Ministry of City Planning and Water Supplyrwss.lk/wp/webcontents/idcb/strategypaper/Analysis...

Ministry of City Planning and Water Supply

Water Supply and Sanitation Improvement Project

INSTITUTIONAL DEVELOPMENT

AND CAPACITY BUILDING

CONSULTANCY

STRATEGY PAPER WaSSIP/IDCB/SP/03

ANALYSIS OF INSTITUTIONAL OPTIONS FOR AN

ORGANISATION TO SUPPORT CBOS Task: D 1.1 Activity: 1.1 Output: 1.1.3

Prepared by

IDC – Ceywater – COWI Joint Venture May 2018

Strategy Paper – Analysis of Institutional Options for an Organisation to Support CBOs

Institutional Development & Capacity Building Consultancy

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IDCB Consultancy

Strategy Paper

Analysis of Institutional Options for an Organisation to Support CBOs

20th May 2019

Author: Chris Ricketson

Disclaimer: This document is prepared by the IDCB Consultancy as a basis for discussion only and does not necessarily reflect the views of PMU or other Sri Lankan institutions. Revision

No. Date Prepared by Checked

by Authorized By Remarks

0 10.04.2018 Chris Ricketson Anandalal Nanayakkara

Sunidha Senaratne

Arne Dahlen

1 03.05.18 Chris Ricketson Anandalal Nanayakkara

Sunidha Senaratne

Arne Dahlen

2 20.06.18

Chris Ricketson Anandalal Nanayakkara

Sunidha Senaratne

Arne Dahlen



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Contents

Abbreviations and Acronyms ...................................................................................................... iii

1. Introduction ...................................................................................................................1 2. Institutional Options.......................................................................................................2

2.1 Option A: Government Department (status quo) .......................................................... 2

2.2 Option B: Statutory Public Corporation ......................................................................... 3

2.3 Conclusions from the comparison of options ................................................................ 5

3. International examples of non-departmental institutional models ...................................6 4. Mandate for a CBO Support Institution ...........................................................................7



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Abbreviations and Acronyms

BoD Board of Directors

CBO Community Based Organization

DNCWS Department of National Community Water Supply (of MCPWS)

IDCB Institutional Development and Capacity Building

MCPWS Ministry of City Planning and Water Supply

NWSDB National Water Supply & Drainage Board

PMU Project Management Unit

RWS(S) Rural Water Supply and Sanitation

WaSSIP Water Supply and Sanitation Improvement Project

WB World Bank



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Strategy Paper: Analysis of Institutional Options for an Organisation to Support CBOs

1. INTRODUCTION

The Government of Sri Lanka has established the Department of National Community Water Supply (DNCWS) as a government department. This is the most common of all institutional models for support of community operated small water supply entities, both within the region and internationally. There are however other models of service delivery that can be considered. In this section we compare the pros and cons of different institutional models. It is relevant to recall that DNCWS’ predecessor was the National Community Water Trust. The trust was a special purpose organisation established in 2010. With limited resources it was unable to make an impact on the functionality of rural water schemes and struggled to find a clear role for itself1. It was superseded in 2014 by DNCWS. We have not re-examined the “trust” option in this report. Another option not considered in detail in this report would be to make the National Water Supply and Drainage Board (NWSDB) responsible for rural water support. We understand that the option would be inconsistent with NWSDB’s current strategic focus for developing sustainable urban water and wastewater services. NWSDB’s role will therefore be as defined in the Memorandum of Understanding with DNCWS (signed on the 11th May 2018) which foresees a gradual withdrawal of NWSDB from rural water support activities. This document presents an initial analysis of institutional options available to the government of Sri Lanka in organizing support and monitoring services for Community Based Organizations (CBO) water supply and sanitation activities. The paper has been prepared by the IDCB Consultancy at the request of PMU (supported by the WaSSIP donor WB). This work is additional to the original IDCB work plan and description of Task D-1 in the approved IDCB Inception Report. In case the MCPWS will pursue an alternative option to the present DNCWS, that new option would require a revision of the already presented DNCWS institutional development strategy, with drafting of supplementary legislation. This would be outside the present scope of work of the IDCB Consultancy.

