Kampala Water Connections for the Poor Project Project Completion Report TF091510-UG June 2015 © 2015 The Global Partnership on Output-Based Aid The World Bank 1818 H Street NW Washington DC 20433 Website: www.gpoba.org E-mail: gpoba@worldbank.org All rights reserved.This report was produced the Global Partnership on Output-Based Aid (GPOBA). The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of GPOBA or the Board of Executive Directors of the World Bank or the governments they represent. Neither GPOBA nor the World Bank guarantees the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of GPOBA or the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Note: All currency amounts are in U.S. dollars unless otherwise noted. CURRENCY EQUIVALENTS (Exchange Rate Effective as of November 19, 2014) Currency Unit = = Ugandan Shilling (U Sh) US$1.00 = U Sh 2744.99 2 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy DO Development Objective ESMF Environmental and Social Management Framework GNI gross national income GPOBA Global Partnership for Output Based Aid IDA International Development Association IVA independent verification agent MDG Millennium Development Goals NGO nongovernmental organizations NWSC National Water and Sewerage Corporation OBA output-based aid OECD Organization for Economic Cooperation and Development DAC Development Assistance Committee PDO Project Development Objective PM prepaid meter PwC PricewaterhouseCoopers PWP public water points QEA quality at entry QSA Quality of Supervision UPPB Urban Pro-Poor Branch US$ United States Dollar YT yard tap 3 Table of Contents Data Sheets .................................................................................................................................. 6   A.   Basic Information .................................................................................................................. 6   B.   Key Dates .............................................................................................................................. 6   C. Analysis of Project Results .................................................................................................. 7   D. Project Performance Ratios in ISRs (ISRs were not required for small trust-funded projects) ......................................................................................................................................... 9   E. Project Restructuring .......................................................................................................... 10   F. Disbursement Profile .......................................................................................................... 11   1.   PROJECT CONTEXT, DEVELOPMENT OBJECTIVE AND DESIGN ...................... 12   1.1 Context at Appraisal  .....................................................................................................................  12   1.2 Original Project Development Objectives and Key Indicators  ...............................................  12   Revised PDO (as approved by original approving authority) and Key Indicators, and justification  ...........................................................................................................................................  13   1.3   Project Design  ...........................................................................................................................  13   1.4   Main Beneficiaries  .....................................................................................................................  14   1.5   Original Project Components  ..................................................................................................  14   1.6   Revised Components  ...............................................................................................................  15   1.7   Other Significant Changes  .......................................................................................................  15   2. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................ 16   Affordability  ..........................................................................................................................................  16   Practicability  .........................................................................................................................................  16   Absentee Landlords  ............................................................................................................................  16   Land for PWP  ......................................................................................................................................  16   Procurement  ........................................................................................................................................  16   Community Mobilization  .....................................................................................................................  17   OBA Subsidy Rates  ............................................................................................................................  