Rand in South Africa - ODI
Updated - Thursday 15 January 2004
Although much attention has been paid to a management structure involving private sector participation, public-public partnerships are also being developed to promote water sector development in developing countries. In the Odi area of South Africa's North West province, near Pretoria, Rand Water, a public sector utility, has signed contracts with municipalities to manage their retail water services. Odi has an unemployment rate of 44%, which is higher than the national average.
Since 1995, a national process has taken place throughout South Africa to create new boundaries for water boards in an effort to negate the impact of apartheid planning and increase sustainability - financially and otherwise. To do this, successful water boards with high cost-recovery ratios are required to expand their services into the poorer areas, which have traditionally received subsidies. Importantly, the subsidies are being phased out, imposing cost recovery charges on people who are not accustomed to paying them.
Rand Water's contract, which lasted from 1996 to 1999, was to improve the financial integrity of the municipal water boards and improve the management capacity of local staff. At the end of the contract term, management returned to local authorities, with a goal to improve the viability of each water board.
In the lead up to the project's start date in 1996, specific attention was paid to including the community in preparation decisions, as well as agreeing to certain principles with the community, such as establishing a proper billing and payment system and defining roles and responsibilities for the project throughout the life of the contract. Labour issues were addressed prior to the contract, with participation from the South African Municipal Workers Union (SAMWU), and with a provision that no layoffs would occur during the contract as part of efficiency improvements. New management was added, with a specific goal to train more management staff, to increase the project's effectiveness beyond the terms of the contract. Significant community input was sought on the project's design, and in negotiations technical issues were on an equal footing with other social and institutional considerations.
While this planning process took two years, between 1996 and 1998, payment levels reportedly rose by 400% (note that at the start of the contract, payment levels were almost negligible). To achieve this, all connections were registered with water meters, and all were billed on regular cycles.
To promote and affirm their presence in the area, Rand Water officials attended community functions and held regular meetings with the community, as well as providing educational campaigns on water use and training for staff. This helped to build trust between the company and the community. The company also used local businesses to develop advertising campaigns and other marketing tools to promote cost recovery.
As the national subsidy for water is being phased out, the community faces significant challenges, especially in poorer areas that may be unable to afford the higher tariff levels. Although instalment plans are provided for those who cannot afford to pay, non-payment leads to disconnection, and even confiscation of property. These issues may affect the long-term performance of supply in the Odi area, as elsewhere in South Africa, if unemployment persists and ability to pay declines.
For further information
See: CPS
Contact: Centre for Policy Studies
First Floor
No 9 Wellington Road
Parktown, South Africa 2193
Tel: +27 11 642 9820
Email: claire@cps.org.za
