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Aus4Water Investment Design Document (April 2017) 1

Aus4Water

AUS4WATERDRAFT INVESTMENT DESIGN DOCUMENT

April 2017

Contents

Acronyms 4

Aus4Water Investment Summary 5

Executive Summary 6

1. Analysis and Strategic Context 81.1 Country/Regional and Sector Issues 8Economic Development 8Gender and Social Inclusion 8Socio Economic Development Strategy 9Governance of the Rural Water Supply Sector 9Constraints and Challenges to Private Sector Engagement 11Constraints and Challenges for the Private Sector 14

1.2 Evidence-base/Lessons Learned 16National Target Program for RWSAS (NTP-RWSS) 16Lessons Learned Through the NTP (all phases) 18DFAT trials of new models through InnovationXchange 20Lessons Learned on Gender Equality 21

1.3 Strategic Setting and Rationale for Australian/DFAT engagement 22

1.4 Innovation and Private Sector Engagement 23

2 Logic and Expected Outcomes 252.1 Theory of Change 28

2.2 Anticipated Change-view 30

2.3 Assumptions 31

2.4 Principles for Implementation 32

3 Delivery Approach 333.1 Aid Modalities 33

3.2 Delivery Model 34Foundational Activities 35Component One: Demonstrations 36Component Two: Replication 41Gender Equality and Women’s Economic Empowerment 44

4 Monitoring and Evaluation 474.1 Rationale for Monitoring, Evaluation and Learning (MEL) 47

4.2 Purpose 48

4.3 Principles 48

4.4 Key Evaluation Questions 48

4.5 Have women been engaged in RWSS as entrepreneurs and employees in operations and management roles? Approach 49


4.6 Aus4Water MEL Framework 50

5 Implementation Arrangements 555.1 Management and Governance 55Joint Steering Committee (JSC) 55Governance Roles and Responsibilities 56

5.2 Budget 68

5.3 Planning and Reporting Cycle 68Reporting 68

5.4 Implementation Plan 70Inception Phase (Jun to Dec 2017) 70Implementation Phase 71

5.5 Procurement Arrangements 72

5.6 Sustainability 72

5.7 Gender Equality 75

5.8 Disability and Inclusion 77

5.9 Risk Management Plan 79

5.10 Safeguards 79Child Protection 80Displacement and Resettlement 80Environmental Safeguards 81

6 Annexes 836.1 Annex A: Concepts for Initial Demonstrations 84

6.2 Annex B: Budget Tables 89

6.3 Annex C: Aus4Water Year One Work Plan 94

6.4 Annex D: Risk Matrix 96


AcronymsAWA Australian Water Association CBO Community based organisationsCPC Commune People’s CommitteeDFAT Department of Foreign Affairs and Trade (Australian

Government)DRR Disaster Risk ReductionGoA Government of AustraliaGoV Government of VietnamLTA Long Term AdviserMC Managing ContractorMARD Ministry of Agriculture and Rural DevelopmentMOF Ministry of FinanceMOH Ministry of HealthMPI Ministry of Planning and InvestmentMBO Mass Based OrganisationM&E Monitoring and EvaluationMEL Monitoring, Evaluation and LearningMoF Ministry of FinanceMoH Ministry of HealthMPI Ministry of Planning and InvestmentNCERWASS National Centre for Rural Water Supply and SanitationNGO Non-government organisationNTP National Target ProgramO&M Operation & maintenancePE Private Entrepreneur PCERWASS Provincial Centre for Rural Water Supply and SanitationPMO Program Management OfficePPC Provincial People’s CommitteePPP Public-private-partnershipPWD People living with a disabilityRWSE Rural water supply enterpriseRWSAS Rural water supply and sanitationRWSS Rural water supply schemeSDG Sustainable Development GoalSME Small and medium enterpriseSOE State owned enterpriseSTA Short Term AdviserVWSA Vietnam Water Supply & Sewerage AssociationVWU Vietnam Women’s UnionWASH Water sanitation and hygiene


Aus4Water Investment Summary

Start date: 1st July 2017 End Date: 30th June 2022

Total proposed funding allocation: $22.5 million

Investment Concept (IC) approved by: < Name> IC Endorsed by AIC: Yes/No/NA

Quality Assurance (QA) Completed: < e.g. peer review>


Executive SummaryAus4Water is a five year, AUD 22.5 million Australian Government investment in Vietnam’s development, managed by the Department for Foreign Affairs and Trade (DFAT). The Program will contribute to inclusive economic growth in Vietnam, by providing access to water supply to more people in rural areas through private sector engagement and increasing opportunities for women. The beneficiaries of the Program are poor households in rural communities who will have access to safe water, particularly poor women. Other beneficiaries include provincial governments who will be better able to serve their populations, and entrepreneurs and companies who will be able to grow their business. Context

