Plague or Partner?

Poverty Oriented Urban Water Supply and Sanitation

(POUWS&S): Are informal SSPs contributing to achieve the MDGs?

A case study of informal SSPs in poor urban settlements in Nairobi, Kenya

Content

Executive Summary

1Introduction

1.1Service delivery to poor urban settlements

1.2A topic long neglected – the special case of sanitation

1.3Objectives of the study

2Who do we talk about? SSPs in WS&S, a heterogenous group of actors

2.1Informal actors

2.2Private SSPs vs. community-based SSPs

2.3Independent vs. dependant SSPs

2.4Relationship to source

3The Kenyan water sector

3.1Background

3.2Options for legal participation of SSPs in WS&S in Nairobi

3.3Challenges ahead

4SSPs in Nairobi - different constraints and potential

4.1SSPs in Water Supply

4.1.1Mobile water vendors - limited capacity and potential

4.1.2Standpipe operators - a large majority and vital service to the poor

4.1.3Kiosk operators - high acceptance and constraints that can be overcome

4.1.4Water truckers - largely ignored gap-fillers for the non-poor

4.1.5Water quality from SSPs – astonishing results that call for verification

4.1.6Prices for water – there is scope for a reduction

4.2SSPs in Sanitation

4.2.1Manual emptiers – limited capacity but vital service

4.2.2Latrine operators – limited competition reduces “value for money”

4.2.3Exhaustion truck operators – gap-fillers for the non-poor

4.3Summary

5For the poor in Nairobi, what does reliance on SSPs mean?

6SSPs in WS&S – what are the differences?

7How to approach informal SSPs - what development cooperation can do

7.1Understanding informality – bottleneck or window-of opportunity?

7.2There is no choice - regulating SSPs is vital

7.3Partnerships, incentives for formalisation and entry-points to regulation

7.4Introducing an alternative by building on existing structures

7.5The private or the community sector? Complementory roles for both

8Conclusion - SSPs, Plague or Partner?

9Recommendations for follow-up

10References

Figures

Figure 1: Actors in water supply and sanitation

Figure 2: Institutional framework for the water sector under the Water Act 2002

Figure 3: SSPs in water supply

Tables

Table 1: Categorisation of informal SSPs in water supply

Table 2: Sources of water samples

Table 3: Prices charged by informal Small-Scale Providers in Nairobi

Table 4: Comparison of households relying on water from different sources

Table 5: Incentives and disincentives to engage in partnership

Table 6: Partnership commitments

Table 7: Strengths and weaknesses, CSSPs vs. PSSPs

Abbreviations

AWSB
CBO
CSSP
GoK
GTZ
IGA
JMP
MBK
MDGs
MWI
NGO
NWC
NWSS
O&M
POUWS&S
PSP / Athi Water Services Board
Community-Based Organisation
Community-Based Small Service Provider
Government of Kenya
German Technical Cooperation
Income Generating Activity
Joint Monitoring Programme on Water Supply and Sanitation
Maji Bora Kibera
Millennium Development Goals
Ministry of Water and Irrigation
Non-Governmental Organisation
Nairobi Water and Sewage Company
National Water Services Strategy
Operation and Maintenance
Poverty-Oriented Urban Water Supply and Sanitation
Private Sector Participation / PSSP
SPA
SSA
SSPs
ToR
UfW
WRMA
WSB
WSRB
WSP
WSP-Africa
WSRB
WSTF
WS&S / Private Small Service Provider
Service Provision Agreement
Sub-Saharan Africa
Small-scale Service Providers
Terms of Reference
Unaccounted for Water
Water Resource Management Authority
Water Services Boards
Water Services Regulatory Board
Water Service Provider
The World Bank / UNDP Water and Sanitation Programme – Africa
Water Services Regulatory Board
Water Services Trust Fund
Water Supply and Sanitation

Executive Summary

In the last decades many developping countries had to face rapid rates of urbanisation, posing major challenges to the management capacity of municipalities and local authorities, in particular with respect to service provision to the increasing number of urban poor. The latter are faced to live in settlements whose characteristice features include a combination of unplanned and often illegal construction, unsecure tenure, high population densities and no or very limited access to basic services such as water or energy supply, sanitation and waste management. This has serious implications for the health status and thus the productive capacity of local communities.

In these settlements, a wide array of Small Service Providers (SSPs) has started to engage themselves in the delivery of water supply and sanitation services. This group of actors includes community organisations, neighbourhood associations and individual entrepreneurs, who fill the service gap left behind by the public and private sector with the aim of generating an income and improving the living environment in their neighbourhoods. These SSPs operate in a highly decentralised, unregulated system, often within the informal sector. They can be further categorised according to their organisational nature (private entity vs. community-based organisation), according to their position with regard to the main network (independent vs. dependent) and according to their relationship with the source (piped network, point source or mobile).

