June 2001 Insights Issue #37

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Putting poor people first. Making PPPs work for all

How can the needs of the poor be prioritised in strategies encouraging public-private partnerships? What conditions are essential to ensure provision of water supply and sanitation services? Bilateral and multilateral agencies advocate public-private collaboration but also demand a clear poverty focus. Where should donors focus their support?

Concessions and leases on the one hand and inclusion of informal organisational relationships in PPP framework on the other, provide the best opportunity for the public sector to benefit from private sector resources. The contractual framework is crucial: operational detail will make or break successful impact on the poor. The poor, however, have little influence over the PPP process and are never mentioned in the terms of reference.

Research by the UK Water, Engineering and Development Centre, Loughborough University reveals several important findings:

• Public and private sectors have little experience of servicing low income areas. Consumer groups and CSOs also have much to learn about private companies.
• Cash flow is critical: changes in tariffs and payment methods can have a major impact on ability to pay.
• PPPs offer huge scope for technological innovation, locally appropriate engineering standards, and differentiated levels of service.
• Communication is vital, particularly concerning legal rights.
• Disconnection is punitive; households may not be able to afford reconnection and are left without services.
• Operational performance regarding poor consumers reflects the focus of contract preparation - that of the municipality's financial concerns rather than the poor.

The contractual framework needs to be worked out in detail prior to signing. The timescale for preparing bids needs to be lengthened. Greater flexibility within the contract would help ensure that the needs and demands of the urban poor are properly taken into account. Further policy recommendations include:

• facilitating effective relationships between a range of diverse actors
• planning tariff structures carefully along side a thorough understanding of household budgets
• tapping private sector resources to exploit technological innovation and achieve improved service delivery
• developing an information base on poor people's priorities before starting the contract process
• translating contractual concepts into agreed roles and responsibilities at a household level
• ensuring smaller municipalities are able to monitor and regulate complex contracts.

M. Sohail Khan
Water Engineering and Development Centre (WEDC)
Loughborough University
Leicestershire LE11 3TU
UK
T +44 (0) 1509 222890
M.Sohail@lboro.ac.uk