Overview of Water Sector Reforms

Overview of Water Sector Reforms Briefing Notes for Conceptualization Workshop By McLawrence G. Mpasa {Programme Coordinator – NWDP II} Date: 08th February 2007

Contents • Introduction • Background to Water Sector Reform • Reforms under NWDP I • Reforms under NWDP II • UWSS • WRM • RWSS • Town Water Supply and Sanitation • Market Centres • Policy Frameworks • Way Forward (for the Sector) • Workshop Objectives

Introduction • The Water Sector has been under going broad reforms since 1994. • This has involved both the hardware and software aspects of providing and managing water supply services. • The Reforms have been taking place in both the Urban, peri-urban and Rural areas. • Phase I of the Reforms took place under the NWDP I; from 1996 to year 2003; and the second phase is to take place under the NWDP II; from 2007 to 2011/12

Background to Sector Reforms • Prior to 1995, the MoIWD, through the District Water Supply Fund, apart from providing infrastructure and services to rural areas, was also responsible for the provision of potable water in all the urban centres, except for the Cities of Blantyre and Lilongwe. • At the same time, the Ministry, through the WRB had a Policy holding and Regulating function, an arrangement which was not conducive to the efficient delivery of services. • Early 1994, the Government recognized this weakness and initiated a study which was known as the Water Services Sector Study. This was funded by the World Bank and resulted in the development of the National Water Resources Management Policy and Strategies (NWRMPS) document, which was adopted by Government in May 1994.

Phase I – Sector Reform • This study revealed that in order to achieve sustainability of the existing water and sanitation facilities, hence increase coverage there was need to address the management of the sector in a holistic manner; rather than treating Infrastructure Development Programmes (maintenance and rehabilitation) as stand alone components. • The study Specifically revealed that proper Water Resources Management and Water Supply Service delivery was constrained by: • Inappropriate Sector Institutional Arrangements; • Weak and Inadequate Legislation; • Lack of coherent Policy Framework and Investment Strategies • The main Output of the Study was the “Water Resources Management Policy and Strategies Document” (May 1994)

Overall Recommendations The overall Recommendations of the Study were that there should be: • Separation of “Service Provision” from “Policy Holding” and “Regulatory functions” by Government. • Water should not only be treated as a Social Good; but also as an Economic Good”; and that water should also not be over exploited, wasted, or polluted • Malawi should design and adopt an Institutional Reforms for the Sector with 4 No key elements in mind: • Management at the lowest appropriate level, • Simplification of relevant Legislation

Overall Recommendations – Cont’d • The organization of effective operations management Structures and Systems that are decentralized and rely on maximum Private Sector Participation & involvement of Communities. • Introduction of Performance Management systems that will ensure accountability and sustainability of the end user and to the higher Authorities • Improved Integration on the development of the water Supply and Sanitation - (IWRM) • Development of Human and Financial Resources - (necessary for the efficient management of the sector

Some Main Outputs Apart from infrastructure development, some of the Main Outputs of this Study were: • The creation of the 3 No. commercially oriented Regional Water Boards, • Development of the New Waterworks Act No.17 of 1995 to govern the Water Industry. • Formulation of the Water Resources Board - (for the Effective Regulation of the Water Sector), • Transfer of Water Borne Sanitation to Water Boards • Development and Promotion of District Based, Community Managed Approach to rural Water Supply and Sanitation, and • Community Involvement in the Protection and Management of Catchments

Sector Reforms (NWDP II) • Initiatives outlined above were achieved through the National Water Development Project (NWDP) I. The National Water Development Programme (NWDP) II is a programme aimed at building on the achievements of NWDP I. • The primary objective of this program is to implement projects that will assist the GoM achieve improved management of the nation’s water resources and the delivery of efficient, reliable and sustainable water supply and sanitation services for the benefit of an increasingly large population overtime. • The key implementing Agencies include the MoIWD and the five Water Boards and will run for a period of 5-6 years, beginning from year 2007 to 2012-13. The first 12-18 months from this year will be for Program Preparation there after implementation

NWDP II – Cont’d • The program has five major project components, and each of these have sub-components. Each Sector Institution, under the Program Coordination Unit (PCU), will manage the Program Preparation and later Implementation. • These main Components and Key Players are: • Urban Water Supply and Sanitation (UWSS) - {Joint PIU (BWB & LWB)} • Water Resources Management (WRM) – {WRM PPT} • Rural Water Supply and Sanitation – {RWSS PPT} • Town Water Supply – {RWBs} • Market Centres – {RWBs}

1.0 Urban Water Supply & Sanitation (UWSS) This Project Component has five main sub-components and these are: • Rehabilitation and Renewal Works for Blantyre and Lilongwe Water Boards • Urban Water Sector Reform • Legal Framework (Legislation) • Institutional Framework • Organizational Framework • Financial Framework • Regulatory Framework • Infrastructure Development • Change Management • Provision of Water to Low Income Areas • Consensus Building – {to garner support for the Reforms} • Review Of Business Plans for BWB & LWB

Drivers of UWSS Reform • Efficiency The private sector is often considered to provide greater levels of efficiency when running water supply projects than the Public sector. The increased efficiency results from many factors, including: • Focus on cost-effectiveness and low operating costs, including greater flexibility in personnel management. • Commercial approaches to problem solving; and • Insulation from political consideration. • Technology and Know-how Governments may look up to private sector to provide new technology and know how both in capital works to be constructed and in operation and/or management

Drivers of UWSS Reform – cont’d • Better Management Better management know-how will include: • the efficient running and financing of the utility’s operations, • management of customer relationships, • improvement of customer services, • commercial dealings with sub-contractors and suppliers, • Structuring and re-structuring of management teams, • Establishing of effective lines of internal decision making and communications. • Financing Water systems can be extremely expensive to develop and refurbish. Governments would wish to involve private sector to make service delivery more cost-effective and economically sustainable in the context of demographic growth and industrial development.