17   Lack of Harmonized Approaches  .....................................................................................................  17   3.   ACHIEVEMENT OF PROJECT DEVELOPMENT OBJECTIVE ................................. 17   ........................................................................................................................  17   3.1   Project Outcome   3.2   Project Development Objective Results  ................................................................................  18   4 4.   SAFEGUARDS AND FIDUCIARY COMPLIANCE ........................................................ 19   5. POST-COMPLETION OPERATIONS/NEXT PHASE ................................................... 20   5.1 Operation and Maintenance  .......................................................................................................  20   5.2 Social Dislocation  .........................................................................................................................  20   5.3 Wastewater Drainage  ..................................................................................................................  21   5.4 Replication of the Project  ............................................................................................................  21   6.   ASSESSMENT OF PDO RELEVANCE .......................................................................... 21   7.   LESSONS AND RECOMMENDATIONS ........................................................................ 21   Appendix A: PROJECT COSTS AND FINANCING.............................................................. 24   MAP: OBA FOR KAMPALA URBAN POOR PROJECT AREA .......................................... 25   5 Table of Contents DATA SHEETS A. Basic Information Country: Uganda Project Name GPOBA in Kampala – Water Connections for the Poor Project Project ID: P104943 L/C/TF Number(s): TF091510-UG Lending Instrument: Grant Grantee: National Water and Sewage Corporation (NWSC) Original Total US$2,527,100 Disbursed Amount: US$1,509,455.18 Commitment Revised Amount NA Environmental Category: B Implementing Agency: National Water and Sewage Corporation Users paid 10% of yard connection, NWSC contributed 30% and GPOBA 60% Equiv. US$2,527,100 B. Key Dates Process Date Process Original Date Revised/Actual date Concept March 14, 2007 Effectiveness April 30, 2008 Review Appraisal September 15, Restructuring Nov. 23, 2010 2007 Approval May 1, 2008 Mid-term August 2010 review Closing Dec. 31, 2011 Dec. 1, 2013 Note: The project was originally supposed to end on December 31, 2011 but was extended to December 1, 2013. The extension totaled 23 months, resulting in a 66% increase in project duration. 6 C. Analysis of Project Results Project Development Objectives (from Project Appraisal Document) The project’s objective was to provide poor households in Kampala slums with access to piped water services. Kampala is the capital of Uganda. Revised Project Development Objectives There was no revision to the PDO during implementation. However, Some PDO indicators were revised. (a) PDO Indicator(s) Indicator Baseline Original Target Formally Actual Value Value value (from Revised target achieved at approval value Completion or documents) Target Years Indicator 1: The number of yard taps and public water points made by NWSC using an output-based aid approach in the targeted areas Value 19,070 yard tap 6,000 yard tap 5,932 yard tap quantitative or connections connections connections qualitative 205 public water 200 PWPs with 200 PWPs with points (PWP) with ordinary meters ordinary meters ordinary meters 2,333 PWP 1,131 PWP with 615 PWP with with prepaid prepaid meters prepaid meters meters Date achieved Feb 2008 Nov. 2010 Dec. 2013 Comments The project achieved 99% of the revised target and 35% of the original (incl. % target. achievement) The achievement of PWP ordinary meters was 100% for revised target and 98% for the original target. The achievement for PWP prepaid meters reached 69.7% for the revised target and 265% of the original target. Indicator 2: The number of yard taps and PWPs still in use after 12 months of service provided by NWSC Value 0 19,070 yard tap 6000 yard tap 4,652 yard tap quantitative or connections connections connections qualitative 205 PWPs with 200 PWPs with 114 PWPs with ordinary meters ordinary meters ordinary meters 615 PWPs with 2,333 PWPs 150 PWPs with 7 Indicator Baseline Original Target Formally Actual Value Value value (from Revised target achieved at approval value Completion or documents) Target Years prepaid meters with prepaid prepaid meters meters Date achieved Feb 2008 Nov. 2010 Dec. 2013 Comments There were 4,652 yard taps that qualified as having 12 months of service (incl. % connections. This represents 78 percent of the revised target of 6,000. achievement) One hundred and fourteen PWPs with ordinary meters qualified as having 12 months of in-service connections, representing 57% of the revised target of 200. One hundred and fifty prepaid meter PWPs qualified as having 12 months of in-service connections, out of the target of 2333. This represents 6%. These figures are based on the verification report by the IVA (PwC). There were many prepaid meter PWPs that were not verified because they had not yet attained 12 months of service. Details of outputs delivered by area are shown in the table below. Clarification is being sought from PwC where the connections after 12 months were higher than the total number of connections earlier verified. 