,e,r upp,UP International Conference on Water0, 2Supply and Sanitation for Small Towns

0* t1gf,f, and Multi-Village Schemes

£ | ° Addis-Ababa, Ethiopia11-15 june 2002

Small Towns, Special Challenge

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|Internationl Conference on Wafer Suppy and Sanitation for Small Towns and Multi-Villoge Schemes

ACRONYMS AND ABBREVIATIONSAG Attorney General

BNWP Bank Netherlands Water Partnership

BOO Build Own Operate

BOT Build Operate Transfer

CBO Community Based Organization

CLG Community Liaison Group - Malawi

CO Constructor Operator

CSA Central Statistical Authority - Ethiopia

CTB Central Tender Board

DEM Directorate of Operations and Maintenance

DHH Direction d'Hydraulique Humaine - Cote d'lvoire

DRA Demand Responsive Approach

DWD Directorate of Water Development

EU European Union

GNP Gross National Product

GWC Ghana Water Company

HIPC Highly Indebted Poor Countries

IDA International Development Association

IWE Institute of Water and Environment (United Kingdom)

KfW Kreditanstalt for Wiederaufbau (German Development Agency)

LA Local Authority

MDG Millennium Development Goals

MWR Ministry of Water Resources of Ethiopia

NGO Non Governmental Organization

NRWB North Region Water Board - Malawi

O&M Operations and Maintenance

PLC Private Limited Company

PLC Public Limited Company

PO Private Operator

PPIAF Public Private Infrastructure Advisory Facility

PPP Public-Private Partnership

PSP Private Sector Participation

RWSB Regional Water Boards

RWSS Rural Water Supply and Sanitation

SHC State Asset Holding Company

ST Small Town

WEDC Water, Engineering and Development Centre

WFI Water Fund Indonesia

WSC Water Supply Company

WSS Water Supply and Sanitation

WTP Willingness to Pay

12 * Small Towns Special Challenges

Intemational Conference on Water Suppy and Sanitation for Small Towns and Multi-Village Schemes

,xr Supp/,,

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Addis Ababa, Ethiopia11-15 June, 2002

Small Towns, Special ChallengesThe Addis Ababa Conference on "Water Supply thedevelopmentofasanitaionstrategyinsmalltownsand Sanitation (WSS) Services for Small Towns and * To identify priorities for further learning, and toMulti-Village Schemes" was the first international use the Addis Ababa conference as a launch padmeeting dedicated entirely to small town and multi- for the BNWP Town WSS Initiative which willvillage schemes. This Conference followed the first provide recommendations and guidance to taskregional conferences on this topic sponsored by managers and governments concerned with smallFrench Cooperation in Ouagadougou in 1 998 and town WSS.in Nouakchott in 2001. The Conference drew morethan 200 practitioners from all continents; about Ethiopia moving towards a Programmatic70% of them from Africa; and the majority with Approach to Water Sector Developmentover 1 5 years of experience in water and Addis Ababa provided an ideal backdrop to thesanitation. The five-day Conference was hosted by conference. Water supply and sanitation is at the heartthe Government of Ethiopia through the Ministry of Ethiopia's developmentagenda, including over 600of Water Resources (MWR) and sponsored by the small towns earmarked for improvement and extensionWorld Bank, the Water and Sanitation Program and of WSS services. The sector strategy is based onthe World Bank Institute, as well as the UK decentralization and local cost recovery for urbanGovernment and the Bank-Netherlands-Water- systems. It supports the shif to a programmatic approachPartnership (BNWP). to sector development.

Objectives and Expectations Global Overview

The goal of the Addis Conference was to provide water The global consensus on the need to improve access toand sanitation specialists with the unique perspective WSS services is reflected in the Millennium Developmentneeded to meet the challenge of improved WSS services Goals (MDG) which specifically call for: (a) by 2015,for small towns. reducing by half the proportion of people without

sustainable access to safe drinking water and to basicThe objectives and expectations for the conference were: sanitation; and, (b) by 2020, to ensure that 100 million* To share global experience, build a community of slum dwellers have access to improved sanitation. These

interested professionals, and start a knowledge are daunting targets considering that 1 . billion peoplenetwork focused on small town WSS are without access to safe drinking water and that 2.4

* To review and enrich our understanding of the billion do not have access to improved sanitation.ingredients for success in small town water supply

* To better understand the needs of small towns for The MDG for water supply implies a 70% increaseprofessional support and the options to access in annual investments from the current averagethe required financial and technical expertise level of US$15 billion to US$25 billion. Business

* To identify tools of the trade that address as usual will not do. Countries will have to findprofessional support needs and build local capacity new ways of mobilizing resources for the WSS

* Tobuildknowledgeonkeyissuesandapproachesfor sector in particular from the private sector.

