The WateJand Sanitation Program is an POLICY NOTE intemational partnership for improving water and sanijalion sector policies, practioes, and capacities to serve poor people September 2005 34566 impact of the Budget Support Instrument on Rural Water Supply in Uganda This policy note examines the impact of the World Bank's Poverty Reduction Support Credit (PRSC} Budget Support Instrument in the context of rural water supply and sanitation in Uganda. The policy note is based on a 2004 study commissioned by the World Bank: Towards the MDG in Uganda: A retrospective study of the Impact of three years of the BSI on rural water. Abbreviations and acronyms BoO Bills of Quantities BSI Budget Support Instrument cccc Community Contribution towards Capital Cost CDF Comprehensive Development Framework DDP District Development Plan DRA Demand Responsive Approach DTB District Tender Board DWD Directorate of Water Development DWO District Water Office/ Officer DWSDG District Water & Sanitation Development Grants FDS Fiscal Decentralization Strategy FY Financial Year GFS Gravity Flow Scheme GOU Government of Uganda HI PC Highly Indebted Poor Countries HRD Human Resource Development LGDP Local Government Development Program LGFC Local Government Finance Commission M&E Monitoring and Evaluation MBFP Medium Term Budget Framework Paper MDG Millennium Development Goals MIS Management Information System MoFEP Ministry of Finance and Economic Planning NGO Non Governmental Organization O&M Operation and Maintenance IMPACT OF BSIIN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA OP5 5-year Operational Plan (2002-2007) PAF Poverty Action Fund PEAP Poverty Eradication Action Plan PRSC Poverty Reduction Support Credit PRSP Poverty Reduction Strategy Paper RGC Rural Growth Center RT Review Team RWS Rural Water Supply RWSS Rural Water and Sanitation Sub-sector SIP Sector Investment Plan SWAP Sector Wide Approach to Planning TEC Technical Evaluation Committee TSU Technical Support Unit UGS Ugandan Shillings USD United States Dollar wss Water Supply and Sanitation wuc Water User Committee NOTE: The Financial Year (FY) of the Government of Uganda (GOU) begins on 1 July and ends on 30 June. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 2 Table of Contents 1.0 The Budget Support Instrument: Three years on 5 1.1. A pioneering lending instrument 5 1.2. The Ugandan context 5 2.0 Findings: Implementing the BSI 7 2.1 . Pace and nature of delivery 7 2.2. Reliable management information statistics 7 2.3. Theoretical vs. actual coverage 8 2.4. Funds release, reporting and accountability 8 2.5. District-level governance 8 2.6. Spending on rural water supply 11 2.7. Role of the private sector 13 3.0 Recommendations 14 3.1. Further support to the PRSC 14 3.2. RGC management 14 3.3. Planning horizon 15 3.4. Technical support 15 3.5. Setting up supply chains 15 3.6. Drilling 16 3.7. Procurement 16 3.8. Planning Process in the Districts and SWAP 16 3.9. Three year budget guarantee 16 3.10. Equity amongst districts 16 3.11. Releasing funds optimally 17 3.12. Monitoring 17 3.13. O&M Strategy 17 4.0 Conclusion 19 IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 3 IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 4 1. The Budget Support Instrument: Three Years On This policy note examines the impact of the is the inclusion of Comprehensive Development World Bank's Poverty Reduction Support Credit Framework (CDF) into the PRSC lending (PRSC) Budget Support Instrument (BSI) in the instrument. context of rural water supply and sanitation in Uganda. The PRSC BSI began operating in Uganda in July 2001 and took effect under the 5-year The foundation of this policy note is a study Operational Plan (OP5) for the Rural Water and commissioned by the Bank in 2004, entitled Sanitation Sub-sector (RWSS) since 2002. Towards the MDG in Uganda: A Retrospective Study of the Impact of Three Years of the BSI 1.2. The Ugandan context on Rural Water, by Erich Baumann and Ephrem Uganda has one main water basin , with eight sub-basins Asebe. Additional input was gained from the Despite providing nearly 7.5 million persons (Nile River, below) . World Bank's Africa Region of the Water and with safe water facilities in the last 12 years, it Although rainfall is relatively Urban Development Unit , the Ugandan is estimated that only 47-57 percent of plentiful , the predictable Directorate of Water Development (DWD) in Uganda's rural population have access to safe availability of potable water is a major social and Kampala, district water officials (DWOs) and water. The Sanitation Sector is weak and economic problem community members. responsibility for this sector is divided somewhat cumbersomely amongst three ministries. 