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State and Non-State Providers in the Delivery of Water and Sanitation Services

Urban-Rural Governance and Poverty Alleviation

The main messages of the World Development Report (WDR) 2004 are that services are failing poor people---in quantity, in quality, and in access; that economic growth, while necessary is not sufficient; and more public spending, while invaluable in many contexts, by itself is not enough. But, despite these failures, citizens and their governments can and must make services work for poor people's well being. The report tries to set out why services are not working, what are the key institutional relationships necessary for making services work, and how services have been made to work in a wide range of settings through various approaches.

The report emphasizes that the failures of service delivery are not primarily technical nor managerial problems, and therefore are not remediable through a technical fix. If seven percent of service providers are absent, it is a management task to lower the absentee rate to five percent, but if fifty percent are absent, then the problem involves deeply embedded institutional relationships of accountability and voice, and thus requires fundamental changes in these relationships.

It is important to emphasize that the report states clearly and consistently what was noted earlier: that for reasons of market failure, equity and rights, making services work are a public responsibility. But, in many cases, the public sector is failing to deliver services. This does not mean that more private delivery or NGO delivery is better, but it does point out how much specific country context matters for determining both short and medium term goals.

It is important to distinguish between the 'public interest', which can also be called the 'common good' or 'social contract'; 'public responsibility', which is what the government is to ensure for its citizens (health, education, clean water, freedom from crime, safe roads); 'public sector', which is the also bureaucracy that is charged with certain specific organizational tasks.

In the case of water and sanitation services in African urban locales, there is a widespread acceptance that the 'model' for water and sanitation services that has worked in developed countries cannot be adapted in the short to medium term for developing countries, especially in Africa. The problem of providing clean water and adequate sanitation services---or guaranteeing that they are provided----presents a complex challenge for both government officials and donor agencies.

What should be the role between traditional centralized and networked utilities (in water, much less so in sanitation) and the goals for service delivery? Is privatization a dead end answer (as seen with the retreat of water utilities in Latin America)? Should network models be adapted and diverse, usually non-state providers be deliberately incorporated into the overall public framework for water and sanitation? What roles can these non-utility providers play in the process of delivering services? What steps would need to be taken to enhance their capacity and efficacy?

In assessing the options for providing water and sanitation services in low resource and low income countries, the particular urban context and history---what has been provided in the past? What is the current nature of the water market? What types of approaches have been used to develop sanitation systems?

One starting point for this discussion are the existing water systems. What is the structure of water systems? What is the current role of the state? What is the role of the local governments? Who currently delivers water? How is the water market structured? Even where utilities not provide adequate services, poor households manage to find a water source or supplier, and there supply mechanisms that have adapted to meet demand, often outside the public sector or publicly owned utility.

The roles of non-state providers can considered in relation to the various approaches for specific urban contexts:

  • Extending water supplies to those where supply fails at the neighborhood level
  • Tapping-into utility water supply and transport utility water to locations not served by the network (distributor provider)
  • Serving those who are not reached by the network - providing an alternative water supply (production and distribution).

In most contexts, Non-State Providers have developed a close relationship with poor households. While there are many areas requiring further research regarding the spread, quality, pricing and sustainability of water services offered by Non-State Providers, these providers do offer benefits to those who are unable to access the utility network supply. Many of these benefits accrue to the poorest and more vulnerable households. In relation to the poor, the roles of diverse providers can be categorized into three points:

  • They increase choice - empowering the poor;
  • they fill gaps in network supply; and
  • they tailor their service delivery to meet the complex needs to the poor

While there is increasing acceptance of the important role that Non-State Providers can perform, there is not always consensus as to the best way to move towards the legislative and policy environment that enables their contribution. Two issues lie at the heart of this uncertainty. The first is the very context specific nature of the problems and opportunities. The potential roles of independent providers and their relationships to utilities vary considerably - influenced particularly by existing supply, capacity and attitudes.

The second is the informal nature of many Non-State Providers and the lack of definitive information on the effects of formalization on the creative and responsive nature of their service. The tension around the issue of formalization is central to the discussion of a number of other thorny issues concerning Non-State Providers. In particular, the factors affecting the balance between under and over regulation require further exploration in a variety of settings. Policy-makers need to be clear on what the regulatory environment for Non-State Providers should be.

At the outset, a receptive context for Non-State Providers needs to be put in place and it is essential that the discussion over the role of independent providers is unpacked from other related but not synonymous issues. Many of the policy/legislative factors constraining the contribution of diverse forms of service providers are not about who delivers (the providers and their status) but:

  1. What level of service is delivered (i.e. accepting incremental upgrading rather than universal service objectives);
  2. What the scope of that service is (i.e. accepting an unbundled production/distribution process); and
  3. Where it is located (i.e. resolving land tenure issues making delivery in many poor settlements risky and inefficient).

Enabling environment---policymaker-provider
What can policy-makers do to encourage, not just enable, the development and efficiency of non-utility providers? It is possible to define four key areas of activity: mitigating unacceptable risks, improving incentives, promoting good practice and supporting scaling up. Efforts should be placed on defining the activities that are relevant in each context.

But what of the other scenario - where a functioning utility is managing an effective production and (network) distribution system? In the urban context of low-income countries where network water supply is limited and network sewerage is absent, can independent providers still play a role in service delivery? How would the roles and relationships differ?

What seems clear from the evidence emerging from many African cities is that, in the short to medium term, the network 'household connection for all' approach is unattainable when large areas are not served by the urban networks.

Nurturing and encouraging a diverse range of providers may affect the existing utility through competition and/or alternate provision models, delivering water services for poor clients and reform/competition pressures for the existing utility.

The World Development Report promotes a goal of 'eight sizes fits all'. This places an emphasis on the context and the type of service, so that without reducing the central role for the public sector, the potential for diverse forms of Non-State provision diverse providers as a potential resource is ultimately the same, inevitably the requirements for each of these scenarios (dysfunctional and functional utilities) are likely to be different. For instance, a policy environment needs to be adapted to allow non-network providers while still promoting network connections. Subsidy strategies need to be redefined to include non-network customers to ensure that the benefit is targeted on the poorest households.

The context will shape the best course of action. The roles and relationships that can be developed with Non-State Providers will vary and will influence the potential areas for action. In both scenarios however, the capacity of the utility and the Non-State Provider market will determine the strategy adopted. In light of this, policy-makers must have access to more structured frameworks and more basic information to assist in the analysis of local opportunities and the development of appropriate solutions.

Globalization Research Center - Africa