CHALLENGES OF REFORMINIG PUBLIC ENTERPRISES: The ceo’s Experience

CHALLENGES OF REFORMINIG PUBLIC ENTERPRISES: The CEO’S Experience

Presentation to the Board and Senior Staff of Kisumu Water and Sewerage

Company Ltd

Dr. William T. MuhairweDr. William T. Muhairwe

Managing Director, NWSC-UgandaManaging Director, NWSC-Uganda

November 2010November 2010

3rd November 2010, Kisumu Kenya

Outline ….2

Introduction What are the global water and

sanitation challenges? Specific Challenges for Reforming

Pubic Enterprises What next? First Things First Key lessons Conclusion

Introduction3

The provision of Water and Sanitation Services is of paramount importance as it provides the foundation for sustainable development.

Global trends show provision of water and sanitation services is still inadequate:

1.1 billion people have no access to safe water services, and 2.6 billion have no access to adequate sanitation services

The provision of water and sanitation services in the developing World has lagged behind that of the developed countries.

Introduction …4

Indeed , the challenges facing the Water and Sanitation Industry in the developing countries are generic and homogenous in nature.

The cost of failing to properly address the water and sanitation gap is significantly higher than the cost of addressing it

The question is what are the prevailing water and sanitation challenges?

WSS Challenges: 1. The Financing Gap

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Infrastructure needs in most developing countries are enormous.

There is scarcity of resources because; Full cost recovery Tariffs in Developing economies is still

a myth Private sector financing is not readily available Returns in the water sector are long term in nature Government funding is over stretched Donor funding ebbing But even where financing is not a major problem,

there are still gaps in the provision of water and sanitation services.

WSS Challenges: 2. Climate Change

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Unfamiliar draught and excess rains Intermittent supply leading to back siphoning-

recontamination of piped water Flooding leading to destruction of works and mains,

recontamination of potable water

Lowering of lake/river levels - affecting the Quantity & quality of water & leading to increased production costs

Destruction of land cover - through human activities - Pollution and siltation.

Destruction of wetlands - Natural Filtration system destroyed.

Even where there is abundant row water supply, there are still gaps in the supply of potable water

WSS Challenges: 3. Provision of Services to the Poor

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Social dislocation resulting in high rate of urbanization and increase in urban poor settlements

Challenge of serving the poor due to the unplanned settlements & the question of who should pay?

WSS Challenges: 4. The Sanitation Challenge

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Generally provision of sanitation services tends to lag behind that of Water services

This is attributed to a number of factors including;

High cost of piped water sewerage services. The institutional fragmentation for provision of

sanitation services with no clear responsibility The proliferation of on-site sanitation facilities.

The rapid urbanization places a major challenge in providing sustainable sanitation

WSS Challenges: 5. Leadership and Management

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The greatest of all these challenges is lack of competent, efficient, business-like and service-oriented institutions.

Most institutions are characterised by Poor Governance: Corruption Poor Leadership : lack of foresightedness & priorities Operational inefficiencies. Poor Organizational culture

Reforming Public EnterprisesChallenges10

What are public Enterprises? A Public Enterprise is a business organisation

wholly or partly owned by the state and controlled through a public authority.

Some public enterprises are placed under public ownership because, for social reasons, it is thought the service or product should be provided by a state monopoly.

Utilities e.g Water, gas, electricity etc, broadcasting, telecommunications and certain forms of transport are examples of this kind of public enterprise

(Ref: Encyclopaedia Britannica, www. Britannica.com)

What is or has been the Problem?11

1. Poor Leadership. What is Leadership? – the process of social influence in which one person

can enlist the aid and support of others in the accomplishment of a common task. (Alan Keith, 2010)

What happens in Public Enterprises? Emphasis is put on managing, controlling and interference Visionary and focused leadership is non existent Organizations have no clear and motivating visions and missions Lack of leaders who can study and understand the existing performance

situation, set vision and bring turn-around solutions

What is or has been the Problem? …12

2. Poor ManagementWhat is Management? - a process of getting activities

completed efficiently and effectively with and through other people. (Gulick & Urwick, 1937)

