million; and by 2020, it is expected that over 50% of the population in African countries will reside in urban areas (ref).
According to the World Health Organization, in order to meet the recently established millennium development goal of ‘halving the unserved population by 2015, urban Africa will require an 80% increase in the numbers of people served. This objective would require, on average, about 6,000 to 8,000 new connections every day. Political commitment to these goals, backed by resources and action, is essential if utilities are to prevent a widening of the gap between ‘served’ and ‘unserved’ households (ref).
Given that most of the urban population growth is occurring in communities that are poor and settlements that are informal and unplanned, the task of reaching the unserved will become increasingly difficult. These informal settlements now house between 40% and 70% of the urban population and range from high density, squalid inner city tenements to spontaneous, peri-urban settlements lacking legal recognition. Their residents often lack access to adequate and affordable basic water supply and sanitation services, lack adequate housing and have limited or no access to other infrastructure and services such as solid waste, storm water drainage, street lighting, roads and footpaths. As a result poor households are more vulnerable to natural disasters and are often exposed to multiple disease vectors associated with poor environmental health and sanitation. Improving services in these areas is a practical challenge because of their haphazard layout, high density and/or difficult geographical and environmental conditions.
Despite the size and significance of these informal settlements in relation to the total
urban population, municipal utilities often play a limited role in serving the inhabitants that
reside there. Most households obtain water and dispose of waste without recourse to the utility networks. Where utilities have made efforts to provide a basic level of service through public standpipes, these services are often unreliable, inaccessible and/or over subscribed and as a result many low-income households are forced to purchase water purchased through vendors or private water kiosks at much higher prices. Sanitation services are in most cases provided exclusively by such providers (manual cleaners and suction truck operators). It is generally agreed that concerted effort is required by all actors involved in service delivery to identify innovative solutions and appropriate mechanisms for reaching low-income urban communities.
Given their critical role in WSS service delivery, utilities will have to act as institutional anchors, working in partnership with municipalities, NGOs, CBOs and private providers. A
reasonably efficient and financially viable utility is a necessary condition for
Until now little work has been done to understand or to develop the capacity of the alternative small scale providers, since the activity was perceived as a temporary and marginal solution. There are also other reasons linked to the attitude of utilities, who have conducted their businesses as monopolies. The small scale providers are seen as a vibrant independent water and sanitation sector that responds to market niches and meets the needs of both the poor and other unserviced communities. Independent providers are creatively tackling the challenge of water and sanitation service delivery in a variety of ways, and maybe the only option for many poor households. A number of authors recommend that by recognising and regularising the activities, roles, and institutional position of independent providers, and by facilitating coordination and partnership between city wide operators and independent providers municipal and national authorities can set the stage for better delivery of water and sanitation services to the urban poor.
Many African countries chose at independence to continue providing water and sanitation services through the public sector or public enterprises, regarding any private sector initiative with suspicion. Government attitudes towards the private sector have become more open in recent years, and the current trend is in the direction of privatisation of public services. Between the years 1995 – 2000 several countries were either in the process of establishing joint public private or entirely private water distribution companies or were in the process of doing so. In all cases one entity is given exclusive rights to operate the city wide piped water network and ownership is dominated by large international corporation (Collingnon and Vezina, 2000). The way in which privatisation is carried out indicates that the underlying perspective is commercial rather than service oriented, since any notion of a competitive market is absent from the concession and leasing contracts, and the multitude of independent small private providers who have been delivering water into (truckers, carters, resellers, small network operators) are generally ignored. The concession areas encompass the most profitable urban markets, where densities and incomes are highest and unit infrastructure costs lowest, leaving low income urban areas to the independent providers. Yet, the independent providers are expected to charge the same water rates, which were set to allow the concessionaires to cross subsidise service to less profitable markets with profits from the core markets.
A recent study by the Asian Development Bank examined the performance of water supply and sanitation utilities in 18 Asian cities and what civil society sees as its role in improving water services in the cities (Andrews and Yniguez, 2004). It was found that water utilities are performing only marginally better compared to twenty five years ago and only in certain limited aspects. Customer satisfaction and water resource management have improved. But gains in service coverage and non-revenue water are minimal. Importantly, overall financial management of utilities seems to have worsened. Revenues from tariffs are not able to cover operations and maintenance costs, let alone financing costs and capital expenditure. Poor families in Asian cities continue to suffer from bad water supply services principally because of low and inappropriate water supply tariffs.
Reflections on Kenyan water sector reforms
Kenyan water reformers need to be cognizant of the above concerns. There are mixed messages about the effectiveness of the recent water sector reforms in Kenya..
