Supporting the delivery of basic services in developing countries Overcoming Obstacles to Overcoming Obstacles to Serving the Urban Poor in Serving the Urban Poor in the Water and Sanitation the Water and Sanitation Sector Sector Patricia Veevers-Carter, GPOBA World Water Forum Istanbul, March 2009
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Overcoming Obstacles to Serving the Urban Poor in the Water and Sanitation Sector
Overcoming Obstacles to Serving the Urban Poor in the Water and Sanitation Sector. Patricia Veevers-Carter, GPOBA World Water Forum Istanbul, March 2009. Outline of Presentation. Obstacles to be addressed: Appropriate Investment Finance, Cost-Recovery & Subsidy Policies - PowerPoint PPT Presentation
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Supporting the delivery of basic services in developing countries
Overcoming Obstacles to Serving the Overcoming Obstacles to Serving the Urban Poor in the Water and Urban Poor in the Water and
Sanitation SectorSanitation Sector
Patricia Veevers-Carter, GPOBA
World Water Forum
Istanbul, March 2009
Outline of PresentationOutline of Presentation
• Obstacles to be addressed:– Appropriate Investment Finance,
Cost-Recovery & Subsidy Policies
– Give the Poor a Voice / Land Tenure / Eliminate Administrative & Legal Barriers
– Strengthen & Regulate Service Providers
• Advice on structuring schemes
Possible solution: Output Based Aid (OBA) =>
•A method for improving the delivery of basic services – such as water, electricity and health– when the inability of users to pay full cost justifies performance-based subsidies to complement or replace user fees.
•Services are contracted out to a third party, which could be a private or public provider, NGO or CBO.
•Service providers are - for the most part – re-imbursed after delivery of the (pre-) agreed output.
•Sources of subsidy funding are generally from public sources, such as taxes, ODA and foundations funding.
• Outputs:1) Household connections or public kiosks and 2) continued service delivery through sales revenues. Project will benefit about 60,000 people.
• Resources Mobilized: MFI loan for 80% of capital costs, partly collateralized by subsidies (40%). Up-front user contribution of 20%.
• Efficiency: Subsidy per person approximately US$19 (not including TA)
• Sustainability: Demand-driven; up-front contribution; tariffs cover O&M plus non-subsidized capital cost (pay remainder of loan over 5 years)
Kenya Community WaterKenya Community Water• Onus on communities to mobilize up-front user
contributions, securing MFI finance, securing registration under Kenyan law for Community Water Provider (CWP), securing license by respective Water Services Board (WSB)
• Process is facilitated by WSP-AF, multi-donor program with local offices
• Strong sponsor: K-Rep Bank, a leading MFI - adds rigor to due diligence and discipline during project implementation (sustaining accounts, collections etc.) USAID DCA guarantee.
• Monitoring of outputs through independent audit firm, consent by WSB on a no objection basis.
Land Tenure => Morocco Urban Land Tenure => Morocco Urban WaterWater
Land Tenure =>Morocco Urban Land Tenure =>Morocco Urban WaterWater
• Obstacle: Land ownership and tenure issues often create barriers to the provision of service to the poor
• Solution: development of strong local partnerships to ensure ensure that parties responsible for urban planning play their part – don’t expect operator to solve it by itself.
• Example: Morroco Urban Water – Very few official land titles => not criterion for
connection– Land title replaced by authorization from the
municipality
Limited awareness of admin/legal Limited awareness of admin/legal requirements => Uganda NWSCrequirements => Uganda NWSC
Limited awareness of admin/legal requirements => Limited awareness of admin/legal requirements => Uganda NWSCUganda NWSC
• Obstacle: The poor may be unaware of administrative and legal requirements, or find it difficult to understand them and comply.
• • Solution:creation of specilaized units by the
service provider to provide tailored solutions for the poor.
• Example:Uganda NWSC Pro-Poor Branch – more appropriate billing systems – greater sensitization on hygiene and related
issues– assistance when applying for connections
Outline of PresentationOutline of Presentation
• Obstacles to be addressed:– Appropriate Investment Finance, Cost-
Recovery & Subsidy Policies
– Give the Poor a Voice / Land Tenure / Eliminate Administrative & Legal Barriers
– Strengthen & Regulate Service Providers
• Advice on structuring schemes
Strengthen and regulate service providers Strengthen and regulate service providers => Uganda NWSC=> Uganda NWSC
Strengthen and regulate service Strengthen and regulate service providers => Ugandaproviders => Uganda NWSCNWSC
• Obstacle: Public service providers sometimes lack the autonomy, financial and human resources, and incentives to provide services to the urban poor
• Solution: management of service providers are partly compensated through performance payments
• Example: Uganda NWSC– Incentive regime to deliver, including delivery to the
poor– OBA assists NWSC by making connections, some
of which are metered kiosks, more affordable
Strengthen and regulate service Strengthen and regulate service providers => Ugandaproviders => Uganda Small TownsSmall Towns
Strengthen and regulate service Strengthen and regulate service providers => Ugandaproviders => Uganda Small TownsSmall Towns
• Obstacle: The services provided by Small Private Service Providers (SPSPs) are not recognized, encouraged and regulated.
• Solution: Government explicitly recognizes service providers
• Example: Uganda Small Towns
– Providers licensed and regulated– Cost-recovery tariff regulated by contract
Outline of PresentationOutline of Presentation
• Obstacles to be addressed:– Appropriate Investment Finance, Cost-
Recovery & Subsidy Policies
– Give the Poor a Voice / Land Tenure / Eliminate Administrative & Legal Barriers
– Strengthen & Regulate Service Providers
• Advice on structuring schemes
Advice on Structuring an OBA Water Advice on Structuring an OBA Water Project for the Urban PoorProject for the Urban Poor
1. Involve the community – make sure service is affordable and meets their needs
2. Use independent verification agents to ensure that results are being delivered on the ground and at an acceptable quality level
3. Make the subsidy eligibility requirements and disbursement procedures as simple and transparent as possible
About GPOBAAbout GPOBA
• Established January 2003 by DFID &World Bank.• Other donors include AusAid, SIDA, IFC and
DGIS.• $300 million in funding for for TA, Dissemination
and Subsidy Financing• US$100 million Subsidy Portfolio of over 25 pilots
targeting 5 million poor • Positive Mid-Term Review by Ernst and Young
(Fall 2007)• Vision:
• Mainstream OBA in development finance over next 3-5 years period.
• Assist development partners, including governments, to set up OBA facilities and disburse own program funds on an output-based basis.
Thank you.
Please visit us at www.gpoba.org
23Supporting the delivery of basic services in developing countries