Management Functions Planning Organising Staffing Directing Co-ordinating Reporting Budgeting

What is or has been the Problem? …13

3. Managemet also involves Goal setting Goal setting involves establishing specific,

measurable and time-targeted objectives "Goals provide a sense of direction and purpose" Goal Setting should be SMARTER

Specific Measurable Agreed Realistic Time Bound Ethical Recorded

What is or has been the Problem? …14

4. Poor Accountability & Governance Lack of accountability frameworks - No

framework that clearly spell out each parties obligations to avoid overlapping of responsibilities

Poor governance and corrupt tendencies - everyone wants to be rich right from the time they are born

Technology slavery - perception that new technology is the solution to all organisation problems

What is or has been the Problem? …15

5. Attitudinal problems - living with the status quo (sit and do nothing syndrome)

6. External interference – Political Interference, global crisis external to the business

7. Inadequate financing – is the problem availability or leadership?

The list is endless ----------------

What are the Implications ?16

Financial crises for businesses – bankruptcy & deficits

Poor service delivery - rampant customer outcry

Management condemnation from the political and other oversight authorities

The sinking ship – restructuring and loss of jobs

Invitations/imposition of managerial ideologies, including those that are incompatible

Again, the list is endless ----------------

What next ??17

What are the first thins you would do if you were appointed Board Chairperson, MD Kisumu Water, Manager Engineering Services, Manager Finance, Manager Corporate Services or even a Head Master of a Top Secondary School in Kenya or Director of a Referral Hospital??

First Things First - What next?18

In Theory, Any Manager would do the following1. SWOT analysis2. Formulate a Vision 3. Formulate a Mission4. Design Strategic Plans and Goals (Long-term and Short-term)

Corporate Plans (3-5 years) Annual Financial Budgets

5. Formulate Operational Plans/Programmes (short-term and long-term

Types of Reforms19

1. One Man driven reforms Needs a strong leader

2. Team led reforms Needs committed workforce

3. Stakeholder buy-in reforms Needs Board, Management,

Government and Private Sector

NWSC Case: SWOT Analysis as a first step of the Transformation Process

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NWSC SWOT Analysis as at 1998

Strengths: Sound infrastructure, abundant plant production capacity enabling legislative framework, well trained workforce, sound billing system, good corporate planning strategy, good financial budget planning policy.

Weaknesses: Low staff productivity (36 staff/1000 connections),high UfW (60%), Low Collection Efficiency - 71%, huge arrears of about 14 months of billing, high number of unviable towns.

Opportunities: Government support, relatively stable economy, donor support, abundant water resources,

Threats: Huge Debt and pending debt Servicing obligations, VAT law.

NWSC Case: Visions & Mission

Previous Visions of NWSC1. To be the Pride of the Water Sector in Uganda

(before 1998)2. To be the Pride of the Water Sector in Africa (1998-

2004)

Current Vision Statement3. To be One of the Leading Water Utilities in the World

Mission StatementTo provide Efficient and Cost effective Water and

Sewerage Services, applying Innovative Managerial Solutions to the Delight of our Customers

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NWSC Case: Strategic & Operational Plans

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Formulated both Long Term and Short Term Plans

Policy level Strategic level, change in Board & Management First Corporate Plan 1997- 2000 Annual BudgetsOperational level Operational framework through Change

Management Programmes (100 Days, Service and Revenue enhancement project

(SEREP), Area Performance Contracts (APC), Stretch out programme Internally Delegated Area Management

Contracts (IDAMCS), One Minute Management Concept (OMM), Checkers system

See our Website for details: www.nwsc.co.ug

Key Lessons: Main Performance Drivers

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=>Autonomy■ Devolution of power from centre to areas■ Institution of Performance Contracts (APCs and IDAMCs)

=>Customer Focus

=>Team Work■ Collective participation in the development and formulation of the

programmes. ■ Work outs through the “stretch out programme” in which workers

were free to air out any of their grievances and needs.

