WATER DIALOGUE 22 ND JUNE 2018 UNLOCKING THE POLICY AND REGULATORY BOTTLE NECKS IN THE WATER SECTOR ENTREPRENEURSHIP Introduction The main agenda at

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1 WATER DIALOGUE 22 ND JUNE 2018 UNLOCKING THE POLICY AND REGULATORY BOTTLE NECKS IN THE WATER SECTOR ENTREPRENEURSHIP Introduction The main agenda at the dialogue was to assess the policy and regulatory bottle necks in the water industry in Kenya especially in regard to water entrepreneurship. The participants of the dialogue were drawn from government institutions, private sector and non governmental institutions with an interest in the water sector. The water dialogue discussion was spark by the high level of water insecurity in Kenya and the realization that there have been minimal innovations around the water sector. Of the about 200 innovations that have been supported by Kenya Climate Innovation Centre (KCIC), only 5% of this have been innovations in the water sector. Based on this KCIC is interested in supporting the sector to build a business case for water. The big debate and question being how we can increase the level of investment in the water sector. The dialogue was centered around the perennial water shortage in Kenya, the commercial water tanks popularly known as clean water tanks and the big question of where they access their water from when residents do not have water in their taps. There was also the question of water as a public good and whether this should be the preserve of the government or there is a space for the private sector in provision of water. This is with the understanding that access to water in Kenya has been a preserve of the government and is now a devolved function to the county governments while at the same time there are numerous community water projects and minimal operated by the private sector. Where the private sector is involved it has largely been within the real estates where there are efforts to dig boreholes and sell water to the people. The discussion was narrowed down to whether there is a business case for water and what is the role of the private sector in a highly government dominated sector. At a glance the dialogue looked into achieving was looking at various options and opportunities in the country to make the country water secure.

2 Some of the issues that are important to consider in the efforts to increase entrepreneurship in the water sector include: Building the capacity and understanding of the people especially investors by bringing out the business case for water entreprenuership. This could be done through engagement with the private sector to open up to the opportunities for business in the water sector. It is also important to open conversations with the public sector on the creation of an enabling environment for investment in water. This could come in terms of tax incentives that encourage more investors to increase their risk appetite for the water sector. Telling the story of other successful startups in this sector and what they have done to be able to support access to water in the sector to spur more innovation to improve the services offered or to motivate people and investors to invest in the industry Building partnerships between the private and public sector is another possible strategy that could be used. Water has been a preserve of the public sector and the inclusion of the private sector could improve the level of access to water. The private sector has been seen over the years to be more efficient in service provision as compared to the public sector. Building on the efforts of the civil society as they have been very instrumental and active in the provision of water in programs named WASH (Water and Sanitation).

3 Key Note Address The Key note speaker for the water dialogue was the CEO of the Water Sector Trust Fund (WSTF), who has been an expert in the sector and passionate about increasing access to water for all. His presentation focused on then challenges the water sector has faced and what the solutions could be even as we look into increasing the presence of the private sector. Figure 1:CEO WSTF giving his key note address Challenges facing the water sector Service provision and sector as a whole. 1. The country has a major challenge in management of the water sector. The Management of the Kenyan institutions especially government institution is faced with challenges especially that are linked to corruption scandals and inefficiency. There is a systemic failure in the ethical systems that has resulted to poor management of the water service providers. Those that have been given the mandate to manage the water institutions in the country are in form of boards and largely lack the requisite expertise to strategically manage the water systems entrusted to them. 2. There is minimal innovation in the water sector. The water sector innovations are all around the bottling of water, purification or smart metering. Innovators have shied away from the sector with the fear that the investment they put will not pay off as it should.

4 3. Failure of the government systems to deliver water due to the increased political interference surrounding the water sector. The water sector has become one of the most lucrative political agendas yet one that the leaders do not make any effort to deliver on. There is clear sabotage and what we refer to as cartels that work to ensure the unreliability of water in the country for selfish benefits. Anytime there is water shortage in a given area one will observe the heavy presence of clean water tanks begging the question where they get their water from when everyone else does not have access. Solutions There is need to have a complete overhaul in the water management in the country. There cannot be any meaningful progress with the same level that we have been operating at. From the management to the business aspect of water services provision there is need for paradigm shift to better and more efficient solutions. Service provision Developing a water master plan for each county, that will detail the solutions to the water management and services provision in the counties noting that every county has its unique challenges they must address. Beyond development of the master plan there is need for commitment to deliver the master plan to the letter with the focus and drive to deliver water for all. Professionalization of the water services boards. This would mean the county governments need to look into the composition of the water boards and incorporate people with sufficient expertise in water management in the boards so as to have boards that would add technical know how to the management. Review of national and county legislative and policy framework for the water sector to create an enabling environment for water entrepreneurship to grow and to also create checks and balances for the management of the institutions.