UWSS Reform • Objective Create an appropriate Environment for possible deeper form of Public Private Partnership (PPP) Arrangement • Steps • Introduce Service Contract (for BWB & LWB) • Aims: • Attain Operational Efficiency • Improve Customers Services Delivery • Carry out mid-term review (after 24-30 months) to determine if the desired results (improved Performance & conducive Sector Environment and/or Market Conditions) are achieved • Proceed with Service Contracts or introduce deeper form of PPP

Expected Outputs • Reduced UfW; • Improved technical and operational Efficiency; • Better Customer Service and Responsiveness; • Improved Financial & Financial Efficiencies; • More Investments into infrastructure to attain improved Service Coverage; • Enabling Environment for sustainable Improvements

PPP Transaction • New Water Operating Co. to manage BWB and LWB; • Malawian Investors • Management & Employees Share Ownership • GoM to: • Retain Asset Ownership • Be responsible for approving & financing capital works; • Ensure provision of services to LIA • Operating Co to list of Stock Market NB: Cabinet Paper prepared

Provision of Water to Low Income Areas Main Objective “Achieve improved access to potable Water Supply and Sanitation Services to people residing in an Un-Planned areas by increasing service coverage and reduced walking distances through Private Sector Participation. • Technical Sub-component (Investment) • Increase Water Service Coverage • Rehabilitation/Upgrading/Extension • Institutional and Financial Sub-component • Management Structure and Systems • Financing Requirements and Arrangements (for Sustainability of all the three sub-components) . • Sanitation and Hygiene Promotion (to based around the National Sanitation Policy of 2005) Sub-component.

2.0 Water Resources Management (WRM) • Institutional and Technical Support • Pilot Catchment Management and Development • Lake Malawi Level Control • Water Resources Investment Strategy • Construction of Multi-Purpose Dams (for Water Supply, Irrigation and Electricity) • Enabling Legislation (New Water Act) for the National Water Policy

3.0 Rural Water Supply & Sanitation (RWSS) In an effort to support and strengthen the Decentralization process, this Project Component has four main sub-components and these are: • Hygiene and Sanitation Promotion (HSP) • Preparation of Implementation Manual for Piped Water Supply and Water Point Sources • Design of Programme to Strengthen the Rural Water and Sanitation Mapping System and Prepare M&E Programmes to keep track of changes in the National Coverage • Technical and Environmental/Catchment Audit

4.0 Town Water Supply Design and Construction Supervision of the Rehabilitation, Upgrading and Extension Works of: • Zomba and Mangochi Water Supply Schemes (SRWB); • Kasungu Water Supply (CRWB); and • Mzuzu Water Supply Scheme (NRWB)

5.0 Market Centres This Project Component has two main sub- components and these are: • Pre-feasibility Studies for 61 No Potential Market Centres • 17 No in the North; • 19 No in the Centre; and • 25 No in the South) • Feasibility Studies, Preliminary Design, Business Planning and Construction Supervision of the Potential Market Centres

Policy Frameworks • National Growth & Development Strategy • An overarching operational strategy for attaining VISION 2020, and aims at reducing poverty through attainment economic growth (Promotes Public Private Partnerships) • Decentralization Policy (1998) • Strategy for Empowering and Developing Capacity at District level as a pillar for improving Planning, Financial Management and Accountability • Water Resources Policy (August 2005) • Tool for achieving sustainable provision of water supply for All and sustained services delivery equitably for social-economic development at an affordable cost • National Sanitation Policy (Draft) • Tool to guide the Country on how to implement Sanitation, and clarify Roles and Responsibilities for Improved health.

Way Forward • Short/Medium Term • Operationalization of Policies; • Enacting of Enabling Legislation; • Reduction of Non-Revenue Water; • Rehabilitation, Upgrading of Priority Works; • Cost Management & Efficiency Improvements; • Setting up Operations & Management Sytems and Structures to support the Decentralization Process; • Capacity Building at levels (National, District & Community) • Long Term • Community Operation & Management of Infrastructure, and Catchment • Development of New Raw Water Sources • Enhanced involvement of Private Sector in the Sector

Objectives of the Workshop • Brief Key Stakeholders and Policy Makers on the: • Some of the key developments within the Sector (focusing NWDP II) • Innovative Approaches and Options available for achieving improved Operational and Management Efficiency in Service Provision to the Urban and peri-urban Areas before engaging a wider public; • Get key Stakeholder and Policy Maker Feedback and Input into the envisaged Sector Reform initiatives; • Assist the Sector develop Strategy and Roadmap to improving: • the Management of the Nations Water Resources • Service provision to the Urban, and peri-urban areas, • Making safe water easily available to as many people as possible overtime

Overview of Water Sector Reforms