Small Towns Speciol Challenges * 31

|International Canlerence on Water Suppy ahd Sanitation for Small Towns and Multi-Village Schemes

Equally important will be measures to tackle As urbanization progresses, the number ofgaps in knowledge, policies and capacity. The small towns (ST; population of 3000 to 30,000)Addis Ababa conference provided an increases. While their number rose rapidly, theopportunity to address these issues in the proportion of towns without improved watercontext of small towns. supply services has doubled over the lost twenty

The Special Challenge of Small Towns years (see Box 1).As a rule small towns have "fallen between theAsignificantpartofthechallengeofimprovedWSS cracks" because they are neither an attractive

services will have to be met in small towns, which market for urban utilities, nor are they withinaccount globally for about one billion people in a the scope rf interventions designed for ruraltotal of roughly 1 50,000 towns and small communities. The strong demand for pipedsettlements. comniis Th.togdmn o ie

systems has led local authorities, communitiesSector planners, policy makers and communities and private entrepreneurs to take initiatives toface specic.l chplic develop and manage such systems, in manyface special challenges when it comes to WSS instances outside a formal policy framework.services for small towns. Water supply systemsfor small towns can be characterized as follows: The vast range of institutional models illustrated* They are sufficiently large and dense to by the case studies reviewed by Conference

benefit from economies of scale and higher showed the resourcefulness of local actors aslevels of services offered by piped systems; well as their limitations and the constraints

* The are too large and complex to be under which they operate. ST Managementoperated by communities;operated by communities- models fall Into two main types:

* They are too small and dispersed to be mdl alit w antps, They are too small and dispersed to be0* Direct management by local authorities orprofitably managed by a conventional by communities employing their own staff;urban water utility , Nlrlt urThey "ca'te goiity alone", and need often a "default" scenario; and,

* They "can't go it alone", and need * Delegated management to a professionalspecialized professional support in operator either local or regional/national;particular to train operators and to prepare with capacity requirements and risksand update business plans, expansion increasing with the scope of delegation andprograms and efficiency strategies. with the size of the systems.

Inability to access professional skills and

"Fill Between the Cracks" precarious governance structure have beenBox 1: ST Flil Besveen the CracKs recurring weaknesses.

During the 90's the gap (localities without a The great variety of approaches and theproper water supply) increased in small dynamism of lao neactin on thetowns (3,000 to 30,000 inhabitants) dynamism of local communities, acting on their

own or in groups, points out the importance of:(i) learning from the emerging experience; and,

__0% (ii) adapting to local conditions and capacities.80%mi _ -Pp Hence the importance of gaining a bottom-up40 %-_ wh&lly understanding of what are the factors20% underpinning successful water supply services0% 1 p for small towns.

___________________ The Ingredients for Success1990's snapshot

.0om ,1 _Success for water supply and sanitation80% meons good quality, affordable ond

6 ot.* IP sustained services for all20%

oM. The Conference reviewed and refined the findings ofresearch concerning key ingredients for success forWSS services in small towns. These are summarizedbelow together with the outcome of the Conference

14 Small Towns Special Challenges =_c_

X International Conference on Water Suppy and Sanitation for Small Towns and Multi-Village Scme

deliberations concerning the policies, practices and for: (i) training their own staff (or the staff of theirtools through which they can be developed and small scale operator) in routine functions; and, (ii)sustained: supporting non-routine functions: i.e. financial

management, business planning, tariff setting,1) Financial and managerial autonomy expansion planning, efficiency improvement,

Financial and managerial autonomy is essential to trouble shooting and communication, customerencourage entrepreneurship and investment. relations (Box 3).Autonomy for ST WSS means:

* Control of operations (staffing, connection and Box 3: Professional Supportdisconnection, billing) Routine Operations Specialist Skills

* Own bank account, ring fencing, no transfer to - Meter reading S Financial mgt trainingtown budget; *

* Tariffs set in light of local conditions; * Billing * Business planning* The flexibility to adapt service level to demand; co * Revenue collection * Tariff setting

