Making Space for the Poor….

1. Making Space for the Poor…. …in Institutional Reforms Clinic: Building Partnerships to Extend Services to the Urban Poor, May 7, 2001 Presented by R. Mukami Kariuki

2. Overview • Current trends and future directions • Why focus on serving the poor? • Key issues in Pro-poor reform • Including the poor in PSP reform

3. Current Trends and Future Directions

4. Current Trends • Rapid urbanisation and growing poverty… • Urban areas - increasingly unplanned and unserviced • Urban poverty - growing and deepening • Declining utility coverage (access, availability, reliability, affordability) • 18% in Bamako are served through the utility • alternative providers… a fast growing sub-sector • Increasing complexity of issues to be addressed • what to do about sanitation • ….and hygiene… cholera in some countries is endemic

5. Future Directions • PSP is not enough…the pace of reforms is slow…an accumulating backlog • how many more big towns? • what about small ones and medium ones? • one town or all towns? • Decentralisation - a municipal public sector model • what role for the public sector - deliver, regulate, etc? • the local small and medium private sector? • what to do about urban sanitation? Whose responsibility is it…household, municipal, utility

6. Why Focus on Serving the Poor?

7. Some reasons... • The bulk of future new utility customers will be low income urban households….many are currently served by small scale private providers or have provided for themselves… • Conventional approaches and standard solutions have not made enough impact - serving the poor is a complex problem that requires specific actions and special attention - ‘ one size does not fit all ’ • The poor are paying customers…they pay more per unit than others…to alternative providers who understand the market for WSS

8. Key Issues in Pro-Poor Reform

9. A seat at the table….. • Informal or illegal status oflow income communities is a long term and complex problem but requires immediate action • allow a moratorium/temporary licence (20 years) for delivery of services to the poor • reform technical/service standards, focus on outputs rather than inputs • innovate, (e.g. condominial systems, above ground networks, flexible delivery arrangements) • reduce/relax requirements for access (title deed) …illegal/informal status increases risk for investors - small/big.

10. One size does not fit all…... Low income communities - a complex market for water and sanitation that requires a range of options/service levels • offer a range of services that respond to demand from different segments of the market • enable communities cross subsidise internally (contributions according to ability) • competion and the market (regulatory framework for all - water quality focus) • build customer outreach capacity - in/out house ….and leads to gap filling/alternative approaches - illegal connections signal unmet demand?

11. The last mile….. A connection…for whom and at what cost? many households obtain water through intermediaries - neighbour, landlord, vendor, etc • lower the entry/connection costs by allowing for financing/subsidy, installments • increase access to network (infilling, extensions, multiple (individual) taps in yards) • count group/community/bulk connections towards performance targets • innovate e.g. to get around the “limits to access” …financing connection costs is difficult for daily wage earners...

12. Missing the target…. The primary targets of social blocks, lifeline tariffs - the poor - are often not connected…and buy second or third hand…in small quantities • adapt block tariffs to accommodate multiple family dwellings, domestic vendors, etc (volumetric tariffs) • introduce bulk rates for non-conventional retailers (domestic vendors, tanker filling stations) • allow for smaller payments made more frequently (billing/collection cycle, prepayment) • enable utility to offer/facilitate credit for in-house/yard installations … the challenge: to understand the market…customer demand

13. If you cant beat them... CBOs/NGOs and small scale private operators are primary service providers to the poor - they fill a gap the utility cannot meet in the short term and reach customers utilities are often unable to • count alternative providers in coverage targets • legitimise and regularise activities of alternative providers (contracts, leases) • offer better terms and conditions (bulk rates, smaller deposits, shorter billing periods) • fora for dialogue/discussion (vendors association) • incorporate SSIPs in service delivery plan …join them - partner/co-opt/compete…..

14. Nobody’s business…. • Whose responsibility is sanitation? - Utilities are often best placed to facilitate financing of improvements in on-site sanitation, hygiene… • integrated management of water and sanitation (management contracts, leasing public toilets, sludge/wastewater dumping permits) • mobilise financing for sanitation/hygiene education through water supply (surtax) • consumer awareness programs -commercial and hygiene aspects (private sector) …..public financing for sewers… latrines? hygiene?

15. Policy does matter!! • “WATER FOR ALL” objective not supported by clear strategy and legislation - PRSPs still demonstrate a rural bias.. • mandate the utility to work in unplanned/informal areas - directly or through others • Remove exclusivity/monopoly clauses in legislation and/or establish a legal framework for SSPs, CBOs • Establish an enabling policy, legal, regulatory framework…the contract alone is not sufficient • Develop pro-poor utility policy/service delivery plans ..policy void = lack of MANDATE for utilities to serve the poor...

16. Including “the Poor” in PSP reform

17. Preparing for PSP….actions to take • Assess implications/potential/requirements for desired PSP model to improve services to the poor (obligations of Govt., Private Operator) • Develop information/knowledge base on customers, demand, service delivery arrangements early in the reform process • Strategise when, where and how to incorporate services in the reform process (before, during, after PSP) • Identify potential winners and losers/accommodate realities (SSPs) • Specify desirable outputs/outcomes and allow innovation and incentives to deliver a best fit solution • Tailor solution to particular situation…learn and adapt to working in “brownfields” • Design regulatory arrangements to include views/representatives of low income consumers (NGOs) Don’t assume the poor will benefit along with others…….

18. Preparing for PSP…some examples • sample tools for working with alternative providers (training materials, financial management, agreements) - Regulator • tariff reforms to ensure that poor are adequately understood and accommodated - Government • poverty focussed performance targets (develop baseline information, delivery modes - SSPs) - Transaction advisors • business/Service Delivery Plans that specify activities/financing requirements to extend services to LICs - Utility • in-house or out-sourced Consumer services/Outreach Services for reaching consumers in LICs - Utility • WTP assessments, consumer/market surveys, poverty mapping/baseline data, user consultations, - Government,Transaction Advisors • guidelines on output/outcome oriented standards - Government, Regulator

19. Conclusions • Don’t assume one size fits all • Understand the market • Enable access by the poorest households • Forge partnerships for wider coverage • Create a firm policy and legal foundation • Don’t forget hygiene and sanitation …learn from the rich experience of recent PSP Transactions……..

20. Thank You