1.1. A pioneering lending instrument In 1997, the Government of Uganda (GOU) Uganda is one of the countries pioneering the moved to change the course of basic services testing of the World Bank lending instrument, delivery to the poor. Through an extensive the PRSC BSI. This new concept in participatory poverty assessment, a detailed performance contracting, which embodies a sector analysis, and structured stakeholder redefinition of the World Bank's relationship consultations at both the central and local with a client government, was launched in government level, the government prepared its September 2000. A critical aspect of this first Poverty Eradication Action Plan (PEAP) . lending instrument is that it puts the Government of the borrowing country in the In 1998, Uganda was granted debt relief from 'driver's seat'. donor countries and multi-lateral agencies under the Highly Indebted Poor Countries (HIPC) The underlying principle of the BSI , along with initiative. This led to the formation of the the Sector Wide Approach to Planning (SWAp) Poverty Action Fund (PAF) in 1998. The PAF IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 5 serves to channel funds made available through Sanitation (WSS) as a priority sector; the HIPC debt relief initiative and to mobilize consequently the budgetary resources for the further donor resources towards key sector were increased threefold . The GOl:J development sectors. RWS program represents one of the largest rural water and sanitation programs in Africa with In Uganda, the PAF is also being used to parallel and decentralized implementation in 55 accelerate the process of decentralization. The districts. majority of PAF funds are channeled directly to the district-level administration in the form This program is supported by the World Bank of conditional grants, i.e. budgetary resources instrument- Poverty Reduction Support Credit (conditional grants) are passed on directly to (PRSC) - which amounts to USD150 million districts against a formula and a set of per year. PRSC contributes directly to the guidelines. Conditional grants ensure that the government budget based on selected priority funds are all used on the key programs in the actions (including policy benchmarks and PEAP. quantitative targets) agreed to between the GOU and the Bank. The PEAP and PRSC The PEAP, and the Poverty Reduction Strategy articulate the strategy for increasing incomes Paper (PRSP) (the latter developed in 2000) , and improving the quality of life of the poor set out a development agenda for Uganda. The through accelerated service delivery in eight PEAP and PRSP identified Water Supply and sectors, one of which is Water and Sanitation . Water Supply and Sanitation (WSS) was identified as a priority sector, hence budgetary resources were tripled. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 6 2. Findings: Implementing the BSI The BSI , in the context of decentralization and additional persons served was 645 ,000. This the Sector Wide Approach to Planning (SWAP), means the number of un-served persons is still relatively new and in the process of being remained approximately the same.) established. District Water and Sanitation nts (DWSDG) were introduced Development Gra_ The rate of protection of shallow wells has only in the Financial Year (FY) 2000/2001. increased , whereas the number of boreholes Thereafter, in the first two of the three years drilled has declined significantly. Where shallow under review i.e. 2002/2003 and 2003/2004, wells are feasible they are certainly a some parallel implementation occurred because technology that might give the best value for of the phasing out of traditionally-financed money . They are, however, not always government projects. perennial and their output and water quality has to be closely monitored: shallow wells are more 2.1. Pace and nature of delivery vulnerable to pollution than many other water source types. Critics of BSI feared that the radical change in implementation method effected by the 2.2. Reliable management introduction of the BSI would lead to a information statistics Ngabet Borehole in Kumi considerable setback in the pace of service Sub-county was drilled in Baumann and Asebe found a wealth of data on delivery, because of the need to build capacity late 2003. It serves more Water Supply and Sanitation (WSS) in Uganda. than 1,000 people. at district level. The GOU's national Directorate of Water Development (DWD) has developed a Despite system changes and the associated Management Information System (MIS) and learning curve, however, Water Supply and statistics are available, giving a breakdown of Sanitation (WSS) coverage increased roughly all water points, right down to the last spring. at the same rate (during the period under review) However, the records are not entirely consistent as during the pre- Poverty Reduction Support and some discrepancies are evident in the Credit (PRSC) period. reporting of facilities constructed by agencies The new instrument has not (yet) effected an other than the government. Improving this MIS acceleration of service provision. (The average will be an important step towards providing more increase in rural population was around 650,000 consistent performance indicators with which pe.rsons per year; the average number of to evaluate the BSI. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 7 7 2.3. Theoretical vs. actual coverage and submitted via the Technical Support Unit (TSU). During FY 2003/2004, however, the Different research models give conflicting Ministry of Finance and Economic Planning estimates of the number of rural Ugandans with (MOFEP) was slow in releasing funds . access to safe water. Instead of the required 95 - 100 percent The coverage estimated on design capacity of disbursement, the districts were expected to actual water points- wells, boreholes, springs, receive approximately only 86 percent of funds etc.