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					The Water Dialogues
International Berlin Workshop
28 October 2006 – 1 November 2006




APPENDIX TWO:
Research methods and tools
Process recording and building a strong dialogue


Contents

DAY TWO – Monday 29th October

   A. Research tools and methods                                            p.2

   Presentations by the International Academic Panel

       Water - history, economics and politics – Dr David Hall              p.2

       Investigating why organisations work – Dr Richard Franceys           p.9

   Some issues from the research meeting: a personal view (Hilay Coulby)    p.29




DAY THREE and DAY FOUR – Tuesday 30 October and Wednesday 1 November

Capturing lessons from our experience                                       p.31

   Lessons from Pilot Process Recording - Antonella Mancini and Emily Huc   p.31

   Building a Strong Dialogue - Hilary Coulby                               p.36




                                                                                   1
Presentations by the International Academic Panel
1. Water - history, economics and politics – Dr David Hall

Summary
This presentation offers some evidence and suggestions concerning the history, economics
and politics of water
Water supply systems develop over time, affected by their local and historical contexts.
They are constrained and resourced by economic factors – investing capital, deploying
labour, managing water resources – and paying for all that.
They are driven and shaped by political factors, the balance of forces that generates
commitment to providing water as a public service.
Understanding these material factors is necessary for developing policies to extend water
supply services to all.

Economics
•Water services as an economic activity
      –Factors of production: capital, labour, natural resources
•Capital required for building storage and piped systems
      –Piped sytems most efficient: compare bottled water, tap water
      –Public finance for water extensions: long-term, low return, govt guaranteed
•Labour required for all: construction, operation, management
      –Voluntary: family, community; or employed: public, private
      –Central to capacity: payment and training of workers is key
•(Water) resources
      –Political mechanisms to resolve competing uses
      –Public finance to ensure adequate investment in capturing water (dams)
      –But note problems of environmental and economic impact of separate BOT
      investments
•Finance and distribution
      –User charges, cost recovery: but problem of affordability, monopoly prices
      –Taxes: key redistributive and guarantee mechanism
      –Borrowing: public or private: who pays the cost?

              •Cost recovery and affordability
              •Private finance and investment
              •Public finance capacity – municipal bonds etc
              •Impact on resources and finance of private dams and treatment plants

Politics – role of state and campaigns
•National, municipal governments key actors
        –Universal water connection as a political commitment of public policy
        –Other political issues involved eg unofficial peri-urban settlements
•Stronger social and political movements
        –Strong enough to frustrate global donor policies on privatisation
        –Transparency, accountability, participation (TAP) as growing issues:
•International politics volatile



                                                                                            2
       –1980s ‘decade of water’: failed? ; 1990s privatisation, fail to deliver
       –2000s MDGs, water as human right, WB/IMF change on public sector
•Different views of state
       –Neoliberalism seeks weaker state, politics as ‘interference’
       –New thinking on stronger state, stronger politics, stronger public sphere
•Interest in developmental state and state building (Fukuyama etc)
•Taxation capacity of state as key issue (IDS etc)
       –Civil society campaigns linked with politics and public capacity

       •Politics and civil society campaigns
       •Building tax and finance capacity of municipalities and governments
       •Governance and finance of water services in slum areas
       •International solidarity finance mechanisms


Economics: current interest
•Capital finance
       –Public/private investment, RoR (IMF, WB)
       –Local debt finance: bonds (cos, USAID, NGOs)
       –Taxation: (IFIs, researchers, countries)
•Pricing
       –Lifeline, x-subsidy, subsidy (general)
•Labour
       –Pay, participation, capacity-building (res, unions)
       –Management systems, local public, local private
•Resources
       –Dams, BOTs, leakage, demand management

Politics: current interest
•Participation
        –By communities, public, stakeholders (donors, NGOs,)
•Governments
        –Role of national/local government (res, donors, IFIs)
•International
        –Conditionalities, IMF policies, MNC impact (IMF, WB)
•Parties and NGOs
        –Role of political parties, NGOs in process

History: North
•North: the City in Time
       –Common patterns, Inc. USA
•19th century private, 20th century public sector
•Municipal socialism, extension of system via public finance
•Universal service: duty of public authorities, not citizens right
      –Different development of governance and charging
•France: 19th century firms survive and dominate
•UK: municipal nationalisation then privatisation (unique)



                                                                                    3
•Corporatisation: German/Austrian stadtwerke, Italian aziende
•Communist states: national, regional
•Charging: volumetric, but Ireland/UK/communist states via tax
      –Note England: water still has privately collected property tax
      –Strong local and national factors
•Recent shift to EU directives, MNC expansion, global trends

History: South
•South: cities in the world
        –Historical context of colonialism
•Cities develop on apartheid basis, limited service
        –Independence key for service and state
•End of foreign rule, privileges, private concessions
•Universal service is social, national, public, state
        –Water sometimes national, not local
        –Globalisation reintroduces external drivers
•Conditionality, multinationals, end of communist states
•Privatisation focuses on customers as market: willingness to pay, full cost recovery
        –Resentment of privatisation worldwide (World Bank)
•Foreign, exploitative, reversing national development
•Low trust in private monopoly pricing policies, regulation

The dominant role of public sector water


               Water supply in 409 cities > 1 million
                           (source: PSIRU/UNDESA)


                                     Private
                                      11%




                           Public
                            89%




                                                                                        4
Water time: historical patterns of public/private
•Early 19th century private, 20th century public, 1990s some private
•Nationalisation periods in communist countries, UK

Public finance is historical method
•Water extended in Europe/USA via public finance
       –Even France (90% via public finance), UK (100% coverage before privatisation)
       –Private sector unwilling to risk beyond profitable markets
•Mechanisms
       –tax, charges, municipal/government bonds
       –Using local capital as base
•Private investors have same problem now
       –Withdrawals from developing countries
       –India’s need for state planning, guarantees, investment
       –Suez refinances Jakrta water via local bond (in rupiahs)