* Ability to invest to adapt and develop system * Accounting * Customer relations

* Routine O&M * Technical trainingAutonomy rests on: (i) financial viability; (ii) . Houseconnections * Expansion planningstakeholders support; (iii) protection from political Sinterference through community oversight (Box 2). Ergen repaira

o * ~~~~~~~Emergency repair 8 ad

Box 2:How to establish and maintain fhoci dviseautonomy e~~~~~~~~~~~~~~~~~~ Efficiency improvementautonomy

* By designing system to be financially viable The country cases showed the range of strategies* By building support among all stakeholders for adopted by STs to access the expertise and the

the principles of autonomy professional support that they require, ranging from* By building the professional competence of the cost sharing to more formal aggregation whereby one

service provider operator is given responsibilities for the WSS systemsBy ensuring protection from political interference of a number of towns. Aggregation strategies alsothrough community oversight allow STs to strengthen their bargaining power with

* Through user oversight and independent suppliers and operators.auditing spiesaaoeaos

Professional support comes at a price - customers/2) Transparency and accountability community must be willing to support related expenses.Transparency and accountability are critical to gain Sharing of professional resources betweenand maintain the trust of users and investors. They neighbouring towns results in economies of scale.are founded on: (i) clear roles and responsibilities; (ii) Guidelines and tools are needed for a range ofindependent audit a nd monitoring; and, (iii) disclosure functions including:of information. They are particularly important in * establishing and regulating professional standardssituations where there is a monopoly in service * procurement and contracting of management andprovision. support services

* business planning,Transparency. and accountability are key to good * cost effective designgovernance but require good information flows and * tariff setting and review process, billing etc.consultation. Customers must be aware of their rightsand oversight boards need the qualification, the The three ingredients for success outlined above dealcapacity and the tools to exert their responsibilities. essentially with management and operationalThe latter include most importantly by-laws, internal responsibilities. They apply to the whole range ofrules, accounting systems, performance backed management models although they are much morecontracts for operators and monitoring systems. easily achieved and sustained in situations where the

oversight function is clearly separated from day-3) Professional support. to-day management. Hence the trend for delegatingThe need for outside professional support for tasks system management to private professional operatorsbeyond routine functions is a defining characteristic through contracts. Limitations include: (i) inability toof ST WSS systems. STs need professional support attract competent operators; (ii) lack of capacity in

Small Towns Special Challenges *_S

fjternatianal Conference on Wafer Suppy and Sanitatioe Far Small T_wn and mMulti-Village Schemes

drawing up and regulating the contract; and, (iii) lackof customer confidence. Box 4: Supportive policies and laws

are needed for ST WaterThe next two ingredients for success deal with the Supplyenabling environment for WSS services in STs. * To ensure stable access to and protection

of water resources4) Competition * To legitimize the role of local actors in STCompetition keeps prices down, brings quality up, WSS servicesfosters innovations and builds capacity. STs offer a range * To establish a framework for delegatedof opportunities for local firms. Although network-based management and for the involvement ofwater supply systems serving small towns share some the private sector in operations andfinancingof the "natural monopoly' characteristics of urban water * To establish cost recovery principle forutilities, they are more amenable to competition. The water serviceslarge range of sizes of small towns found in most * To define regulatory mechanismscountries, and the extent to which they are clusteredtogether, creates multiple market niches attractive todifferent sizes/types of operators. that: (i) regulation is costly and would ultimately be

supported by the users; and, (ii) in most countries, theCompetition for the market requires: (i) supportive legal concept of independent regulation is not yet welland regulatory environment (open entry and minimum established and would in any case be difficult to applyrestrictions on service areas); (ii) attractive contracts in to a lorge number of small decentralized systems.scope, duration and size (through pooled procurement, Whether the operator is a private or public body, simpleclustering and aggregation); and, (iii) a competitive contracts in which responsibilities, payments terms andprocurement process. incentives are clearly set out, underpin regulation.

Competition in the market can be fostered by: (i) The nexttwo ingredients for success cover services andalternative services (tankers, vendors, private stand posts, system development.reselling); (ii) limited contract duration and re-bidding;(iii) support to innovations; and, (iv) benchmarking. 6) Responding to the demand

Approaching ST WSS with the basic goal of offering5) Legal framework and regulation services that customers want and are ready to pay forAs far as small towns are concerned the central purpose is a powerful ingredient for success. At the system levelof national laws and regulations is to establish and demand responsive approaches lead to higher costenforce "rules of the game" that foster fair and recovery and internal cash generation ensuringsustainable relationships among local actors. The sustainability and allowing further development. At thechallenge is to translate policies into country-wide norms country/program level demand responsiveness allowsand regulations without stifling local initiatives. for more efficient use of public funds.