Vietnam’s strong economic growth over the last two decades has delivered impressive development gains, lower middle-income country status, and a dynamic market economy. However economic growth has slowed markedly since 2008, reflecting structural constraints in the economy that have hindered private sector growth. Vietnam’s Socio Economic Development Strategy (SEDS) 2011-20 identifies strengthening market institutions, developing human resources (particularly skills for modern industry and innovation) and improving infrastructure, including water supply and sanitation, as essential to Vietnam’s ongoing socio-economic development.In 2016, Vietnam’s rural population was approximately 61million, or 66% of the country’s population. Vietnam has made significant progress in meeting targets in the Water, Sanitation and Hygiene (WASH) sector, and achieved demonstrable positive health outcomes as a result. However, the national aggregates hide significant regional disparities. In 2016, only 42% of the rural population had access to safe water that meets MoH (QCVN 02) water quality standards, compared to 83% in urban areas. Safe water supply coverage in rural areas is uneven ranging from 10% to 65% across provinces; almost all low performing provinces are in the mountainous and poor areas. A staggering 35million people in Vietnam’s rural areas do not have safe water; causing health and economic constraints for rural communities, and a particular burden to women who carry the main responsibility for household water needs.While Vietnam has made great achievements in closing the gender gap in many areas gender disparities still exist, particularly in women’s access to and ownership of economic assets and women’s representation in leadership, management and technical roles. Vietnam’s National Strategy on Gender Equality 2011-2020 commits to narrowing the gender gap in the economy, assuring women quality jobs, and increasing the number of female entrepreneurs. The National Rural Clean Water Supply and Sanitation Strategy to 2020 (NRCWSSS) (updated in 2011) set out the Government of Vietnam’s (GoV) intention to achieve universal clean water coverage through engaging the private sector in water supply projects, and ensuring sustainability through cost Aus4Water Investment Design Document (April 2017) 6

recovery. Australia has been an important donor partner; contributing to the GoV efforts, particularly in the rural water sector.The Investment

Aus4Water continues Australia’s history of support to increasing access to safe water for rural households, with a renewed approach designed for greater change impacts. Aus4Water will contribute to two overarching goals:

1. Alleviated workload and increased economic opportunities for women.2. More sustainable private sector enterprises are increasing affordable

water supply to rural Vietnam.Specifically, the program aims to achieve and be measured against the following End of Program Outcomes:

1) Household access to safe water is increased2) Women are meaningfully engaged in private sector water supply 3) More private companies draw upon competitive financing, are

skilled in water supply management, and access affordable technologies, to own and operate more rural water supply schemes.

Aus4Water will achieve these outcomes by piloting innovative mechanisms to increase private sector engagement in rural water supply, and support their replication across Vietnam. The Program leverages private investment in rural water supply schemes to achieve its immediate and intermediate outcomes, and contribute to development goals in Vietnam. Aus4Water represents a sizable contribution to the innovation agenda, and to DFAT’s commitment to private sector led growth as a pathway to development. The investment will capitalise on learning, results, networks and partnerships to promote innovative models and financing mechanisms that recognises the key role of the private sector in development and promotes a closer engagement between the Australian Aid program and private sector stakeholders.The Program will use demonstrations to promote successful approaches to private sector engagement in rural water supply in Vietnam; using the demonstrations to build knowledge and skills of key stakeholders. Those key stakeholders will be supported to replicate those approaches most suited to their context; particularly in the early stages of establishing inclusive private sector led water supply schemes. Aus4Water will be jointly implemented by the Australian Government and the Government of Vietnam with the support of a Managing Contractor. The Ministry of Agriculture and Rural Development (MARD) has overall policy responsibility for the rural water supply sector, and is supported to implement its role by the National Centre of Rural Water Supply and Sanitation (NCERWASS) at the national and Provincial Centres of Rural Water Supply and Sanitation (PCERWASS) at the Provincial level. At implementation stage the Program will identify policy advocacy opportunities with the Ministry of Investment and Planning (MPI), Ministry of Finance (MOF) on water tariff regulation and the Aus4Water Investment Design Document (April 2017) 7

Ministry of Health (MOH) on water quality issues. A Joint Steering Committee (JSC) will be established and chaired by the Vice Minister of MARD and DFAT. The JSC will provide high level oversight and policy guidance to the Program, and serve as a mechanism to coordinate internal and external resources to leverage greater impact.


1. Analysis and Strategic Context

This section provides a strategic analysis of the investment operating environment, particularly the development context. It hones in on the problem for Vietnam supply of safe water to rural households, and presents a strong rationale for Australian Government investment that will help Vietnam solve this problem.

1.1 Country/Regional and Sector Issues

Economic DevelopmentVietnam experienced rapid economic growth in the two decades following the launch of the Doi Moi reforms in 1986. From a poor, centrally planned economy, Vietnam has become a lower middle-income country with a dynamic market economy. However economic growth has slowed markedly since 2008. The growth slowdown reflects structural constraints in the economy, including weak institutions, unreliable financial sector, inefficient state-owned enterprises (SOEs) and poor infrastructure. Private sector growth is constrained by an uncertain policy environment and unclear legislation. SOEs and closely linked private companies enjoy monopolies and preferential access to capital and resources – privileges not available to the private sector. These issues constrain private sector growth by stifling real competition, limiting access to capital and creating high input costs.Servicing Vietnam’s growing population and economy will require continued major capital funding and technological innovation. Investment needs are substantial compared to the local revenue base. In the past, Vietnam relied heavily on the state budget and official development assistance (ODA) for developing infrastructure, but the Government of Vietnam (GoV) is facing fiscal constraints due to slower economic growth and ODA funds are shrinking because of the country’s lower middle-income status. GoV acknowledges that the country must seek new funding sources, including from the private sector through public private partnerships.