5 In line with one of the Agenda 4, among the priorities of the current regime, it is important to loop in the private sector especially under the understanding of water for productive use. The entry and contribution of the private sector should be based on the benefit they get from the improved services while at the same time they increase their contribution to the water sector in terms of investment. For there to be effective systems of management it is important for this systems to be understood by both the managers and the users. It will be paramount to build the capacity of the common mwananchi to create an understanding of the systems and what the responsibilities of all the parties are. Business Aspect Investment in systems that will be geared towards the maintaining of efficiency within the water management systems. This will include ensuring there are systems to monitor the revenue streams from the water management within the county water service providers, systems to monitor efficacy of the water provided and the level of reliability and safety. Public and private investment into the sector to accelerate access to water in communities in a sustainable manner. Governance Aspect Strategic thinking is a major key in resolving the governance challenge in water sector institutions. The thinking employed by most people is exploitative thinking thus they are there on an agenda to further their own interests rather than to develop the sector. Competitively benchmarking the sector is fundamental where the sector should be able to benchmark itself to other companies or organizations that have created better distribution systems such as Kenya Power so as to compare their outreach. There has been best in class operations that could offer a host of solutions.

6 Panel Discussion After the presentation from the CEO WSTF, there was a panel discussion which comprised representatives from the Nairobi Water and Sewerage Company (NWSC), Africa Enterprise Challenge Fund (AECF), DANIDA and the Water Sector Trust Fund (WSTF). Figure 2:From Left Mbutu Mwaura (Nairobi Water), Pauline Mbayah (AECF), Charles Wasike(DANIDA),Ismail Shaiye (WSTF), Sarah Makena (KCIC)

7 Introductory Remarks The panel discussion started by the assessment and thinking of whether in light of the experience of the various institutions represented there is a business case for water and what needs to be done to encourage the entry of more private sector firms in access to water: Nairobi Water and Sewerage Company (NWSC)- adopt a policy of water for all and all for water in an effort to enhance the access to water. This means as we strive to provide water to the people there is also a strive to involve the people in water provision. Africa Enterprise Challenge Fund (AECF)- Work in strengthening and empowering the private public partnerships in Kenya for the water sector. DANIDA- We should strive to look at the interlinkages in various components that affect water since the problem could be outside water and also check on our attitudes and behavior as the end users. Water Sector Trust Fund (WSTF)- Water is a scarce resource and thus we should work towards conservation of water as we use water. The next point of discussion was whether there is a business case for water and what is the role of the private sector in innovation: NWSC- As it stands right now the water sector needs an investment of about 1.7 trillion which the government is not able to fund on its own. The government will only manage to fund about a third of this and the rest of the funding needs to come from the development world and the private sector. This then shows there is a business case for water. The private sector should be able to drive innovation that will be geared towards reducing the number of people that have no access to water. AECF- The business case in the water sector revolves around; Customer service and Service delivery. The private sector over time has been seen to be better at service delivery than the public sector and this thus means the entry of the private sector needs to be focused on the delivery of services. DANIDA- For the private sector to thrive in the water sector they should use a social investment approach where they are aware that they have to have a social impact in the provision of the services. 7

8 PARTICIPANTS QUESTIONS The water for all campaign has been there for a while and little traction seems to be made what is the challenge? Figure 3:Participant making remarks NWSC The challenge has been poor governance systems that have hindered the implementation of the water for all strategies that have been developed over time. However, the water for all strategy remains one of the main agendas under the Kenya Vision There was also a challenge of the practicality of the strategy that derailed implementation and has resulted to review of the strategy, some of the challenges have included changes in population and technology. It is difficult to separate water from sanitation how is this being handled by the various government bodies: WSTF The government has developed strategies on waste management but there is need for integrated planning in water and sanitation. The government has come up with Decentralized Treatment Facilities (DTFs) which are being set up in various urban centres in the country. 8

9 To achieve the transformation that is needed in the water sector its going to be beyond just having entrepreneurship, what can be done in the education system to have more professionals that understand water management and also how can we integrate the leaning on water conservation to the education system. DANIDA DANIDA is in the process of putting together a program where they will work with institutions of learning to increase the professionalism in the water sector. This will include the vocational training centers in the country. How is the cost of water transferred to the consumer? NWCSC The cost of production of water is not fully transferred to the consumer for the reason that there is a responsibility under the government to provide water to its people and therefore the cost that is transferred to the consumer is the cost of maintenance and operational cost. Figure 4:Participants making remarks 9

10 Conclusion Private sector involvement is one of the strategies and ways that the public sector should be thinking. It would be important to consider privatization of institutions where the public sector has been proven to fail in the delivery of services. This can also be done through public private partnerships with the aim of improving service delivery to the people. The success of the water sector is not dependent on efforts from one part of the economy. All stakeholders including wanjiku, civil society, private sector and the public sector have a responsibility in the journey towards access to water for all. All for water, water for all Figure 5:Networking 10