3 Field Note Water and Sanitation Water and Sanitation Program Sector Reform in Uganda: An international A Government-Led partnership to help the poor gain sustained access to improved Transformation water supply and sanitation services Africa Region Water, sanitation and hygiene are vital components of sustainable development and the alleviation of poverty. Across Africa, political leaders and sector specialists are generating new momentum in these important areas. This Field Note, together with the others in the same series, constitutes a timely contribution to that work. It is intended principally to help politicians, leaders and professionals in their activities. As the Water Ambassador for Africa, invited by the African Development Bank and endorsed by the African Water Task Force and the African Ministerial Summary Conference on Water (AMCOW), The Ugandan Government has been reforming the water and sanitation sector for the past I commend it to your attention. four years. This reform promises much. It is intimately linked to the government's poverty alleviation plans, and financed largely by debt relief funds. The government has led from the front, building a high level of trust and consensus with its sector development partners and with civil society stakeholders, and initiating progressive and innovative reforms throughout Salim Ahmed Salim the sector. Water Ambassador for Africa The reform process has involved a comprehensive assessment of the water and sanitation sector, including studies of the rural and urban sub-sectors, and preparation of action and investment plans. The key strategies to emerge from these assessments include more decentralised delivery of services, increased private-sector participation, and the need for a programmatic, sector-wide approach. Many independent observers agree that it is the most dynamic and successful sector reform process in sub-Saharan Africa, with useful lessons for other countries. Yet, it is still too early to tell how effective the reforms will be in translating the good intentions into tangible improvements in water and sanitation services to benefit poor people. agencies. In the 1990s, average household incomes increased by 50%, annual GDP growth averaged over There is always 6%, inflation fell from 42% to 6% and both investment and exports grew substantially, although the more recent decline something new in the price of coffee is a concern. Despite these successes, average per capita income is out of Africa only now approaching that previously achieved in 1970. PLINY Progress in social and human development has been modest. Basic services are inadequate, and Uganda's social indicators remain below average for sub-Saharan Africa. At present both the economy and people's livelihoods are dependent on agriculture2 and most of Uganda's population, including 96% of those classed as poor, live in the rural areas. Background Poverty Uganda was devastated by prolonged conflict between reduction initiatives 1971 and 1985. The fertile and once abundant nation emerged from this period with deep scars: the economy lay in ruins; institutions of excellence, such as the famous The government has recognised that resource Makerere University, had collapsed; many skilled workers deficiencies and weaknesses in the delivery of basic had fled overseas; infrastructure had fallen into disrepair; services represented critical constraints to development. and most basic services were not functioning. Therefore, national policy has been refocused on three Since the end of the conflict in 1986, Uganda has made key approaches: a remarkable recovery. The economy experienced a strong · Decentralisation (devolution of power and authority economic renaissance during the early 1990s, when effective to local authorities to improve access to and quality of reforms and increased coffee revenues1 provided the basic services) impetus for impressive economic growth. The new · Privatisation (unburdening the state of responsibility for government also committed itself to poverty alleviation, `commercially viable operations') thus attracting plentiful support from external support · Poverty alleviation (underpinning the economy and improving social development) Access to rural water supply and sanitation The application of these 100 approaches has been informed by a series of 90 iterative and participatory 80 processes initiated by the government in the mid-1990s. 70 The first product was the (%) 60 1997 Poverty Eradication 2001 , Action Plan (PEAP), a 50 development framework that MoH Coverage 40 explicitly addressed the Rural WS challenges of poverty 30 Rural San. 2001a; alleviation, and was , Rural targets D 20 intended to guide the W government and its D 10 development partners in policy, planning and resource 0 Source: 1990 1995 2000 2005 2010 2015 allocation decisions. The PEAP 1Half of Uganda's export revenues come from coffee. 2Agriculture accounts for 43% of Uganda's GDP, and is the main source of livelihood for 80% of its population. 