Transcript Presentation title

Involving external organisations
in municipal service provision
Presentation to the MISA conference on
’Accelerating municipal infrastructure delivery
through Capacity Enhancement and Strategic
Partnerships’
Ian Palmer
25th November 2011
Scope of this piece
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The capacity challenge from an engineering perspective.
Overview of partnering options.
Overview of contracting options.
Some thoughts on how we are doing with partnerships.
What needs to be done.
And something about funding.
2
Where are we
with infrastructure
and capacity to
manage it?
Condition of assets (% of useful life
remaining on all infra in Municipality)
60%
40%
20%
0%
1996
2001
2006
2011
Year
No of engineering professionals
1600
Last and only time we
have had good data
(SAICE)
1500
1400
1300
1200
1996
2001
2006
2011
Year
3
The capacity challenge: engineering
professionals in LG
9.5
10.0
Gauteng 2009 – 3.2
8.0
6.0
5.0
4.4
4.0
3.1
2.8
2.2
2.0
0.8
0.9
0.6
0.0
Districts
Typology 1 Typology 2a
Typology 2b Typology 3
Typology 3
Typology 4
Typology 4
Population - Population - Population - Population - Population - Population - Population - Population 32m Districts
(2005)
4.5m No
6m Small
established towns -former
town (2005) TBVC states
10m Districts 10m Large
(2005)
10m Large
urban areas urban areas
(2005)
(2007)
15m Metros 15m Metros
(2005)
(2007)
Major cities
Botswana,
Lesotho,
Namibia,
Swaziland
(2005)
Source: Lawless, 2009
How is lack of capacity playing out in the 21
priority districts – rural areas specifically
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Infrastructure is failing.
Yet we focus on building new infrastructure in situations
where we do not have the systems in place to manage it.
Systems are inadequate :
–
–
–
–
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Information on assets is seldom there (including roads).
Customer databases do not exist.
Metering or volume control systems are not in place.
Water is not accounted, technical losses high; hence bulk water
costs are high.
– Revenue is not being raised from those that use above free
basic limits.
In order to accelerate and spend capital effectively we need
these systems and the managers to run them.
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The capacity challenge: engineering
professionals in LG
10.0
8.0
9.5
Gap – 1000 civil engineering
professionals
Gauteng 2009 – 3.2
6.0
5.0
4.4
4.0
3.1
2.8
2.2
2.0
0.8
0.9
0.6
0.0
Districts
Typology 1 Typology 2a
Typology 2b Typology 3
Typology 3
Typology 4
Typology 4
Population - Population - Population - Population - Population - Population - Population - Population 32m Districts
(2005)
4.5m No
6m Small
established towns -former
town (2005) TBVC states
10m Districts 10m Large
(2005)
10m Large
urban areas urban areas
(2005)
(2007)
15m Metros 15m Metros
(2005)
(2007)
Major cities
Botswana,
Lesotho,
Namibia,
Swaziland
(2005)
Source: Lawless, 2009
Condition of assets (% of useful life
remaining on all infra in Municipality)
80%
60%
?
Trends in
infrastructure
status and
technical capacity
40%
20%
0%
1996 2001 2006 2011 2016 2021 2026 2031
Year
No of engineering professionals
5000
4000
We have to establish
partnerships to fill
this gap.
3000
2000
1000
0
1996 2001 2006 2011 2016 2021 2026 2031
Year
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Partners: a picture of current arrangements
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Private
Civil society
Mainly DBSA,
Eskom & water
boards
Government
NGOs and CBOs
Public entity
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Structuring relationships with partners
MISA
Other
National
departments
Private
Sector (incl
Funders)
Public entities
(Eskom and
Water boards)
Provinces
Civil
society
Local
government
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Partnership options with ‘external’ service providers
private
Utility Management
Public Water
PLC
Private Water
PLC/Ltd
Joint
Venture
Concession
BOT, BOOT, etc..
Private
management
options
Lease contract
Management Contract
Municipal
Entity
O&M Contract
public
Municipal
Public
Supramunicipal management
Public-private
partnership
options
options
public
mixed
Utility Ownership
private
Source: Adapted from DCoG
Private partnership status
Type of
partnership
What have we done
Comment
Ownership
Midvaal Water – section 21
Company supplying water (NW)
Good track record, financially
strong.
Concessions
Mbombela and Illembe contracts
(30 yrs).
External observers rate them as
successful. Some concern that
they are too urban focused.
Leases
Lukhanji and Amahlathi LMs
(quasi leases for 10 yrs)
Lukhanji contract in place for 19
years; stable arrangements.
BOT
eThekwini wastewater recycling
contract as example
High benefit to the City with
funding off budget.