=>Monitoring and Evaluation Systems■ Checkers un announced visits: both process ad outputs oriented

=>Appraisal system ■ Strong incentive systems and equitable gain sharing plans■ One Minute management system■ Performance Contracts for all staff■ Performance based pay■ Penalties

Key Lessons: How do you Manage Change?

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Ref Book: “How to be Brilliant; Change your ways in 90 days”-Michael Happell1. Positive Action2. Break out of Limiting Beliefs3. Think Differently4. Ability to Manage Stress5. Massive Action

Key Lessons: How do you Manage Change (Positive Action)

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“Attitudes that Attract Success”- Wayne Cordeiro

Attract Success1. Make your choice2. Believe you can change3. Train your eyes to see what is

good4. Practice, Practice & Practice5. Never Give Up

NWSC Key Achievements26

Performance Indicator 1998 2010

Service Coverage 48% 74%

Total Connections 50,826 246,459

New Connections per year 3,317 25,000

Metered Connections 37,217 245,199Staff per 1000 Connections 36 6

Collection Efficiency 60% 98%

NRW 60% 33.3%

Proportion Metered Accounts

65% 99 %

Annual Turnover (Billion Shs)

21 112

Profit (Before. Dep) (Billions Shs)

8.0 (loss) 25.4 (Surplus)

Key Lessons: NWSC Experience27

Reforms are about creating harmony

Custom

ers

Utility

Nat/Local Govts.

Private Sector

Finan

cier

sFinanciers

Customers

UtilityNat/LocalGovts.

PrivateSector/ suppliers

Today! Where to Go!

Key Lessons: NWSC Experience28

Gradual, incremental approach to the reforms A hardworking and committed Board of Directors with a good mix of skills is

necessary Committed, transparent, competent top leadership A dynamic team of staff motivated by clear vision, mission and objectives & their

involvement at all levels Continuous self monitoring and evaluation of programmes Firm decision making on key aspects of the reform Adopting a “do it yourself policy” Stakeholders involvement in the reform process & a comprehensive customer

focus Reward system for competing areas & use of benchmarking based on efficient

utilities Capacity building at all levels through research (MBAs, Masters, Ph.Ds) and

seminars and workshops Having “open door” policy to most operating data, for interested parties to make

references e.g. use of web-sites and circulation of performance reports

Benefits of Successful Reform: Benefits with Peer Utilities

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Through the External Services Unit, NWSC shares its experiences and initiatives with other utilities and institutions within and outside Africa.

Services Offered:

Advisory Services, e.g. Organizational behavior change, Contract design and incentive systems, water losses reduction initiatives

Core Utility Services, in the field of water losses reduction, plant and distribution system maintenance

Who have benefited from our Services?Nairobi Water and Sewerage Company-KenyaNkana Water; Lusaka Water and Sewerage Co Ltd: ZambiaDAWASA/DAWASCO: Dar-es-Salaam: TanzaniaKarachi Water and Sewerage Co.: PakistanNew Delhi Water Board and Several Water Municipality Water Boards in IndiaOgun State- NigeriaEthiopiaSouthern Sudan, Mozambique etc

Conclusion 30

Reforms are a reality. Every utility in East Africa must adapt itself to these challenges by implementing its own tailor made Vision, Mission and strategies.

There is always a difference one can create in terms of improving performance in a Public Enterprise, managed by the locals. You just need determination, commitment , courage and discipline.

Always, remember the saying:

“WE MUST EITHER FIND A WAY OR MAKE ONE”,

HANNIBAL

THANK YOU FOR YOUR ATTENTION

For more information & literature on the NWSC experience read: Making Public Enterprises Work, (By, Dr. Muhairwe Tsimwa William) available at http://www.iwapublishing.com

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