Economics: profitability of private capital in developing countries




                                                                                        5
Economics – investment by public, not private sector




Failure of private sector investment




-Less than 0.5% of the population needing connection in SSA/Asia
-Misled donors into reducing investments, focussing on private sector


Local private sector: not suited for water
•Low expertise or financial capacity
       –Public sector is normal
       –Only large oligarchs can raise capital



                                                                        6
•Vendors are symptoms of failure
      –Urban piped water most efficient cf bottled water
•Bad vehicle for private sector development
      –Non-export, low tech, politically driven, monopolistic
      –Chase Manhatten: failed NY water company>bank
•Encourages corruption
      –Eg France, USA, Indonesia


Labour: training and wages
•Trained labour key for sustainability and service
       –key to develop service: technical, financial community
       –Reproducing skills and capacity eg ADB Vietnam project, Porto Alegre DMAE
•Good pay is an important issue
       –Big pay increases in success in Phnom Penh
       –Avoids corruption (Paine), more efficient (Ford)
•Community interface matters
       –Evidence from India, Brazil (MIT, Sussex IDS)
•Involve unions in reform
       –Eg Tegucigalpa, Odi (S Africa), Uganda NWSC

Economics – full cost recovery vs affordability




Watertime: wastewater treatment in cities

• Year in which sewerage treatment was introduced
• No consistent economic or national factors
• Explicable as social, political developments




                                                                                    7
Policies: financing investment
•Develop local capacity to finance investment
       –To issue municipal /govt bonds, revolving funds (eg USAID, DFID projects)
       –Develop sustainable tax base to service bonds
       –Redistribution (via tax, aid, cross-subsidy) for extensions to poor
•Develop mechanism for international investment in bonds
       –Potential demand
•International pension funds etc need long-term secure debt
•Growing demand for ethical investments
       –Use markets, develop international finance mechanism:
•Pooling of bonds to reduce risk
•Aid to remove eg currency risk, supplement investments

       ‚What is the global public finance equivalent of ending apartheid?‛
       (Mike Muller, S Africa, DWAF, to Camdessus panel, 2003)

Policies: Building capacity of public sector
•Capacity of public sector key
       –Strengthen public authorities (state-building)
       –Implies public sector capacity to deliver, not only contract
       –Offer non-private support: public-public partnerships (PUPs)
•Expand sources of support, strengthen public-public links
       –Develop sustainable finances: local savings, taxation
       –Local needs assessment and plans central (accountability, participative budgeting)
•Bottom up not top down a la Camdessus
•Strengthening labour role and quality
       –Training: project, national, or sub-regional training
•Why did World Bank, DFID, AFD, Finns etc cut aid for training?

Some conclusions
•History matters: some common and some different starting points
        –All history is of public finance and provision of water service: no new way
        –In south, re-assertion of independence may be happening eg re IMF loans
•Economics of public sector central
        –Full cost recovery is diversion: need redistribution, to accumulate capital where
        would not otherwise be enough capital
        –Property-based municipal rates taxes + govt cheap loans
        –Mechanisms for global financial solidarity and taxation
•Politics is necessary part of the process
        –Civil society and political programmes essential – otherwise just patronage
        –New politics demands transparency and participation
        –Not simple for donors: any intervention changes politics
        –Solidarity action can be important re policies, finance




                                                                                             8
2. Investigating why organisations work – Dr Richard Franceys

‘The water crisis is mainly a crisis of governance - not of water scarcity’

What do we mean by Governance?
    •   "Governance is the framework of social and economic systems and legal and political
        structures through which humanity manages itself" World Humanity Action Trust
    •   Governance and sustainable development are intimately tied together. The future
        role and architecture of institutions, from local to international levels, will be crucial
        determinants of whether future policy and programmes for sustainable development
        will succeed.

What do we mean by ‘Institutions’ ?
  • At the simplest level "an institution is an established way of behaving", representing
      the beliefs, practices, laws and roles of a part of the structure of society. At another
      level the institution is the structure or organisation rather than just the behaviour.
      "Institutions are the organs that perform societies' functions" (Mitchell,1979).
  • By ‘institution’ the new institutional approach (Lane, 1995) means the values,
      conventions, laws and codes, technologies, property rights, cultures and authority patterns
      which constitute the ‘rules of the game’ or ‘humanly devised constraints on social interaction.’
      (Batley, 1997)

What do we mean by Organisations ?
  • a group of people who work together, www.cogsci.princeton.edu/cgi-bin/webwn
  • A company, corporation, firm, enterprise or institution, or part or combination
      thereof, whether incorporated or not, public or private, that has its own functions and
      administration. For organizations with more than one operating unit, a single
      operating unit may be defined as an organization. www.gdrc.org/uem/ait-terms.html
  • Cullivan et al (1986) point out that "Institutional problems are qualitatively different from
      specific technical or procedural problems. They affect broad areas of operational performance
      and therefore are 'cross-cutting'. Often deficiencies in an easily identifiable area of
      institutional output are identified as the primary problem when in reality the deficiency
      identified is merely a symptom of the larger problem."

Investigating why organisations work
   • People and organisations,
   • Working together – more than simply a collection of individuals,
   • But also division of labour,
   • A meter reader’s interest?
   • Why does a meter reader read meters?