The primary focus of regulation is to reconcile the Development projects (supported by government/imperative of financial viability with the need to protect external aid or NGO's) can foster demand responsivethe customers. The regulatory functions for ST WSS approach by: (i) allowing flexibility concerning designservices should focus on process and quality standards standards, technology choices and services levels; (ii)and on guidelines for tariff setting and revisions providing for informed choice by households and(periodicity, information, consultations and recourse and communities; and, (iii) encouraging competition.arbitration).

7) Incentives for expansionEffective regulation is enhanced by: (i) communityoversight; operators of ST WSS systems are keen to develop their(ii) sound contracts and business plans; (iii) open distribution network thereby adding customers and sales.communication and consultation mechanisms; and, (iii) The issue for planners is to ensure that the properexternal auditing and benchmarking. requisites are in place; essentially: (i) access to adequate

water resources; (ii) stable institutional/legal frameworkThe build up of regulatory capacity for ST WSS should allowing fair return on investment; and, in mostbe approached with limited objectives as a response to situations, (iii) basic production and storage facilitiesspecific needs. The reasons for caution relate to the fact built (or rehabilitated) with sufficient capacity.

6 Small Towns Special Challenges

Internotional Conference on Water Suppy and Sanitation for Small Towns and Multi-Village Schemes

Incentives and facilitating factors for system expansion Sanitationinclude:

* Access to financing in particular for household The problems facing sanitation and public hygiene inconnections small towns reflect the general state of sanitation in most

* Pre-financing of private connections by the developing countries; i.e. lack of awareness and lowoperator and payment in monthly installments demand; lack of policies and institutional leadership;

* Limited regulatory or administrative restriction on and, no financing.service area; certification focused on quality andsafety The starting point is for communities and households to

* Freedom of initiative with limited approval see the need for a clean and healthy environment.requirements focused on quality and safety The drive to improve sanitation in small towns should

* Access to expertise and capacity for business address the range of environmental issues: used waterplanning and management and excreta disposal, solid waste management and

* Incentives for expansion built in operator's drainage, and should rest on a clear understanding ofcontract the respective role and responsibilities of households

* Output based-aid to encourage expansion into and the community.less profitable areas

It is when future cities are still small towns that incipientEquity and services to low-income urban communities have the best opportunities togroups establish shared expectations and land-use planning

that will set them on the right environmental path. InRising tides lift all boats. In most countries poverty is order to seize these opportunities small towns need:prevalent in small towns and villages, therefore programs * A Vision of a clean and healthy environmentthat target small towns respond to poverty reduction * A Policy reflecting the attitudes needed to carryobjectives. The first concern should therefore be to ensure the vision, e.g. ART (Avoid, Reuse, and Treat waste)that small towns have efficient and financially viable and, thewill to implement it through advocacy, clearwater systems. Within this framework expansion and institutional arrangements, standards, fundingdemand responsiveness will foster broader access to mechanisms and enforcement capacityservices for low-income households in particular through * A Priorityto mobilize communities and householdsreselling, kiosks and community taps. The key point is to take initiatives that can make sanitation a realityto ensure that low-income households are recognized and evolve their own local strategy to pursue theiras legitimate customers. As they grow, towns and cities vision of a clean and healthy city.would eventually require programs specifically directedat services for the poor. Box 5: Roles and responsibilities sanitation

systems in Small TownsAccess to services for poor households can be supported Guiding principles: Decentralization and autonomyby: Ii) providing an element of grant for the initial Sanitation Solid Drainage Hygieneinvestment so that tariffs remain affordable; (ii) pre- Waste Promotionfinancing "social" connections; and, (iii) ensuring the Standards/poor have a voice as stakeholders and customers. Guidelines LA LA [A LA

Implementation HH/PS LA/PS LA/PS LA/NGOWhile communities and private operators seem able to Polic/lisation CG CG CG CGmobilize the resource needed for expanding small town leilatiorI CG I C

LA = local authority HH = Householddistribution networks, this is often not the case for the PS = Private Sector CG = Central Governmentlumpy capital injection needed to build or rehabilitate NGO = non-governmental organizationsthe basic facilities (borehole, pump and elevatedreservoir).

