PRIVATE OPERATORS WHO SUPPLY WATER TO SMALL AFRICAN COMMUNITIES AND POOR DISTRICTS IN BURKINA FASO, MAURITANIA, MALI, AND SENEGAL.

Bernard Collignon, Hydro Conseil, France. Paper presented at the Community Water Supply and Sanitation Conference, The World Bank, Washington, DC. May 5-8, 1998

Since 1996 Hydro Conseil has been studying the current role, potential, and limitations of private operators in the informal sector who supply water to smaller communities and poor districts. The study is part of a French program promoting potable water and sanitation in peripheral urban areas and small communities. In the cities studied (in Burkina Faso, Mauritania, Mali, and Senegal) all of the companies studied were public, except the one in Senegal, which was recently privatized.

This research focuses on small rural communities with populations between 2,000 and 20,000 and poor city districts with transient populations (but in working-class districts with houses of solid construction, not shantytowns). National water supply companies often do not supply these small communities with water because of their smallness. They aren't profitable so most companies are reluctant to take charge of their water supply. For centralized companies, these small communities are lossmakers, but a small local provider might be able to limit its operating costs.

From the 1950s through the 1970s, when many African towns were just getting started, city authorities were involved in water distribution. But faced with chronic losses, most city authorities turned the water supply over to a national state company, although in most countries they continued to manage public potable water, providing water to poorer sectors by levying municipal taxes. In the last dozen years or so, they have stopped directly controlling public potable water because tax receipts were so low they could no longer afford to finance the service. Gradually concessionary companies closed down public potable sources or handed their management over to private operators (who are the focus of this study). Today city authorities play virtually no part in providing water to this sector, not even in fixing charges or equipment planning. Instead, various water functions are carried out by a variety of operators, often in the informal sector.

Economic Importance of Private Operators

This study estimates the average cost per person of potable water to be between $4 and $9, or 2 to 3 percent of per capita GNP in these countries. This is far from the incredible 10 to 15 percent of household income sometimes announced by organizations working in the poorer districts. This sum is roughly the same in towns and cities.

Small private operators (such as water carriers, source managers, and truck drivers) play a crucial role in providing potable water. In the five cities studied here, small private operators earn between 21 and 84 percent of the added value of the profession, even though they are mostly in the informal sector. With some exceptions, their share is larger in small communities than in cities.

Conclusions

City authorities have for ten years virtually abandoned the provision of public potable water supplies in areas outside their domain. The degree to which informal water trade is secret and illegal varies from town to town, depending on the efficiency of public service and the amount of state support. In Port-au-Prince, where the state plays only a limited role in the sector, private operators have created small-scale local monopolies (by owning wells, private cisterns, or "public" standpipes) and are willing to defend them by force. In cities such as Dakar or Bobo Dioulasso, where the public service is of high quality, well-organized and regulated, informal trade in water is neither clandestine nor illicit (although bribes and favoritism occur) and no violence is involved.

Small Towns

• Private operators account for most retail sales. Their service complements that of public concessionary companies, who cannot effectively meet the demands of low-income populations. They fill the gaps in service provided by national companies.

• The cost per cubic meter is high but it succeeds because it meets demand effectively. Private operators supply small amounts directly to the home, a convenience people are willing to pay for.

• Private operators' share in the market for water supplies and jobs is inversely proportionate to the efficiency of the national company holding the water company.

Recommendations

• Always study the activities of private operators before making new service offers. Private operators (especially those in the private sector) are well suited to the needs of low-income populations. A good way to analyze demand is to study the services they operate.

• Projects should not be undertaken to promote private operators. Project planning is limiting and does not meet companies' needs. The staffs that design and lead projects are civil servants who are not always able to anticipate entrepreneurs' concerns. And the rigid nature of criteria for decision-making within project-type organizations forces companies to copy the language and philosophy of the "project" but no genuine internal change takes place in the company.

• The level of energy and achievement a private operator displays depends on how much competition he is subjected to. Paradoxically, some programs promote monopoly situations that are not healthy and can lead to abuses such as unfair prices and communities being forsaken because they are "unprofitable." In one district, for example, the number of public standpipes is kept low to keep the turnover-and prices-high. Managers tend to protect their local monopoly by preventing the construction of new standpipes.

• Do not be tempted to bring the informal sector under official supervision just because it seems appropriate or because it can be done. The informal sector is fragmented, disorganized, and anarchic-all factors that make it difficult to integrate successfully into a public service providing high quality water to everyone.

• Do not go after subscriber-retailers. Subscriber-retailers do not always provide a service as good as that provided by public standpipes but it complements a public service that is inefficient. Subscriber-retailers provide a response tailored to demand and significantly increase coverage rates with a level of public investment that is considerably lower than standpipes, with few maintenance costs, and with no land conflicts.

• The state must guarantee respect for the law, particularly for concessionary and leasehold contracts and private investors' property rights. One of the chief factors keeping private operators in the informal sector and preventing them from investing more is legal insecurity - the absence of law. If they were guaranteed legal protection, they might transfer to the official sector and provide extra fiscal and corporate revenues.

Types of Operators in the Informal Sector

When public authorities in French-speaking Africa abandon their role of providing water supplies, a variety of operators, often in the informal sector, take over various water functions:

• The concessionaire.
In the last five years we have heard about certain West African countries granting concessions or leaseholds to local operators for small water supply systems, private or municipal. This management technique has been used on a meaningful scale only in Mauritania, where a hundred or so small systems, representing half the country's water supply, have already been conceded to private operators. These concessionaires are all private. Most are young and college-educated (not craftsmen or trades-people) and come from the towns and villages whose water supplies they manage.

