Introduction
Program Considerations
• Enabling Environment
• Increasing Coverage to the Poor
• Service Delivery Methods
• Metropolitan and Community-Based Services
• Accountability
Bibliography
Web Sites
Introduction
Service delivery is the cornerstone of city governance and includes access to water, trash collection, solid waste disposal, wastewater collection and treatment, and electricity connection. The reliability, quality and cost efficiency of equitable services to all areas of the city — wealthy and poor — is the primary responsibility of local government, and is the most tangible result for which the community will hold their elected officials accountable. This is particularly true as more countries decentralize administrative and fiscal authority to city and local governments. With decentralization, the responsibility of closing the gap in service provision among the poor and the wealthy falls to city governments, and this gap is large. Over 1.1 billion people lack adequate access to safe water, and nearly 2.5 billion people lack access to sanitation services. See WSP Website
To begin bridging this gap in basic service provision to all un-serviced areas, city governments will need to reach out to the local private sector and to citizens, particularly the poor to explore how public-private partnerships could improve service delivery. City governments will be unable to provide in a sustainable way even the most basic services without engaging stakeholders about their needs and their ability to pay. Cost recovery is fundamental to sustainable and responsive basic service provision. Participatory management, cooperation, transparency, and accountability are also key in delivering services, especially to the poor.
Programmatic Considerations
Enabling Environment.
Decentralization should enable cities to better manage service delivery by having the autonomy to set tariffs and user fees and access other finance mechanisms; to determine the mix and level of services; and to design efficient delivery methods including the private sector. National laws and regulations should continue to play the role of setting health and environmental standards, ensuring a level playing field for involving private firms and NGOs as service providers, and for strengthening capital markets so cities can access private sector finance. (see utility regulation and strategy
World Bank Utility Regulation Page). Another prominent factor that affects basic service provision to the poor is the issue of land security in informal settlements, where the poor are concentrated.
Increasing Coverage to the Poor.
Affordability of basic services for the poor has long been a concern of all levels of government and the private sector. The myth that the poor are unable to pay for fundamental services such as water and electricity continues to plague and hinder expanded coverage to poor communities in and around most cities. The poor do pay, and often pay more than if they were formally connected to city services. To overcome this myth and increase the poor’s access to basic services, city governments should identify the needs and demands of the community, including residents and businesses. Governments often justify their use of universal subsidies by stating that subsidized services will help the poorest. However, it is exactly because services are subsidized for everyone, including those who easily could pay, that service providers do not recuperate sufficient costs to be able to expand and improve service networks in poorer areas. Cities must fully recover the cost of their services and assist the poor with carefully targeted subsidies. One way to target subsidies is to identify specific households and provide them with cash or vouchers to pay the costs of essential urban services. Just as with the services themselves, it sometimes is more efficient for cities to contract the private sector or NGO organizations to administer social assistance programs. Another way to target the subsidy is to cover the costs of a minimum amount of consumption for all households. (see Foster et al May 2000).
With financially sustainable tariff levels in place, city services should reflect the needs and demands of the community, including residents and the public, private and NGO sectors. Public consultations, including referenda, town meetings and open city government sessions enable citizens to negotiate their preferred service mix. Bringing stakeholders together in a strategic planning process may build consensus for services that not only meet immediate needs, but will attract businesses and contribute to urban employment and economic growth.
As customers, citizens need full information about the related costs and benefits to the various service options available. Transparent pricing through users fees–instead of hiding service delivery costs in taxes–makes the trade-off clearer. (see Regulating Quality: Let Competing Firms Offer a Mix of Price and Quality Options.
A menu of options with varying degrees of service provision along with the opportunity for periodically upgrading the level of services would empower customers to choose a service that they feel is affordable and sufficient. Customers may increase or decrease their use of services depending on pricing, administrative arrangements, perceived levels of corruption, and the availability of alternative services.
Service Delivery Methods.
For some services, such as public safety, citizens may want their government to be the service provider. For most services, however, the private and NGO sectors–including user groups and citizen associations–offer advantages of experience, technology and skill. At what level should the private sector be involved? To answer this question, a city must examine the sophistication and competitiveness of the private sector and its own needs for investment and technical capacity.
See World Bank Private Sector and Infrastructure Page
Mechanisms for involving the private sector:
- Contracting out for services, when the ends are more important than the means. If private firms (and NGOs) compete to deliver services and are rewarded appropriately for the results delivered, they are motivated to devise cost-saving technologies.
- Corporatization, when government wants the technical expertise of the private sector to improve management, but wants to maintain overall responsibility.
- Leasing and concessions, when the government is looking for the private sector to take on more financial responsibility and risk. Usually, this means a longer term commitment, from 5 to 10 years for leases and 15 to 20 years for concessions.
