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This session shines a spotlight on an issue most development partners, government representatives, and utility managers are aware of, but seldom discuss openly: across the globe, too many public institutions don’t pay their water and sewerage bills, thereby starving utilities of resources they need to provide adequate service and ensure realisation of the human rights to water and sanitation.
Find out more and register at https://www.everydrop-counts.org/
The event is organised by GIZ – Water Policy, Water Integrity Network (WIN), End Water Poverty, Eastern and Southern Africa Water
Regulators Association (ESAWAS), Rwanda Utilities Regulatory Authority (RURA), NGO WASH Forum.
Access to safe water and sanitation are human rights. To serve everyone and realise these rights, water and sanitation service providers must be able to operate and stay financially viable.
However, there is evidence to show that many public institutions do not pay the water bills they receive, or with crippling delays. This is a problem for service providers who count on this revenue.
When governments don’t pay, people do. The burden shifts to those who face increased tariffs and those who are left with poor or no service, who pay with their health, time, and productivity.
There are many ways to address the issue. Utilities must improve systems to ensure collection of payments. Governments must ensure payments to utilities are given due priority and urgent attention. This is essential, to ensure resilience in crises, avoid costly bailouts, and safeguard the human rights to water and sanitation for all.
Access to safe water and sanitation are human rights. Water and sanitation service providers must be able to operate and stay financially viable to serve everyone. But this ability is often at risk due to non-payment – including by government institutions.
Water that is treated and delivered has a cost, also water meant for public office buildings, security and policing facilities, and other public institutions such as public hospitals and schools. Except when they are exempt from payment by law, these public institutions should receive water bills and are expected to pay them. However, there is evidence to show that many do not, or that they pay with crippling delays.
These arrears contribute significantly to the financial and operational challenges faced by utilities. Non-payment thus has direct impact on the ability of utilities to provide adequate service and hampers the realisation of the human rights to water and sanitation.
Someone always pays. When governments don’t pay, people do. The burden shifts to those who face increased tariffs and those who are left with poor or no service, who pay with their health, time, and productivity. The impact on affordability of service is severe. The long-term social, economic and environmental costs are dramatic.
There are many ways to address the issue. Based on new research by WIN and End Water Poverty, this policy brief outlines best practices for service providers, regulators, public finance actors and water sector stakeholders.
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COVID-19 is a major threat to the livelihood of rural communities living off agriculture and livestock herding in Nakuru and Makueni counties. Key economic institutions have been shut down in response to the pandemic, including markets. This has negative consequences on household income and social interactions in rural communities and is leading to underemployment in informal labour markets.
Water, sanitation, and hygiene issues (WASH) are coming to the fore. Governments are urging people to wash their hands with soap and water as an essential means to stop the spread of infections. This has led to high demand for communal handwashing facilities in low-income areas and for the distribution of soap with handwashing tanks.
To address these issues, curb the spread of the virus, and cushion Kenyans from the socio-economic impact of the pandemic, the Government of Kenya is disbursing COVID-19 relief funds to county governments, with support from non-governmental actors.
There is no room for corruption or manipulation in these unique circumstances. Relief funds cannot be wasted. County governments must follow national procurement rules and regulations in using these funds. They must use the money transparently and with integrity. We cannot afford to take this lightly. We must hold service providers, civic and county leaders accountable.
Holding local governments accountable for effective use of COVID-19 relief funds
The Centre for Social Planning and Administrative Development (CESPAD), with the Water Integrity Network (WIN) and the Kenya Water and Sanitation Civil Societies Network (KEWASNET), are launching a citizen’s campaign, to sensitise the public on their rights and duties to ensure the effective and transparent use of COVID-19 relief funds during the pandemic. We are focusing on ensuring meaningful public participation, as well as monitoring and evaluation of funds and procurement activities.
The campaign highlights ways to hold county governments and water service providers accountable:
how to report corruption from civic and county leaders,
how to ensure the poor and marginalised are not excluded or exploited,
how to deal with misinformation spread through social media,
how to take part in county budgetary processes.
The pandemic can only be stopped in its tracks with integrity. County and national governments must put in place sustainable measures to limit the impact of the pandemic. People must follow guidelines to wear masks correctly, wash hands, practice social distancing, get tested and self-isolating when feeling ill. For it all to work, active participation, accountability mechanisms, and anti-corruption procedures are essential. They can ensure that funds disbursed to help fight the virus are used well and benefit those who need them most.