This suggests that development of optimal financing Guiding principles:strategies is a critical element for the preparation of - Focus on sanitation services from thesector programs that seek to maximize the poverty household's point of view,impact of public funds (budget and external aid) - Achieve more effective advocacy throughallocated to the water sector. social marketing and health and hygiene

promotion

|Small Towns Special Challenges * 71

Interntioncal Conference on Water SuppyandSianitftion for Small Towns and Multi-Village-Schemes -- - X _

- Make local authorities responsible for organizing to pay, household demand and service levels (seesanitation and environmental services and clarify Box 6). The value of the BP process is that it treatsthe supporting responsibilities of sector agencies the WSS system as a whole focusing on the(Box 5). continuity of its operations. It avoids the

- Set up funding mechanisms that reflect community shortcoming of the project driven approachand household responsibilities and ensure at centered on the appraisal and funding of capitalleast recovery of O&M. expenditure.

- Foster opportunities for private sectorinitiatives. The Contingent Valuation Methodology (CVM)

allows planners to assess the willingness to payTools of the Trade for selected level of services; typically, stand posts,

yard taps or shared connection and individualTools of the trade address professional support connections .This information is essential to supportneeds, and help build the capacity of local service community participation and enable "informedproviders. They also play a role in the choice" at the household level as well as for theimplementation of sector policies and in investment co ity as a hole.kWTP suveys provids thedecisions. The tools reviewed by the Conference community as a wkole. WTP surveys provides thearecistioned Thel toolsgretherwe the keyference necessary basis for projecting sales and revenuesare outlined below together with the key points freautn xaso ln n o etn

arsn rm h eae for evaluating expansion plans and for settingarising from the debate, tariffs. The relative high cost of WTP tolls is likelyto to come down as they are systematically applied

The Cost Effective Design tools allow planners to and aste local ting pression buidtest the cost recovery potential of water systems capdacityand provides a basis to match system components capocity.and service levels to town size and affordable user The fourth tool, billing systems, is critical forcharges. It promotes cost effective design and sustainability and autonomy. Small towns needresulting financial viability. One of the striking support in setting up and managing their billingcharacteristics of small town water systems is that and collection functions. The challenge is to keephigher investment and higher service levels (e.g. costs down in relation to the small revenue basismore house connections and less households served and to overcome the constraints arising from thethrough stand-posts) usually lead to lower average lack of trained personnel, the unavailability ofcosts per liter, and hence lower tariff, because the banking services, etc. Key points: metering isrevenue increase faster than investment and O&M indispensable as well as a clear responsibility forcosts. each connection.

Box 6: Business Planing The Conference stressed the critical role of tools of(an iterative, rolling process) the trade to support improvements in WSS systems

and to translate general policy principles intoAssess curren & operation practical guidelines. Tools need to be adapted tooperations plan Financia Willingness the context of each country. The dissemination and

Project LTechnical o to p adaptation of the four tools reviewed and thedemand I design I development of additional tools and guidance

Agree.financing plan material should be given priority in the follow-upAgree financing plan to the Conference.

Agree performance Management and Contracting Options|indicators for M&E -1

Direct vs. delegated managementUnderstanding ST water systems require clarifying:

While the cost effective design tool models a range Who owns the facilities? Who oversees the assetsof options, the Business Planning (BP) tool focuses and supervises operations (water authority)? Andon the operations and financial results of a specific who operates the facilities (water servicessystem. The BP tool models the operations of the providers)?system over time and year-by-year financial flows.The BP tool pays particular attention to the Ohen the responsibility for ensuring that servicesparameters affecting revenues; namely willingness are provided is interpreted as the responsibility for

8 Smons Special Challenges _ j

Intemnational Conference on Water Suppy and Sanitation for Small Towns and Multi-WI/lage S~chieme

providing the services. As a result, town water Private Public Partnership (PPP) for ST WSSsupplies are often managed directly by a public Servicesentity (see Box 7). which hires and directly manages The unfolding worldwide movement toward PPP in theits own staff. It is inherently difficult under direct WSS sector has providedagrowing body of knowledgepublic management to realize the ingredients for and lessons on which to develop an understanding ofsuccess. how to pursue PPP for small towns WSS services.