- Privatization, when the market is well-developed and the regulatory framework can ensure that fair pricing and adequate levels of coverage will be maintained.
Cities selecting to involve the private sector in service provision should be explicit about expanding coverage to the urban poor, particularly in un-serviced areas. Experience demonstrates that many private sector firms are hesitant to move downstream and provide services to the poor, who are incorrectly perceived as unable to pay and thus a significant risk. City governments can facilitate better basic services for the poor through specified deliverables and risk sharing, i.e. partial guaranteed lending.
Metropolitan and Community-Based Services:
Service delivery can be managed at levels either above or below the city government. Cities may find it economical to cooperate on delivering services that naturally extend beyond their borders or when economies of scale or complementarities exist. An example of metropolitan cooperation is the management of supply and distribution of water in the Hyderabad, India metro area. In the other direction, service delivery can be effective at the community level by empowering user groups and citizen associations to develop effective solutions to their community’s needs. The involvement of citizens as owners and operators may offer savings as the residents may be more careful to ensure proper maintenance of capital they have bought themselves. Researchers have found that community-built sewerage systems cost approximately one-half to one-third the costs of systems built by governments. (see Snell). Condominiums also have shown improved collection rates, as citizens police themselves in the payment of fees. (see condominium experience in Kyrgyzstan
See
World Bank Transition Newsletter and
Bolivia El Alto Condominial Water Project
Accountability.
Accountability often refers to the relationship between city officials and their constituents, but also includes the relationship between contractors and city governments, citizens and service providers and city governments and other levels of government. One set of tools for improving accountability are efficiency measures that compare output produced or outcomes accomplished to inputs provided. The use of contractors for service delivery actually makes it easier to develop efficiency measures as costs are clearly defined. Performance benchmarks are additional tools that help detect problems, but also build confidence as improvements are tracked over time. See
ICMA Center for Performance Measurement
Bibliography
Foster, Vivien, Andres Gomez-Lobo and Jonathan Halpern. May 2000. Designing Direct Subsidies for Water and Sanitation Services, Panama: A Case Study. Santiago: Universidad de Chile.
This paper illustrates an approach for rationalizing social policy towards the water and sanitation sector in the context of sector reform. The reform process provides an opportunity to reconsider the underlying justification for any water sector subsidy and to redesign the associated policy instruments, so as to ensure that they really do benefit the poor and avoid distorting the efficient operation of the sector. Panama’s experience on water sector reform, where a direct subsidy system formed an integral part of the reform strategy, is identified and illustrated in this paper through identifying several key design questions that arise in the creation of a direct subsidy system. Each country is urged to develop a single system for conducting the socio-economic assessment of households which may be used to inform the allocation of funds in a whole range of social programs.
Institute for Urban Economics and Urban Institute. Spring 2002. In-Service Training in Public Policy for Russian Local Government Civil Servants and Advocacy NGO Staff: The Policy Fellows Program. Moscow/Washington, D. C.: Institute for Urban Economics/Urban Institute/USAID.
Since the beginning of the transition period, Russian local governments have become responsible for the delivery of public services. A number of cities have experimented with using NGOs as service providers under contract to the city, as well as involving NGOs in the policy making process. Local NGOs have emerged to champion specific causes and to promote more efficient and open government. This course is designed to improve local decision making by raising skill levels and by strengthening working relationships between NGOs and government bodies.
Lampietti, Julian with Vahram Avenesyan, Sumila Gulyani and Anthony Kolb. May 2001. Utility Pricing and the Poor: Lessons from Armenia. Washington, D. C.: World Bank.
This report assesses the 1999 electricity tariff increase and the potential for future improved water sector cost recovery, with particular attention to questions of service accessibility and affordability to the poor. Increased tariffs for electricity, without increasing access to low costs substitutes, would lead to the greatest hardship of the urban poor; as electricity makes up the bulk of expenditures for most households, particularly the poor. Water utilities are caught in a low-level equilibrium trap, characterized by decreased service quality and revenue. In order to break free of this trap, water utilities must generate more revenues through improved service delivery. A two-stage approach is recommended. First stage, revenue should be increased by enforcing payment from the households that are currently receiving reliable service and are not paying their bills and the second state (after collection capacity is strengthened) start a program of tariff adjustments based on improved service and meter-based billing.
McMaster, Jim. 1999. Alternative Methods of Service Delivery. Conference on Intergovernmental Fiscal Relations and Local Financial Management held in Chiang Mai, Thailand, 24 February to 5 March. Washington, D. C.: World Bank.