8 Area Outputs Delivered Total Total Total Total Total Total YT YT-12 PWT PWP PWP PWP Conv. Conv- PM PM-12 12 1 City Center 119 68 27 16 113 0 2 Kansanga 168 79 10 5 112 0 3 Najjanankumbi 28 0 2 0 50 0 4 Bwaise 817 310 23 9 251 150 5 Ntinda 644 389 10 8 2 0 6 Kitintale 268 228 29 20 232 0 7 Nakulabye 487 180 22 3 64 0 8 Natete 232 66 17 11 79 0 9 Nansana 89 85 0 0 82 0 10 Bunga 70 1 0 1 0 0 11 Mukono 1,394 1,341 0 1 0 0 12 Kireka 608 662 33 20 53 0 13 Kyaliwajjala 214 550 1 1 0 0 14 Gayaza 140 204 3 2 0 0 15 Kanyanya 84 93 11 7 77 16 Matuga 267 147 8 5 0 0 17 Salama 105 0 0 0 16 18 Kyengera 198 249 4 5 0 0 Total 5,932 4,652 200 114 1,131 150 Source: PwC 13th Verification Report D. Project Performance Ratios in ISRs (ISRs were not required for small trust- funded projects) No Date ISR DO IP Actual Achieved Disbursement ($, millions) July 30, Moderately 674,834.08 2013 satisfactory 9 E. Project Restructuring Restructuring Board ISR Ratings Amount Reasons for Restructuring Dates Approved at Disbursed at & Key Changes PDO Restructuring restructuring Change (US$, millions) DO IP November NA NA NA 0.4 Affordability: Many eligible 28, 2010 customers who received applications for yard taps did not return duly filled and paid applications, citing affordability as the main reason. Practicability: In informal settlements and congested areas, the practicability of yard tap connections was limited. Absentee Landlords: Most residents were tenants whose landlords were difficult to locate because they did not reside in the same areas. Procurement: There were also delays in procurement of prepaid meters. Two attempts to procure failed. The procurement had to be repackaged by separating supply from installation of prepaid PWP meters. 10 F. Disbursement Profile The disbursement profile is depicted in the table below. The cumulative disbursement was US$1,509,455 out of the grant of US$2,527,100, or 59.7 percent of the total. Despite intensive mobilization, there was inadequate demand from the community to install yard taps, partly due to high poverty levels, coupled with absentee landlords. Date From Date To Actual Cumulative ($) 01/01/2008 06/30/2008 0.00 07/01/2008 12/31/2008 0.00 01/01/2009 06/30/2009 0.00 07/01/2009 12/31/2009 166,866.84 01/01/2010 06/30/2010 216,108.00 07/01/2010 12/31/2010 295,176.24 01/01/2011 06/30/2011 397,540.44 07/01/2011 12/31/2011 397,540.44 01/01/2012 06/30/2012 397,540.44 07/01/2012 12/31/2012 674,834.08 01/01/2013 06/30/2013 674,834.08 07/01/2013 12/31/2013 1,197,020.18 01/01/2014 06/30/2014 1,509,455.18 11 1. PROJECT CONTEXT, DEVELOPMENT OBJECTIVE AND DESIGN 1.1 Context at Appraisal Ugandans are poor by most standards: gross national income (GNI) per capita totaled about US$280 in 2007, compared to a global average of US$7,011, and the Sub- Saharan Africa average of US$746.1 Average annual per capita income in the slum areas targeted by the project was particularly low, at just US$115. In 2005, only 60 percent of Uganda’s population had access to an improved water source. While the rate was higher on average for urban residents,2 coverage for those living in urban slums targeted by this project averaged 55 percent. Uganda’s government aimed to provide 70 percent of all urban residents’ access to safe drinking water by 2005, with 100 percent receiving coverage by 2015. However, the government also set budget ceilings that limited annual allocations to the water sector. Furthermore, a major power crisis caused electricity prices to rise, further constraining water sector development.3 The situation in Uganda was compounded by a substantial gap between what poor households were willing and/or able to pay for improved water services, and the actual cost of providing the services. Nevertheless, there are clear social and economic imperatives for providing clean water to the poor, including improving health and hygiene, reducing disease and providing households with time for greater productivity. 1.2 Original Project Development Objectives and Key Indicators The Development Objective of this project was to provide access to piped water services to poor households living in poor areas of Kampala, the capital of Uganda. This Completion Report evaluates the success of the project against the primary objective. Original Key Indicators A. The number of yard taps and public water points made by the National Water and Sewerage Corporation (NWSC) on an output-based aid basis in the targeted areas 1 World Development Indicators: “Little Data Book – 2007” World Bank. 2 World Development Indicators: “Little Data Book – 2007” World Bank. 3 A study of transport costs indicated that the cost of transporting a container from Mombasa, Kenya to Kampala Uganda was the same as the transport cost from Europe to Mombasa. 