Management
contracts
Jo’burg Water and Maluti-aPhofung (MAP)
Jo’burg contact considered
international best practice. MAP
contract went through renewals
O&M
contracts
Examples of district-wide O&M
contracts in N KZN (e.g.
uThungulu and Zululand)
uThungulu used as example
later in presentation.
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Management contracts – bringing in
capacity fast
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MISA can only succeed if it facilitates a rapid increase in engineers
working in or with local government, specifically the 22 target
districts.
This, in my opinion, can only be done through partnerships with
the private sector who have the engineers ‘in house’ or will be able
to contract them.
Management contracts are an internationally recognised way of
contracting in expertise.
They can be focused on setting up systems, building an
organisation, promoting efficiency and supporting interns.
Management contractors can have contracts with MISA and LG.
They are typically 3 to 5 year contracts with 5 years preferable.
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O&M contracts - uThungulu district example
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uTungulu District Municipality (Northern KZN) is 80% rural and is
the best performing DM that is a Water Service Authority in the
country, according to DCoG criteria.
The DM is well managed financially and collects some revenue
from water sales; it is looking at new innovations in this regard.
Private contractor has been running their bulk water supply system
for over a decade, based on a service contract renewable every
three years.
The contractor employs 500 people.
Based on perceptions of external assessors the contracting
arrangements are a success; but there have been proposals by
councillors to terminate it with the motivation evidently being to
employ the 500 staff, something which will substantially increase
expenditure and cut off access to external management expertise.
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Civil society has a big role to play
Type of
partnership
What have we done
Comment
CBO water
providers
Well over 100 community based
water service providers set up in
1990s, collecting their own
revenue
Local and international
evaluations found success in
most cases; failure in some.
They have almost all gone.
CBO
undertaking
O&M
Chris Hani has the most recent
experience with this model. They
have been innovative.
Positive evaluations. But
concerns over Support Service
Agent costs.
Water
maintenance
officers
Zululand DM uses over 200
village based officers who
undertake O&M tasks, paid a
stipend.
Evidently works well, gets
village-based O&M done
effectively and cost efficiently.
Income stays in community.
Road & waste Not widely applied but plenty of
O&M
opportunity
NGOs
supporting
communities
NGOs are well placed to bring in
expertise in community
management.
NGO sector in SA has a good
track record but NGOs are
treated like private firms now.
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Partnering with public entities
Type of
partnership
What have we done
Comment
Eskom
Eskom is way the biggest partner
with about 50% of the electricity
connections in the country
Expanding electricity supply in
rural areas involves Eskom.
DBSA
With Siyenza Manje shifting to
MISA, DBSA role is shifting. Big
increase in lending to LG
DBSA position has been
presented at MISA conference.
They remain a key partner.
SAAWU and
water utilities
generally
SA Assn of Water Utilities
represents most utilities, water
boards and others.
There is a major institutional
restructuring initiative being
undertaken by DWA.
Water boards
doing bulk
Primary function of water boards
but they have difficulties working
in rural areas
Much to be done to expand the
role of water boards with better
contracting.
Water boards
doing retail
Lepelle Northern Water and
Sedibeng Water and undertaking
interesting retail projects but
scale too small.
Water boards realise if the
retail water supply system is
not working then bulk supply
cannot be viable.
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What needs to be done?
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A major national drive to set up carefully designed partnership
arrangements in the 21 districts.
Focus on management contracts but with full partnership spectrum
considered, including public entity and civil society partners.
Regional scale will bring cost efficiencies.
MISA is well placed to do this once it has the contracting expertise
in place.
But it requires a funding mechanism for the local and regional
activity over a transitional period.
Concepts have been developed for this such a mechanism, using
terms such as ‘supplementary operating grant’ or ‘systems
improvement grant’. But nothing has happened.
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Financing: a virtuous cycle
Fund a major
capacity building
initiative
No further
need for capacity
support
This has by far the
biggest multiplier of
any grant funding:
Ability to raise
own capital
finance
Increased ability
to manage
infrastructure
Increased
Ability to raise
revenue
Improved
financial & asset
performance
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Why do these sort of interventions not happen at
scale?
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Our country is faced with what Andrew Boraine has called
‘disaggregation of effort’.
There is a lack of trust between public sector, private sector,
civil society and labour.
– Trade unions and anti-privatisation groups have effectively
blocked further concession and lease contracts. They even block
water board management interventions (OR Tambo).
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We have not had the capacity, structure and cooperative
arrangements at national level to drive a major intervention
based on partnerships. MISA can play this role.
We have not been good enough at getting sound contacts in
place, even for quite conventional support interventions.
Funding is not made available at necessary scale (prev slide)
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To conclude:
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I believe in local government and we are very fortunate in this
country to have the municipalities we have in most cases.
Local government will prevail.
But in order to prevail, particularly where capacity is so
lacking, we must build partnerships to accelerate service
delivery.
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Slide on borrowing not used
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