2 set out specific goals, including universal access to primary compromising education, primary health care, and safe drinking water, the provision and guaranteed political freedom and human rights. of equitable The PEAP, revised in 2000, was used as the basis for the and sustainable Uganda Poverty Reduction Strategy Paper (PRSP). The World services. Bank and IMF accepted that Paper and qualified Uganda The first step for debt relief under the Heavily Indebted Poor Countries in the reform (HIPC) Initiative. process was to strengthen Reasons for water and the regulatory UGANDA framework, and sanitation sector reform provide a basis for cost recov- ery,3 through Substantial investments have been made in the provision the introduction of rural and urban water supply and sanitation services, of the 1999 most notably within the last decade. However, these National Water investments have failed to improve coverage or Policy. Next came the development of a comprehensive sector service levels as extensively as expected, and at present strategy, based on sub-sector studies in the following areas: less than 60% of the population has access to safe water · Rural Water Supply and Sanitation supply or sanitation services. Furthermore, many rural · Urban Water Supply and Sanitation facilities no longer function, and since decentralisation, local · Water for Production authorities have been struggling to operate and maintain · Water Resources Management urban systems. The Rural and Urban studies were completed in The poor performance of previous investments illustrates 2000/01, and provided specific recommendations for the the magnitude of the task implied by the PEAP targets, and reform of these sub-sectors. The studies were also important recent sector reviews have identified further constraints to in generating consensus on the importance of a sector-wide progress, including: insufficient sector funding; ineffective approach, as already adopted, with some success, by the sector co-ordination; inadequate local capacity; inefficient Health and Education sectors. resource use; and supply-driven project approaches. Recognition of the challenges inherent in the ambitious Sector-wide approach PEAP targets, and the sector's structural constraints, made reform of the water and sanitation sector an urgent requirement. The subsequent allocation of a large share of the HIPC debt relief money to the water and sanitation The move towards a sector-wide approach (SWAP) is sector, and the heightened scrutiny of the sector's perhaps the most radical of the reforms proposed. It performance that this allocation inevitably involved, was follows recognition of the disadvantages of another factor driving the reform. implementing development activities through discrete projects, and the problems associated with co-ordinating a sector that is still heavily dependent on external support. Process of water and Previous activities were generally donor-driven, and were often piecemeal, with approaches varying depending on sanitation sector reform the actors involved. This caused duplication, inappropriate sequencing, and led to inefficiencies in the government system, thus reducing the benefits of investments and In 1998, the government demonstrated its commitment decreasing the sustainability of the water and sanitation to reaching the PEAP targets by beginning the services provided. reform of the water and sanitation sector. The stated The SWAP concept involves a quantum change in the aims of the sector reform were: to ensure that way the sector operates, and in the relationship between water supply and sanitation services were provided government and its development partners. There are two with increased performance and cost effectiveness; and to key elements to SWAP: the replacement of current project- reduce the government's financial burden without based approaches with comprehensive sector-wide 3The National Water Policy directs that users contribute 2-5% towards capital costs, and 100% of operation and maintenance costs. 3 Another feature of the rural WSS sub-sector reform is the promotion of private-sector involvement in service delivery. District authorities are encouraged to develop and utilise local private-sector capacity for design, construction, and operation and maintenance of rural water supply and sanitation facilities and for the supply and distribution of spare parts and appropriate equipment. A major output of the rural WSS sub-sector study was an investment plan for the period 2000-2015. This plan was developed by the Directorate of Water Development of the Ministry of Water, Lands and Environment, and separates A hand-dug well under construction using temporary caissoning. investments for rural water supply from those for rural sanitation. This programmes; and, a move to co-ordinated funding of water is a significant point, reflecting both the complex institutional and sanitation provision through government budgets. arrangements for the provision of rural sanitation,4 and SWAP will require strong leadership from the government, government policy on latrine subsidies. and a high level of trust by its development partners. Government policy directs that the capital costs of household sanitation facilities be wholly met by individual Reform of rural water households, i.e. that no latrine subsidy is provided. Therefore, the sanitation component of the rural WSS investment plan supply and sanitation covers only provision of communal public latrines,5 sanitation promotion, and support to district programmes. The focus of the rural WSS sub-sector reform is on Reform of urban water strengthening the decentralised provision of services. Central government is to co-ordinate the sector and supply and sanitation facilitate technical assistance to local governments, while funds for rural WSS are to be channelled directly to district authorities, and the water and sanitation capabilities