Sustaining High Performing Public Enterprises

Case Study of National Water and Sewerage Corporation, Uganda

Silver Mugisha

• Publisher: IWA Publishing
• Year: 2019
• eBook ISBN: 9781789060263
• Topic: Biological Sciences
• Subtopic: Applied Sciences
• Index: Biological Sciences

Sustaining High Performing Public Enterprises presents steps taken by National Water and Sewerage Corporation of Uganda, a typical public enterprise, to sustain a high performance momentum after over 15 years of successful utility reforms. Specifically, the author pinpoints key achievements during the period 2013–2018 including growth in geographical coverage from 23 to 240 towns, increase in connections from 310,000 to about 600,000; revenues growing more than three times and network growth improving from 80kms per year to over 2000kms per year. The concept of new public management (NPM) is used to set the scene for a case description of various initiatives and innovations implemented. A balanced scorecard framework is used to characterize the various activities. The book highlights a shift from over-emphasis on positive cash-flows alone to a balanced approach to 'water for all' citizens. The need to balance technical work and political aspirations is highlighted. Also featured is the nexus between utility operations and environmental protection to ensure sustainable water supply. The cardinal role of aligning staff needs to organizational needs and working for win-win solutions is also highlighted. Sustaining High Performing Public Enterprises presents strong lessons and conclusions for utility leaders and policy makers intending to reform their utilities to create value for citizens. It is also of value to academicians and researchers for scholarly studies in water and sanitation governance and management.

© IWA Publishing 2019. Silver Mugisha Sustaining High Performing Public Enterprises: Case Study of National Water and Sewerage Corporation DOI: 10.2166/9781789060256_0001

Chapter 1

Introduction

The water sector faces a decisive moment in countries throughout the world. More than 750 million people survive without safe water sources (worse still, over 2 billion people are experiencing intermittent water supplies), and over 2.4 billion live without safe sanitation. The next 10–20 years will be a period requiring a host of decisive actions for water management. It will be a period with serious challenges and risks, but also with significant opportunities, mostly in the provision of safe water and decent sanitation. The demand to allocate water efficiently to cities, industries, energy, food and ecosystems presents an unprecedented challenge to those developing and implementing policy. In tandem, it also presents a unique opportunity to create sustainable water management for the future. With increasing pressures from global change, coupled with existing unsustainable managerial practices, cities around the world will experience difficulties in efficiently managing less reliable water resources. In order to meet these challenges and to provide water security, there is the need for change and innovation in the water sector.

Delivering solutions for the complex water management problems that we face today and in the future requires a focus on bridging the gaps between sectors, and raising advocacy and awareness at a political level. It also requires leading-edge technologies, targeted scientific research, new mindsets, and the right human competences, all to be combined with the best management practices. As a sector, there is need to embrace disruptive technologies and thinking, and adopt them at a much faster rate if we are to deliver the optimal benefit they can bring. We must ‘take the bull by its horns’ and measure up to the enormous challenges ahead.

1.1THE WATER, ENVIRONMENT AND SANITATION SECTOR IN UGANDA

The water and environment sector of Uganda consists of two subsectors: the water and sanitation (WSS) subsector and the environment and natural resources (ENR) subsector. The WSS subsector comprises water resources management; rural water supply and sanitation; urban water supply and sanitation; and water for production. The ENR subsector comprises environmental management; management of forests and trees; management of wetlands and aquatic resources; and weather and climate.

The institutional framework for the sector consists of: the Ministry of Water and Environment with the Directorates for Water Development (DWD), Water Resources Management (DWRM) and Environmental Affairs (DEA); local governmental bodies (Districts and Town Councils), which are legally in charge of service delivery under the Decentralisation Act; and a number of de-concentrated support structures related to MWE, which are at different stages of institutional establishment, including Technical Support Units (TSUs), Water Supply Development Facilities (WSDFs), Water Management Zones (WMZs), and Umbrella Organizations.