Box 7: Management Types The first point is that in order to succeed PPP needs someprerequisites - most importantly: commitment from all

Direct Management Delegated Management stakeholders based on good communication of thechanges that will be necessary to implement PPP. The

Ownership |wnership choice of contract has to rest on a realistic assessment ofOversight Oversight the local context against the prerequisites for successC Operations ontrct corresponding to each option ( see Box 8).

Staff Lprtioor Box 8: PPP for WS Service MappingOption Prerequisites

As they expand and become more complex, ST WSS Requirement Political CosAcovering Regulatory Good

systems evolve from the so-called "default option" - Option Connitment Ter& Fromewok Information

direct public management or informal delegation - Service Contract Low Low Low Low

towards delegated management and contracting Manogement

options and management models under which Contract Moderote Moderate Low Low

"professional support" is provided with increasing LeoseAffermage High High Moderate Moderate

levels of private sector involvement in management BOT Moderate High High High

and financing. Concession High High High Hi gh

There are two types of contacts full service andspecialized services. Full service operators "offer one The second point concerns the fact that designing astop shopping" where both routine and specialized successful PSP transaction is essentially aboutservices are provided by the operator. In the understandingrisks,tryingtoreducethemandmakesurespecialized service model routine operations and thattheyareallocated in linewithcompetence, capacityspecialized services are offered separately. An and ability to control.example of the specialized services model isfranchising, where the fronchisor offers specialized While the principle of private sector participation in theservices to a local operator, the franchisee for a development and provision of WSS services is broadlyshare of the revenue. accepted, PPP could not be considered as the exclusive

avenue for improved services. Most countries still lackAggregation the legal framework, the regulatory capacity and theAggregation is critical to share cost and build a sufficient knowledge basis to benefit fully from PPP. Nonetheless,demand for specialized services and support. This there is no doubt that PPP introduces opportunities forapplies also to smaller towns (2,000 to 10,000) for entrepreneurs in the water sector, and that this buildswhich costs can be reduced by directly employing their capacity. PPP contracts set performance targets and in-own staff through performonce agreements or by troduce checks and balances between the oversight bodycontracting a private operator from within the and the operator. Bidding for contracts promotes com-community. petition. The overall impact is to foster productivity and

fair pricing.Aggregation models differ by the extend to which theirassociation is institutionalized. Towns can: The franchising approach as applied to WSS services,- Form a formal association or company that contracts would have an experienced operator, the Fronchisor,

a full service operator render services and transfer business know-how to a- Join together for bidding, but sign separate contracts, or smaller water company, the Franchisee (see Box 9). The- Enter into separate contracts with established Franchisor would be responsible for monitoring quality

operators in a given areas. of performance of its Franchisees. Although there are

Small Towns Special Challenges * 91

Internationference on and Sanation Small Towns and Multi-Village Schemes = X

just few instances where the franchising approach have aggregation and delegation strategies with localbeen implemented, in the water sector, the Conference accountability.considered that it had considerable potential for WSSservices for small towns. Governments and their development partners should

recognize that small towns and multi-village schemesBox 9: Franchising represent special challenge and opportunities that

Under the franchise necessitate development or adaptation of a supportive'brand' Franchisees policy, legal and regulatory frameworks as well as

Frascisor receives business programs. Sector policies related to small towns must be'know-how' from Sco eae ml,$ F A m Fronchisor and broad enough to allow a range of alternative

provides services /products to customers management arrangements to emerge and evolve inFranchisor monitors response to local demands and capacity.service to customers

*customers payFra.Chstoees forproducts Box 10. Processes of Changeand services ond a % ispassed back to the From default options to new approachesfronchisor as a royoltypayment , I Voo

Franchising - a business methodology, based on the duplication * publicwaterpicq *-. frionchisingof success, between two or more separate legal business entitiesoperating under the same brand name. / concession

ca / S~~~~~~~~~affermage/leasJ In conclusion, /* Larger towns could contract with a full water service

operator to provide both routine and specialized * direct public mngtservices, whilst smaller towns would use local Public Privateoperators, public or private, supplemented by Manogementspecialist service providers.

* Towns benefit from competition to countermonopolies that build capacity and improve service; The proper focus of programs for the development ofand WSS services for small towns would be to guide and

* Towns need to join together in one way or another support local initiatives. The learning and piloting can(aggregate) to create viable units capable of be supported by "retail" projects dealing with a limitedsecuring the necessary professional support. number of towns, leading to a more systemic approach

based on sector-wide programs better suited to deal withThe Way Forward - a 'Change Process' institutional issues and financing mechanisms.