1 WATER SUPPLY AND SANITATION IMPROVEMENT PROJECT, Project Appraisal Report, World Bank, 2015.



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2. INSTITUTIONAL OPTIONS

2.1 Option A: Government Department (status quo)

This option is easy to implement in that it does not require a dedicated law to establish a government department2. It may also be attractive at a political level as it makes the services directly accountable to politicians. There are however a number of constraints to the government department institutional model which may make it harder for it to succeed. For instance:

Political autonomy and governance structure: By definition, government departments are not expected to be insulated from political interference. Typically government departments have a top down power structure, with senior staff accountable to politically appointed ministers. Senior management staff are appointed from civil service grades;

Operational autonomy: DNCWS is obliged to adopt Government rules and procedures with respect to organisational structure, pay structure, recruitment, and procurement. Among other things, this makes it extremely difficult for the organisation to recruit and retain good quality staff.

The lack of autonomy has already affected DNCWS’s development; obstacles have included very strict and time-consuming procedures for cadre approvals, insufficient freedom to develop its own organisation structure as it sees fit, and particular challenges in recruiting engineers and technical cadres because government pay rates are lower than market rates. With the scenario of NWSDB’s gradual withdrawal from making direct inputs to the rural water and sanitation sector, the DNCWS has to build its technical capacity. It need to attract, develop and retain competent technical staff consisting of engineers, engineering assistants and technical officers. DNCWS has not been able to do this upto now. Further, it is observed that the technical personnel in Sri Lanka are keen to join only the organizations which have avenues for career development both technically and professionally. In case of Engineers, it needs to be highlighted that the Institution of Engineers of Sri Lanka (IESL - which is the body to accord professional recognition -“Charter” status - for the Engineers), recognizes only the experience gained in a recognized and approved engineering organization when assessing the experience of an Engineer in the professional review. For obtain the approval of the IESL, the organization has to have well-qualified senior engineering professionals to guide and mentor the junior engineers, and should carry out recognized engineering activities.

Staff continuity: Government officers, at every level, are expected to rotate at five yearly intervals. These inter-departmental transfers give rise to difficulties in

2 DNCWS was established on the basis of a cabinet decision and subsequent notice through an official gazette (Gazette Extraordinary bearing No. 1881/6, dated 22nd September, 2014).



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retaining experienced, skilled and competent personnel within the department, affecting the effectiveness and efficiency of the organization and also maintaining the required services to CBOs. It is noteworthy that the topmost position in DNCWS, namely the DG post, was occupied by three officers within a short period of 15 months since the IDCB Consultancy commenced, because of the inter-departmental transfers. However, it is noted that, in case of “closed” departments, such as the Department of Irrigation or Survey Department, this type of inter-departmental transfers are rare. Thus, unless the DNCWS can grow into such a closed department through the “development ladder”, this occurrence would continue.

Legal mandate: The implication of not having a dedicated law to establish the department, are that a) DNCWS has no powers of enforcement, and b) its mandate may not be clear. DNCWS’s mandate is currently established through a cabinet memorandum3 which does not provide it with the legal legitimacy that it needs and which leaves a degree of ambiguity over its future role and responsibilities;

Culture: government departments have a tendency to develop bureaucratic process-orientated cultures rather than the service-orientated culture that will be needed to support the CBOs.