Increasingly the potential of SSPs to contribute towards reaching the MDGs is being debated. In this context, this study on SSPs in water supply and sanitation in poor urban settlements in Nairobi wants to call for a more differentiated view on these actors, acknowledging that the variation with regard to their capacity, technologies applied, quality of services offered and risks associated with their activities (for customers and the environment) is large. For instance in the case of water supply, water sampling undertaken in the course of this study hinted at the fact that in practice distuingishing between dependent and independent SSPs is important. While water provided by dependent SSPs was found to be of high quality and biologically and chemically suitable for drinking, water provided by independent SSPs was found to be of degraded quality and not suitable for drinking.

Also differences between warer supply an sanitation have to be taken into account. While demand in water supply is evident, in sanitation it is often only latent and has to be actively stimulated in order to open markets for SSPs and encourage entry. Owing to limited effective demand, there is less private initiative in sanitation, where many facilities are donor-funded and managed by community organisations. Furthermore network solutions are not necessarily the ultimate goal in sanitation where increasingly on-site systems are regarded as viable in the medium and long term. While governments and donors continue to favour interventions in water supply, in sanitation, where the financing gap is large and systems are not regarded as potentially revenue earning, SSPs are more likely to be accepted as partners and encouraged in their endeavours.

Yet unless formalised and regulated, SSPs will continue to impose grave negative externalities on their customers and the environment. In water supply critical issues surround the quality of water and pricing, while in sanitation the main concerns are adequate discharge and cleanliness of the facilities. But it has to be doubted that most SSPs have an utter interest in formalising their venture, even when the existing information gap on the sector reform, legal requirements and standards is closed. Unless they are provided with reasonable incentives and the costs of formalisation are actively reduced, SSPs are believed to favour continuing to operate in the informal sector. One means to introduce proper incentives and regulate SSPs could be to establish partnerships or to implement a well-designed water kiosk system, transfering the responsibility of managing outlets to SSPs via sub-contracts. Both approaches are based on the view that regulation of SSPs is best undertaken on the local level, by the utility in charge.

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1Introduction

1.1Service delivery to poor urban settlements

The rapid rate of urbanisation, which has taken place in many urban areas in developing countries over the last two decades, poses major challenges to the management capacity of many municipalities or local authorities, in particular with respect to service provision to the increasing number of urban poor. The spread of slums[1] is probably the most obvious evidence of the growing number of urban poor. These settlements are home to the majority of urban dwellers in developing countries, who often have no or very limited access to basic services such as water or energy supply, sanitation or waste management. This has serious implications for the health status and thus the productive capacity of local communities.

A combination of uncertain legal tenure rights, ownership rights and illegal construction activities plus the non-payment of taxes or revenues are often cited by authorities to be the reason for non-investment into social and technical infrastructure in poor urban settlements.[2] During the 90s the hope was that the private sector firms could address the challenges in service provision by increasing efficiency and allocating resources into infrastructure development and maintenance. However, where large-scale private sector participation (PSP) has taken place, the lack of service provision to the poor has prevailed or was often even enhanced by poor contract management and missing pro-poor regulation. It is now widely accepted that new solutions need to be adopted quickly to improve service delivery to the urban poor. Urban poor can be attractive customers who are often willing to pay much more for their services than better-off residents. But regardless of the fact that in these high density poor urban settlements the biggest leverage for the achievement of MDGs can be obtained, investments of governments and donors do not focus sufficiently on these areas yet.

Because neither the public nor the private sector has yet been able to overcome the various existing barriers towards increasing access of the poor, in practice up to today neither of these actors contributes much to the delivery of services to the large majority of poor urban dwellers. It is in fact the informal sector, constituting a vibrant number of different types and scales of actors, that provides these services.[3] Communities, neighbourhood associations and individual entrepreneurs are filling the gaps left by the public and the formal private sector. They are providing water and sanitation services with the aim of generating an income, sustaining their livelihoods and maintaining a clean and healthy living environment.

Over the last years development practitioners have increasingly acknowledged that SSPs are likely to remain important suppliers of water and sanitation services in low-income or informal settlements in the foreseeable future. Regardless of the fact that the ultimate long-term goal remains to be to connect as many people as possible to high-quality piped water and public sewer lines, the short- and medium-term outlook for poor urban settlements realistically includes the engagement of this wide array of Small Service Providers (SSPs). The pace of population growth and urbanisation simply outstrips the capacity of utilities to provide services to new and especially to poor customers. Therefore, there is no indication that SSPs will become less in number.

SSPs form a highly decentralised system that in most cities is neither coordinated nor regulated or monitored by the public sector. In the water supply sub-sector, SSPs are often criticised for taking advantage of the dependency of poor consumers on them, by charging high prices, while providing low-quality water. In sanitation, SSPs are said to provide a low-quality service at comparatively high prices. Owing to these critics, little effort has been devoted so far to developing policies and actions that could improve the delivery of services to poor urban settlements by building on the structures and SSPs in place.

This study wants to examine the question whether it is feasible to build on the existing water supply and sanitation systems of SSPsin order to improve service delivery to the poor, increasing access and ultimately reaching the MDGs. To answer this question, the study takes a look at the institutional, legal and regulatory framework in which urban SSPs in Nairobi operate, their operational characteristics, the constraints they face towards improving and expanding their services and the environmental and health risks associated with their activities.