of Reform of the urban WSS sub-sector centres on the the district authorities are to be substantially enlarged. introduction of commercialised operations, chiefly Demand-responsive and integrated approaches are to through increased private sector participation. The sub- be introduced, based on community ownership and sector study recommended public-private partnership, management of rural WSS facilities, with increased attention whereby the public sector retains ownership of urban WSS paid to hygiene promotion, gender awareness, and assets, but private operators carry out service delivery. In participatory planning. Operation and maintenance costs practice, this has translated into slightly different approaches are to be borne by the users, with support for rehabilitation in `large towns' and `small towns'. and major repairs from central and local government. · Large towns: The strategy for the large town group, which Clearly, these new approaches will require major will comprise some 30-35 towns with populations above increases in capacity, and operational adjustments, both in 15,000, is to give responsibility for management of all urban government and among user communities. During the WSS services to a single international private operator under transition phase, Technical Support Units are being a ten-year lease contract. The urban WSS assets involved established in each region. Their aim is to build local capacity will be vested in a wholly government-owned Asset Holding and to encourage the adoption of new ideas, while ensuring Authority, which will monitor the operator's performance, a uniformapplicationofnationalpoliciesandsectorapproaches. manage the leased assets, and plan future investments. 4The Ministry of Health is the lead agency for household sanitation and hygiene promotion; sanitation in schools is covered by the Ministry of Education and Sports; sanitation in rural growth centres (and urban areas) falls under the Ministry of Water, Lands and Environment. 5In rural growth centres, schools and government offices. 4 · Small towns: The strategy for the small towns group, unprecedented participatory process, with strong links to which will comprise the 43-48 urban WSS systems not the PRSP process, and thus to the government's primary included in the lease group, is that both responsibility and objective of poverty alleviation. This participatory process ownership of the systems will remain with local governments, has been high quality, sustained and influential. It has which will also be responsible for ensuring that the systems brought civil society, NGOs, external support agencies and are managed on a commercial basis. To this end, service government together, leading to real partnerships and delivery will be contracted out, either to newly created local mutual understanding among sector stakeholders. It has water and sanitation authorities, or to local private operators. also fostered the development of networks of policy Where possible, multiple systems will be consolidated in advocates, such as the Uganda Water and Sanitation order to capture economies of scale in their management, Network (UWASNET),6 and legitimised civil society's role and make the operation of the systems more attractive to in monitoring the use of poverty alleviation funds. private operators. In addition, a national urban water and The evidence of these processes in action is manifold. sanitation development agency will be created to support There has been a large amount of activity in the sector in a local government and local WSS authorities in the provision very short time: sub-sector studies and strategy papers have of effective decentralised urban WSS services. been completed; memorandums of understanding have Private sector participation needs some form of been signed; new co-ordination bodies are being initiated; regulation, and an independent regulatory institution will substantial government arrears have been settled; and, be created in Uganda. Its main duties will be to set tariffs, more than half the districts have set up fully staffed District provide consumer protection, and resolve disputes between Water and Sanitation Teams. sector stakeholders. Funding sector reform Analysis of the sector reform The reform process has also raised the water and sanitation sector's profile, and increased confidence among its backers. As a result, funding to the sector Main features of the reform process has tripled over the last four years, with the largest Uganda is neither alone in pressing ahead with reform of its water and sanitation sector, nor unique in the reforms that it has proposed. Nevertheless, the sector reform process in Uganda stands out, in two main ways, from similar reforms under way in other African countries. · Firstly, the reform process is being led by the Government of Uganda (GoU), rather than imposed from outside. The reforms were built on domestic development plans, and are being enacted through government channels. As a result, there is a genuine sense of ownership from those involved in the reforms, and this is driving a positive and energetic reform process. · Secondly, the reforms were developed through an 6UWASNET is an umbrella organisation for NGOs and CBOs involved in water and sanitation activities in Uganda. 