Water

Water Champion: Almud Weitz
Breaking Barriers in Serving the Urban Poor
July 2003

By Ma. Christina Dueñas
Water Knowledge and Communications Coordinator, ADB

Almud Weitz is an Urban Economist in the Social Sectors Division of the Southeast Asia Department. She managed the Regional Technical Assistance (RETA) 5926: Public-Private-Community Partnerships in Urban Services for the Poor. Project Brief The pressures of rapid urbanization and population growth have prompted many Asian countries to turn to private provision of urban services. Experience shows that introducing private sector expertise can, among others, improve services, increase operational efficiency, reduce tariffs, and free public funds for other important uses. However, extending these services to the urban poor is more complex and requires more flexibility. For instance, service standards based on the experience in developed countries, such as mandatory in-house water pipelines, may prevent companies from serving poor neighborhoods since the up-front costs are too high. Other constraints, such as lack of secure land tenure, add to the problem of excluding poor households from services. ADB has supported private sector participation (PSP) in developing member countries (DMCs) through various technical assistance. RETA 5926, however, is the first to look into its impact on the poor. The RETA was designed to document and assess PSP experience in the provision of urban services to poor communities in selected DMC cities. It also aimed to develop guidelines that can assist DMCs in attracting PSP, improving institutional, contractual and regulatory arrangements with the private sector, and handling policy issues related to pricing and competition. The findings of the study are presented in a publication entitled Beyond Boundaries: Extending Urban Services to the Poor, a collection of cases from Asian countries where the private sector-- either independently or in partnership with the public sector, NGOs, and community-based groups-- has stepped in to provide services such as water supply, sanitation, and solid waste management. The findings support two premises: Water supply, sanitation, and solid waste collection services are a key component in any poverty reduction strategy. The private sector has a vital role in poverty reduction through expansion of services. For detailed information on the results of the study, visit http://beyondboundaries.adb.org/.

Some literature already defines the community as being part of a public-private partnership. Why was it differentiated in your study?

On the one hand, a lot of people think of the private sector as mainly the transnationals or multinationals. On the other hand, some would argue that anything that is not public is private; hence NGOs could be private, too.

We view the 3^rd party—the community—as the rather broad sector of civil society. Its distinction with the private sector is not always clear-cut but I think one major factor is the profit motive. For instance, in studying sanitation in India and the partnership between Sulabh International (NGO) and two municipalities, we found out that an NGO can actually cross over and become a formal private operator while retaining its NGO character. Sulabh builds toilets and showers for people in very poor areas and earns profits in the process. Yet it reinvests its profits only into the company, not in the market, and subsidizes the exceedingly poor communities that can’t afford to pay for their toilets.

What hypotheses did you want to prove with this study?

The study was very open. In the beginning, we really did not know whether PSP has effects on the poor or not. We covered 19 cases in 10 countries. In the end, we had both successes and failures. We grouped our cases into three categories.

The first group involved very small-scale NGO type interventions. Their main problem was scaling up; they were too small to make an impact beyond a restricted community. We had some good examples of scaling up, though. Dhaka’s waste management program was one, and it is currently being copied by other cities.

The second group involved those with management or smaller concession contracts who went into the business for profit. Serving the poor was not on their agenda but they ended up doing so because they just could not ignore the demand, or because their coverage targets simply required them to include all areas.

The third group is where we found real cases of tripartite cooperation. There was very little in that group, and we found Manila’s water and sewerage concessions to be the most promising. In the long run, this is the only way to go to make the partnership and the service sustainable.

Did the cities you worked with have the legal frameworks to support such partnerships?

Not really. In Southeast Asia, especially the Philippines and Indonesia, the regulatory framework is not there at all. They have bits and pieces, but they’re working towards strengthening it.

What do you think would be crucial for the regulatory bodies of these countries?

They should be - as much as possible - independent from influences that can corrupt. They would probably always be associated with the public sector, and that’s fine as long as they have a degree of authority to make decisions and their decisions are final.

Clear separation of roles and responsibilities is even more important. For instance, it makes no sense for the regulatory office to be governed by the same board that’s regulating the actual service.

Still, it’s very difficult to make people understand that regulation is needed not just to attract the private sector. Regulation is important for public services because they’re not being controlled in any way. As a result, cities have the worst water services, and they don’t even have the benchmarks against which to rate the performance of their service providers. This is one thing the regulators can look into.

How does the project tie in with ADB's water policy?

It addresses the needs for introducing water sector reforms and improving water service delivery. I think water is a good area for studying the interests of the private sector and that of the poor. As the study shows, they do not really have to conflict—one can have private sector investment in the right amount and have communities come in to help.

Can you share an interesting experience while working on the study?

I went with some members of Doctors Without Borders to see one of Maynilad’s (one of the two concessions in Manila) projects with the poor in Malabon City. Maynilad, the concessionaire, had teamed up with the city government, the community and some local NGOs to provide water to a very poor and densely populated community. This community was filled with garbage and the people lived in houses on stilts. Maynilad put in the water, the community raised and cemented the ground by about a meter, the local NGOs put in the pipes so wastewater would flow out of each house, and the city government relaxed some of the requirements for permits.

That was a good example of real tripartite cooperation. Unfortunately, they couldn’t expand their efforts because ownership of the adjacent lots is unknown. This is a major concern. Land tenure issues will be critical in determining the water utility’s ability to serve its customers. For instance, the government should not ask the private companies to cover 100% of the population in 5 years if there are still so many areas where the government doesn’t want them to go, or can’t give them a guarantee that the communities will not be evicted after 5 years or so.

What's the way forward for public-private-community partnerships and this project?

We can increase our advocacy and training for water utility providers and regulators on key pro-poor elements of future contracts and regulation. In the long term, we hope to make it a part of a standard training program that should ideally be offered on a regular basis by one or a number of Asian universities. We can also continue urging governments to either fix the regulatory framework before going into contracts or, at the least, make sure that the baseline assessment of services before entering into contracts is as accurate as possible. . This way, the parties can avoid unrealistic expectations and the need to scale down and revise targets immediately thereafter, which creates an atmosphere of continuing mistrust rather than cooperation or partnership.

The challenge involving the private sector is that one can easily be dragged into exhausting theoretical black and white discussions. I think a lot of it comes out of the communities’ fear towards PSP, and the misunderstanding that this means large western companies swallowing up the sector. Let’s not forget that these transnationals will not be interested in much beyond a few major cities in the region. For the large majority, talking private means talking local. I think we just have to stay focused on our objectives of improving water services for the poor, and build the partnerships to make this happen.