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>>> "Giuli Osso" <giuli@gocomms.co.za> 2009/04/07 07:59 >>>
Hi Kevin,
That's great that someone came forward to volunteer - I think working closer
together could make for excellent synergy. Thanks for the presentation. If
you have any articles (anywhere from 500- 1 000 words) I will gladly
incorporate them into the FASA newsletters and put them onto our website.
It might bring in further enquiries.

>>>>>>>>>>>>>

Much of South Africa's public sector water and sanitation services infrastructure is
very well built and operated, and delivers a safe and reliable service. However,
thanks to poor operation and maintenance, much of the country suffers from a poor
and sometimes even unacceptable quality of service. The reason for this is
invariably inadequate arrangements and incentives -- including not just skills
shortfalls, budget shortfalls and sometimes inadequate design and/or construction,
but weak institutional arrangements, and unwillingness, or inability, to change.

Improved institutional and financial mechanisms, where corporate, social and ethical
responsibilities are given due attention, are needed. Very important, positive
incentives must be greatly increased. Part of this must undoubtedly be the
measurement of performance, and a system for rewarding on the basis of that
performance.

The Water Research Commission (WRC) and the Council for Scientific and Industrial
Research (CSIR) have been investigating the application of franchising partnership
principles to this operation and maintenance. As with any other kind of franchising,
this would:
     transfer appropriate skills transfer to local personnel,
     bring ongoing performance measurement and support, and mentoring and
        quality control, and
     provide backup at-a-distance skills together with the incentive, on the part of
        the local (franchisee) personnel, to call for those at-a-distance skills and, on
        the part of the franchisor, to make them available, because there is a binding
        contract between them and a shared reputation.

We find that franchising partnerships could address many of the challenges to the
management of water and sanitation services.

The partnerships would involve three parties -- that is, franchisor, franchisee and the
owner of the water services infrastructure. The main incentive to the franchisor and
franchisee to perform is, frankly, that their livelihood depends on it. The incentive to
many owners of water services infrastructure (most of them municipalities) to reform
their current often inadequate provision for quality service delivery is not just the
need to provide their communities with an adequate service but also increasing
pressure from the Department of Water Affairs and Forestry (DWAF), which is
threatening to prosecute authorities not complying with the legislated requirements
for safe drinking water and adequate sanitation.

Help from the franchisor would be of particular value away from the major urban
centres. Few rural municipalities in South Africa can afford to employ competent
qualified staff, and this directly results in periodic unreliability of supply and frequent


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non-compliance with national standards relating to, for example, sewage treatment
works effluent quality. Significant improvements would soon be seen if the often
under-qualified and under-resourced municipal staff could have this ongoing support,
mentoring and quality control -- or if the municipality could partner with
microenterprises which would, through franchising, enjoy the necessary ongoing
support, mentoring and quality control from the franchisor.

The cost of the higher skills levels, which (bar emergencies) are needed only at
infrequent but regular intervals, is spread across many sites -- thus cost per
franchisee, or per municipality, is low.

As with franchising any other good or service, it would with few exceptions be those
who would like to be franchisors that would design the franchise arrangements.
Many opportunities lie in the franchising of suitable parts of the water and sanitation
services value chain -- of activities suitable for microenterprises in that they can be
readily systematised. Activities suitable for franchising include meter management,
plumbing, sewer maintenance, and operation of small treatment plants. Franchising
also appears well suited to operation and maintenance of rural schools sanitation,
which is often in a dire state -- by the time this article appears, a pilot in the Eastern
Cape, to give to franchisees the responsibility for maintenance of the sanitation
infrastructure at more than 300 schools, will be under way.

A number of franchises already operate in the water services utility area. For
example, a well-known plumbing franchise started 30 years ago when a Pretoria
plumber decided that the way to expand was through franchising. With 60
franchisees, that franchise is now represented in every city and large town in South
Africa. Their business models are however their competitive advantage.

We want to see a vast increase in the number of franchises, providing a much wider
range of services than is presently the case. Also we want to put into the public
domain everything that is developed, making it free for use by entrepreneurs that feel
they can provide a service that would also be the basis of a viable business.

Business modelling should of course only be done by franchisors competent in the
technical area of the service being offered, and also familiar with what will be their
customer base -- that is, familiar with the service usage patterns, affordability, and so
on. We have modelled several selected activities in the water services sector. This
we have done with the assistance of specialists in the particular areas -- as FASA
states, it would be asking for trouble to franchise a business that you don't intimately
know.

There is great potential for the franchising of water services operation and
maintenance in South Africa. There is a need for potential franchisors that have, or
can hire, the necessary technical and other expertise, to take the opportunities that
are presented, and to follow up on them. This would have to include convincing the
current owners of the water and sanitation infrastructure, generally the municipality or
water services authority, that outsourcing the operation and maintenance (without it
losing ownership of the infrastructure!) will improve the service to citizens, while
improving compliance and satisfying the requirements of DWAF.

Dr Kevin Wall
CSIR Built Environment
kwall@csir.co.za




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