- is 47 percent, whereas the most recent by the financial year-end. (At the time of the household survey indicates a 57 percent review , mid May 2004, about 51 per cent of coverage. The difference can be explained the funds had been released.) The late release partly with the high average usage per water of DWSDG funding has adversely affected the point and by the under-recorded contribution districts in their effort to meet their targets set from Non Governmental Organizations (NGO) . out in their work plans. Field observations corroborated the higher A further negative spin-off from the delays in Aapu Spring , Atjtur coverage estimate: the actual number of people funds release involves both contractors and the Sub-county.The water served at the water points visited was potential recipient communities. Through the supply is strong and reliable. The spring is considerably higher than the respective planning and preparation process, community located a good distance theoretical/design capacity. The practice of expectations are raised and contractors are from the nearest stretching the design capacity of systems in selected. When a planned project does not homestead, to reduce the order to meet the principle of 'some for all' could proceed, both contractors and communities are risk of pollution. The site is also protected from negatively affect the functionality of the disappointed and dissatisfied. Budget livestock and the area systems . reductions can contribute to a lack of trust above it kept fenced and between communities and the private sector the grass short. 2.4. Funds release, reporting and on the one hand and the districts' management accountability on the other. (The Letter of Understanding, which commits all parties to implementation of the Rural water is a protected sector, i.e. once a district work plan , needs to be enforced .) budget allocation has been approved, at least 95 percent has to be disbursed. This condition 2.5. District-level governance was met in the first two years of the BSI. The districts comply with the reporting requirements The essential elements for effective functioning and the level of financial accountability is good. of the BSI have been put in place at district There were no reports of major problems level , including guidelines, policies, and human regarding reporting on , and accounting for, resources. Valuable experience has already monies spent. Reports are usually completed been gained. IMPACT OF BSIIN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 8 Planning processes Demand Responsive Approach (DRA) and The districts appear to have enough capacity community input regarding technology choice, to implement the District Development Plans is limited. The selection of sites or recipient (DDP). These are three-year rolling plans, communities is also affected by political which are submitted via the Technical Support influence. However, strong demand is evident Unit (TSU) to the Directorate of Water and communities visited clearly articulated the Development (DWD) and eventually approved positive impact of safe water on their lives. by the Ministry of Finance and Economic Appropriate monitoring could assist in the Planning (MOFEP) . The District Water Offices challenges posed in the allocation mechanism. (DWOs) seem to be quite capable of meeting For example, 50 percent of the DWSDG should the requirements for planning, managing and be delegated to the sub-counties, for low cost supervising the development activities under technologies. the District Water and Sanitation Development Grants (DWSDG). Reporting and planning Managing supply in Rural Growth Centers Mrs. Christine Apio: according to the guidelines does not seem to RGC are cultural and economic hubs in District Water Officer of the be problematic. Uganda. They are the first point of interaction Kumi District. Local level between rural and urban economies, and the skill-retention and development is evident in The sub-counties are consulted during the place where the rural entrepreneurs link up with the presence of highly planning process, but the district administration their urban counterparts. The size and number trained DWOs such normally handles the contracting and financial of RGCs is growing rapidly and simple piped as Mrs. Apio. Her matters. However, if the planning horizon were water systems are planned. contribution illustrates the depth of competence and to be extended it would be feasible for the commitment of women at DWOs to take over responsibility for design Currently, Gravity Flow Schemes (GFS) are district level. and construction- particularly in Rural Growth handled at district level with support from the Centers (RGCs). Both the DWD and TSU could TSU. RGC construction is dealt with by the provide technical assistance with on-the-job DWD and tendered through the Contracts training in the preparation and use of tender Committee. Planning and tendering takes time, and contract documents. Moreover, if higher usually six to eight months. Under the present ceilings were given for water grants, the districts regime of