2.2 Option B: Statutory Public Corporation

An alternative would be to establish DNCWS as a public corporation. Such a corporation would be wholly owned by the government of Sri Lanka. The Public Corporations (Financial Control) Act (1980) defines a public corporation as follows: “public corporation” means any corporation, board or other body which was or is established by or under a written law, other than the Companies Ordinance , with capital wholly or partly provided by the Government by way of grant, loan or other form. Since it is established by a law, that law will set out its powers, functions and duties as well as its constitution. There are numerous examples of public corporations in Sri Lanka. They are sometimes referred to as “boards” (e.g. National Water Supply and Drainage Board - NWSDB), sometimes “Authorities” (e.g. the Ports Authority, Roads Development Authority), others are called “corporation” or “agency”. The name of the public corporation (whether board, authority etc.) does not itself serve to distinguish the type of activity it performs. However, given that DNCWS’s role is largely one of development and support, we would suggest that the terms “Board” or “Agency” would be most applicable. A public corporation enjoys a certain amount of freedom as compared to a Government department. Subject to the terms of the law under which it is established the potential advantages of the public corporation model could be as follows:

3 In the absence of a dedicated law, DNCWS’s mandate is expressed through two non-legally binding Cabinet Memoranda dated March 2014 and June 2017.



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Improved governance arrangements, with senior managers being appointed by, and accountable to, a Board of Directors (BoD). There would be an opportunity to create a professional BoD comprised of high quality individuals drawn from various parts of society (civil society, private sector, academia etc.) with expertise in relevant fields;

Improved operational autonomy, so that the organisation has the freedom to determine its own organisational structure and address skill shortages through adjustments to its pay, terms and conditions;

There would be no inter-departmental transfers of staff leading to greater staff continuity and a longer term perspective amongst senior managers ;

More independent decision-making with less potential for political interference;

Improved clarity and accountability: The role and powers of a statutory corporation are expressly set out in its corresponding act. This, therefore, provides the organisation with greater legitimacy and makes evasion of responsibility more difficult for its officers.

Improved transparency - The disclosure requirements placed upon statutory bodies are generally stricter than that of a department

The public corporation would carry additional setting up costs, and plus the costs of running the Board of Directors and higher salaries in some cadres to address staff shortages. It would be expected however that these extra costs could be offset over time through greater staff productivity and efficiency. It is worth noting that the majority of statutory corporations are established to pursue a commercial activity on behalf of the government. Examples include NWSDB and Ports Authority of Sri Lanka. This would not be the case in the case of the CBO support institution. This institution would, at least for the foreseeable future, rely on the government to fund its activities. (Examples of such institutions are the Roads Development Authority and Water Resources Board) This total dependence on government financial support will inevitably limit its ability to act independently.



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2.3 Conclusions from the comparison of options

The conclusions from the analysis above are summarised in the table below.

Option A

Government Department

Option B

Public corporation

a) Cost/ease of establishment

X

b) Governance arrangements

X

c) Political autonomy X

d) Operational Autonomy

X

e) Addressing skill shortages

X

f) Staff continuity X

g) Clarity of legal mandate

X

h) Transparency X

i) On-going running costs

Not known Not known

X = weak, = satisfactory, = Good Based on the above analysis we consider that Option B (Public Corporation) would be the most suitable institutional model for providing support and monitoring services for CBO water supply in Sri Lanka.



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3. INTERNATIONAL EXAMPLES OF NON-DEPARTMENTAL INSTITUTIONAL MODELS

As we have noted above, the most common institutional form adopted for rural water support is that of government department. Box 3.1 below provides some examples of non-departmental models. Box 3.1: Examples of non-departmental rural water and sanitation support organizations

Gujarat. India: The Water and Sanitation Management Organization (WASMO) was established by Government of Gujarat (India) as a Special Purpose Vehicle in the year 2002 to facilitate community management in rural areas of Gujarat. WASMO is registered as a society under the Societies Registration Act, 1860 Karnataka Water Supply and Sanitation Agency: KRWSSA is a state level special purpose agency set up under the World Bank’s Second Karnataka Rural Water Supply and Sanitation Project to provide policy and implementation support to rural water systems. We understand that a key rationale for creating KWSSA as a semi-autonomous agency was the need to underpin the Government of Karnataka’s shift away from ‘provider’ (direct service delivery) to that of a ‘facilitator’ (policy formulation, arranging for capacity support/building and monitoring and evaluation). It was expected that KRWSSA would be scaled up to manage RWSS service delivery in the State. However, government has since established a Rural Water Supply and Sanitation Department leaving no role for the KRWSSA.

