To unlock the economic potential and alleviate poverty in rural areas, access to improved water access crucial. Building upon the insights of the previous blog under the same title “Politics, Water Governance and Service Delivery Management Models for A Resilient Rural Water Sector”, this blog delves into the transformative power of adaptation and partnerships in addressing the challenges of the rural water sector. Discover how Kakamega County Government adopted Pilot Markets Based Water Service Delivery Management Models, its benefits and lessons.
Transforming Rural Water Management through Partnerships.
Between 2012-2015, SNV Kenya in partnership with Kenya Markets Trust and Adams Smith International designed a participatory action research based innovative programme; the Market Assistance Programme (MAP) that aimed at improving sustainability of rural and small towns’ water supply by engaging private firms. This project used the Making Markets Work for the Poor (M4P) concept in analysing and designing models for post-construction management of water systems.
By addressing capacity of both public and private actors (formal and informal), SNV concluded space for interventions taking a market systems approach could be successful. The approach in Kakamega County included: (1) Market Research on willingness and ability to pay by consumers (2) Commercial Viability Assessments for rural water supplies (3) Modelling Private Public Community Partnerships (PPCPs) and business planning for private firms (4) Procurement, negotiation and contracting of private firms (5) Orientation and capacity building for the lease operator and nurturing relationships (6) Consumer Awareness, (7) Strengthening National and County level evidence-based policy lobbying and advocacy.
Kakamega County selected the Lease Operator Model (Refer to Figure 1 below) where a Water Service Board (Lake Victoria North Water Service Board) engaged a Lease Contract with the main Water Service Provider (WSP) in Kakamega; Kakamega County Water and Sanitation Co. (KACWASCO). The national water regulator (WASREB) approved the framework for water tariff setting and enforcement, while taking into consideration affordability and cost recovery principles. The project created awareness on the pros and cons of adopting Public Private Community Partnership Management Model, oriented KACWASCO on possible business opportunities and models; and supported public authorities (WSB and Kakamega County Government) on participatory and transparent procurement process. KACWASCO provided water services under a licensing regime/revenue payment model in Navakholo Sub- County. KACWASCO was attracted by the potential of increasing their bottom line and public sector investments in infrastructure to strengthen overall profitability.
Figure 1 Illustrating the Lease Operator Model
Results
The facilitated interventions improved sustainability of water services in Navakholo. KACWASCO was able to increase access to water for 8,330 people in underserved and unserved areas of Navakholo by 2015, whilst greater oversight opened the possibility for the county government support to improve services, collect data on performance, and demand accountability from them. Other results included:
- Improved Management of Navakholo Rural Water Supplies:
In rural areas, improving management practice of Water Management Committees is key to improving sustainability.
SNV facilitated: (1) legal transformation of the Water Management Committees to Water Users Association (WUAs) to separate governance and management roles, and (2) engagement of KACWASCO Lease Contract that enabled professionalized management towards demand responsive service provision.
- Access to Finance for the Lease Operator: During the initial stages of implementing the Lease Contract, financing rehabilitation works to operationalise unfunctional systems was a key issue. If KACWASCO were to borrow from a commercial market (at a high interest rate of 18-21%) notwithstanding the risks, the water tariff had to be increased to ensure the water supplies are commercially viable which would be unaffordable for the poor. MAP designed a water-financing product, using blended subsidy concept, to enable WSPs access market finance.
It is worth noting that taking a market systems approach in the water sector is complicated given the public nature of water. A purely free-market approach was fraught with risks and could lead to inequitable access, meaning careful consideration had to be given to the role of the public sector. SNV first evaluated the rural water sector, highlighting potential for growth in services delivery. Whilst assets were publicly owned and activities regulated by WASREB, there was room for commercial incentives. Profits were generated through tariffs and connection/reconnection fees, creating potential for private sector investment that encouraged the uptake of the water financing product.
- Public Sector Capacity Strengthening: The PPP procurement is different from the traditional procurement of good and services, as the payment for the PPP’s is mainly made from the projected revenues of the water systems. A high level of trust, mutual commitment to set objectives and clearly defined incentives for KACWASCO was created.
- Policy Advocacy and Support: The entire concept of PPCP and private sector participation was a relatively new concept in the rural water sector. Therefore, the project supported evidence-based policy advocacy and improvements at national and county levels; MAP supported the State Department for Water in developing PPP tools and guidelines and in improving coordination and communication through National PPP Node.
Lessons
The success of any SDM pilot depends a lot on learning and adaptation to provide an effective evidence base for policy and regulatory adjustments. Overall, there was a huge potential for PPPs to improve sustainability, service levels and revenues through operational and managerial efficiencies. Change of mind sets takes time MAP was time bound; the success of the model required strategic continuous engagement of all three groups of stakeholders: the water buyers (users), the water sellers (Lease operator) and the Sector policy and regulations makers (public authorities) to achieve sustainable outcomes. Particularly there was need to support Kakamega County in developing and implementing appropriate legislations, policies, guidelines so that PPPs are fully recognised and adopted to enhance scaling of the model through transparent procurement process and tools, financing, performance monitoring, learning and replication of emerging success of PPCPs, yet such documents take a lot of time and resources to be accented and adopted.
Through these partnerships and improved legislations and policies, the path is paved for understanding the institutional reforms and scaling solutions needed to achieve a sustainable rural water sector, fostering economic growth and improving livelihoods. More on “Scaling Sustainable Models can be found in the Blog 3 of “Politics, Water Governance and Service Delivery Management Models for A Resilient Rural Water Sector”
About the author:
Euphresia Luseka is a Water Governance Specialist and Co-Lead of RWSN Leave No-One Behind Theme. She is a seasoned Expert with experience in leadership, strategy development, partnerships and management in WASH sector nationally, regionally and internationally. She has specialised in WASH Public Policy, Business Development Support Strategies and Institutional Strengthening of urban and rural WASH Institutions. Euphresia has several publications and research work in her field.
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