DWSDG, which are only approved - supported by TSU - could handle a higher for 12 months, it is unlikely that the DWO and investment volume. District Tender Board (DTB) could handle such large contracts in this unrealistically brief Striving for equity timeframe. The BSI aims to close the wide gap in coverage between districts, and also within districts 'The 12 month budget keeps us on our toes, among the sub-counties. Equity of supply may but we struggle with delays in disbursement be difficult to achieve in the immediate future and the spend or lose ruling.' Board (DTB) could as the equitable allocation of resources is handle such large contracts in this challenging at both central and district level. A unrealistically brief timeframe. IMPACT OF BSIIN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 9 Technology choice patterns Community development & mobilization · With the introduction of the BSI , a considerable Sub-counties are responsible for village-level shift towards the use of low cost technologies mobilization and many Water User Committees has taken place. Shallow wells and protected (WUC) have been formed. Some of the springs are prime examples of effective low communities visited showed a strong cost technologies, but these sources are not commitment to maintaining their scheme; the always perennial and may soon be fully level of mobilization is, however, uneven. The exploited. These facts have negative seven critical criteria to be el igible for PAF implications for water security and leave funding are seldom formally fulfilled . boreholes as the main alternative for the future. Communities are sometimes slow to pay their DWOs tend to favor low cost solutions. But Community Contribution (CCCC) and/or do not the one-year timeframe for implementation pay the specified amount. Regarding curtails the involvement of villagers in the Operations and Maintenance (O&M) , some planning and contracting process. communities already perform minor repairs themselves. Appropriate training and incentives Procurement process could by used to promote this practice. Communities typical ly DWOs initiate the procurement process contribute one percent of initial infrastructure immediately after their budget is approved. But The implementation of the BSI has resulted in costs and thereafter the 12-month project cycle is too short and skills development and retention at village level; assist with maintenance negatively affects the procurement process. career paths are developing at district level in The procedure requiring the pre-qualification of the WSS. The inclusion of women in WUC , as contractors is neither fully transparent, nor seen in Kumi , is a particularly positive sign. effective . O&M: Who owns and maintains what? Due to cases of conflict of interest, supervision Uganda is in the fortunate position that many of works by the district technical staff can be of the key aspects of an O&M strategy are awkward and ineffective. This may result in poor already in place. The LGDP funds include a quality of work and contract management, component for O&M, which goes directly to which puts the sustainability and efficacy of subcounties. water supply at risk. However, precisely how much of this money is The role of the DWD as a regulatory agency spent on O&M and monitoring is however will continue to be critical. Many of the policies difficult to establish. The scope for cost and guidelines are established , but need to be recovery from communities must be realistically adapted to meet targets. It is vital that this measured against notions of affordability with,in department continues to develop in accordance the largely subsistence economies of the rural with changing needs. areas. The concept of paying for water is not IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 10 ' widely accepted, given both the levels of The releases, in Ugandan Shillings poverty and access to 'free'- if unsafe- water (UGS) comprised • sources. 2000/01 20,996,010,000 Willingness and affordability aside, many 2001/02 23,337,112,000 "villages are ill prepared to take full responsibility 2002/03 24,501 ,075,000 for O&M. Expanding community involvement in O&M and other aspects of running the rural did not stop immediately when the BSI started. water schemes is hampered by ambiguity Accordingly, in FY00/01 and FY01/02, some concerning the ownership of schemes, i.e. do districts received only a small portion of the they belong to the state, the district or to the DWSDG. When the donor-support ended, these user/ maintainer-community? In other words, districts received much higher grants. the ownership question should be addressed more fully at a policy level, in order to The amount of money allocated varies strengthen O&M . considerably- amongst the districts- per un- served person. For example, Iganga District Mr Boniface Kagwa Moreover, in order to realize the full benefits of received UGS 1.55 per un-served person, is the caretaker of a protected shallow well in decentralization and the BSI, a more whereas the Rukungiri and Kayunga Districts the Odeperio Village in the comprehensive and effective O&M strategy is received as much as UGS 39.47 and UGS 63.35 Palisa District. He maintains needed. This will enhance both the well-being respectively. Equity of allocations is receiving the pump, greasing and of communities and the sustainability of the attention through the Fiscal Decentralization oiling parts. Mr Kagwa usually earns a small water schemes. Strategy (FDS). monthly stipend paid entirely by the users' contributions. 