Ceera, Brazil. The state water and sewerage company provides monitoring of community systems, handles complex tasks and takes care of new system development and major rehabilitation.



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4. MANDATE FOR A CBO SUPPORT INSTITUTION

The primary objective of a CBO support institution would be to support the development of safe water and sanitation services in areas not covered by the water supply and sanitation services provided by NWSDB or local authorities. The institution will achieve this primarily by providing support to the CBOs, establishing and providing water supply services in what is termed rural communities, covering small and medium water supply schemes. The mandate of the CBO support institution would largely be the same, regardless of whether this is a department (DNCWS) or a Statutory Public Corporation established by the government as a Board or Agency. It is suggested that the mandate shall comprise the following.

a) Assisting with the development of the policy and legal environment governing rural water and rural sanitation sectors, including:

i. Advising the Minister on rural water supply and sanitation policy issues; ii. Developing relevant legislation;

iii. Providing an accountability framework which encourages CBO self-reliance and financial sustainability.

b) Providing legal and organizational support to CBOs, including: i. Promoting legal incorporation of CBOs;

ii. Advising CBOs on suitable organizational structures and governance arrangements;

iii. Developing a model CBO constitution for adoption by CBOs; iv. Promoting greater efficiency in the sector by facilitating greater cooperation

between CBOs, CBO mergers, and partnerships with the private sector.

c) Building capacity and awareness in the CBOs and their associated communities, by: i. Developing good practice guidelines;

ii. Designing and delivering training programs for CBO committee members and operatives;

iii. Ensuring that CBOs maintain Operation and Maintenance Manuals and Standard Operating Procedures up to date;

iv. Promoting the spread of good practice by establishing CBO forums (and similar networks);

v. Promoting health and hygiene through community awareness campaigns.

d) Providing technical advisory services to CBOs in relation to: i. The design, commissioning, remediation (if required) and operation of water

schemes; ii. Protection of water sources and environmental matters;

iii. Water quality testing; iv. The design and operation of rural sanitation schemes; v. The development of technical standards, where appropriate;

vi. Procurement and oversight of consultants and contractors.

e) Promoting better financial and commercial management in CBOs, by: i. Providing guidance to CBOs on tariff levels, tariff structure and CBO bank

reserves; ii. Assisting CBOs establish suitable billing systems and where appropriate to

identify suitable billing and financial software; iii. Promoting good financial management and good financial discipline in CBOs;



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iv. Ensuring that CBOs produce audited annual accounts each year.

f) Assisting CBOs with investment planning and implementation, by: i. Establishing rules governing CBO responsibilities for funding investment;

ii. Establishing eligibility rules for government grants and loans; iii. Providing guidance to CBOs to improve long term planning, for instance by

developing simple Annual Business Plans and Asset Management Plans; iv. Assisting CBOs to develop investment plans; v. Assisting CBOs identify suitable sources of funding for their investment, and

assist with grant and loan applications.

g) Assisting CBOs with problem resolution, including: i. Providing a mediation service where a CBO has not been able to resolve a

customer grievance; ii. Coordinating with other sectors of government as necessary to ensure that

CBO interests are properly represented within government.

iii. Assisting with obtaining access to public water resources???

h) Monitoring the rural water and sanitation sector, including: i. Maintaining a register of community based organizations;

ii. Establishing and maintaining a computerized M&E system for CBOs iii. Collecting and analyzing data on the condition and performance community

based water schemes; iv. Undertaking sample audits of CBO data to verify the quality of data

submitted by CBOs; v. Preparing an annual report on community water supply;

vi. Identifying CBO water schemes that require external intervention; vii. Maintaining records of CBO schemes including as-built records, operation

and maintenance manuals, and audited accounts.

i) Contributing to the overall sector development including: i. Ensuring continuation of water quality surveillance system in the country

ii. Promoting and implementation of Water Safety Plan activities iii. Sector Planning, regional planning

j) Undertaking research and development into rural water and sanitation.

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