Follow news on the campaign on Twitter: @cespadkenya
For more information, contact the WIN Programme Officer for this initiative:
Nagnouma Kone, nkone[at]win-s.org
Water, sanitation, and hygiene (WASH) is the first line of defense against the spread of COVID-19. Safe WASH practices can help stop human-to-human transfer of the virus at the household- and community-level. Recognizing the crucial role of WASH services during a pandemic, national and county governments, especially in low- and middle-income countries, have deemed WASH as essential services and have directed water utilities to ensure uninterrupted supply to all consumers, regardless of their ability to pay. While important for public health, this directive can compromise the financial health of utilities over the long-term.
Averting Financial Crisis for Water Utilities During the COVID-19 Pandemic
As a result of the COVID-19 pandemic, water utilities are caught in a perfect storm of declining revenue coupled with rising costs. In Kenya, the government’s directive to water service providers (WSPs) includes the following requirements: water should be provided for free in informal settlements and public places, disconnected customers should be reconnected, and no disconnections for nonpayment of bills should be carried out during the pandemic. In addition, WSPs also have to comply with social distancing guidelines and use personal protective equipment (PPE) and other infection control measures. While these directives serve important public health needs, they also amplify the economic effects of the COVID-19 pandemic on water utilities. WSPs, which rely on fees from customer tariffs, new connections, and reconnections to cover their operations and maintenance costs, stand to incur huge losses in revenue from these directives. This sharp decline in revenue collection, combined with the cost of COVID-19–related compliance, increases the financial stress on utilities.
The Nzoia Water Services Company Limited (NZOWASCO), a Kenyan utility organization providing water and sewerage services within the County Governments of Bungoma and Trans Nzoia, is one such utility that is facing a looming financial crisis due to the pandemic. “Our revenue collection is low, and customers are not paying for water. Following the directives given by the government, we cannot disconnect them. We have not paid our power bill for the last month as a result of this,” notes Mathew Wakhungu Maruti, Managing Director of NZOWASCO.
NZOWASCO’s experience is not unique. The Kenya Water Service Providers Association estimates that water utilities’ revenue collection has dropped from 94 percent to 30 percent since March. Based on Kenyan Water Services Regulatory Board projections of the primary financial impact of COVID-19 on two large WSPs, USAID estimates that collection efficiency will fall to 50 percent in a best-case scenario. The worst-case projection sees this number falling to 20 percent. When expenditure changes are required to meet the directive of providing free water, the worst-case scenario predicts a two-fold increase compared to pre-COVID-19 monthly expenditures. (For more details, see Water Service Provider COVID-19 Financial Stress Testing and Mitigation.)
“Immediate financial support is very much needed and will be critical for sustaining water and sanitation service provision that underpin public health measures in responding to the pandemic,” notes Barbara Kazimbaya-Senkwe, USAID WASH-FIN’s senior WASH governance advisor.
How USAID and Partners are Helping Water Utilities Keep the Lights On
Providing support to WSPs to ensure continuity of services enables communities to maintain access to WASH — a crucial pillar of USAID’s response to COVID-19, and a part of the Agency’s larger framework of short- and long-term recovery and resilience.
Financial Stress Testing of WSPs in Kenya
USAID’s Water, Sanitation, and Hygiene Finance (WASH-FIN) project is conducting financial stress testing of large WSPs in Kenya using the World Bank’s COVID-19 Financial Impact Assessment Tool for Water and Sanitation Providers. Through assessments of revenue, debt, operational expenditures (such as wages and rent), and additional costs associated with the crisis (such as chemicals, PPE, additional water points, and tanker services), the tool allows WSPs to quantify the financial impact of the pandemic on their operations and helps prioritize potential response options. For its first cohort, USAID WASH-FIN selected two large WSPs that had previously been relatively well-performing, financially stable, and among those best-positioned to weather a financial crisis. The third WSP is smaller and representative of WSPs that despite not being financially creditworthy, had still procured commercial loans through an output-based aid approach. Such WSPs are likely to experience significant pandemic impact.
The results of the analyses are stark. The three selected WSPs will require around KES 155 million (US$1.4 million) to sustain their operations through the next six months. If no action is taken, all three WSPs assessed are expected to run out of cash by September 2020 and, in some cases, even earlier. To continue to serve the public, the WSPs must, at a minimum, have enough cash to cover their most basic operational and maintenance costs. Given that they are presently unable to fully collect revenue from most of their customers, additional financial resources will be required to close the gap and ensure they can continue to provide essential services and support the government’s public health objectives.
