Africa Water, Sanitation & Hygiene Africa Water & Sanitation & Hygiene May -June 2017 | Page 25

WEF IN AFRICA 2017
urban dwellers with piped water in 2000 to 124
million in 2015, but the urban population served
with piped water on the premises declined from
40 to 33 percent over the same period.
The total population with improved sanitation
services increased, and many countries in the
region were able to meet their MDG goals, but
most of that increase came from an increase
in the access to piped water off premises and
self-supply.
In sanitation, the situation is even worse. Only
30 percent of Africans have access to improved
wastewater services, and more than 23 percent
are practicing open defecation (Ibid.). In
addition, a vast majority of the African utilities
do not provide wastewater services, and some
that did in 2000-2006 dropped wastewater
collection services due to high costs and
technical difficulties.
As the medium-term outlook suggests, these
demographic and economic trends are going
to continue. So what to do? How are utilities in
Africa going to cope with the backlog they have,
while also preparing to provide water to more
people and economic activity?
We embarked upon a review to understand why
utilities are not keeping up in providing energy
and water services to understand better how to
transform these utilities into agencies that can
provide high quality water and sewer services to
all urban citizens at affordable prices.
We reviewed the performance of African water
companies based on data and information
collected by International Benchmarking
Network of Water Utilities (IBNET, www.
ib-net.org), using a data panel of about 120
utilities in 14 low- and middle-income countries
in Africa, which represent about 53 percent of
the urban population served by piped network
services.
Utilities’ performance in Africa is generally
weak, although there are some that are well-
performing.Their performance showed some
improvements between 2010 and 2013. Utilities
in the sample were able to slowly improve water
coverage, but overall coverage stood still at only
60 percent with a tendency to decline.Access to
sewer services is in its infancy in Africa — with
very few utilities providing such services. We
used several measures of utility performance
(looking at financial performance, operational
performance and customer performance) and in
general, we found that utilities are performing
below global benchmarks.
Yet, the variance of utilities’ performance within
and between countries is very large. This is, for
the most part, because water and wastewater
services are affected by the utility’s location.
Location-specific factors can vary widely
between utilities and include factors such as the
distance to the water source and its effect on
the cost to store and transport water; the quality
of the water that is being sourced and the need
for water treatment, among others.
Performance is also dependent on cost. As
virtually everywhere, water tariffs are mostly
driven by the operation and maintenance
(O&M) cost of water. It requires incentives
to improve the efficiency with which the
utility operates its services. Fixed costs in
the water sector are huge, and capital cost
significantly drive O&M.
More general macro-economic and structural
policies in the country — such as energy
subsidy policies, labor policies and regulation,
environmental and water quality standards
— also affect the operation and maintenance
(O&M) cost, but a re beyond the direct
control of utilities. We found that the O&M
costs of water services between 2010 and
2013 have been accompanied by an increase
in the affordability of water services.
Hence, as the average African city dweller is
better off now than 15 years ago, there is —
in certain places — some room to increase
tariffs to existing water utility clients, so that
government subsidies can be used to expand
services to those not yet connected instead
of subsidizing the water use for those who
are already connected to the piped water
system. This is especially important since in
general, only about half the utilities in the
sample were not able to cover their O&M
costs with their revenues (data from 2013).
The high dependence on subsidies has major
consequences. It crowds out investments in
the sector, but it also results in serious equity
concerns as those with piped water services
tend to be more likely be households with
higher incomes. The case studies undertaken
show that there are relatively utilities that
perform well in terms of operations and are
able to cover more than just O&M costs.
Yet, even those that are performing well
with regard to operational and financial
performance show weaknesses in providing
customers with high-quality services (as
measured in type of service level, reliability,
and water consumption levels), especially
when compared to global benchmarks.
Improving the performance of water
utilities in Africa will require actions at many
different levels: at the national level, but also
at the sector level and at the utility. The name
of the game is about providing incentives
that help utilities perform better. In the case
of the World Bank, that will mean more
attention to the efficiency of water sector
investments, and the incentive structures in
place that may affect utility performance. As
investments lock in O&M costs for decades,
it is important to ensure that the investments
are not only technically but also economically
sound, while diligently monitoring outcomes.
These and other interesting findings are
presented in the new “Performance of Water
Utilities in Africa” publication.