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close this bookBetter Water Services in Developing Countries - Safeguarding the Interests of the Poor (DFID, 2000, 22 p.)
View the document(introduction...)
View the documentWater is Essential for Life
View the documentThe Need
View the documentRequirements for Successful PPP
View the documentProblems and Opportunities
View the documentInvestment Needs
View the documentFinance and Risk Mitigation
View the documentThe Opportunity for PPP
View the documentBack Cover

The Need

More than one billion people in developing countries still lack access to clean water and over 2 billion lack adequate sanitation. Population growth, increasing urbanisation, and the need to meet the demands of long-term economic development all increase the demand for reliable and efficient water and sanitation service provision.

Developing countries invest in excess of US$200 billion a year in new infrastructure, around 4% of their national output. Water and sanitation accounts for about one quarter of investment. However, the impact of such expenditure on water and sanitation services is often limited by major inefficiencies in operation and maintenance management. Access to reliable safe drinking water and hygienic sanitation remains far from satisfactory.


Figure

Water and sanitation are fundamental human needs which are inadequately provided for in many developing countries.


Figure

With few exceptions, services are of a relatively poor standard, and will he further strained by future growth.


Levels of Access to Sanitation and Safe Drinking Water


Employee/Connection Ratios

Without adequate funding water service providers can be caught in a cycle of decreasing revenues and worsening service standards. The continuity and reliability of supply deteriorates, mains pressures fall and may become non-existent in some parts of the system. Water quality fails to meet prescribed standards and levels of non-revenue water steadily increase.

Public Private Participation in water and sanitation provision presents challenges which are increasingly well understood and provided for, with a growing record of success.

Commercial factors that contribute towards inefficient operation include:

· low collection/billing ratios, often 50% or less
· incomplete customer registers
· high numbers of illegal connections
· inadequate knowledge of the asset base
· absence of asset management plans and business plans
· unreliable accounts and financial information
· tariffs which are not related to recovery of the costs of the service
· high employee/connection ratios
· lack of knowledge of customers' desired levels of service and willingness to pay.

Private sector commercial management and customer relations skills are well suited for the firm, but fair, approach that is required in order to bring about improvements. A private company pays for inefficiency and non paying customers out of its profits, and in consequence will be far more determined and effective in minimising these conditions to create efficient water supply and sanitation services.

There is a widely held perception that the private sector cannot provide a monopoly supply without the risk of exploitation and unreasonably high prices. There is also concern that uneconomical services to poorer communities may be neglected, substandard or otherwise inadequate. Such risks have to be acknowledged, but knowing the risks steps can be taken to provide adequate protection to customers. This has been done successfully for example in Buenos Aires (Argentina), Cd'Ivoire and Guinea.