• The pump operator.
The person responsible for operating the pumping station that feeds the water-supply pipes in most small communities must be a competent mechanic, plumber, and electrician. In Senegal, these skills often require six months of intensive training, paid for by the government, but the profession is still poorly recognized so the job is sometimes entrusted to people who are poorly qualified and badly paid (in one region in Mali, less than $15 a month). The pump operator is generally a regular employee of the system owner, but allowing pump operators to develop small service businesses, and be paid by results, might be the cheapest way to make pump-station ownership into a profession without seeking external financing (which might be unavailable for small-scale needs anyway).

• The carter.
Carters transport small volumes of water (200 to 600 liters) the few kilometers from one supply point to another. This is a well-established profession in Sahel towns with more than 12,000 inhabitants; the service and profession are less well-established in the towns of the Sudanese, in forested regions, or in towns with uneven terrain. Its success in towns of the Sahel is probably because of strong demand for water (a long dry season and inefficient wells), relatively plentiful draught livestock (horses or asses), and towns that attract stockbreeders or sons of stockbreeders looking for work and accustomed to animal husbandry (an activity considered worthwhile there). Purchasing a cart represents a significant investment, often financed by a relative already living in town. The activity is mainly practiced by recent immigrants or even by seasonal migrants who return to the village each year (sometimes with the draught animal) for the winter. For these people, transportation is often a supplementary dry-season activity or a stepping- stone toward more stable activities in town.

• The standpipe manager.
This is a relatively official task (managers enter into a contract with the water- supply company, which is generally public) and because of its official character, it is not fully competitive. Whereas carters are typically young (below 25), little educated, with not much social standing-standpipe managers are typically older, more educated, and more-established in the community. They are often chosen from among the relatives of local elected officials. Taking over management of a standpipe often means having to pay considerable sums to the water supply company, including taxes and advances on consumption-a practice typical of numerous public companies.

• The repair company.
Researchers on this study expected that a lot of their work would involve small private firms from the maintenance sector (mechanics, plumbers, pump repairers, and the like). They learned that such companies are somewhat apocryphal:

• In Mali's Kayes region no firm specializes in pumping station maintenance. Management committees generally call on government mechanics they encountered when the pumping station was installed.
• In Senegal pumping-station maintenance was still carried out by the public sector, although for small jobs (notably involving pipes) they often called in poorly qualified plumbers.
• Regulations in Mauritania stipulate that maintenance must be carried out by an official water engineering team but in practice these teams don't have the necessary resources (vehicles, fuel, and spare parts, for example) and generally arrive late.
• In Cape Verde and Burkina Faso system maintenance is carried out by the government, city authorities, or the public company in charge of the system.

What would explain the lack of development in the private maintenance sector? Government may be reluctant to engage private operators in maintenance; owners of small water systems are often barely solvent and do not provide financing for large-scale repairs; and water supply systems have often been installed as part of projects whose government workers are well-known to consumers, so if there is a problem consumers turn to those workers. Yet there is a maintenance company specializing in motorized pump units of average power, based in the Timbuktu area, a company of craftsmen whose annual sales are $120,000, or $800 per year per pump unit.

• The maintenance-contract owner.
To build confidence and improve relations between system owners and private repair firms it might be tempting to institute maintenance repair contracts. Such contracts (and even a dedicated company) have sometimes been systematically "imposed" on owners by project sponsors. These projects use operators from the official sector who are often highly qualified but who so distort competition that it is impossible to tell how long the system will last, because the economic survival of these companies is directly tied to subsidies provided under these projects.

Roles in Outlying City Districts

Urban water supply services use a wide range of operators, from the water carrier (whose earnings do not exceed $20 a month) to the well owner ($3,000 a month). (The public operators may have earnings of $300,000 a month.) Among operators in this sector:

• The chain of operators.
Supplying water to large cities in the Third World is not the exclusive domain of the public water company. Private operators in the informal sector respond more ably to disparate demands than do national companies with a monopoly, whose services are too standardized.

• The truck driver.
The work of the truck driver is important in cities where the system does not serve all districts and where transportation by cart is difficult because of terrain or distance. Revenues from this activity are limited by competition from other forms of supply (such as carts and rainwater storage) so truck drivers are obliged to keep their costs extremely low, by investing in old trucks that are mostly paid off or by using removable tanks, which are mounted onto the trucks only a few months a year when water shortages push prices higher.

• The subscriber retailer.
This is an almost wholly illegal practice but it is widespread, and the government does not come down too hard on it because it keeps everyone happy: consumers (who find water near their homes), the subscriber-retailers (who share the cost of their subscription with other consumers), and the water supply companies (because the sales price per cubic meter above the "company cut" is often higher than the "standpipe" price.) One official said local resales were a useful secondary means of supply, even if theoretically forbidden.

• The water carrier.
A distinction must be made between those who have a cart pushed by hand (rather like a rickshaw) and those (especially women) who carry water by hand or on their heads. Those who push carts have a more limited investment ($130) than those who own animal-drawn carts ($500), but their daily profit is similar (about $70 a month). They are particularly numerous in the southern parts of Burkina Faso. Those who carry water on their heads are on the bottom of the social ladder, with extremely low income. In Dakar this activity brings no social recognition whatsoever and women are often reluctant to admit that they make a living from it.