2.6. Spending on rural water supply Rural/urban delineation affects delivery The community also pays statistics for minor repairs and parts. Decentralized funding releases Excellent demographic data is available in The District Water and Sanitation Development Uganda. But definitive statistics (regarding the Grants (DWSDG) increased unevenly in the numbers of rural Ugandans served) are period under review. obscured by the fact that the stated numbers of persons served do not take into account It is clear that reforms to the allocation those living in Rural Growth Centers (RGCs). mechanism are needed: an increased and more predictable flow of monies to the districts is The RGCs are not financed with District Water imperative. Moreover, equity will continue to and Sanitation Development Grants (DWSDG), be elusive while large disparities in spending rather the water supply investments are are evident. Although previous allocations were managed directly from the Directorate of Water based on need, the nature of criteria used is Development (DWD). During the period under unclear. Many of the donor-supported projects review, safe water supply was extended IMPACT OF BSIIN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 11 annually to a further 210,000 persons living in Some 34.3 percent of the total spending went · RGCs. Thus the statistics on coverage may directly to the districts, while 65 .7 percent include some under-reporting. remained with the DWD . However, the . Investments indicate the following typical cost distinction between rural and urban is not clear. per capita: Cost escalation and spending Overall investment for Rural Water During the period under review, the cost of RWS including Small Towns: per capita has risen slightly despite the fact More and more rural Funding Source Amount spent in million$: that more low cost technologies were used. people live in these settlements which are FY2002/03 Moreover, the gap between the actual spending classified neither as 'urban' GOU 20,6 and the projected cost increased, based on the nor are they any longer unit prices as used in the 5-year Operational Donor 19,1 strictly 'rural' Total 39,7 Plan (OP5) . This suggests that the financial performance has worsened. The numbers of persons served were: Rural 730,000 Reasons for this development are unclear from Small towns 210,000 the available data. As in previous years, full Total 940,000 cost transparency was not achieved . Cost efficiency and value for money, therefore, are issues that will need future attention . If the per • USD 18.6 under DWSDG (largely used for capita cost is indeed escalating in real terms, hardware); i.e. above the inflation rate, it will be difficult to • USD 7.0 for support to the Rural Water accelerate the pace of service delivery. and Sanitation. Sub-sector (RWSS) (nearly all software); Chart 2 illustrates the coverage forecast. With • USD 3.6 financed by others (mix of no Operations and Maintenance, 5 percent of hardware and software); all systems fall in disrepair per year: • USD 76.7 for small towns (mix of hard- and software). 2.7. Role of the private sector Chart 1: Distribution of spending in Rural The private sector can play a significant role in Water for the Financial Year 2002/3 increasing service delivery, but this sector also faces challenges. For example , the procurement system is often viewed as costly and lacking in transparency. Private secto~ stakeholders' perception of the BSI is mixed- in part because the cost of doing business has increased. Profit margins are regarded as slim; IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 12 Chart 2: Coverage Forecast 2003-2015 35.00 30.00 25.00 Ill c 20.00 0 ~ Cll c. c 15 00 ~ ~ 10.00 5.00 FY02103 FY03/04 FY04/05 FY05/06 FY06/07 FY07/08 FYOB/09 FY09110 FY10/11 FY11112 FY12/13 FY13/14 FY14/15 in part due to fierce competition and small lot cumbersome or 'over designed' and this sizes. It appears that tendering guidelines , contributes significantly to the private sectors' designed to prevent corruption , are perceived cost of doing business. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 13 3. Recommendations This review of the implementation of the BSI co-ordination and close collaboration between in the context of Rural Water Supply (RWS) in the DWD and District Water Offices (DWO) Uganda has indicated more strengths than should lead to optimal district structures.The weaknesses in the first three years of operation. FDS has already begun to give more autonomy What follows in this Policy Note is a set of to the districts, particularly regarding the setting recommendations to improve the of planning priorities. The shift of control to local implementation both of the BSI and the governments needs support , especially decentralization process, the goal of which is regarding the establishment of better to increase the efficacy, cost-efficiency and mechanisms for Monitoring and Evaluation