The water companies in Nairobi and Kisumu were reported in January 2005 to have collaborated with small-scale water vendors: >Small-scale water vendors in Kibera (Nairobi) and Kisumu are collaborating with the official water companies in these cities to improve water supply service for low income consumers (www. Irc.nl/page/15728). Maji Bora Kibera, an association of 500 small-scale water vendors serving approximately 500,000 Kibera inhabitants, has entered into a partnership with the Nairobi Water and Sewerage Company. They agreed to form a task force that will address concerns of unaccounted-for water, revenue collection and rent seeking. Between 40-60% of the population of Nairobi’s informal settlements lack access to safe drinking water and pay almost 20 times more than well-to-do city residents.
>In Kisumu 200 of the total 1000 small-scale private water providers receive bulk water at concessional rates of US$ 0.40 (EUR 0.31) per cubic meter from the Kisumu Water and Sewerage Company (Kiwasco). A pre-determined sale price to consumers has been agreed. The vendors will also manage secondary water distribution branches installed by Kiwasco, serving poor settlements. The vendors will be screened by community committees, which will also provide oversight. In Kisumu the total population now unserved is 200,000.
However, a water crisis was reported in both towns a few months later on account of mismanagement (Otieno and Ogada, 2005). The problems were attributed to dilapidated infrastructure, corruption, nepotism, and mismanagement. The chairman of the Nairobi Water and Sewerage Company warned that water supply in Nairobi could collapse if the City Council was not restrained from interfering with the activities of the company (Mathangani, 2005). One of the conditions set by the World Bank for loans to the company was that the board remained representative. The City Council disregarded the condition by removing the National Council of NGOs from the board. The NGO council represents the interests of Nairobi residents and water consumers. This action jeopardised a Kenya Sh 12 million World Bank loan to supply water to informal settlements. With only about 187,000 or 42 per cent of households in Nairobi having proper water connections, the water supply situation is indeed a bad one. This in turn has impacted negatively in the area of sanitation.
Africa currently has the fastest rate of urban growth in the world. It is expected that, by 2025, the continent's urban population will have grown from 300 million to 700 million, or from 30% to 52% of the total population. In big and small urban settlements alike, low-income settlements account for 40 to 70% of the population. Often unplanned and illegal, these settlements share a common problem of inadequate access to basic services such as safe water and adequate sanitation. Poor environmental health and hygiene are chronic features of these settlements, contributing significantly to rising morbidity and mortality rates.
In some African countries, utilities and other service providers (NGOs, communities, the private sector and municipalities) are undertaking innovative approaches improving water and sanitation service delivery and increasing hygiene awareness in low-income/informal settlements. However, these approaches are often carried out on a piecemeal basis and requirements for scaling up are not well understood, developed or documented (Water Utility Partnership for Capacity Building (WUP) Africa, 2003). Likewise, a recent study of ten Asian countries to investigate the roles of and interaction between the public sector, private sector, and civil society in serving the urban poor with water supply, sanitation, and solid waste management confirmed the limited ability of existing public and private entities to reach the poor (Franceys and Weitz, 2003). A very limited number of public private community partnerships with international operators were found to be dramatically improving service to some of the poor, with better quality at lower price, but often with long term uncertainty or contractual stability. There is a very real risk that water sector reforms to improve service provision may lead to mercantaliszation of water resources.
The poverty-focussed Millennium Development Goals (MDG) and the World Summit on Sustainable Development recognise safe water and adequate sanitation as basic human rights. They include ambitious water and sanitation targets for service coverage as means to eradicate poverty. The feasibility of achieving these targets in countries such as Kenya is questionable. Even accepting these targets, it seems clear that no single player in the partnership between the public sector, private sector, and communities can be responsible for achieving them (Carter and Danert, 2003; Muller, 2003). It is clear that the challenge of delivering water and sanitation services to low-income communities requires a collaborative approach that draws on the knowledge and experience of utilities, communities, governments, the formal and informal private sector, and external support agencies.
Title of article:
Irony of Kenya's water crisis
Source: News from Africa. Issue September 2002.
Poor planning, mismanagement and lack of technical skills have led to perennial water shortages in a country otherwise endowed with enough water resources.
Water problem, for the country with a population of 30 million people in general and 10 million in particular for those residing in urban centres, remains a nightmare urbanites have learnt to live with!
That is why though it is five o'clock at dawn in Eldoret town, 50-year-old Mary Kamau and her three daughters have ventured out in search of water, which has become a rare commodity.
The trio from the sprawling Kamukunji slums of the town will trek for 5 kilometers where they will draw water from the filthy Sisiani River. If they don't rise up early, they say, they will find a long queue and when their turn comes, the water would have been dirtier. However, whatever they will fetch could not even be enough for the family that consumes about 120 litters of water daily.
This is the kind of life many Kenyans living in urban centres have to endure, with little hope of a change for the better. Paradoxically, the crisis is no respecter of riches, for the wealthy too have not been spared.
So rife is the water crisis in our municipalities that it has caused untold anguish to the society. Many deaths have been caused by this sorry state of affairs emanating mainly from carelessness and poor planning.