To help mitigate financial stress, USAID is working closely with these WSPs to consider a mix of actions, such as increase in collection efficiency, internal cash preservation, liquidation of assets, and debt restructuring. Even with all of these mitigating factors, however, it will be critical to provide financial support to these WSPs. “Due to reduced revenue from water sale, we have accumulated debt to our suppliers, including those supplying water treatment chemicals,” notes David Ndumo, Corporate Manager of NYEWASCO.
USAID WASH-FIN is also performing a crucial coordination role for the Council of Governors (COG) concerning national-level dialogue and action following the onset of the COVID-19 pandemic in the WASH sector. Following the facilitation of a high-level meeting by USAID between COG and WASH development partners, UNICEF committed US$100,000 for the provision of water treatment chemicals for WSPs in 13 counties.
All of these efforts will be extremely beneficial to companies like NYEWASCO, which must meet their obligations not just for chemicals but also other inputs, including electricity and labor costs required to keep water and sanitation services flowing.
Financial Stress Testing of WSPs in Indonesia
As in the case of Kenya, the Government of Indonesia required that local WSPs provide free or discounted water to customers, free connections for new customers from low-income households, and greater flexibility on payments to ensure residents’ uninterrupted access to water. This mandate has severely impacted the financial situation of local water utilities.
Using the World Bank’s financial assessment tool, USAID’s IUWASH PLUS (Indonesia Urban Water, Sanitation, and Hygiene Penyehatan Lingkungan Untuk Semua) project is conducting financial stress testing for its 25 local partner utilities. The results, which are expected by the end of July, will help to better focus the needed assistance, including getting reduced tax for the year of 2020. In the next quarter, USAID IUWASH PLUS will continue the analysis for all of the 32 assisted water utilities, while continuing to help them improve performance, reduce operational cost, and adjust their business plans to get operations going while expanding coverage. Additional data collection is ongoing to assess COVID-19’s impact on the operational activities of WSPs, which will in turn inform the local government’s planned investment in their utilities.
Three months’ worth of data from the Bogor District’s water utility are already projecting a 12.5 percent decrease in the utility’s revenue this year, which is largely attributed to commercial entities’ reduced water use. The billing collection rate is also down from 98 percent to 85 percent, and capital expenditure has been reduced by 70 percent.
Building on efforts in Kenya and Indonesia, USAID plans to further roll out the stress testing tool in Mozambique and Zambia, with the possibility of expanding to other countries.
Rapid Assessment of the Impacts of COVID-19 on WSPs and Business Continuity Planning in the Philippines
To assist WSPs in the Philippines with their emergency response and recovery planning, USAID, through its Strengthening Urban Resilience with Growth and Equity (SURGE) project, conducted online surveys from April 23 to May 12, 2020, to identify the impact of COVID-19 on WSPs. USAID and its partners used the findings from the rapid assessment to identify appropriate assistance and interventions for WSPs, such as providing training and mentoring to develop business continuity and recovery plans (BCRP). The purpose of the BCRP is to ensure continuity of water services during the pandemic while maintaining the safety of the WSP employees and consumers. The project is also working with its partner WSPs to identify their interest in electronic billing and payments following the findings on low collection efficiency. SURGE is also advocating and promoting the institutionalization of proper handwashing with soap by completing concept designs of handwashing stations.
Short-Term Operating Cost Subsidies to Private Water Providers in Mozambique
As part of a coordinated response to the COVID-19 pandemic, many governments have issued decrees suspending water tariff charges for low-income households. While these decrees may be beneficial and are a form of targeted subsidies for at-risk households, they will also lead to lowered revenues for water utilities. This will result in the WSPs having reduced ability to pay for the energy and water treatment chemicals, in effect compromising the ability to provide quality water services over the long-term. USAID is partnering with UNICEF and key government partners in Mozambique to provide short-term operating cost subsidies to private water providers in peri-urban areas and small towns. This initiative will help ensure they are able to balance the need to meet short-term public health mandates with the risk of financial insolvency over the long-term.
Intervening at a Critical Juncture
The COVID-19 pandemic has already shown in just a few months the devastating impact it has had on water utilities globally. If these shocks are not addressed urgently, the consequences of utility deficits will be felt immediately and long after the virus subsides. We are also at a critical juncture in the progress toward universal access to water and sanitation by 2030. Falling utility revenues and ballooning national budget deficits in many countries could set back the advances in universal access that have been made in recent years.
Mobilizing resources to counter falling revenues and rising costs will require a concerted effort from governments, development partners, and water utilities themselves. “It’s clear that water is critical to mitigating the impact of COVID-19. As importantly, we also recognize that many of our service providers weren’t operating in a technically and financially viable manner, even before the crisis,” notes Joel Kolker, program manager for the World Bank’s Global Water Security and Sanitation Partnership. “Therefore, we must enhance our efforts to deal with the crisis and improve the long-term viability of the service providers.”