The sector also has four semi-autonomous agencies: (i) the National Water & Sewerage Corporation (NWSC) for urban water supply and sewerage; (ii) the National Environment Management Authority (NEMA) for environmental management; (iii) the National Forestry Authority (NFA) for forestry management in the government’s Central Forest Reserves; and (iv) the Uganda National Meteorological Authority (UNMA) for weather and climate services. There are also NGOs/CBOs (coordinated through UWASNET and ENR-CSO Network) and Water User Committees/Associations; plus the private sector (water and sanitation infrastructure operators, contractors, consultants and suppliers of goods). The activities undertaken in Sanitation and Water for Production (mainly focusing on agricultural and animal production) require close coordination with other line ministries including the Ministry of Health, Ministry of Education & Sports and the Ministry of Agriculture, Animal Industry & Fisheries.

The evolution of the water and environment sector in Uganda has been coupled with a number of reforms. There has been significant policy and institutional reform, bringing elements of performance management, performance monitoring and evaluation, multi-stakeholder coordination and decentralised management approaches. Understandably, there has been more emphasis on water supply than on sanitation coverage. On the water supply side, the concept of ‘some water for all rather than all for some’ has helped to navigate scarce resources. Sanitation coverage faces a number of barriers. These include: heavy resources required for infrastructure, obstacles in convincing people to connect to conventional sewerage systems, inadequate business orientation towards sanitation, poor physical planning in informal settlements, and inadequate incentives for public utilities to focus on sanitation.

1.2PUBLIC VERSUS PRIVATE MANAGEMENT IN THE WATER SECTOR

In the 1990s, there was a significant debate in developing countries on what had to be done to rid public water utility companies of a plethora of problems they were facing. The problems included: poor customer care, rampant corruption and rent seeking, delayed maintenance of facilities, inadequate financing to cover operation and maintenance, political interference, and wasteful expenditure coupled with inadequate tariffs. These problems resulted in extremely poor service delivery characterized by unreliability of supply (often less than two hours per day), poor water quality and low service coverage due to limited investment financing. It was rare to find any water utility with a coherent strategic plan. Consequently, there were no performance measures on the basis of which accountability could be enforced. As a result, staff and managers enjoyed a lot of free-riding, with little regard to delivering value for the organisations in which they worked. There were no performance incentive plans in place, and employee promotion, let alone recruitment in the first instance, was largely based on patronage and technical know-who (rather than know-how).

Clearly, as can be seen above, the problem in most of the utilities can be summarized as lack of adequate finances for operation and maintenance (including depreciation) and capital investments, low operating efficiencies, poor customer care and demotivated employees. The debate was, therefore, on how to tap into the private sector to help address most of the problems above. The assumption was that the private sector (in contrast to the public sector) had an inherent incentive to bring investment capital and optimize operating efficiencies to maximize return on capital employed. Of course, the proposition was that the private sector’s usual profit maximization mission would lead to significant efficiency gains, which would in turn yield improved service delivery to citizens. One of the concerns was the level of profits to be made, which was to be managed through contracts and other regulatory options. On the other hand, efficiency gains would be managed by incorporating performance measures/targets in contracts and subsequent regular monitoring and evaluation. The other concern was the risk of the private sector not delivering what it promised and whether the oversight bodies had the capacity to discern performance gaps and take remedial measures.

But what actually happened? The private sector solution came with a host of expectations and was, indeed, experimented with in several countries in Africa. These included: Uganda, Tanzania, South Africa, Mozambique, Cameroon, Kenya, Ivory Coast, Burkina Faso, Senegal, and Rwanda. The benefits in terms of leveraging private capital and improving efficiency...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• List of Acronyms
• About the Author
• Preface
• Acknowledgements
• Chapter 1: Introduction
• Chapter 2: Internal perspective
• Chapter 3: The people perspective
• Chapter 4: Financial perspective
• Chapter 5: Customer and community perspective
• Chapter 6: Summary conclusions and recommendations
• Index