sustainability of RWS . (M&E). The FDS will also enable districts to tackle bigger projects- such as Rural Growth 3.1. Further support to the PRSC Centers (RGC) and Gravity Flow Schemes (GFS). Further support should be given to the Poverty Reduction Support Credit (PRSC) Budget 3.2. Rural Growth Center (RGC) Support Instrument (BSI) in Uganda. The management Mrs Rebecca Okello from functioning of the BSI is expected to improve the Kumi District is one of as the new Fiscal Decentralization Strategy Responsibility for the investments in the users of the new (FDS) process develops: the FDS formula for mechanized systems for RGCs should be Ngabet Borehole equitable distribution of funds amongst districts transferred from the Directorate of Water is quite simple and easy to apply. It is clear, Development (DWD) to the District Water however, that If Poverty Eradication Action Plan Officers (DWO). (PEAP) targets are to be met, the rural sector will need a substantially increased share- 35 Technical aspects can be addressed by percent rather than 25 percent- of government institutionalizing technical support to the DWO, resource allocation. and this can be provided by the Technical Support Unit (TSU) or private sector The process of transition should also be consultants. characterized by continuous support; district level structures need to be developed to match The economic and social aspects of RGC growing responsibilities. The role of the management should be in the hands of the Directorate of Water Development (DWD) as DWO. Piped systems mean changing over from the regulator is highly important: inter-district simple Operation and Maintenance (O&M) IMPACT OF BSIIN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 14 structures to a more complex operation regime. works must be improved and unit costs It will be necessary to speed up service reduced . The roles and responsibilities of the ·delivery. It may also be necessary to direct various players - including the DWO, private more resources to like higher cost sector consultants, DWD and TSU , District technologies. Councils , communities and private sector operators- need to be more clearly defined. 3.3. Planning horizon 3.5. Setting up supply chains Mechanized water systems cannot be planned and implemented in one year. The planning An innovative approach was developed and horizon must be extended , included in the adopted in Uganda to support the District Development Plan (DDP) , and fully establishment of sustainable supply chains for integrated with the budgeting process. hand pumps. Other service provisions could also benefit from such innovative approaches. 3.4. Technical support The overall investment for Rural Water including Small Rural Towns in FY02/03 was: In order to deal with the more complex technical • GOU : 37,064,702 UGS aspects of Small Piped Systems (SPS) , a • Donor: 19.1 million USD technical support structure for the execution of an investment project will be required. There The graph below illustrates the spending in Rural is also some risk ahead as the standard of Water Supply: Chart 3: Spending in RWS per Capita 70 ~---------------------------------------------- ro ~---------------------------------------------- ~ t-~~========================~----- Q ( Population served per Year= 730,000 \ ~ 40 ~---------------------------------------------- 30 ~--------------~------------------- 10 District Cond~io n al Support to Rural Wat er Others (Donor projects) Total Rural Small Towns (RGC) Overall Grants Sector IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 3.6. Drilling (LGDP) , bi- or multi-lateral donors, NGOs, or· other government ministries (the latter is most The contracting process for drilling needs to evident with regard to sanitation) . All these· be improved: uniform rates for drilling could be projects require separate accounts, reporting, adopted. An agreed price list for Bills of etc. and project cycles are not synchronized . Quantities (BoO) items could be used for Self-supply is part of the solution. contracting drilling firms, because this approach simplifies and shortens the contracting process. 3.9. Three year budget guarantee Standardized costing could enable districts to The district administrations currently prepare jointly contract the same drilling company and the District Development Plans (DDPs) on a thereby achieve an economy of scale. three-year rolling basis. It is recommended that Competitive bidding on a piece-meal , contract- these three-year rolling plans be approved in bycontract basis would cease - and the pace principle at central level. Approval must include of drilling would improve. a commitment- on the part of both central and local government - to adhere as closely as 3.7. Procurement possible to the budget and outputs of the funding plans. The DWD should formulate , issue and enforce practical guidelines for procurement processes. 