Management understanding?
  • 'teamwork goes with empowerment. It is central to total quality management.' 'A
     team is a more complex creature than most people imagine. For it to work as a
     problem-solving tool it must address seven fundamentals: raison d'etre, rules, roles,
     relationships, ritual, rewards and results.' (Thorne)


                                                                                                    9
   •    dangers of teamwork - 'too much coherence means too little conflict - people are at
       their most creative when they can't get their own way. Review of companies
       described in 'In search of excellence showed that after five years half the companies
       were no longer excellent. 'too much coherence'' (Pascall)
   •   'You never want too much harmony in a company‘ ‘There is a need for constructive
       conflict' Honda President

Organisational research
   • Fayol and Taylor – scientific management
   • Maslow – and the hierarchy of needs
          – Survival
          – Basic Needs
          – Comfort and well-being
          – Self-fulfilment/self actualisation



Market demand/          Large demand, mass markets           Local demand, individual or batch
Technological                                                markets
sophistication
Simple                  Mechanical organisation                   Craft organisation
technologies            fits Weber’s model of bureaucracy The traditional and dominant form until
                        and is centralised, hierarchical,         the industrial revolution. Most are
                        specialised in tasks, formalised and family businesses or partnerships
                        large scale .It is efficient, produces in functioning in local markets with low
                        quantity, provides a standardised         capital and skill requirements.
                        service or product and capitalises on
                        economies of scale.
Complex                 Mechanical-organic organisation Organic organisation
technologies            Mechanical production and control decentralised, relatively non-
                        system with an organic department hierarchical, based on teamwork and
                        for research and development or for networks, specialised around
                        other highly technical tasks              professional expertise, nonformalised
                                                                  and small scale. It is innovative or
                                                                  adaptive, produces quality and non
                                                                  standard goods and services in small
                                                                  numbers and does not benefit from
                                                                  economies of scale.

Organisational theory

A major thesis of contingency theory (Lawrence and Lorsch) is that organisations cannot be
both efficient (low cost of output) and innovative (number of new ouputs or procedures) at
the same time - they must emphasise one or the other performance in their principles of
organisation.

      Lewin – ‘"You Cannot Understand a System Until You Try to Change It"



                                                                                                   10
          –    the stability of human behavior was based on "quasi- stationary equilibria"
               supported by a large force field of driving and restraining forces.
           – Lewin's basic change model of unfreezing, changing, and refreezing
   •   Hayek – Austrian School of thinking –His great theme is the danger of
       ‘constructivism’ – the belief that we can deliberately design social arrangements which
       will be better than those we unwittingly hit upon.’ Constructivism suggests some
       aspects are ‘too complex to plan’
   •   Simon - Nobel Prizewinner economics - ‘Administrative Behaviour’ - In taking a
       decision, he said, no business could process satisfactorily all the ‘zillion things’
       affecting the marketing of a product. . . rather a business tried to make a decision that
       was ‘good enough’. He called the theory ‘bounded rationality’ and invented a name
       to describe it; ‘satisficin, a composition of the words satisfy and suffice.
   •   Size of organisations – economies and diseconomies of scale/of scope
   •   Coase understanding of organisations and vertical integration in businesses through
       understanding ‘Transactions Costs’. In 1937, the Nobel prize-winning economist
       Ronald Coase had explained that companies perform internally those tasks for which
       the transactional costs of outsourcing are too high.
   •   Drucker coined privatisation and knowledge workers
   •   Schumpeter on business cycles - and creative destruction

How to analyse existing institutions?
Is the institutional framework/organisation:
     Effective ?
     Equitable?
     Sustainable?
     Efficient?
     Transparent?
     Replicable?

Context       PEST                   The macro-environment: Political,
                                     Economic, Socio-Cultural,
                                     Technological
Stakeholders Activity &              What is being done/meant to be done
              Responsibility         relative to other institutions
              Matrix
Outputs -     Objective
Effectiveness Performance
& Efficiency Indicators
Capacity      SWOT                   Internal Strengths & Weaknesses,
                                     External Opportunities & Threats : -
                                     SWOT analysis by organisation
                                     insiders




                                                                                             11
          Subjective         Leadership, Organisational autonomy
          Performance        & power, Legislative framework,
          Descriptions       Management and administration,
                             Commercial orientation, Consumer
                             orientation, Technical capability,
                             Developing and maintaining staff,
                             Organisational culture, External
                             orientation
Summary   Scoring the A& R   Rating overall efficiency and
          matrix             effectiveness to define problem areas




                                                                     12
ACTIVITY             Legislation   Allocation of   Approval of Monitoring Sector     Project    Project Design & Operation and   Operation Management Paying for   Institutional & Evaluation
(What has to be                    finance /       tariffs     & economic Research   Planning   Implementation Maintenance of    and          of Customer/ water   Human
done?)                             Budgetary                   regulation                                        Treatment &     Maintenance Community             Resources
                                   approval                                                                      Transmission    of           Involvement          Development
                                                                                                                                 Distribution

RESPONSIBILITY
(Who is doing it?)
Central
Government
State Government


Government
Agency
Local
government/
Municipality
Non
Governmental
Organisation
Private Enterprise


Community
Development
Committees
Households




                                                                                                                                                                                   13
Type and characteristics of PSP?

Householder Management & Ownership
Community Management & Ownership
                                                         Extent of private sector involvement in
Community Contracting
                                                         overall delivery process
NGO & ‘Not for profit’ providers
Vendors                                                  National/International Private
SSIP/IWASP - Small Scale Independent Water and
                                                         Capital Investment
Sanitation Providers; Non State Providers
                                                         Construction risk
Service Contract
                                                         Asset Ownership
DBO Design, Build, Operate
                                                         O&M Responsibility
Management Contract
                                                         Commercial Risk - Who collects
Management contracts with incentives
                                                         tariffs?
Lease
                                                         Payments of use of assets?
Enhanced Lease
                                                         Duration of Contract/Agreement
ROT Rehabilitate, Operate, Transfer
BOT/BOOT Build, Operate, Transfer                        Cost Recovery imperative?
Reverse BOT                                              Extent/ Quality of Quality &/or Price
Joint Venture                                            Regulation
Concession
Divestiture

Type and scale of Public Provision/Public Involvement?
  • Policy-making
  • Price regulation
  • Municipal responsibilities
  • Public service providers


                                                                                                   14
             PERFORMANCE INDICATORS                                                              KPIs Year minus 5 Trend   Present
                                                                                                      (10?)        years   Year