12 B. The number of these yard taps and public water points still in use after 12 months of service provided by NWSC Revised PDO (as approved by original approving authority) and Key Indicators, and justification The Project Development Objective (PDO) remained unchanged. However, key performance indicators were revised during the project implementation. 1.3 Project Design The design features of this project included: Output-based aid: The disbursement of the grant was based on verified outputs (yard taps and public water points (PWP)). Infrastructure: The project was designed to deliver three types of physical infrastructure: i. approximately 19,070 yard taps located external to the physical domestic abode, belonging to individual households that are used by one or just a few families (“domestic”), or, shared amongst many families, for an average of about three families per yard tap ii. approximately 205 public water points (PWP) iii. approximately 615 public water points (PWP) with prepaid meters Incumbent: NWSC’s Kampala Water unit was designated to implement the project. Kampala Water’s Urban Pro-Poor Branch was tasked with the responsibility to operate and extend the water supply in specified areas, including day-to-day project implementation, monitoring and reporting. Pre-financing and disbursement arrangements: NWSC agreed to pre-finance the connections. The Global Partnership for Output Based Aid (GPOBA) agreed to provide a subsidy per connection after outputs were independently verified. Users would contribute to the connection costs based on the statutory user connection charge. GPOBA’s contribution to the costs of connection, also known as the “subsidy”, comprised two disbursement triggers per output: (1) Ninety percent of the GPOBA subsidy per connection was supposed to be disbursed after the connections have been verified to be working by an 13 independent monitoring engineer. Verification was supposed to be done in batches, on a quarterly basis. A robust random sample of connections was supposed to be verified. (2) The remaining 10 percent of the GPOBA subsidy per connection was to be disbursed after independent verification demonstrated that the connections were in working order and delivering satisfactorily (measured by number of available hours and quality of water) over a period of 12 months. Subsidy: The subsidy was a one-off connection subsidy for the physical water connection (yard tap or PWP), and not a consumption subsidy. Users’ contribution: The applicants of yard taps were to contribute about 10 percent of the costs of connection to signal demand. Tariff: The tariff was to be subjected to annual indexation against the domestic price index, the exchange rate, a foreign price index and the electricity tariff. Method of construction: NWSC was responsible for carrying out the works for pipe laying and installation of the connections using the force-account (direct labor) method. This method proved cost effective and satisfactory during the years of implementing the New Connection Policy of 2004 within NWSC Operational Areas. NWSC was supposed to ensure compliance with the provisions of the Environmental and Social Management Framework (ESMF). Verification: GPOBA hired an independent verification agent (IVA) to undertake quarterly technical audits of the physical outputs delivered, as well as to verify information provided by NWSC related to the monitoring indicators. 1.4 Main Beneficiaries The project was designed to target poor households living in poor areas of Kampala. The original number of intended beneficiaries totaled 409,000 people. This figured was increased to 469,951 when the project was restructured in favor of more prepaid PWPs, with figures set at 15 people per yard tap and 150 people per PWP, assuming five people per household. 1.5 Original Project Components Component 1: Installation of yard taps and public water points, including public water points with prepaid meters, with the following targets: • 19,070 connections of new shared and domestic yard taps • 205 new public water points or water kiosks • 615 public water points with prepaid meters 14 Component 2: Monitoring and Verification Agent The outputs were to be verified by an independent monitoring and verification agent who would conduct robust sampling of outputs quarterly, and on a random basis. In addition to the independent agents’ monitoring and verification of actual outputs for certification and subsidy disbursement, the NWSC collected and provided additional information to the IVA and GPOBA for monitoring and tracking purposes. Component 3: Bank/GPOBA Supervision The Bank/GPOBA was to conduct a supervisory mission at least once every two years, based on the risk assessment of the project. The mission’s objectives included ensuring that strong financial management systems are maintained throughout the project’s duration. A review was carried out regularly to ensure that expenditures incurred by the project remain eligible for funding. 