When you finish reading this article, about two children will have died from waterborne diseases. According to Hydro Watch, an Eldoret -based Non-Governmental Organization dealing with water and sanitation at the town's slums, ten people die every day as a result of contaminated water consumption in the country.
This is as a result of poor or lack of treatment by the water departments. The water being consumed is raw and contaminated, not to mention the perennial water rationing. In some low -income areas, taps went dry a few years back and pipes got vandalized. " This is the cause of typhoid, dysentery and cholera so prevalent in towns ," says Dr. Joram Mwangi of Eldoret's Moi teaching and referral hospital.
"Bathing and washing is a problem. We go even for three days without having a shower, because water is expensive. In fact, more expensive than food," reveals Selina Ajega from the Manyatta Village in Kisumu, a newly created city on the shores of lake Victoria.
Children have been occasionally spotted drawing water from leaking sewages, oblivious of the dangers they are exposed to. The water load carried every day is heavy and has caused chest complications to many residents especially those with low incomes. In Busia, a town bordering Uganda to the west, some children have dropped out of school to trade in water.
In Nairobi, the country's city, the crisis bites harder. Water trades at exorbitant rates of 20 shillings for a 20-litre jerry- can. This is too high considering that most families live below the poverty line. In fact the water crisis in the city has made it a lucrative business for those who sell water. Some enterprising people have gone ahead by drilling deep boreholes from where they draw water and haul it in transport in trucks.
Fighting and quarrels at water points are so rampant as women battle for the little water available. And for those who stay out late, there is the danger of being raped.
Feuds in municipalities as a result of disagreements and lack of managerial knowledge are the causes of this sorry state of affairs. Councils in most cases delay their workers' pay, resulting in strikes or go- slows, which paralyze the whole system. "There is also inefficiency and lack of enough well trained personnel. In most cases a pipe could be leaking and nobody bothers to repair it. They even go ahead purchasing expired or poor quality treatment chemicals resulting to the mess," says John Mburu, the managing director of Hydro Watch.
In March this year when he opened a four-day national Conference on water resource management at a Nairobi college President Daniel arap Moi expressed his anger over the wastage of water in the city. He complained that funds have been wasted due to negligence, as over 50 percent of water goes to waste due to leakages.
Complaints also abound in other municipalities where water dealers collude with the municipal water department to create a crisis so that they (dealers) could find somewhere to sell their water.
In the year 2000, the whole country was plunged into days of darkness, as there was little water in the dams to generate electricity. The blackouts saw many people loose business as others lost their jobs in companies.
But the future probably looks brighter as Kenyans wait for parliament to debate the Water Bill. The Water Bill, 2002 proposes the establishment of an authority - Water Resource Management Authority-which will develop principles, guidelines and procedures on the use of water resources.
"It shall be the duty of the minister to promote the investigation, conservation and proper use of water resources throughout Kenya," a section of the Bill says.
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 The term ‘institution’ is used in its sociological sense, as a rule, norm, or custom simultaneously enabling and constraining human agency (Bakker, 2001).
 The two most important market failures identified with respect to water are natural monopoly and externalities. Water is a classic example of a ‘natural monopoly’, and so far as supply by one firm entails lower costs than supply by more than one firm; the incumbent firm has an overwhelming cost advantage as compared with new entrants. Natural monopoly arises in the water industry because direct competition between firms in the provision of infrastructure networks would entail inefficient duplication of fixed assets.
 These include high level of household poverty (exacerbated by past and present conflicts and HIV/AIDS), importance of patronage within Ugandan society, greed, low levels of trust, limited government funds and dominance of donors.
 The functions of the new Ministry are as follows: conservation, control and protection of catchment areas; water resource management policy; water apportionment policy; water quality and pollution control; rural water development and supply; urban water development and supply; irrigation and dam construction schemes; wastewater treatment and disposal; flood control and land reclamation and National Water and Pipeline Corporation.
 Water supply to Nairobi’s 2.5 million residents has long been plagued by inefficiencies arising from complex political and management problems at the Nairobi City Council. Therefore, a priority strategy of the water sector reforms was to delink this crucial supply function from the Nairobi City Council. The Nairobi Water and Sewerage Company (NWSC) was officially launched on August 19, 2004. It operates along the lines of a private sector enterprise, with an autonomous board of directors.
 The city council is represented on the board by five members. Other board members were African Medical Research Foundation, Institute of Certified Public Accountants of Kenya, the Chamber of Commerce and Industry, and Kenya Association of Hotel Keepers and Caterers. The city decided to make a casual appointment from the NGO sector to fill the vacancy. The council being the sole proprietor was not required by the Water Act to give reasons for removing any directors from the board. It was claimed that the NGO council’s removal was part of a scheme to get rid of the whole management team.
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