Effective?   Percentage of population served with water
             Proportion of household connections (urban only? population/ per connection)
             Per person production & consumption of water (by income quartile?)
             Hours supply per day/Extent of interruptions of service
             Pressure range throughout the day
             Water quality at consumer’s tap
             Proportion of people served with sanitation and/or sewerage
             Proportion of waste water treated
             Extent of water related diseases in the serviced area
             Timeliness/accuracy of billing
             Customer complaints per 100,000 customers
             Billing contacts/complaints not responded to within ‘x’ days
             Customer satisfaction surveys (quantitative questionnaires and qualitative focus
             groups incl women only focus groups)
             Capital expenditure (capital maintenance and quality/service enhancement) per
             person per year
             Notices/fines of environmental/public health/water quality incidents per year
Equitable?   Breakdown of target population by income groups/Proportion of slum dwellers
             Time taken to access water in home, lowest income quartile
             Proportion purchasing through vendors/accessing through standposts
             Affordability of tariffs (Annual cost of 20/50? litres per person per day/GDP per
             person
             Affordability of new connections (Average connection costs/GDP per person)
             Cross-subsidy to poorest within ‘tariff basket’




                                                                                                                                     15
Sustainability Willingness to pay for services
               Average tariff per m3 (previous years updated to ‘present year’ values)
               Cost reflectivity of tariffs/revenue (Operating/Working Ratio, recognising ensured
               government subventions)
               Liquidity/Cash ratios
               Return on Capital/Profitability ratios/interest & dividend cover
               Dividends pus interest payable as 5age capital value
               Creditworthiness/Gearing ratio
               Average replacement life of fixed assets
               Water mains bursts per 1000 km per year
               Water resources security of supply index (proportion groundwater/surface water)
Efficiency     Size of main service provider (connections/customers/daily water production)
               Population density of service area/s
               Connections per employee/Population served per employee
               Average time to repair leaks
               Non revenue water (Leakage (m3/km/day) & %age unbilled)
               Percentage of consumers metered/ percentage working consumption meters
               Revenue collection/Days receivable ratio
               Capex efficiency (cost in real terms of basket of representative activities)
               Electric energy usage per customer
Transparency Contract/license agreements /performance agreements in public domain
               Financial Statements published on schedule
               Performance indicators published/available
               Transfer pricing – level of trade with associated companies
               Customer involvement processes/meetings per year/million consumers
               Mechanisms to ensure voice of poor/unserved in customer involvement processes




                                                                                                    16
              McKinsey 7 'S'
          Structure             Strategy

                   \            /
Systems                SHARED              Style
                       VALUES


                   /            \
          Skills                Staff


                                                   17
        SUBJECTIVE INSTITUTIONAL
       PERFORMANCE DESCRIPTIONS
         /             Organisational Autonomy &            \
                                  Power

    Legislative                    |                  Management &
     Framework                                         Administration
         |                                                      |

Technical Capability       - Leadership -            Maintaining and
                                                      Developing Staff

         |                                                      |

    Commercial                     |               Consumer Orientation
     Orientation
         \               Organisational Culture             /



                                                                          18
Organisational Autonomy
Organisational autonomy is the degree of the institution’s independence from government. Although still subject to necessary regulatory control and political oversight, the institution requires independence so that it can carry out its a
responsibilities in an effective manner with minimum bureaucratic or political interference and controls by other organisations or departments.
Adequate organisational autonomy is necessary for the success of water and sanitation institutions.



       Sets own organisational objectives and changes them as necessary to provide guidance and
       direction in achieving the objectives of the organisation

       Prepares annual capital and operating budgets linked to revenues and needs; successfully
       obtains approval for budgets

       Establishes and implements levels of tariffs and service charges sufficient to meet capital and
       recurrent costs

       Maintains control over all revenue generated


       Establishes and maintains staffing levels sufficient to meet needs


       Employs, discharges, disciplines and promotes personnel within established and approved
       guidelines according to institutional needs

       Establishes levels of employee compensation including salaries and benefits sufficient to
       attract and maintain capable staff

       Top management is well informed about external policy, financial and regulatory issues and
       actions

       Top management maintains direct contact with the key individuals in all important external
       entities

       TOTAL Organisational Autonomy (total scores/9)




                                                                                                                                                                                                                 19
Management & Administration
Effective management is demonstrated by the capacity to get the most out of the resources available (human and other) in a deliberate or planned manner.
Good managers have a clear sense of objectives and priorities; they know who to rely on to get a job done and how to delegate to them the means to do it. An
effective management climate is characterised by teamwork, cooperation and good communication among staff.


 Managers have a clear sense of their own and other's roles and responsibilities

 Managers communicate roles and expectations clearly to others and involve them in defining their roles and responsibilities;
 they promote teamwork

 Managers know how to plan and delegate to achieve tasks


 Managers regularly set goals with staff and have a sense of priorities


 Departmental/section objectives and performance indicators are clear and understood by staff and are achieved at the desired
 level of quality

 Staff are held accountable for getting work done according to agreed performance indicators


 Managers trust their subordinates


 Managers seek to innovate and develop new ways of achieving their objectives, through technical and managerial means


 Managers have agreed responsibility and authority levels (including signing for payments)


 Administrative systems for budgeting have been developed and are regularly used


 Administrative systems for accounting for all assets have been developed and are regularly used


 Administrative systems for procurement and inventory management have been developed and are regularly used


 Administrative systems for personnel and staff development have been developed and are regularly used
                                                                                                                                                               20
 An effective Management Information System has been developed and is regularly used
Commercial Orientation
Commercial orientation is the degree to which actions in an institution are driven by cost effectiveness and operating efficiency.
The performance of an organisation should be guided and disciplined by a strategy to achieve financial self-sufficiency at an appropriate stage of growth. This commercial
orientation can be viewed at both operational and policy levels.
At the policy level, commercially-oriented institutions structure and stage investments, expenditures and revenues to achieve financial equilibrium annually. At the
operational level, everyday activities are guided by quality standards and by constant attention to cost factors. The institution strives to establish a reputation as a financially
well-run business in the eyes of its consumers (to promote the payment of tariffs) and in the financial and political community in order to obtain financial support for growth
and to maximise financial and operating autonomy.