This resource provides information on private sector involvement in public service functions. When considering the role of the private sector in the provision of services, it is important to carefully appraise the costs and benefits of alternative organizational arrangements before selecting the most appropriate type of private sector involvement. Cost-effectiveness, opportunity to introduce competition into the service market, attractiveness to the private sector, ease of administration and post privatization regulation and the capacity to service customers provide a selection criteria for alternative organizational arrangements. The main alternatives for private sector involvement include: contracting out services to private firms, franchising services to the private sector, the use of grants and vouchers, mobilizing community groups and developing self-service measures as well as the privatization of government enterprises that have provide urban services.
Urban Institute. June 2000. Performance Management: A tool Kit for Improving Local Services in Albania. Washington, D.C.: Urban Institute/USAID. The toolkit consists of sets of materials intended to assist local governments in developing plans to improve service delivery using their existing resources. This results-oriented methodology enables a local government to evaluate the effectiveness of each service, both from the perspective of the citizen and from the view of efficient management resources. The toolkit comprises four components: 1) five model action plans, 2) two sample customer surveys, 3) an example of one method of performance measurement, and 4) a brief introduction to many of the concepts that form part of performance management.
Snell, Suzanne. "Water and Sanitation Services for the Urban Poor: Small-scale Providers-Typology &Profiles." December 1998. UNDP/World Bank Water and Sanitation Program. Working Paper Series.
For several years, the World Bank has been promoting the participation of the private sector in the water and sanitation sector at the formal level focusing on utility performance and regulatory reforms. Recent evidence suggests however, that the poor urban populations are still without access to the water and sanitation services, despite sector modernization. This has raised interest in the small-scale and informal private sector. These small providers have the potential to deliver improved services to low-income areas at comparatively low investment costs. This paper describes twenty small private providers (from community-based businesses, to NGOs, to commercial entrepreneurs, working in the water supply and sanitation sector in Africa, Latin America, Caribbean and Asia) and how these small providers are able to fill service provision gaps for clients where the public utilities have been unable to act.
Steuerle, Eugene. 2-3 October 1998. "Common Issues for Voucher Programs" in Conference Papers: Vouchers and Related Delivery Mechanisms: Consumer Choice in the Provisions of Public Services. Conference held at Brookings Institution. Washington, D. C.: Brookings Institution, Committee for Economic Development and Urban Institute.
A voucher is a means of subsidizing or paying for services or goods. Vouchers have been used for food, higher education, primary and secondary school education, housing and utility services, employment and training, child-care and medical insurance. Typically governments use vouchers to ensure access to a service by the poor. This study provides an overview of issues that tend to arise in voucher programs.
Undeland, Charles. January — February 2002. "Condominiums in the Kyrgyz Republic: Building Communities and Managing Housing Effectively" in Transition Newsletter, vol. 13, no. 1. Washington, D. C.: World Bank.
This articles focuses on Kyrgyz Republic’s massive privatization efforts of its housing stock as a political gesture to empower citizens and as a quick way to provide a substantial part of the population with some means of accessing capital. In 1997, with the assistance of USAID housing reform project, the government passed the Law on Condominiums, which established a framework for unit owners to set up associations to organize or contract the maintenance of buildings’ common areas.
UNHCS (Habitat). 2001. The State of the World’s Cities. Nairobi: United Nations Center for Human Settlements.
This edition takes you through Africa, the Arab States, Asia and the Pacific, the highly industrialized countries, Latin America and the Caribbean and countries with economies in transition to understand better how shelter, society, environment, economy and, above all, systems of governance can contribute to urban vibrancy and viability in a globalizing world.
Web Sites
Urban Water Supply and Sanitation Programming Guide
http://www.makingcitieswork.org/urbanws/splash.pdf
The Urban WS&S Guide provides an orientation that will help planners and decision makers to identify and focus on the most important tasks. It is a starting point for action — a concise overview of strategic issues, planning processes and implementation practices. The objective is to identify major activities and components of successful programs, and some first order principles to guide the design and implementation of WS&S programs. The Guide is intended for use by those who are making plans and decisions for the provision of WS&S services, and the policy makers who must establish the enabling environment for successful program implementation.
ADB Enhancing Municipal Services Delivery Capability
http://www.adb.org/projects/Benchmarking/default.asp
This project is managed by ADB through its Regional and Sustainable Development Department, Agriculture, Natural Resources, and Social Sectors Division (RSDD/RSAN). This project aims to institutionalize the modified benchmarking and continuous improvement techniques within the three most successful municipalities in Phase 1 — Bangalore, India, Colombo, Sri Lanka, and Cebu, Philippines, as well as introduce these techniques to an additional nine municipalities. These techniques will help participating local governments seek practice ways of improving service delivery and how to cope with the growing demand for better services.