5 sector reforms gather Water and sanitation sector funding momentum, there is an 160 increasing need for government and its 140 development partners 120 to co-ordinate their efforts. A wide range 100 of sector stakeholders (billions) GoU were involved in the provisional 80 ESA joint review, including are Ush 60 five central ministries, 2001 representatives of , figures 40 local government, multi- Moller lateral and bilateral 20 2001 agencies, and NGO 0 representatives. Source: Note: 1997 1998 1999 2000 2001 The Joint Sector Review was reported to increase being in the government's contribution, up from have resulted in `resounding convergence' on the US$2 million to US$20 million7 since 1997. appropriateness of the sector-wide approach, and of the The sector reform process involves some major ongoing urban and rural sub-sector reforms. However, it institutional transformations, which will take time to achieve. also identified areas of concern, and proposed undertakings Despite this, progress in meeting PEAP sub-sector targets to address these shortcomings. for 2001/02 has been good. In the urban WSS sub-sector, · The Joint Sector Review notes that the number of water eight small towns have been operating under management points provided per year has not increased significantly over contracts since mid-2001, and all but two are at or near full the last four years, despite the massive increases in sector cost recovery for operation and maintenance. funding. Similarly, operation and maintenance subsidies Efforts are also being made to strengthen the for rural water supplies remain high, yet approximately 30% operational and financial standing of the National Water of the facilities are non-functional. and Sewerage Corporation (NWSC), in order to reduce its · Sanitation provision is lagging behind water supply, thus commercial risks and attract competitive lease bids when it threatening the expected health benefits of the major is privatised. At present, the performance contract between investments being made. In rural sanitation, the problems NWSC and GoU appears to be driving operational have been largely due to the involvement of three ministries improvements, including reductions in staffing, increased in service provision. However, there are also structural connection rates, and a turnaround from a loss of US$1 reasons for the difference. Both investment in sanitation million in 1999 to a profit of over US$2 million in and its coverage targets are considerably lower than those for water supply. These shortfalls can be explained by the 2001. The reforms also contain some transparently government's decision that household latrine construction pro-poor elements, such as the recent 60% reduction in will not be subsidised, and that, instead, government funds the fee for connection to urban water supplies, the will be directed towards the less easily measured tasks of allocation of 30% of new water supply connections to poor hygiene promotion and technical assistance. Unfortunately, households, and the proposed inclusion of a domestic this approach appears to have reduced the importance of, discount in the revised water tariff. and attention to, sanitation in the sector reform process. · The urban sub-sector is most affected by the reforms. At The Joint Sector Review present, there is consensus that private sector participation will increase the efficiency of urban WSS service delivery in Uganda. However, it is less clear whether the urban WSS Another measure of the success of the sector reform management models selected are optimal, or whether the comes from the findings of the recent Joint Sector level of risk associated with these models is acceptable, Review. This joint review was in line with the partnership given the limited scope for change once the management principles of the PEAP, and recognises that as the contracts are in place. Specific concerns include the potential 7Exchange Rate: US$1=Ush 1,750 (2001). 6 for genuine competition in the narrow market that exists in responsibility for the sector reform extends beyond the Uganda, and the possibility that the reforms will have government. This can be achieved by the sustained negative impacts on small-scale independent providers of participation of sector stakeholders in the reform process. urban WSS services, especially those serving the poor. In Uganda, a wide-ranging group of stakeholders, including civil society organisations, has been involved throughout Work in progress the planning, design and review of the reform process. This has resulted in strong convergence on policy, and mutually agreed undertakings to resolve problems quickly The reform of the water and sanitation sector in Uganda and move the process forward. is in its early days. Much of the reform process has still to be planned and implemented, and many of the Effective sector reform attracts investment processes are ongoing. Decentralised service provision Improved access to and delivery of basic services is central is in its infancy, and it will be some time before the new to poverty alleviation. A strong and effective water and institutions develop sufficient capacity to carry out their sanitation sector is an attractive investment for both functions effectively. government and external support agencies. Total funding The transition to SWAP has been hindered by the sector's to the Ugandan water and sanitation sector has grown by relatively complex institutional environment, but it is now the an average of over 30% per annum since the sector reforms main priority for the reforms. Key steps remaining include: began. During the same period, government's increased · Re-alignment of existing projects and programmes commitment to the sector has been demonstrated by with SWAP principles increases in its funding of 70% per annum. · Formal agreement that external assistance will be provided through budget support · Revised modalities for funding · Development of common rules, policies and accountability requirements · Formulation of action plan (in 2002) and sector investment plan (by 2003) The actions agreed by the government and its development partners at the Joint Sector Review address many of the problems identified above, and augur well for the future of the sector reform. The main actions were to: reassess sector targets; prioritise resources for sanitation and hygiene promotion; carry out tariff and pricing policy reviews; and ensure improved provision of services to the urban poor. Lessons learned Government leadership is crucial to success Government-led reforms are always likely to be more effective than externally imposed ones. In this case, building the reforms on the GoU strategy for economic transformation and linking them to the PRSP process has engendered government ownership of the reform process, and made the GoU genuinely committed to leading rapid and effective change in the sector. Effective sector reform requires broad ownership of the process It is important that the sense of ownership and 7 Over-ambitious targets can reduce the effectiveness Water and Sanitation of sector reform Program-Africa Region (WSP-AF) Target setting requires a balance between using The World Bank, Hill Park, ambitious targets to galvanise Upper Hill, P.O. Box 30577, activity, and building confi- Nairobi, Kenya dence in the sector through incremental achievements and Phone: (254-2) 260300, 260400 improvements. At present, the Fax: (254-2) 260386 targets for the sector reform E-mail: wspaf@worldbank.org in Uganda appear over- Web site: www.wsp.org An independent financial operator ambitious, given the ongoing in the small towns sector. decentralisation process and the level of restructuring and planning that remain to be completed. These targets reflect the high level of community need, but there is a risk that if the targets are unrealistic, community- based approaches might suffer and operation and maintenance might be neglected. This would reduce the sustainability of the WSS services provided, and lead to less effective sector reform. References Acknowledgments · Collignon, B. and M. Vézina. Independent Water and Sanitation Providers Written by: Andy Robinson, with in African Cities. Washington D.C.: Water and Sanitation Program, 2000. particular thanks to Ato Brown, · Directorate of Water Development. Strategy for Rural Water Investment, Belinda Calaguas and Including Operation and Maintenance. Draft Ministry of Lands, Water Monica Kunihira Series Editor: Jon Lane and Environment Issue Paper. Kampala: Government of Uganda, 2001. Assistant Editor: John Dawson · Directorate of Water Development. Framework for Sector-Wide Approach Published by: Vandana Mehra to Planning (SWAP): Water Supply and Sanitation Sector. Draft Ministry of Photographs by: WaterAid Uganda Lands, Water and Environment Issue Paper. Kampala: Government of and WSP-Africa Uganda, 2001. Designed by: Write Media Printed by: PS Press Services Pvt. Ltd. · Government of Uganda. First Joint Government of Uganda ­ Development Partners Water and Sanitation Sector Review. Draft Memorandum of We are saddened to report the death Understanding. Kampala: Government of Uganda, 2001. of Monica Kunihira soon after the · Kahangire, P. and A. Tanner. Uganda Urban Water and Sanitation Sub-sector completion of this Field Note. Reform. Reform of the Water Supply & Sanitation Sector in Africa Conference, vol. 2, Presentations. http://www.wsp.org/English. Kampala: 2001. August 2002 · McGee, R. with J. Levene and A. Hughes. Assessing Participation in Poverty The Water and Sanitation Program is an Reduction Strategy Papers. Brighton: Institute of Development Studies, 2002. international partnership to help the · Moller, L. Is the Water Sector Delivering? Unpublished PMAU/MFPED poor gain sustained access to improved paper, 2001. water supply and sanitation services. · Ministry of Health. Strategy Paper on Household Sanitation and Hygiene The Program's main funding partners Promotion. Draft Ministry of Health Strategy Paper. Kampala: Government are the Governments of Australia, of Uganda, 2001. Austria, Belgium, Canada, Denmark, · WSP. Poverty Reduction Support Credit (PRSC) II: Water and Sanitation France, Germany, Luxembourg, the Component Joint Appraisal Mission, Jan. 28 ­ Feb. 10, 2002. Draft Aide Netherlands, Norway, Sweden, Memoire, 2002. Switzerland, and the United Kingdom; the United Nations Development Programme, and the World Bank. The World Bank does not accept responsibility for the views expressed herein, which are those of the author, and should not be attributed to the World Bank or its affiliated organisations. The designations employed and the presentation of the material are solely for the convenience of the reader anddo not imply the expression of any legal opinion whatsoever on the part of the World Bank or its affiliates concerning the legal status of any country, territory, city, area, or its authorities, or concerning the delimitations of its boundaries or national affiliations. Information from Water and Sanitation Program publications may be freely reproduced. Proper acknowledgment will be appreciated.