  The institution achieves a yearly balance between expenditures and revenues. Revenues may be partly drawn from subsidies which
  are phased out according to a planned schedule or have been assured by Government for very low income users
  Tariffs include payment for capital expenditure through depreciation of fixed assets (amortization of loans)


  Budgets are set according to negotiated priority levels for quality


  Expenditures are monitored against agreed budgets


  There are annual, published, audited financial records


  Staff actions throughout the institution are guided by cost effectiveness as well as quality standards


  Staff belief in a commercial orientation and think of their service function as a business


  Economic and financial feasibility is calculated for all projects and other institutional activities


  Services are 'contracted out' which can be run more efficiently by private enterprise or community organisations


  TOTAL Commercial Orientation (total scores/9)




                                                                                                                                                                                       21
Consumer Orientation
Consumer orientation is organising and directing the services and output of the organisation towards the demands and desires of the consumer or
customer. Staff of a successful WATSAN institution see serving consumers as their primary function. All work, all programmes and projects are
directed towards greater efficiency, effectiveness and equality of service to all consumers. Every effort is made to inform and educate customers
about the role of the institution and the means it is using to achieve its (the customer's) objectives.


    Staff at every level demonstrate that they are oriented towards serving consumers; when observed their decisions and
    actions are clearly driven by what is best for the consumer
    There are identifiable mechanisms for consumers to interact with key areas of the institution over important matters
    (for example, accessible district offices, emergency telephone hotline, bill disputes, service problems)

    There is clear evidence that the institution responds to complaints, emergencies and suggestions which consumers
    make

    There are identifiable, ongoing and effective measures to inform and educate consumers about institutional services
    and requirements

    The institution makes efforts to invite and encourage an effective level of consumer participation


    There are concerted efforts made to project a positive image of the institution to the consumer


    Efforts are made to ensure accessible services to all levels of the public


    Tariffs and/or charges are designed to be fair and equitable and understandable and affordable and payable for all
    levels of the public

    Consumers are also seen as customers - who pay the bills and thus the salaries


    The level of complaints from the public is relatively low


    TOTAL Consumer Orientation (total scores/10)




                                                                                                                                                    22
Legislative Framework
Every services utility or institution has to work within the framework of a country's political choices, as demonstrated by the legislation passed by
politicians to define the institution's roles and responsibilities. This legislative framework needs to assist and guide in a positive manner rather
than hinder and restrict negatively.


 The institution has clearly defined responsibilities and authority

 There is an effective regulatory framework


 There is legislative framework for ensuring tariffs are maintained at suitable level


 There is a political will to ensure adherence to legislative framework


 There is a clearly defined disconnection policy for non payment


 National legislation promotes appropriate technical choice for public health


 Local bye-laws promote appropriate technical choice for public health


 Legislation allows for community/consumer involvement in public health


 Legislation allows for private sector involvement in public health


 There are effective methods open to the institution to seek to adapt its legislative framework as its operating
 environment changes

 TOTAL Legislative Framework (total scores/10)


                                             [after "WASH" 37, (Cullivan et al, 1986)]




                                                                                                                                                        23
Organisational and Staff Culture
        Organisational culture is the set of values and norms which inform and guide everyday actions which translate into behaviour which can be observed.
Although often unstated, an organisation's culture serves as a powerful means of defining and justifying organisational operations either in positive or negative
ways. The organisation with a positive culture has a clear sense of mission and identity. People are seen as the most important asset.



 An observable team spirit exists among the staff

 People express a sense of ownership and pride about working that is expressed in statements such as 'this is a good place to work'.


 There is a clear commitment to the organisational goals at all levels of the staff; people feel involved in and informed about the
 institution's activities

 The commitment to personal goals is demonstrated by individual's support for the organisational goals


 Staff believe they are trusted in the organisation with responsibility and authority


 Staff are committed to improving their skills and knowledge and attitudes; people are interested in learning new things and new
 ways of doing things

 Line managers are committed to and involved in the development of their staff


 The organisation provides adequate salaries and incentives to maintain and motivate staff


 Active systems are in place for providing ongoing formal and informal feedback to personnel about job performance


 Individual corruption to the detriment of the organisational team is seen as unacceptable


 A clear system exists for hiring qualified personnel and firing or disciplining staff when necessary


 Staff place a value on maintaining the facilities of the organisation, for example the offices, treatment plants and grounds, sign
 boards, so they look clean, well maintained and attractive

 TOTAL Organisational and Staff Culture (total scores/12)
                                                                                                                                                                    24
      Patrimony                        (patronage and/or inheritance??)

Lack of accountability
Role of state emphasises exercise of power and control rather than service to civil
    society with weak checks and balances from weak legislatures, interest groups
    and mass media
Lack of the rule of law
Courts dependent upon executive branch and makers and enforcers of law
    consider themselves above the law
Patrimonial Pay/Incentive system
Political and personal loyalty rewarded more than merit [performance]
The state is there to reward patrons and supporters as a form of employment and
    source of bureacratic rents
Disabling regulatory burden on private sector development
Patrimonial state plus absence of law means entrepreneur is at mercy of politician
    and has to buy into access to ‘rents’ or buy ‘protection’ from state.
Distorted Resource Mobilisation
Tributary and regressive tax and customs
Bureaucratic Budget Mangement
Budgetary authorisation reflects relative powers of elite rather than economic
    priorities
Patrimony = Monopoly Power + Discretion - Accountability - Transparency



                                                                                      25
26
                                     Sustainable
                                     Commercial
                                     Orientation



                                                             Consumer and
                                                             Market Driven



 Reactive and Patrimonial
 Administration
 Orientation                                       Productive Capacity
                                                       Proactive Management
                                                       by Objectives Orientation
                        Allocative
                        Capacity
Engineering and
Supply Driven
                                     Adaptive
                                     Capacity ?