1.6 Revised Components Component 1 outputs were revised to the following: • Provision of subsidies to increase piped water supply through the establishment of: (i) approximately 6,000 connections of new shared and domestic yard taps, estimated to serve about 90,000 people; (ii) approximately 200 new public water points or water kiosks, to serve about 30,000 people; and (iii) approximately 2,333 public water points with prepaid meters, estimated to serve about 349,951 people. • The time for delivery of outputs was extended by 23 months, from December 31, 2011 to December 1, 2013. Component 2 Monitoring and Verification Agent: Revisions were as follows: • The deadline for monitoring and verification outputs was extended to December 31, 2013 from December 31, 2011. • The contract value for monitoring and verification was increased by US$9,620, bringing the total contract value to US$162,713. A Bank-executed TF paid the contract. 1.7 Other Significant Changes 15 The financial audit requirement was dropped during the amendment to the financing agreement in November 2010. It was determined that the output verification reports sufficed. It was also noted that the only method for disbursement was reimbursement. 2. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME Affordability Many households could not afford the 10 percent contribution, resulting in low returns of properly completed and paid applications for yard taps. In its request for a project extension (2010), NWSC cited high poverty levels among targeted communities as one of the reasons for low demand. The yard taps target was revised from 19,070 to 6,000. Practicability Informal settlements and congestion in slums made it practically difficult to install water connections in some areas. Absentee Landlords Many landlords were not residents in the area, and the tenants lacked legal rights to the land. Tracing these landlords to obtain their consent was a challenge. Many land disputes further hindered prepaid meter installment. Land for PWP Securing land for public water points proved challenging due to widespread skepticism about the project. For example, many households feared that the government wanted to take their land and some expected financial compensation. Political rivalries within communities also complicated matters. In some communities, landlords changed their minds about site location midway through the installation process. Procurement There were significant delays in procurement of the initial batch of prepaid meters. Two attempts to procure a contractor to supply and install prepaid meters failed. NWSC then decided to split the procurement into two: the supply of prepaid meters and their installation. This approach succeeded but delayed implementation. 16 Community Mobilization As described in above, the initial community mobilization approach was ineffective. Midway through the project, community mobilization guidelines were revised to ensure proper targeting of households. Mobilizers would receive performance-based payment for their efforts. This improved communities’ demand, but not enough to meet the target of prepaid meters. OBA Subsidy Rates The OBA subsidy rates for the yard taps, conventional and prepaid meter PWPs, were fixed at the time of project appraisal (2007). These rates were not indexed to inflation and exchange rate fluctuations. As a result, NWSC contributed more than originally planned. In future, there should be a provision for revising the subsidy rates based on the changes in the economic conditions. Lack of Harmonized Approaches NWSC intended to raise the 10 percent community contribution from selling tokens, which proved difficult. Parallel/supplementary projects funded by KfW had issued tokens free of charge, and customers for the OBA-funded connections were reluctant to pay token fees when their counterparts received KfW-supplied water without paying. The token fee was consequently waived, but NWSC encouraged households to purchase initial credits of U Sh 5,000 as a sign of commitment. 3. ACHIEVEMENT OF PROJECT DEVELOPMENT OBJECTIVE 3.1 Project Outcome A total of 288,630 people were served out of the planned 409,000,4 or 70.6 percent of the target. Details of the population served by area are shown in the table that follows. 4 Project Appraisal Document, 2008 17 Table 3.1 Population Served under OBA by Area Area Total Pop. Total Pop. Total Pop. Total YT Served PWT Served PWP PM Served Pop. Conv Served 1 City Centre 119 1,785 27 4,050 113 16,950 22,785 2 Kansanga 168 2,520 10 1,500 112 16,800 20,820 3 Najjanankumbi 28 420 2 300 50 7,500 8,220 4 Bwaise 817 12,255 23 3,450 251 37,650 53,355 5 Ntinda 644 9,660 10 1,500 2 300 11,460 6 Kitintale 268 4,020 29 4,350 232 34,800 43,170 7 Nakulabye 487 7,305 22 3,300 64 9,600 20,205 8 Natete 232 3,480 17 2,550 79 11,850 17,880 9 Nansana 89 1,335 0 - 82 12,300 13,635 10 Bunga 70 1,050 0 - 0 - 1,050 11 Mukono 1,394 20,910 0 - 0 - 20,910 12 Kireka 608 9,120 33 4,950 53 7,950 22,020 13 Kyaliwajjala 214 3,210 1 150 0 - 3,360 14 Gayaza 140 2,100 3 450 0 - 2,550 15 Kanyanya 84 1,260 11 1,650 77 11,550 14,460 16 Matuga 267 4,005 8 1,200 0 - 5,205 17 Salama 105 1,575 0 - 16 2,400 3,975 18 Kyengera 198 2,970 4 600 