1.2A topic long neglected – the special case of sanitation

Regardless of its importance and health implications for humans, sanitation is still an underrated and often neglected topic. The deficits in provision of sanitation services to the people in developing countries are vast. According to UN estimates 2.6 billion people lack sustainable access to improved sanitation, this figure being double the figure for access to safe water. Sanitation is essential for a positive and sustainable development. In the absence of adequate sanitation infrastructure, people suffer from waterborne and hygiene-related diseases, which lead to high morbidity and mortality rates. The global health burden of diarrhoeal disease in particular is tremendous and falls disproportionately on young children. Diarrhoeal diseases, the third leading cause of infant mortality following malaria and respiratory infections, kill approximately 2 million people annually and accounts for approx. 20% of deaths among children under age five.[4]

Besides personal distress, the lack of access to sanitation has a direct impact on the productivity of people and thus the national economy as a whole. Inability to work due to sickness „cost“ developing countries approx. 5 billion working days per annum.[5] Due to this, investments in the expansion of sanitation infrastructure pay off double, enabling people to live a healthier life and thus increasing their productivity and economical activity and ultimately their income. A cost-benefit analysis carried out by DFID (2005) confirmed that every US$ invested into the sanitation sector realizes a social and economical benefit of 5-23 US$ (variation according to the country).[6]

UNDP estimates the total costs of achieving the MDG for sanitation to be around 10 billion US$ for a provision of simple latrines and 34 billion US$ for supply of flush toilets.[7] In comparison with the actual figures of investment into the sanitation sector this reveals a shocking discrepancy and calls for immediate and concerted efforts by governments, donors, private and civil actors. The huge challenge ahead has lead to wide-spread disillusionment and a state of resignation.

But opportunities for significant improvements in the delivery of sustainable sanitation services exist while moving from top-down approaches to social mobilisation and active marketing for sanitation with a strong focus on initiating and supporting demand that can then be served by public or private entities. This however might prove to be a process that requires long-term commitment since demand for sanitation is often limited by cultural taboos and behavioral patterns that are difficult to change and require collective action. Prestige and social pressure are also crucial motives for the choice for sanitation facilities that is undertaken at household level. Once effective demand is created, markets for sanitation services are endless and offer tremendous opportunities for fast-tracking initiatives to improve access and thereby creating employment on the side of sanitation providers.

There are various sound reasons for addressing the challenges regarding water supply and sanitation jointly. The transmission of diseases via the faecal-oral route, passed on by drinking or handling microbiologically unsafe water that has been in contact with human or animal waste, or because of insufficient water for washing and bathing is an important one.[8] Yet, it has to be acknowledged, that the situation in the sanitation sector differs severely to the water sector i.e. with regard to technology (ultimate goal of network supply vs. acceptable on-site sanitation) but also when it comes to the various actors engaged. In fact, in many aspects sanitation has more in common with waste management than with water supply, despite its strong links in programming. As waste management, sanitation services are delivered along a commodity chain that may even end up recycling the output (excreta), i.e. in Ecosan projects. On-site sanitation requires facilities to collect the human waste, systems to remove it, transport it, treat it and dispose of or recycle it. This results in a large number of different actors working in different market segments. This fact is usually reflected not only at the level of service providers, but also at the local and national governmental level, were responsibilities are often shattered amongst many actors.

In-depth knowledge of the special features of sanitation is required in order to take these specifics into account and plan interventions accordingly. In this respect, this study will contribute towards identifying the main differences between the water supply and sanitation sector on the level of SSPs.

1.3Objectives of the study

In very recent years there has been an increasing debate on informal service providers. The debate divides development practitioners into two groups. There are those who want support SSPs through partnerships and capacity building, taking a light-handed regulation approach. And there are others, who regard SSP as only a short-term solution, which will always deliver a lesser quality service than the main utilities and thus should be removed completely unless they are able to comply with the general regulatory service standards.

Regardless of these differing views there has been a general acknowledgement of the fact that little is known about informal SSPs, their management set-up, operational characteristics and constraints that hamper their endeavour to deliver and even expand their services. The complexity and heterogeneity of the informal sector in general and informal actors in WS&S specifically, has led to many development agencies shying away from developing adequate approaches towards dealing with this issue. Owing to this, there is a general lack of guiding principals, concepts and comprehensive approaches towards working or partnering with informal actors in WS&S.

It is therefore the aim of this study to contribute to the ongoing debate by providing an insight into the activities of SSPs operating in and around the poor urban settlements of Nairobi (Kenya). The objective of the study is to establish a comprehensive picture of SSPs in water supply and sanitation that can assist in answering the question of whether or not SSPs are able to increase access of the poor and contribute towards reaching the MDGs. In this regard the study aims at facilitating the development of an adequate approach towards SSPs and the identification of possible entry-points for improvements of their working environment and the quality and efficiency of services offered. A further objective of this study is to compare the actors in water supply with those in sanitation in order to identify similarities and differences that enable development interventions to be designed appropriately.