                                     Subsidy &
                                     Grant
                                     Orientation




                                                                                   27
 Overall Performance Assessment
• Statistics not usually sufficiently robust for
  conventional analysis?
• Composite scoring – subjective weighting
• Systematic weighting of factors
  – Dinar & Saleth: Water Institutions Health Index
  – Spider diagrams
• Data Envelopment Analysis
  – ‘Black box’ linear programming




                                                      28
II. Some issues from the research meeting: a personal view (Hilay Coulby)

Having a national focus
  • Research agendas should reflect the consensus of national stakeholders on what are
     key issues
  • This means that different national dialogues will have different research agendas
  • It is essential to produce research that is relevant to national contexts and agendas
  • If we find commonalities across countries that is good; if we don’t, that is also good.
     Specifics are important.

Building on the strenghts of a multistakeholder group
   • Engage in formal participatory processes that use NWG members as a resource when
       drawing up research parameters and defining and agreeing research approaches
   • Make sure that lead members or their named alternates attend these sessions
   • The research should matter to as many people as possible in NWGs – retain and
       reveal differences and comment on what these might mean, rather than trying always
       to achieve consensus

Don’t suppress differences in interpretation
When interpretation of agreed data/findings leads to conflicting conclusions amongst NWG
members
  • Don’t go for the lowest common denominator to achieve consensus
  • Expose differences as being the real situation
  • Emphasise that even with strong data arriving at conclusions is complex

Case studies
Select case studies to
    • balance geographic and political contexts in the country
    • look at places where something interesting has happened including success and
        failure
    • stay focused on service delivery to poor people
    • be alert to the wide range of possible lessons to be learned
    • don’t treat case studies as valid sample surveys, they are not
Think – how do you know that PSP is the significant variable in determining outcomes

Stimulants
    Since water and sanitation provision is a monopoly business, whether public or
      private, regulation is needed whoever delivers the service
    Decentralisation inhibits cross subsidisation, national water resource management
      and increases the difficulty of establishing effective, independent regulatory bodies
    If 1000 different municipalities provide water individually, how will they be
      regulated and managed in the best long term interests of the nation’s consumers?
    Bad macro-economic policies create a bad environment for utilities.
    When countries are getting poorer they may not want to pay for service expansion
    Does the general economic situation allow for services to be paid for (by government,
      by consumers)?



                                                                                         29
   Where a country is on the corruption index influences outcomes
   Public participation influences outcomes – well organised consumers are a key
    element in successful service delivery
   Availability of a good raw water supply is a key factor in determining the quality and
    price of service delivery
   Appropriate design and technology, plus economies of scale impact on outcomes –
    the cost per user is likely to be higher the more fragmented the system; transaction
    costs including billing will be less where the scope is larger (which allows for cross-
    subsidisation)




                                                                                        30
      Day three and four – Tuesday 31 October - Wednesday 1 November
                   – Capturing lessons from our experience -

I. Lessons from Pilot Process Recording (Presentation by Antonella Mancini
   and Emily Huc)

The national dialogues and the IWG have agreed that the project should produce a guide for
externals who want to run multistakeholder dialogues It has been agreed that the project
should record the methods, tools and processes used to create and sustain effective
multistakeholder dialogues but until now, very little process information has been captured
by the project. An obstacle to making progress is that there is no clear framework for process
recording and without this countries have been confused about what to record and how to
record it.

The objectives for process recording are to:
     produce a guide for externals who want to run multistakeholder dialogues. In order
        to do this we need to establish a framework that will allow us to:
     capture the essence of MSH processes, including strategic challenges and internal
        dynamics
     record tools used at national and international levels
     draw operational lessons and provide tools
     share information between countries participating in the project so that they can learn
        from each other’s experiences.
Additional advantages of process recording include the fact that it will provide valuable
information for reporting to donors during the period when research is underway; and
enable country dialogues to demonstrate to outsiders that their process is inclusive,
participative, consultative, etc

Additional advantages of recording the process:
   The data will provide information for reports to donors. As there will be little else of
      substance to report until research studies are finalised and their findings endorsed by
      each country’s multistakeholder groups, documenting the different stages through
      which the dialogues are proceeding may be one of the few substantive items of
      progress that can be reported.
   Documenting process will also allow dialogues to demonstrate to outsiders that it
      involves a broad range of stakeholders, is inclusive, participative, consultative, etc.
      that is, to be fully transparent and accountable.

Brainstorming session in June 2006
    Identify key areas to record
    Draft set of questions for specific dimensions of the dialogue process: ‚How to get
       started?‛
    Pilot of first phase of framework in Brazil & South Africa




                                                                                           31
Piloting the process recording framework – Brazil & South Africa
Brazil and South Africa were selected for the process recording pilots because they were the
first two countries to start national dialogues and, therefore have mature and stable National
Working Groups.

An external consultant visited Brazil in June. The Project Officer and another external
consultant visited South Africa in August. Information was gathered through individual
interviews with members of NWGs and by attending meeting of the National Working
Group.