0 - 3,570 Total 5,932 88,980 200 30,000 1,131 169,650 288,630 3.2 Project Development Objective Results Key PDO achievements resulting from the project are described below: Reduced distance to PWP: The project reduced the average distance to a public water point to 50 meters, with a range of between 14 and 100 meters. This was far below the sector standard for urban water coverage of 200 meters, or 0.2 km distance to the nearest safe and clean water source. Time savings: The project reduced the average time to reach a PWP to one minute, with a range of between one and three minutes. The average waiting time at the PWP was one and a half minutes, again ranging from one to three minutes. Field observation indicated no significant queues at PWPs. Households used the time saved for other domestic chores. Cost savings: The average cost per 20-liter (L) jerry can was U Sh 100, with a range in price from U Sh 50 to U Sh 200. Project implementation raised the cost per cubic meter from U Sh 688 to U Sh 1,323. There were no major differences in the price of a 20L 18 jerry can at project appraisal and after project implementation. However, after discounting for inflation, there was a reduction in the cost of 20L jerry can in real terms: assuming an inflation rate of 10 percent, households were paying 10 percent less than the real price. Higher service level: Water was available an average of 22 hours per day, with a range of between eight to 24 hours. The pounds-per-square-inch (PSi) for most connections (79 percent) was good, at 20 PSi and above NWSC standards for piped water pressure. Only one connection, in Najjanankumbi, had a PSi below 14. Quality of water: Most of the households sampled reported having good water quality. Kireka and some parts in Mukono reported dirty water at the time of rationing. General satisfaction: Three-quarters of the sampled households were satisfied with the quality of water services; eight percent were fairly satisfied, and 17 percent were not satisfied. The major cause for dissatisfaction was disconnection without notification. 4. SAFEGUARDS AND FIDUCIARY COMPLIANCE Environmental and Social Safeguards: The Environmental and Social Management Framework (ESMF) guided compliance with environmental and social safeguards with the attendant Resettlement Policy Framework. The environmental and social impact assessment identified major concerns, including the excavation and restoration of pipe trenches, management of water spills, traffic control measures where pipe trenches cross roads, dust control during the works, and site cleanup measures. There was adequate restoration of excavated sites and proper management of water spills. The sites were cleaned up after works and there was no evidence of negative environmental impact at the sites where PWPs were constructed. The project did not displace anybody, except for a few hours to enable work along the pipeline. Financial management. The report noted that NWSC had sufficient controls to deter the possible misuse of project funds. Internal auditors conducted risk-based audits and pre-audit of payment vouchers. Unaudited Interim Financial Reports (IFRs) were produced every six months and submitted to IDA. However, the project was exempted from annual audit requirements due to its nature of being funded by OBA. Disbursements: Disbursements were low. By May 2014, 59.7 percent had been disbursed, leaving a balance of 40.3 percent unused. This was attributed to land wrangles during site mobilization, construction challenges in informal settlements, delays in procurements, a thin project implementation team, and reluctance among some communities. There were also initial challenges with the withdrawal application, but these were quickly resolved and did not significantly affect the disbursement of funds. 19 Procurement: The project procured motor vehicles, prepaid meters, conventional domestic meters, labor contractors and pipes and fittings. The original procurement plan was not followed due to the following conditions: • Two attempts to procure a contractor to supply and install prepaid meters failed. There was no responsive bid to the first attempt, and the bidder pulled out of the second attempt. • The need for repackaging the procurement by separating supply of prepaid meters and labor for installation. • NWSC was able to use part of its stock for the conventional PWPs and yard taps. 5. POST-COMPLETION OPERATIONS/NEXT PHASE 5.1 Operation and Maintenance Prepaid meters require more maintenance than conventional post-paid meters, and spare parts are expensive and not locally available. Expertise for repairing prepaid meters was not developed. To address this challenge, NWSC is in the advanced stages of procuring stock of spare parts, and training staff members in the maintenance of prepaid meters. For conventional PWPs, there is a risk that attendants will not pay their bills: many have already been disconnected for non-payment. NWSC is planning to convert active and disconnected conventional PWPs into prepaid meter PWPs. Water vendors who lost business as a result of the project started to vandalize installations. NWSC planned to continuously engage and mobilize the community through Water Community Communication Clubs. Replacement of lost or stolen tokens will be a challenge. People want free replacement of tokens and that is expensive. NWSC plans to charge a fee for token replacement or acquisition for a new customer. 