The change process is driven by the fact that, as small Programs to support the change process for should betowns grow and as theirWSS system expand and become guided by the following principles:more complex "default options" are not good enough. - To nurture and support the initiatives of local actorsThe lessons from the cases is that community management through flexible response and support mechanisms;has notable strengths, but is not adequate to address - To emphasize capacity building based on tools andlong term sustainability. Beyond 5,000 inhabitants, practices reflecting local experience;community management needs to evolve toward more - To foster country level learning, knowledge sharing andinstitutionalized models involving water boards with a networking among scattered actors involved in STWSSlegal basis and the capacity to enter into formal contracts. services.

The ingredients for success provide a useful framework Priorifies for further leamingto assess the performance of town water supply systems Developing and improving ST WSS service should beand to identify their needs for professional support and approached as a learning process at all levels:to map options to foster efficiency and to support communities, country and global/regional; reying on casecontinued expansion. studies, models, good practices, tools and guidelines

The Conference stressed the need for further knowledgePublic-private-partnerships introduce manyadvantages, development and networking on issues related to WSSNot least in building local business opportunities and services far ST with special attention to sanitation and tobetter career prospects. The challenge is to balance services for low-inc gu a.n -om mnitaie which* SmallTwsservices for low-income groups and communifies which

riO * Smal`l ovvns Special Challenges

- i-~ --- I::-ftirinational Conference on Water Suppy and Sanitation for Small Towns and Multi-Village Schemes

should be a guiding pre-occupation for all knowledge Concluding Statementdevelopment activities.

The Addis Conference resolved that the above findingsIn order to support the development and the evolution of and recommendations provide useful guidance toST WS systems, policy makers, planners as well as recognize and address the special challenge ofoperators will need to develop their understanding of: improving WSS services for small towns and multi-- How best to structure the contractual relationships village systems.

between operators and small towns water board;- How to foster aggregation and which aggregation The Conference mandated the organizers to disseminate

models are best adapted to various situations and its findings and recommendations to all actors engagedcategories of towns in the water and sanitation sectors including knowledge

- How to approach capacity building of oversight boards organizations and development agencies as well asand local operators; and, organizations focused on local authorities.

- How to nurture the emergence of specialized WSSenterprises. The Conference mandated the organizing partners to

They also need to leam more about the following specific pursue the learning agenda outlined above and toissues: (i) tariff setting and cross subsidies, (ii) household organize within the next three years, i.e. by 2005,connection policies, (iii) financing and risk mitigation, (iv) regional or global consultations on small towns WSSregulation, and (v) water resource management. issues preferably in partnership with organizations

serving municipalities and local authorities. TheThe Conference stressed the importance of networking BNWP town water initiative was welcomed as an(web-based activities, workshops, help-desk), help-desk, opportunity for further development of the ideastraining and databases. They specifically recommended presented during the conference and the prioritiesa follow-up e-conference on ST WSS services in mid-2003. fr furter erning. tParticipants from West Africa resolved to form a regional for further learning.network during the Conference. The Conference mandated the organizers to express

the gratitude of all the participants to the GovernmentBox 1 1: WBNP Initiative for Town WSS of Ethiopia and in particular to H.E Ato Shiferaw Jarso

The Town WSS Initiative is BNWP largest program. It and the staff of the Ministry of Water Resources, forsearches for optimal arrangements between demand and hosting the Conference. The Conference thanks thesupply, between revenue base and operator size. The organizers and the supporting partners for theirprogram will: initiative and for the good conduct of the proceedings.1. Prepare best practice notes to facilitate sector dialogue

and improve the design and implementation of townwater and sanitation programs.

2. Identify, assess and field test professional support andaggregation options in three to five countries in EastAsia, Central Asia, South Asia, Africa and/or LatinAmerica.

3. Develop practical "tools of the trade' to helppractitioners improve town water supply.

4. Disseminate results

BNWP: Bank Netherlands Water Partnershipjiansens@warldbank.org

The Bank-Netherlands Water Partnership (see Box 11)continued support to the Small Town WSS initiative will:- consolidate what has been learned,- investigate aggregation from the perspective of towns

and private operators,- develop practical tools of the trade that build capacity,- assist selected countfies that are conmitted to building

state of the art tcvn water and sanitation programs, and- disseminate information and support continued

consultation.

Small Towns Special Chalenges * 11|

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