Framework dimensions covered in the pilot process

    Timeline
             Background on early stages of dialogue, who involved, key events etc
    Convening MSP
             How people got involved
             Difficulties faced
             What worked well
             How representative range of people
             How core group established
     Lessons drawned:
     In South Africa – convened initially a larger meeting with key players in the Water
     sector who agreed to process & then working group at this stage decided to focus on
     both public and private sector delivery with an emphasis on how to improve public
     sector delivery.
     In Brazil, Toninho used opportunity of National Congress of ABES, again bringing all
     important actors in water industry, to see if there was scope to replicate
     multistakeholder processes in Brazil.
     Therefore, getting initial buy in and support from big players before establishing a
     core group is crucial.
     People welcomed approach in Brazil & South Africa – saw it as an opportunity to
     break through impasse between anti privatisation and privatisation – an opportunity
     to air views and discuss possible solutions. In both cases most actors know each
     other. In SA initial stages involved developing working protocols and principles for
     MSP.
     Representation: Most feel fairly representative although there are issues around
     representativity of NGOs in Brazil, and more activist NGO in SA. However, in initial
     stages the continuity of the group and the fact that it was on whole fairly
     representative of broad range of view felt more important. Moreover there is the
     opportunity to involve other stakeholders at key moments in the dialogue. Eg
     research phase etc

    Motivation
         Understanding of the dialogue
         Why people wanted to participate
         Expectations and how these have changed over time



                                                                                            32
   In both countries – clear that people are motivated to learn more about water sector, to
   get a better understanding of debates, perspectives and also possible solutions.
   Each actor in dialogue process has their own agenda and perspective but clear desire to
   understand more. Opportunity for learning and breaking down barriers

    Risks: Personal/organisational
   There is always a potential risk in bringing together such a diverse group of people – risk
   that you may be seen to rubber stamp a process or that research findings might damage
   the reputation of your organisation or sector you represent. Or personal reputation –
   however, in most cases participants felt no major risk. ToRs in Brazil which were arrived
   at by consensus helped to eliminate risk. In SA participants do not see dialogue as
   compromising positions.

    Resources: Initial support (people/financial)

    Mandate: Perceptions on legitimacy and validity of the dialogue
   There is a broad consensus that representation of key individuals and organisations is
   about bringing in experience and perspective. Members do not seek to represent a whole
   sector. Many are already involved in policy discussions. Others we talked to in SA felt
   that they possibly faced risks in attending meetings, especially those bound by positions
   and policies of the institutions they represent.

    Maintaining the dialogue: Tools, approaches & processes
   regular meetings, coordination, facilitation etc establising code of conduct (South Africa)
   Allocating specific tasks to working group members - Importance of role of the
   facilitator.

    Linking with others: Within organisations; Within sector

    Shifts in perspectives

    Key challenges & lessons learned



Broad lessons emerging

    Each dialogue process is unique & has its own dynamic
         Importance of understanding context in which dialogue process takes place eg
                Familiarity with participative forms of democracy and participative
                    policy making forums
                The current state of the discussions and the policy in the water sector
                    in a given country
           Eg in South Africa context this type of dialogue process is not unique– Water
           sector is also dynamic sector and key actors views and positions are known.
           Consultation processes are common. Important therefore to understand
           context and acknowledge and understand characteristics of civil society and
           political landscape for dialogue (whether open or closed). Very often when a


                                                                                            33
           closed political system opens there is initially conflict and deep divisions –
           therefore thought needs to be given in the initial stages of how one can
           mediate these conflicting divisions to enable dialogue process to take place.

 Establishing core group + consistency of group members
Continuity: creation of a core Working Group + fixed alternates are essential.
The issue of continuity is important – many respondents felt that group members have to
be sufficiently confident, experienced and senior to take part and that other
groups/stakeholders can be involved at critical moments in the dialogue process through
other appropriate forums. Being realistic about the size of the core group – a large group
will make it difficult to build and establish trust. Consistency is a key success factor and
linked to trust/relationship building. Also establishing roles and responsibilities to group
members eg sub groups/committees to take on tasks

 Building trust and commitment of the group: ‚A process like this has to work with
     those who show the most commitment and are prepared to dialogue‛
A commitment for the process and desire to find solutions which will contribute to
improving water service provision to poor people – this is key driver and what motivates
people to take part in this process.
The most important thing in this work – more important than the methodology you use –
is the spirit in which you do it. The process, whilst slow has been an important factor in
building trust and respect amongst the core group members. This has been an important
success factor in maintaining the momentum of the initiative and the continued
commitment and support from the working group members.

 Broad representation of views and perspectives: But sufficiently senior and
  experienced

 Establishing the rules of engagement
Establishing the rules of engagement from the beginning is another important part of the
process – this sets the parameters and scope for the process and helps the group to
understand that it is not about having to agree to a position or consensus that might force
withdrawal from the dialogue process itself. It is more effective when the group
develops the rules of engagement itself, it helps to create a sense of ownership, what
works for a group might is not automatically adapted to another group.
The dialogue process is not an exercise in changing values or positions. It is about
learning to listen to others views and perspectives, in which all views are expressed
without restriction and without compromising their positions. It is also about
knowledge transfer and knowledge generation ie new learning and knowledge results as
a part of this process which will enable participants to gain insights regarding other
sectors and others’ positions. The process therefore has the potential to connect
previously opposed people and demystify some of the misconceptions surrounding
those sectors. Members of the dialogue begin to understand what is at stake for others.
New learning is being generated which in itself may shape thinking and future actions
beyond the life of the dialogue process.




                                                                                            34
    Securing funding early on in the process ‚to enable the process to move faster, but not to
       skimp on the time required to establish the commitment and trust of the group‛.
   There is a need to find the right balance; the group needs to be quite strong when it
   receives funding as it becomes jointly responsible for the money. The process of working
   together to raise funding is seen to be an important element in establishing the
   commitment of the group – yet at the same time have to recognise that the fundraising
   process takes time, requires certain skills and if goes on for too long can lead to
   frustration and disengagement from the process. Question of getting the balance right.

    Skilled facilitation
   The facilitator should be someone accepted by all as legitimate, someone seen as neutral
   and with enough time to follow up between meetings.
   Requires skilled facilitation to manage the tensions and issues arising, also sufficiently
   flexible to enable the reopening of agreed positions and discussions. Also requires
   committed time to coordinate the project ie in setting up meetings in advance, following
   up with core group members who have been allocated tasks etc.