3.1 0. Equity amongst districts These guidelines should make decentralized procurement more flexible , with the aim of The BSI and Financial Decentralization improving the quality and sustainability of water Strategy (FDS) mechanisms aim to close the source protection. wide gap in coverage between districts, and also within districts among the sub-counties. In districts and sub-counties, the purchase of But equity is likely to be elusive in the services and equipment should be done with immediate future, and selfsupply must indeed the aim of creating sustainable infrastructure be promoted in districts where the most isolated and a healthy public-private partnership, i.e. the 10 percent of the rural population lives. lowest price may not be the optimal choice in the long-term. Flaws in the planning process may lead to outcomes outside the principle of putting 3.8. Sector Wide Approach to unserved areas- or the poorest people- first. Planning (SWAP) and planning However, with appropriate monitoring , the process in the districts planning process could address this througl;l County Water Officers, changes in the allocation mechanism. like Mr David Luche, represent the depth of skill Many districts and sub-counties run several and commitment present projects in parallel. They are financed through A strategy of a staggered introduction of FDS at district level. Local Government Development Programs over two years would result in a more even- IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 16 handed distribution. It is recommended that, in monitoring. Improving the DWD's Management year one and two (i.e. 2004/05 and 2005/06) , Information System (MIS) is necessary to '50 percent of funds be distributed according to provide consistent performance indicators for FDS formula and 50 percent distributed in evaluation of the BSI. proportion to past allocations. At district level , it is important to set up a After this two-year period , the Local monitoring system for all facilities- including Government Finance Commission (LGFC) facilities built by means of District Water & should review the impact of this strategy on Sanitation Development Grants (DWSDG) , equity and propose whether further transitional other Local Government Development Plans arrangements are needed in applying the FDS (LGDP), donor funds , NGO funds , or other Protected sectors like water means of funding. The monitoring system will and sanitation must receive in FY 2006/07. Protected sectors like water and their full budget allocation . sanitation must receive their full budget then better indicate a holistic picture of how It is clear that a higher allocation. It is clear that a higher proportion of many systems are in place and how well they proportion of state state resources must be channeled to rural are functioning . resources must be channeled to rural needs needs within those sectors. within those sectors. 3.13. Operation & Maintenance (O&M) Strategy 3.11. Releasing funds optimally The cost effectiveness of preventive It is recommended that central government and maintenance is beyond doubt. Uganda is in the donors do their utmost to ensure that the fortunate position that many of the key aspects budgeting process is realistic and, particularly, of the strategy are already in place. Therefore, that protected sectors do actually receive the the maintenance strategy needs only be full budget allocation . This will obviously extended to promote regular routine increase the likelihood of meeting targets tor maintenance for all new and existing facilities . access to a sate and sustainable water supply. Neglect of O&M has the potential to undermine It will also have positive implications for the and even negate the positive impact of all other relationship between the district administration initiatives. and communities, and the district administration and the private sector. Communities have a keen appreciation for the need and value of safe , accessible water 3.12. Monitoring sources. There is a clear understanding of the link between safe water and the reduction of It is recommended that the monitoring system vulnerability to disease. The motivation of the l;>e aligned with an agreed , standardized , WUC to maintain the facilities is critical if baseline. Once data has been consolidated, existing investments are to meet the expected the present system is quite adequate tor service life. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 17 Chart 4: Progress towards meeting RWS service coverage targets Persons 25,000,000 20,000,000 15,000,000 10,000,000 5,000.000 r-;;EA"P"..> ---------------------·---- --- - --·-·-- - -·- -- -·-- --·· -·-·-·-· 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 ...... Rural Population. Served Unserved The graph above illustrates significant progress Poverty Eradication Action Plan (PEAP) targets in meeting service coverage targets in the for Rural Water Supply (RWS) under the Poverty MDGs , Sector Investment Plan (SIP) and Action Fund (PAF). IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 18 ·4. Conclusion The BSI has taken root in Uganda. A bridge shortcomings of the BSI should be improved has been crossed: there is no reason for gradually. The graph below illustrates the returning to the old way of executing forecast up until2015, including cost reduction , development projects without participation of self supply options and increased funding. the poor and local government institutions. The BSI has proven to be a good pro-poor Uganda can meet the Millennium Development instrument. Goals (MDG) if the BSI process