ICMA Center for Performance Measurement
http://www.icma.org/go.cfm?cid=1&gid=3&sid=101
This webpage is dedicated to helping local governments measure, compare, and improve municipal service delivery. ICMA's Comparative Performance Measurement Program currently assists approximately 130 cities and counties in the United States and Canada with the collection, analysis, and application of performance information.
UNCHS Privatization of Municipal Services in East Africa
http://www.unchs.org/unchs/planning/privat/contents.htm
This report presents the findings of a study designed to determine the nature, extent of progress and effectiveness in decentralization and privatization of municipal in East Africa. The study sought to identify and measure improvements that have taken place in the provision and access to municipal services to the population following privatization of municipal services. An essential aspect of the research report is analysis of experiences of mobilization of municipal financial resources to support sustainable urban development and the extent to which various services have become more accessible and affordable to local populations. The overall objective of the study is to contribute to the improvement of provision of municipal services. The goal of the study is also to constructively contribute to the current debate on privatization of municipal services through an empirical analysis of the East African experience.
USAID Europe and Eurasia Local Government Center Municipal Services and Assets
http://www.usaid.gov/regions/europe_eurasia/dem_gov/local_gov/subject/ms.htm
This webpage serves as a Local Government Center Municipal Services and Assets resource tool for the Europe and Eurasia Region.
Condominial Water and Sewerage Systems Lower Cost with Greater Benefit
http://www.wsp.org/condominial/indexeng.html
This webpage addresses the condominial water and sewerage system which offers an alternative for low-income families that allows for more extensive, lower cost coverage with considerable savings in effort and material. The condominal sewerage system is an alternative to the convention system and incorporates a new layout and network design as well as the community participation component.
State of the Cities Report, UN-Habitat
http://www.unchs.org/istanbul+5/statereport.htm
This report takes you through Africa, the Arab States, Asia, the Pacific, highly industrialized countries, Latin America, the Caribbean and countries with economies in transition to understand better how systems of governance, the society, the environment, and the economy can contribute to urban vibrancy and viability in a globalizing world.
Urban Institute International Social Assistance Program
http://www.urban.org/content/PolicyCenters/International/IACWebSites/
InternationalSocialAssistanceProgram/SocialAssist.htm
This webpage addresses the new Urban Institute Program on Social Assistance in transitional and developing economies focusing on improving the management and administration of social assistance programs at all levels of government. It also focuses on advancing the role of nonprofit organizations as social service delivery agents for local governments. The Institute has extensive expertise in delivering such assistance, which can make a critical difference in addressing the needs of the poorest members of society. Beginning in 2001, the Urban Institute will seek support from a variety of sources to expand its ongoing work in these areas.
Water and Sanitation Programme
http://www.wsp.org/english/index.html
The WSP is an international partnership of the world's leading development agencies concerned with water and sanitation services for the poor. Its mission is to alleviate poverty by helping the poor gain sustained access to improved water and sanitation services. It is managed through a head office in Washington, D.C. and four regional offices in South Asia, East Asia and the Pacific, Africa, and the Andean Region.
Over the past two decades, the WSP has demonstrated success in helping its clients to improve access to water and sanitation services for millions of poor people in rural and urban communities. It has led or supported many of the advances made in the sector in recent years, and actively contributed to the growing understanding of how to translate the guiding principles agreed on at major international conferences in Dublin and Rio de Janeiro into improved policies and programs. The challenge now is how to scale up successful approaches, continue targeted learning efforts, and support reforms that will ensure the adoption and replication of sustainable investments.
World Bank Institute Presentations on Public-Private Partnerships in Utility Provision
http://www.worldbank.org/wbi/urbancitymgt/goa/#mod04
Options for Private Participation
by Penelope Brook (2000)
This presentation addresses the what’s and how’s of private sector participation in urban services delivery. It emphasizes the creation of an optimal match between the objectives that cities might pursue through private sector participation, and the various options that are available to them.
Private Sector Roles in Delivering Public Services: Policy Options for Developing Countries
by Penelope Brook (2000)
This presentation explains the rationale for promoting private sector involvement in urban services delivery. Its main argument is that traditional solutions to service provision often fail.
World Bank Private Sector Participation in Infrastructure
http://www.worldbank.org/privatesector/ppi/ppi_resources.htm
This webpage addresses governments around the world that are transforming their roles from the exclusive financiers and providers of infrastructure services to the facilitators and regulators of services provided by private firms. Growing experience shows that private sector participation in infrastructure can improve the quality and quantity of infrastructure services, while reducing the burden on constrained public finances.
The World Bank Group offers a range of products and services to help member countries realize the benefits of private sector participation in infrastructure. Major areas of assistance include advice, finance, risk mitigation, knowledge and information, and dispute settlement.
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