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Regional Forum on Innovations for Connecting the Poor: Small Piped Water Networks

Opening Address by
Xianbin Yao
Acting Director General, Regional and Sustainable Development Department
Asian Development Bank

ADB Headquarters, Manila
17 April, 2008

Our special guest:

Hon. Domingo Panganiban
Secretary, National Anti-Poverty Commission

Distinguished panelists and guests

Ladies and Gentlemen

After listening to the inspiring keynote speech by Secretary Panganiban, it is my great pleasure to open this regional forum and offer you some points for reflection in your discussions.

The Secretary has reminded us all how important it is to keep the interests of poor communities foremost in our minds when designing and implementing water projects. While all of us in this room will readily profess that we do our work with the best intentions to provide water for all, in reality the poor do not always benefit as much, and as fast, as we like to think.

In the words of ADB’s President Kuroda, we still live in a region with two faces, one of rapidly increasing affluence and booming growth, and another just next door to it, where more than 600 million people still lack safe drinking water, and 1.8 billion people live without a decent toilet.

The performance of governments to provide safe drinking water and sanitation services to their citizens still varies enormously across the region. Most countries in the region are reporting good progress towards achieving the MDG targets for water supply and sanitation. Yet the quality of these services is often uncertain, and for far too many Asians, the prospect of a 24x7 safe water supply service remains a pipe dream until today. Furthermore, when water projects are implemented, we know that it often takes years for citizens in poor communities to get connected, and this is unacceptably long. So we asked ourselves the question, does it have to be like this?

During this regional forum, both sides of the coin need to be explored. Whereas Asia continues to face stark realities and daunting challenges, the region is also full of good examples of how things can be done better, and faster, to benefit poor communities. And, in this ever more connected world of the 21st century, there is evidence that the knowledge of these good practices is also collected and shared faster and wider than ever before. The experience with small piped water networks shows this.

Just some years ago, the work of private entrepreneurs in providing piped water services on a small scale was mostly disregarded by officials as a part of the informal sector. And where it was taken note of seriously, it was more often because of the supposedly illegal status of the services rather than an interest in their benefits to local communities. Much has changed over these past years, and many of the change agents and practitioners are gathered here in this room today, from the Philippines, Viet Nam, and India, and other countries in the region. Some participants will attest to having some skepticism before, yet they have seen for themselves how good results can be demonstrated in a shorter time.

Ladies and gentlemen, I ask you to consider three points in your discussions at this regional forum. The first point is about the need to find faster ways to provide all citizens in this region with access to safe drinking water supply and sanitation, especially those in poor communities.

My second point is to remind you that this is, in fact, possible when government, utilities, and civil society agree to work together more closely in triangular partnerships. At the ADB we have started calling these government-corporate-society partnerships. Most of the pilot small piped water networks are in fact examples of such partnerships.

And my third and last point is that small piped water networks can become part of our solutions to achieve the MDGs if these networks are recognized as an integral part of city development strategies.

Ladies and gentlemen, I have already explained the urgent need to find ways for delivering faster results, and I trust that you agree with me on this point. So let me continue to illustrate my second and third points.

The four small piped water network pilot projects at this regional forum have shown that it is indeed possible to provide results much faster to those who need it most. In the four pilots, between 10,000 to 15,000 people were connected in a very short period, between 3 and 6 months after signing the agreements, rather than after several years. This could happen because of a willingness among city officials, water utilities, local banks, small entrepreneurs, civil society organizations and the local communities to engage in new partnerships.

Moreover, one of the most challenging obstacles for providing water service to poor communities, the one-time connection fee, was taken care of by introducing flexible payment terms of up to three years.

We can say that this represents a new approach to providing water services. In contrast to business as usual, at ADB we like to call this business Unusual. The pilot projects for small piped water networks are examples of business Unusual. Contrary to what many people still believe, they show that private providers can work together well with communities and NGOs at the local level. They also demonstrate that private does not always mean big private companies. In fact, in most large cities in developing Asia, a significant percentage of the population is being served by small private providers.

The Asia Water Development Outlook 2007 report commissioned by ADB last year shows how necessary it is to adopt business Unusual approaches in urban water services. Urbanization in our region is unstoppable, and the growth of urban areas, especially the many small urban centers of less than 500,000 people, will present formidable water and wastewater challenges that most countries in the region will have to face up to. Under such circumstances, it is unlikely that the conventional model of a single large water utility for the whole city can effectively deliver water services to all of the population, at least not in the foreseeable future. We need to think out of the box, step out of our comfort zones of previous experience, and explore new approaches that deliver better and faster results. Another myth that needs to be left behind us is that drinking water should be provided to everyone free of charge, or at highly subsidized rates. As many studies have shown before, payment of water tariffs by poor communities is most often very high, especially when provisions are made for an affordable connection charge.

My third point for your consideration is how we can work together to replicate the good examples of the four pilot projects widely in the region. In the prevailing situation where large water utilities in many Asian cities are still unable to provide service to all of the population in the foreseeable future, we need to recognize that small piped water networks can, and should be seen as an integral part of city development strategies, at least for the coming one to two decades. And there is no reason why investment projects should only provide funds to the larger water utilities and not the smaller providers. The objective is to connect all citizens to piped water services now, rather than having them wait for many more years.

National and city governments can help to make this happen by creating the right enabling environment, with recognition, incentives, and regulation for both small and large water providers, including contractual provisions to ensure equitable and affordable access for the poor.

ADB announced two years ago that it has launched the Water Financing Program 2006-2010 to increase investments in water services and water resource management all across the region, combined with support for reforms, capacity development and regional cooperation. We offer our clients a varied and competitive range of financing products such as local currency bonds, lending to subsovereign (municipal) governments, multi-tranche financing facilities, flexibility in commitment charges, and refinancing facilities.

Mr. Secretary, ladies and gentlemen, we are excited with the good results of the pilot projects that are presented in this regional forum, championed by the leaders sitting in this room. We expect that based on the project results, financing of small piped water networks can be expanded and integrated in these and other cities, under our Water Financing Program.

I wish you all success in your discussions. We look forward to continue working with all of you in making sure that small and large water providers can connect all citizens to piped water service now rather than later.