    All of this takes time – the process cannot be rushed!
   Also here need to find a balance, it might be dangerous to carry on for too long before
   starting the discussions around the substance of the project, risk of people disengaging. It
   is important to recognise that investing in building the trust and commitment of the
   group in the initial phase of MSP is critical. At each stage, negotiating positions and
   statements, protocols, research questions, job descriptions, ToRs for research etc people
   are having to engage in a range of perspectives and ideologies, it is almost an rehearsal
   process for when the ‘real’ dialogue begins.

Lessons: pilot framework

    Value of having an ‘external eye’ asking the questions

    Establishing confidentiality
   Important to establish confidentiality to enable people interviewed to talk openly about
   issues and challenges and that no quotes will be attributed or attributable to individuals
   or organisations. Being flexible with questions more important to build up a picture
   rather than systematically going through each question in sequence and asking the same
   set of questions with everyone.

    ‘Snapshot’ to be complemented by regular reflections by NWG
   Pilot process recording capturing past reflection and learning on process not real time
   process recording. Still a need to complete this ‚snapshot‛ with another dimension;
   document NWGs dynamics on a regular basis: e.g. of SA proposing to record some
   process at the end of each meeting.




                                                                                            35
II. Building a Strong Dialogue (Presentation by Hilary Coulby)

Make positive assumptions
  • It is normal but unhelpful to begin by presuming a great deal about both issues and
      other people
  • It is better to assume that you can learn a great deal about both.
  • Issues are often far more more complex than you may think and other people are not
      as simple, thick-headed, and intransigent as they might seem!

Create a safe space
   • Agree ground rules that provide safety for participants and avoid antagonising or
       humiliating each other e.g. ‚take turns talking,‛ ‚no personal attacks,‛ ‚listen
       attentively‛
   • Recognise one another’s histories and concerns and start to explore options for
       working together
   • Remember that you all bring passion to your work and that criticising your
       organisation or your activities will feel like a criticism of you

Avoid stereotyping
   • Try not to pre-judge what someone will say – this will prevent you from hearing
      what they do say
   • Find ways of expressing your thoughts that will help to prevent others from
      switching off
   • Surprise yourself and others!

Keeping an open mind
   • When listening to the perspectives of others and/or learning more about specific
      issues, try to remain open to the possibility of changing your perspective
   • Changing your perspective and understanding does not mean compromising your
      core values!

Deal with your feelings
   • Tell people at the start of the meeting if pressures of work are making you feel
      stressed, grumpy, impatient, exhausted. This will help them to understand your
      behaviour and help others to be sympathetic
   • When you are exhausted, expect to feel the dialogue will never succeed and that it is
      an impossible waste of time and energy – we all do! Wait until you are rested before
      making any critical decisions.

Detail, not doctrine
   • Focus on learning about the specifics rather than the generalities of the subject
   • Build a working consensus about practical steps forward for the sector rather than
        pursuing discussions around more abstract worldviews
   • Explore specific options together in order to generate practical proposals
   • Devise options that satisfy the concerns and interests of all stakeholders


                                                                                          36
Be realistic about progress
    • Be prepared to take small steps towards the overall goal
    • Be realistic about what you want to achieve, and think about how you can
       demonstrate to others that you are being realistic
    • When there are problems in moving forward, consider new or different options that
       might meet your needs as well as those of the other people

Meetings
  • There should be full preparation before meetings including:
          – Collecting ideas for the agenda
          – Encouraging people to attend
          – Preparing and disseminating background materials
          – Preparing handouts
  • All meetings should have clear objectives which are evaluated at the end of the
      sessions to see whether they have been met
  • Formality is useful. Each meeting should include:
          – a review of and agreement on the minutes/record of the last meeting
          – follow up on action points and a review of outcomes
          – prioritisation of agenda items when time is short/items are many
          – Prompt, accurate, agreed documentation of meetings is needed to act as a
              record of what’s been talked about, what’s been decided, agreed, etc.
   Having the same people at each meeting is essential for building trust
   If the meetings are to be a safe space, everyone needs to be confident that what is said
      won’t be used against them, nor taken out of context
   There should be clear ground rules so that meetings cannot be used as a venue for
      direct attacks on specific individuals or institutions
   People should look forward to meetings – discussions should be innovative and
      creative to encourage attendance
   Meetings must be productive and interesting so that people give them priority over
      what is happening in their offices
   It is important to find a balance between process and management and discussions of
      substance

Confidentiality
   • experience indicates that opposing parties may have incentives to strategically leak
      information to the media or outside groups to further their cause or disrupt
      discussions
   • the NSG should agree protocols that enable participants to indicate which parts of the
      dialogue are strictly confidential and ‚off the record‛ and may not be spoken about
      outside the meeting
   • the record of meetings will indicate only that subject X was discussed
      NB should there be sanctions to enforce these protocols?

Basic requirements




                                                                                         37
   •   Everyone on national dialogue groups holds senior positions and is very busy with
       non-dialogue work. Success is associated with having someone to spend time on the
       project, so employ a Coordinator who can e.g. organise meetings, communicate
       regularly, prepare funding proposals, represent the dialogues, encourage
       participation and take the weight off your shoulders
   •   Communications need to be excellent so that everyone is kept in touch with progress
       whether or not they attend meetings
   •   Funding is the key to long term success – urgent work is required to agree acceptable
       funding sources and prepare a funding proposal

Be realistic about outcomes
    • Do not expect participants to reconcile their value systems
    • Instead, expect to explore carefully how practical disputes over very specific,
       implementable options can be resolved.

The price of failure
   • A return to bilateral working or the status quo
   • No improvement in understanding what works and what doesn’t in service delivery,
       not why or how it works
   • No consensus or reliable advice for service providers or policy makers on the
       advantages and disadvantages of service delivery options
   • Slow progress towards meeting the MDGs
   • More poor people unserved or paying exorbitant rates for water



‚If you want to walk fast, walk alone.
If you want to walk far, walk together‛
West African Proverb




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