USAID is committed to using the results of financial stress tests and other approaches to not only keeping vital water supplies flowing but also ensuring water utilities remain operational now and well into the future. By supporting water utilities, USAID can ensure that the WASH sector not only maintains its critical role in fighting COVID-19, but is also on course to help countries achieve universal access in WASH by 2030.
By Ella Lazarte, USAID, and Farah Siddique, USAID WASH-FIN
Special thanks to Amanda Robertson (USAID/Kenya), Marian Cruz Navata (USAID/Philippines), and Trigeany Linggoatmodjo (USAID/Indonesia) for contributing to this story.
To control further spread of a deadly disease, USAID and its partners are pivoting to improve access to safe water, sanitation, and hygiene, bolstering public health at a critical moment as the worst pandemic in 100 years sweeps the globe.
Since it emerged in late 2019, COVID-19 has gained a foothold in more than 185 countries, claimed more than 645,000 lives, sickened more than 16 million people, and become the world’s worst public health crisis in a century.
Joining a fight that is at once global and local, USAID is marshaling its considerable expertise and resources in the field of water, sanitation, and hygiene (WASH) to help stabilize public health at a time of great uncertainty. The Agency is working in close coordination with communities, governments, development partners, and the private sector to help contain the spread of the disease. This all-hands-on-deck approach is working to flatten the infection curve, buying crucial time for local and national health care systems to increase testing capacity, improve contact tracing, and develop surge capacity at hospitals to treat serious cases.
In the absence of a treatment or vaccine for COVID-19, the strategic approach emphasizes that one of the greatest tools in the battle against COVID-19 is also one of the simplest — handwashing with soap — shown to be one the most effective behaviors for reducing the risk of infection and transmission.
In addition to promoting this vital hygiene behavior, USAID’s contribution to the global fight against COVID-19 includes facilitation of public education campaigns to improve personal hygiene habits, decrease transmission risk, and build communities’ resilience in the face of the ongoing pandemic.
Water service providers are also facing a perfect storm of declining revenues and sharply rising costs as a result of this pandemic. Sustaining water services is critical for public health and handwashing, and provides a foundation for safely reopening schools, businesses, and public spaces. USAID is leveraging its expertise in WASH to help service providers continue operations, secure critical supplies, and avoid financial collapse.
USAID missions around the world are putting the Agency’s new strategic approach into action every day in the fight to more quickly contain and control COVID-19. Read how in the stories below.
With more than 100,000 positive confirmed cases as of late July, Indonesia is grappling with an escalating crisis as increased testing reveals the extent of COVID-19’s spread across the country. Improving access to reliable water and sanitation services and championing regular handwashing with soap are two ways USAID’s IUWASH PLUS (Indonesia Urban Water, Sanitation, and Hygiene Penyehatan Lingkungan Untuk Semua) project is contributing to critical actions that will reduce the spread of the virus.
Working in 120 communities spread across 35 municipalities, USAID IUWASH PLUS and its partners supported the installation of 5,000 handwashing stations, more than 900 soap dispensers, and nearly 700 water taps. In March 2020, IUWASH PLUS began collaborating with puskesmas (community health clinics) to educate the public about handwashing with soap, using a variety of channels to reach residents including radio jingles and social media posts. These efforts are supplemented with strategic messaging emphasizing the importance of either remaining at home or physical distancing when in public.
Meanwhile, to ensure residents’ uninterrupted access to water, the government has mandated that local water utilities must provide customers with free water for the next three months. To support the 25 partner utilities affected by this new mandate and the resulting decrease in revenue, USAID IUWASH PLUS is assisting them to plan their capital needs and strategize how to meet those needs while providing more free water. This support is maintaining continuity of water supply and keeping faucets from running dry.
Improving access to hygiene-related infrastructure continues: IUWASH PLUS is setting up handwashing stations equipped with soap not only outside puskesmas, but also near other centers of community life, such as the local mosque.
“I hope the community understands the importance of clean and healthy behaviors,” says Wheny Susianti of Surakarta city in Central Java. “Hopefully, the handwashing-with-soap facilities will remind people to wash their hands with soap,” a key behavior for stopping the transmission of COVID-19.
In South Sudan, the world’s youngest country, COVID-19 threatens to overwhelm a fragile health care system. To curb transmission of the disease, USAID is helping distribute hygiene kits and soap while improving water and sanitation access in at-risk communities — as well as sending personal protective equipment to health care workers as hospitals prepare for a potential surge of patients.
