Devolution of water services and enhancing the gains

Last Updated 13 years ago by Kenya Engineer

Article by Eng. Peter Njaggah

1.0     Introduction.

The National Water Policy of 1999 and the Water Act 2002 (Act) triggered extensive reforms to Kenya’s water sector, bringing it in line with international best practice. The reforms have since significantly improved water resources management and water services delivery to the benefit of citizens. For the water services subsector, this was achieved on the basis of a clear separation of policy making, regulation and service provision. 

Notable successes have been achieved over the last eight (8) years in water services provision. At the same time, a number of challenges and weaknesses with respect to existing policy, legislation and practice have been identified.

The enactment of the new Constitution of Kenya (CoK 2010) has placed an obligation on all sectors/ Ministries to align their existing policies and legislation. This present a good opportunity for the water services sector to take on board in the new legal framework the lessons learned from the reform process commenced with the Water Act 2002. Towards this end, the   Ministry of Environment, Water and Natural resources has drafted new water policy and a Water Bill 2012 aligning its frameworks to the CoK 2010. 

Further the Constitution of Kenya 2010 has devolved the responsibility for the provision of effective and efficient water supply and sanitation services to the Counties. It has also recognized the right of all citizens to safe water and basic sanitation, (Art 43) and the right of all consumers to be provided with goods of reasonable quality which not only protect their health but also safeguard their economic interests (Art 46). The CoK (2010) expects the State to take policy, legislative and other measures, such as setting of standards, to ensure that these rights are progressively realized (Art. 21(1)).

1.1. Lesson learnt and what to safeguard under devolution.

a) Ring-fencing of revenues from water services.

Wasreb has for the last 8 years been nurturing ring fencing of water services revenues to ensure that the water companies are able to perform the services optimally. If this ring fencing and separation is not protected under devolution, water services will slide back to the pre-reform era, where the water services sector revenue was used to fund everything else in the defunct local authorities and no money was put back to operate and maintain the assets or even to pay back the loans. Consequently water service provision was characterised by poor governance, accountability and poor services. This trend has been reversed in the last 8 year and its imperative that the gains that have been painfully nurtured in the last 8 years continue to be enhanced. 

Wasreb, therefore advices that ring fencing of the water services revenues must continue if the right to water under article 43 of the Constitution is to be achieved and if any loans taken over the last 8 years from the World Bank, African Development Bank, AFD and KfW are to be repaid. 

b) Commercial viability and financial sustainability in provision of water services.

For water services to be delivered in an efficient and effective manner and in order to gradually extend access to all, it is imperative that water service providers (WSPs) are commercially viable. This in turn requires the realization of economies of scale, which can only be achieved where utilities reach a certain minimum size. WSPs which are too small to be viable therefore need to be aggregated to larger units. 

Against this background, the Water Services Regulatory Board (Wasreb) has undertaken an assessment of the options to achieve commercial viability and financial sustainability of formalized WSPs at county and cross-county level.

The objective of the viability assessment is to provide County Governments with an overview of the commercial viability and financial sustainability of formalized WSPs within their area of jurisdiction and to identify suitable options to ensure adequate and cost-effective service delivery through the concentration of Water Supply and Sanitation (WSS) Services under one licensed, commercial Water Service Provider (WSP) at county or cross-county level.

c) Professional management and development of water services assets.

Assets are currently developed and held by the Water Services Boards and managed by the Water Service Providers. Under the new dispensation, management, development and holding of assets will need to be through the Water Service Providers as appointed agents of the Counties. This is in order to ensure that assets are kept in a condition allowing adequate revenue generation for uninterrupted, sustainable asset operation, further investments and repayment of loans attached to the developed assets.

Further, cross-county assets of national interest (such as for bulk water supply) shall be managed and held at a supra-county level in order to ensure that general public interest is preserved.

d) Management of water resources.

 Management of water sources used for service provision across counties is part of water resource management and therefore a national function. The development of shared resources requires planning, financing and implementation at a regional and national level through a basin management approach, following natural boundaries, so as to ensure a need based allocation of water for the sustainable development of the country as a whole. For that reason, and in the same vein as cross-county assets, bulk water services will need to be operated at a supra-county level.

e) Investment into the water services sector.

Since the beginning of the reforms in 2002, a positive trend in sector funding has been registered with urban water coverage standing now at about 53%. The Vision 2030 that seeks to propel the country to a middle level economy envisions water services for all by the year 2030. Clearly huge investment will be required in the next 17 years to realise the Vision 2030 dream and intervention by donors/development partners will be paramount.

By appearing to erode on the gains made would be to send the wrong signals to donors/development funds and is likely to reverse the positive trend in sector funding.

f) Propoor Focus.

Global trends indicate that 2/3 of the global population will migrate to the urban settlement and the majority will leave in informal settlement. Therefore progress in coverage and realization of the right to water services can only be rapidly achieved by focusing on the informal settlement where underserved are living. Customers in low-income areas are part of a profitable market as illustrated by financial institutions who have realized that there are business opportunities in low income areas.

g) Human Right to Water and Sanitation.

The Bill of Rights gives all citizens the right to safe water and basic sanitation and thereby obliges the State and County Governments, as duty bearers, to take necessary measures for the progressive realization of the right and show these to the public.

In a context of rapid population growth and urbanization, this means that significant investments will have to be undertaken which will need to create a real impact in terms of improved water and sanitation coverage. This in turn requires utilities which are commercially viable, operate according to good corporate governance principles, which are accountable to the national regulator and the public and are therefore in a position to operate efficiently and attract finances for investments not only from the public but also the private sector. 

Therefore a close collaboration between the State and County Governments, and   the Water Services Regulator guided by national policy and legislation will be key to successfully improve service delivery now and into the future.

h) National Regulation of Water Services.

The provision of piped water and sanitation services is very capital intensive. Further it is a natural monopoly, with no real market competition .Hence any unregulated operator is likely to abuse its dominant position to charge excessive tariffs while at the same time providing poor services. 

Access to water services is a basic need and a human right which needs to be fulfilled, and at the same time the provision of the service involves costs which need to be recovered for sustainable services. The collection, treatment and disposal of wastewater is a precondition for a cleaner environment, improved public health, and the attainment of economic and social development. Regulation ensures that water services are provided in a manner that protects consumers and the environment and helps to reconcile the social and economic nature of water services.

Regulation entails making sure that utilities, through their tariffs, are in a position to recover justified costs for commercial sustainability and at the same time ensuring affordability to the poor through a progressive tariff structure and regulated prices at public outlets. It involves monitoring of utility operations according to set standards, enforcing the licenses issued to them and reporting their performance to the public. All this is to ensure transparency, accountability, compliance and progressive improvement in service provision.

About the Author:

Eng. Njaggah is the Head of the Regulatory Services at the Water Services Regulatory Board. He holds a Bsc degree in Civil Engineering from the University of Nairobi (1987), Msc in Environmental Engineering from the University of New Castle- Upon Tyne in UK (1990) and an MBA (executive) from Jomo Kenyatta University of Agriculture and Technology (2011).

Eng Njaggah has   extensive experience and knowledge in operation, management and regulation of water utilities. 

He is a Professional Engineer with the Engineers Board of Kenya (EBK) and corporate member of the Institution of Engineers of Kenya (MIEK).