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Improving Water Supply and Sanitation Services for the Urban Poor in India

Section 3

Take Vested Interests into Account

Regularization of informal service providers often helps utilities to reduce illegal connections and corrupt practices by staff, lower water prices, and improve the reliability of services.

Obstracles

Water vendors, organized crime, corrupt public officials, and dishonest utility staff may have a vested interest in preventing better services for the poor.

When the poor cannot get piped water supply services legally they are forced to provide for themselves in some way—legal or illegal. In cities with a high percentage of unserved populations, such as Dhaka, Manila, and Karachi, the amount of money that passes hands informally in the water sector to provide water to the unserved population is reportedly greater than the revenue of the formal service provider. Vested interests will naturally oppose any changes to the status quo that threaten their source of revenue.

Sometimes confrontations can be avoided by giving informal and illegal service providers new roles or incentives that bring them into the formal system. Ultimately, improving transparency reduces opportunities for illicit activities.

Incorporate Informal Service Providers into the Solution

Institutional arrangements and legal reforms that incorporate informal vested interests into the formal solution reduce opposition and improve transparency. Such arrangements benefit both sides: the informal providers gain security and legitimacy, and the utility or alternative service organization can take advantage of the knowledge and skills informal providers have accumulated. Regularization of informal service providers often helps utilities to reduce illegal connections and corrupt practices by staff, lower water prices, and improve the reliability of services—especially if adequate regulatory arrangements are introduced.

Such solutions must be tailored to each situation. There are, however, a number of cases that might provide models that are adaptable to other environments. In some places, formal utilities have hired vendors who lost their markets when piped services were extended and improved. In Paraguay, local private firms that won contracts to build and operate new water supply systems in previously unserved neighborhoods were encouraged to hire small-scale service providers (known as aguateros) to handle day-to-day operations.10

The case of water kiosk operators who entered into formal service arrangements with the Nairobi Water Company in a slum in Nairobi, Kenya (see Box 4), provides another potentially promising example.

Box 4: Water Kiosk Operators Unite in Kenya

In the informal settlement of Kibera in Nairobi, Kenya, more than half-a-million poor people get water from over 650 informal local water kiosks. The kiosk operators lay pipes, as much as 1,500 meters long, to connect their storage tanks to the local utility network. Although the utility recommends that water be sold for Ksh 19 per jerrycan (about

US$0.10), the prevailing price is usually Ksh 2 (the equivalent of US$1.30 per m3 , or eight times the utility’s domestic tariff), primarily because of the costs associated with establishing and running water kiosks: capital investment, bribes paid to utility staff to obtain and retain a connection, and the high tariffs associated with higher consumption blocks. During water shortages, the prices are even higher, soaring to Ksh 5 or even Ksh 10 per jerrycan.

The utility historically had little incentive to address the problems in Kibera. This was because (a) revenue collection in the settlement was negligible; (b) there were many illegal connections; and (c) the water delivered to Kibera was estimated to be less than 10 percent of the city’s total consumption. Instead, the utility simply used water rationing to limit its losses. Until recently, the utility considered kiosk operators to be part of the problem and driving them out of business was seen as an effective measure to reduce unaccounted-for-water.

In May 2004, following an intervention by WSP–Africa, kiosk operators decided to form an association, which they called Maji Bora Kibera (MBK), Swahili for ‘Better water services for Kibera’. They drafted a constitution, formed an executive committee, and applied for official registration. Soon a joint task force was formed with members from the utility, MBK, and WSP–Africa. At the suggestion of the utility, the MBK wrote a letter stating clearly the problems faced by water vendors and offering to cooperate with the regularization of their connections, pay bills regularly, stop paying bribes, report leakages, and expand service to unserved areas. The utility was asked to provide a regular supply of water, adopt better billing and collection practices, and provide engineering advice for network improvements. The letter was a watershed in vendor-utility relations. The MBK and the utility continue to build their relationship. The MBK is working on a number of initiatives to strengthen self-regulation and address the remaining barriers to good services.
While there remains some concern that the association could be an obstacle to long-term change in Kibera (if the members were to protect their own interests at the expense of consumers), there is also a recognition that both the utility and vendors can gain from further collaboration.

Source: Brocklehurst, Clarissa. June 2005. Rogues No More? Water Kiosk Operators Achieve Credibility in Kibera. Water and Sanitation Program Field Note.

9 Kenyan shillings.
10 Triche, Thelma, Sixto Requeno, and Mukami Kariuki. December 2006. Engaging Local Private Operators in Water Supply and Sanitation Services, Initial Lessons from Emerging Experience in Cambodia, Colombia, Paraguay, the Philippines, and Uganda. World Bank. Water Supply and Sanitation Working Note 12, p. 16.

Getting Started: Actions and Resources

This section suggests the following actions for sector actors:

Policymakers and Project Planners

• Take the role of informal or illegal actors (and other vested interests), and the contributions they can make, into account in formulating policies and regulations and planning projects.
• Assess the business dynamics of existing informal operators to determine why their activities are so lucrative.
• Determine whether owners of rental dwellings have vested interests.
• Incorporate existing vested interests into solutions, where feasible, as a means of increasing transparency, neutralizing opposition, and reducing costs.
• Use neutral intermediaries who are trusted by both parties (such as respected local or international nongovernmental organizations, or professional mediators) to promote dialog between formal and informal service providers. Governance Bodies and Service Providers
• Hire disenfranchised vendors to work in the utility when expansion eliminates their markets.
• Team up with informal service providers to improve service and cost recovery in marginal areas. Advocates and Civil Society Organizations
• Act as intermediaries between informal or illegal service providers and the formal sector.
• Help informal or illegal service providers to create institutional structures that will promote cooperation among them, and enable them to negotiate with formal structures.

Table 2: Relevant Case Studies in Accompanying Volume

Case Study Topic
Parivartan Program, Ahmedabad, India (Case Study 1) Politicians who undermine the scaling up of the program by providing funds outside the program
Nongovernmental Organization-Assisted Water Points:
Social Intermediation for Urban Poor,
Dhaka, Bangladesh (Case Study 11)
Difficulty with mastaans, musclemen or influential persons who control slum areas
Temeke District, Dar es Salaam, Tanzania (Case Study 14)

Resistance of water vendors to water services improvement program

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