Efforts to educate the public on best practices for avoiding COVID-19 infection target particularly high-risk communities, such as the densely populated sites hosting people displaced by the conflict that began in 2013. In these settlements, where donors provide safe water and sanitation, USAID support enabled UNICEF to recently reach nearly 30,000 residents in Juba with emergency WASH infrastructure and services.
USAID funding is also helping ramp up additional infection prevention and control measures such as routine cleaning and disinfection of sanitation facilities and water points. “USAID’s continuing support,” says Tina Yu, head of the USAID Disaster Assistance Response Team in South Sudan, “will allow frontline workers to continue combating COVID-19 in the places at greatest risk of infection.”
USAID support is empowering other development partners to make a substantial impact, such as Action Against Hunger International, which now provides handwashing demonstrations to community members visiting its health and nutrition centers. Meanwhile, USAID partner International Organization for Migration installed handwashing stations in high-traffic areas such as transportation hubs and marketplaces. This USAID implementer also focuses on building leadership capacity and holding training sessions with local community leaders so that they may educate their neighbors and spread the word about healthy hand hygiene.
After a months-long national lockdown extending from late March through the end of May, India continues to grapple with the rapidly intensifying spread of COVID-19. Currently, India is experiencing the world’s third highest number of confirmed COVID-19 infections with more than 1.4 million cases nationwide as of late July.
To help reduce the risk of unchecked disease transmission, USAID/India and local partners are working to improve conditions in the country’s densely populated urban informal settlements. Through its Moving India Towards Sanitation for All (MISAAL) activity, USAID/India empowers sanitation committees to improve access to vital hygiene and sanitation services. In addition to promoting healthy sanitation and hygiene habits among residents of slum settlements, these committees serve as intermediaries between residents and local government bodies, facilitating the installation of in-home toilets and improving upon existing sewer infrastructure.
Beyond its push to strengthen WASH in urban settlements, USAID/India teamed up with the Ministry of Health and Family Welfare to facilitate a government public education campaign to help protect frontline health care staff and quarantined households from prejudice. Since March 2020, USAID has trained close to 40,000 health workers on COVID-19 prevention and response in the 12 states where it implements programs, directly benefiting 2.5 million people in India.
Africa’s most populous country, Nigeria, confirmed more than 41,000 cases of COVID-19 as of late July. In a country where one in three people is without access to safe water and more than half of residents are without access to basic sanitation, the potential for transmission of the virus is widespread, as reliable water access is a key ingredient for creating sustainable changes in handwashing habits.
“The importance of water, sanitation, and hygiene has been emphasized by the COVID-19 pandemic,” noted USAID/Nigeria Mission Director Stephen Haykin in May, as the outbreak spread.
Ever since the earliest known confirmed COVID-19 infections in Nigeria, USAID’s Effective Water, Sanitation, and Hygiene Services (E-WASH) program, which partners with utilities in six Nigerian states to improve water access, intensified efforts to improve WASH services. For example, Nosa Okoh, general manager of the Delta State Urban Water Corporation, pledged to provide a “constant safe water supply” in his jurisdiction, to decrease transmission risk. E-WASH is also supporting the digitization of payment services; e-billing enables customers to reduce unnecessary visits to the utility to pay their bills to better promote social distancing.
The state water utilities that E-WASH partners with are shaping other aspects of Nigeria’s evolving response to the pandemic as well. USAID and the Taraba Water and Sewage Corporation recently helped convene Nigerian media professionals, who exchanged ideas on how to combat COVID-19 misinformation and shared best practices for responsibly informing the public about the nature of the disease. Apart from its support to water utilities, USAID/Nigeria also collaborated with telecommunications firms to deliver messaging about safe hygiene habits to millions of Nigerian cell phone users and provided direct technical support to the National WASH Response on COVID-19, including implementing risk communication interventions such as signs and pictorial guidance on the proper use of masks and information resources for hand hygiene.
The Path Forward
As the pandemic continues to evolve, USAID and its many partners across the U.S. Government collectively pledged more than $1 billion to the effort to combat COVID-19 as of late June 2020. Whether it involves installing soap-equipped handwashing stations, refurbishing water and sanitation infrastructure, or delivering ventilators to overburdened hospitals, USAID stands committed to helping protect the communities it serves as they endure some of their most uncertain hours. Thanks to the transformative power of improved WASH, the Agency and its partners are already helping some of the world’s most at-risk populations stay one step ahead of the disease.