continues to be refined, and Poverty Eradication Action Plan The essential elements for effective functioning (PEAP) targets are also within reach . The of the BSI have been put in place at district outlook for the next 12 years indicates that the level, including guidelines, policies, and human MDG are indeed within reach, however, targets resources. Valuable experience has already set in the Sector Investment Plan (SIP) and been gained and must be built upon ; the PEAP appear less attainable . Chart 5: Coverage foremost 2003-2015 35.00 . . -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - , 30.00 10.00 f"'j;E".A."P"':::::•··························································-····································--···········-······-·· FY02/03 FY03/04 FY04/05 FYOS/06 FY06/07 FY07/08 FYOS/09 FY09/10 FY10/11 FY11112 FY12/13 FY13/14 FY 14115 ~ Population ~ Served ....- unserved IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 19 Chart 6: Coverage forecast 2003-2015 35. 00 F:7.':':'=:':':' _:'=-:="" . ..='7':'7:':':':'=:':':' ···. .. . .. """ ::""' :::": ::""" "':"::"'"" :: ~""' · ~"" - ""' ..""'..=""' ..""' ..""' ..""' .. ""' · ""' ."" .. . ~~~==:'=-:~~=~=== .. ... . . .. . .... .. .. .... . .... .. .. . . .. .... ..... ..... .. ;:;:;:;:;:;:;:;:::::::;:;: ... . .. :;:::::::::::::::::::::::: .... .. .............. . 30.00 H"-~'-P'':':' .. ·.·.·.·.·.·.·.·.·.·.·.·.·.· .·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.·.· . . . . . . . . . . . . . ·-·-:-:. .....·.·.·-:.:-:.:.· ...·.·.·.·.·.·.·.·.·.·.·:<<<· .. .. . . ~ ~~ ~ n =~ii~~t-.-F·:.C ~%!~~"~~ Jil ·~.· · :::::::::.:•(:: ;.:-:·.·.·.· ... :-:·.·.·.·.·.·.·.·.·.·.·.· ... ·.·.·.·.·.·.· .. .. .. ,:,:,.;.;.;. ...... .. .. .. .. ~ 2o.oo :::::B::::::::::+~~8:8~~::::::::;:f:~~~f+:8~f:SB~~f:;;:::::;::+.::::::::::+.:::::::+.~:\::+.··-·.·. ... ::;:;:;.::·:·:·:·:::::~;:.; ~ ~ ...... ····.·. .·.·.·.·.· .. .. .. ... ... .. .. .. :::::::::;:::;:;:::;:::::;::::: ...... .. · ··· .. .. ':":'~ ::11 5.00 ~~-~~~~~............~~~~-~~':':'':':':"':'-:"'':':'':':':"':'-:"':':'"' :':'":':':'i:':'"'':':'":':':"':'-:"'i:':''':':'":':':"i:':'"'':':'"-'i:':'"'':':'":':':':i:':'·:.':':'·:::':'; ...':':'1 .. :':':.':':' ..... ..... ..... ....... . ... . .. .. .. .. .. .. .. ............. .. .. .. ,: ~f_=~j~~:·· )11·· : : ·1··~··I"·It-l::·iil;f!1 'i·l" :·: ,.:::: :::: ::: ::::::,.,, ,, : : : . ..... _ .. _ ..... _ .._._ .·: .. :: .: : · . _. _ ::, : :: : . u : :: :. : :- ·. ~-;~·-·:::i::: ·: :: : · FY02103 FY03/04 FY04105 FY05106 FY06107 FY07108 FYOS/09 FY09110 FY10111 FY11 112 FY12113 FY13114 FY14/15 -t- Population ..... Served. all ""*"" Un-served, no "'*"" Un-served, all conditions met systematic O&M conditions met The graph above illustrates the forecast up until 2015 , including cost reduction , self supply options, increased funding and with or without systematic O&M. The outlook indicates that both the MDGs and the more ambitious SIP targets are indeed achievable if increased funding can be combined with reduced unit costs, self-supply options and systematic O&M . Even the Poverty Eradication Action Plan (PEAP) targets could be within reach. With continued refinement, indications are strong that the BSI process will further enhance accountp.bility and efficacy of Rural Water Supply (RWS) . Continued and improved implementation of the BSI thus offers the optimal approach to meet all these targets. IMPACT OF BSI IN THE CONTEXT OF RURAL WATER SUPPLY IN UGANDA 20 September 2005 WSPMISSION To help the poor gain sustained access to improved water and sanitation services . WSP FUNDING PARTNERS The Governments of Australia , Austria , Belgium , Canada , Denmark, Germany, Italy, Japan , Luxembourg , the Netherlands , Norway, Sweden , Switzerland , and the United Kingdom , the United Nations Development Programme , and the World Bank . Acknowledgements This Policy Note is based on a report by Erich Baumann and Ephrem Asebe: Towards the MDG in Uganda - A retrospective study of the impact of three years of the Budget Support Instrument on rural water, financed through the Swiss Consultancy Trust Fund and administered by the World Bank. Ato Brown (Senior Sanitary Engineer, Water and Urban Development Unit of the African Region of the World Bank) managed the writing and production of this Policy Note. The report benefited from inputs by Maimuna Nalubega (WSP - Africa). It was compiled by Elaine Gosser. The findings, Interpretations and conclusions expreuad in this report are entirely those of lha authors and should not be attributed In any manner to lha Water and Sanitation Progrem. Tha Water and Sanitation Program does not guarantee the accuracy of data included in this publication or accept responsibility for any consequences of their use. Dissemination of the material in this report Ia encouraged and the Water and Sanltiltlon Program will normally grant permission promptly. For questions about this report, Including permission to reprint portions or Information about ordering more copies, please contact the Water and Sanitation Program. Design/ Layout: Peter Wambu Water and Sanitation Program-Africa, P.O. Box 305n · 00100, Nairobi Kenya Phone: 254 20 3226370, Fax: 254 20 3226388 Photo credits: Elaine Gosser. Email: wapafOwortdbank.org, Webelte: -.wap.org