5.2 Social Dislocation The pattern of urbanization in Kampala is changing rapidly as slums are transformed into well-planned settlements, such as Naguru Satellite City, and other slums move to new areas. A case in point is Kisenyi 1, which was a railway reserve. This area contained OBA water connections that had to be reallocated following the break up of informal settlements to give way to new developments. NWSC will have to adapt to the changing slum environment by relocating the prepaid PWPs to new areas with poor people. 20 5.3 Wastewater Drainage Most slums are located in low-lying areas with poor drainage. Some landlords who provided land for PWPs have complained about growing ponds of wastewater. NWSC has intervened in some areas by constructing a raised platform or relocating the meter to improve drainage. 5.4 Replication of the Project NWSC plans to install prepaid meters to serve poor areas of other towns under its jurisdiction. It is considering converting over 5,000 active and disconnected kiosks to prepaid meters. 6. ASSESSMENT OF PDO RELEVANCE The PDO was to provide access to piped water services for poor households living in slum areas of Kampala, the capital of Uganda, in an output-based manner. The PDO was relevant in the following ways: (i) The Government’s goal was to achieve 70 percent of all urban residents to have access to safe drinking water by 2005 and 100 percent by 2015. To this end, the PDO contributed to attainment of the Government’s goal. The PDO also contributed to the Government’s goal of meeting the MDGs through increasing access to safe water. (ii) The PDO was also consistent with the Bank’s Joint Assistance Strategy (JAS) for Uganda (2005 – 2009). Pillar 5 of JAS had the objective of improved access to safe water supply and sanitation. It is also in line with Strategic Objective 2 of the Uganda Country Assistance Strategy (CAS) FY11-15, to enhance public infrastructure, and particularly outcome (iii) to increase access to and quality of water and sanitation services. 7. LESSONS AND RECOMMENDATIONS Harmonization of Approaches Development partners often have different approaches and requirements for similar projects. This creates challenges in implementation of the same/ similar intervention in the same or neighboring community by the same organization. For example, NWSC was implementing a pro-poor project funded by KfW that offered free tokens for prepaid meters. However, the OBA project, which was similar to that of KfW, required people to 21 pay for the token. People could not understand why they should pay for the tokens when their counterparts were not paying. The two projects should have been coordinated prior to implementation. Community Mobilization Community mobilization to create demand for water services is a challenge, as urban poor are slow in responding to interventions and require sustained intensive mobilization. Performance-based payment of community mobilisers improved achievement of outputs in terms of applications returned, but this created the problem of some mobilizers cutting corners in order to achieve as many outputs as possible. Some aspects of community mobilization including processes such as dispute mediation, were difficult to implement or monitor consistently. Flexibility in Project Design and Implementation Pro-poor projects require flexibility in project design. For example, project designers assumed that Kampala’s urban poor would prefer yard taps to PWPs, but they actually preferred PWPs. Targets had to be adjusted at mid-term, necessitating the project’s extension. 22 Prepaid PWP for the Poor Some NGOs perceive prepaid PWPs as benefiting utility companies more than the communities they serve, since the investment and maintenance costs are high and the tariff is subsidized. The experience of NWSC shows that prepaid metered PWPs benefit the poor significantly in terms of lower tariffs and long hours of service availability. Subsidy Rates The OBA reimbursable subsidy rates were determined and fixed at project appraisal. There was no provision for adjusting the rates to reflect current market prices. For example, towards the last half of 2011 and the beginning of 2012, Uganda’s inflation rate exceeded 25 percent, but the subsidy rate remained the same, forcing NWSC to contribute more than expected to produce outputs. In volatile economies, the subsidy rates should be indexed to the country’s price index. 23 Appendix A: PROJECT COSTS AND FINANCING Cost Component Budget ($) Actual ($) Installation of yard taps and public water 2,411,300 1,509,455.18 points, including public water points with prepaid meters TOTAL 2,411,300 1,509,455.18 Bank supervision 150,000 Monitoring and Verification Agent 250,000 162,713 TOTAL 400,000 162,713 24 MAP: OBA FOR KAMPALA URBAN POOR PROJECT AREA 25