Gender and Social Inclusion Inequality in Vietnam exists between urban and rural populations, regions and ethnic groups. About 15 million people continue to live below the national poverty line. 90% of the poor live in rural areas. While representing only 15% of the population, half of the nation’s poor belong to ethnic minorities. These groups are highly vulnerable to shocks from climate change and natural disasters, in addition to economic and health shocks.While Vietnam has made great achievements in closing the gender gap in some areas including education and in promoting women’s participation in the formal sector labour force, nonetheless gender disparities still exist. These include barriers to women’s access to and ownership of economic assets and continuing Aus4Water Investment Design Document (April 2017) 9

low rates of women’s representation in leadership, management and technical roles. Vietnam is one of few countries in which the gender pay gap has widened over the past decade. Vietnam’s National Strategy on Gender Equality 2011-2020 commits to narrowing the gender gap in the economy, assuring women quality jobs, and increasing the number of female entrepreneurs. It also aspires to increase the access of poor rural and ethnic minority women to economic resources and the labour market. Vietnam has a positive policy environment for advancing gender equality, including Laws on Gender Equality (2006) and Domestic Violence Prevention and Control (2007), but policy implementation remains weak in many regards, with limited practical capacity and allocation of resourcing representing significant challenges. Revisions to the State Budget Law in 2015 included gender equality as a principle for state budget management; however, achieving this will require considerable capacity building.

Socio Economic Development Strategy Vietnam’s Socio Economic Development Strategy (SEDS) 2011-20 identifies strengthening market institutions, developing human resources (particularly skills for modern industry and innovation) and improving infrastructure, including water supply and sanitation, as essential to Vietnam’s ongoing socio-economic development. Effective implementation of the strategy will require wide-ranging reforms and will face challenges from political institutions and vested interests. Vietnam can no longer rely on aid to subsidise the delivery of essential public services, but must look increasingly to develop the private sector and facilitate economic inclusion. The rural water supply sector continues to be a drain on Provincial governments budgets and capacity, and finding approaches to privatisation that can provide sustainable long-term solutions will ease the financial burden on governments and shift their role to one of quality control rather than supplier. In 2016, Vietnam’s rural population was about 61million, around 66% of the country’s 95million total population1. Vietnam has made significant progress in meeting targets in the Water, Sanitation and Hygiene (WASH) sector, and achieved demonstrable positive health outcomes as a result. Vietnam achieved the Millennium Development Goals for water and sanitation and substantially met the targets in the National Target Program for RWSAS by 2015. Despite these impressive achievements, important regional disparities remain. In 2016, about 86% of the rural population has access to hygienic water, but only 42% has access to safe water meeting MoH (QCVN 02) water quality standards, compared to 83% in urban areas. Safe water supply coverage in rural areas is uneven between provinces ranging from 10% to 65%2. Almost all low performing provinces are in the mountainous and poor areas. A staggering 35million people in Vietnam’s rural areas do not have safe water. Lack of access to safe water is a

1 United Nations, Department of Economic and Social Affairs, Population Division. Worldometers. 2016.2 Minh Chau Nguyen. Joint Donors’ Support to National Target Program for Rural water Supply and Sanitation Phase III. Independent Completion Report. Results for Development Institute, June 2016.Aus4Water Investment Design Document (April 2017) 10

significant cost and burden to rural communities, particularly to women who carry the main responsibility for household water needs.

Governance of the Rural Water Supply SectorThe Ministry of Agriculture and Rural Development (MARD) is the lead agency for development of rural water supply. Implementation of national policy plans and targets is the responsibility of the National Centre for Rural Water Supply and Sanitation (NCERWASS), an agency of MARD. Although the national government (MARD and NCERWASS) establish the national policy directions, implementation is a provincial government responsibility. The Provincial People’s Committee (PPC) is the authority vested with managed of rural water supply in each province. It is supported by the Provincial Centre for Rural Water Supply and Sanitation (PCERWASS). PCERWASS assists the PPC to implement rural water supply policy, provides technical support for the sector and also acts as a water supply service provider. PCERWASS are responsible to both the PPC and to MARD, however rural water supply budgets are supplied through the PPC. Alignment between the plans of the national government and the plans of PPCs varies across Vietnam, and implementation progress of national plans is also uneven. The National Rural Clean3 Water Supply and Sanitation Strategy to 2020 (NRCWSSS) (updated in 2011) set the GoV’s overall vision and goals for the sector. The strategy’s key principles include community participation, sustainability and cost recovery. Since 2001, rural water supply and sanitation (RWSAS) has been financed through three phases of a dedicated National Target Program for RWSAS (NTP), completed in 2015. Following completion of NTP3 in 2015, GoV has decided that RWSAS will continue to be developed in 2016-20 through the National Target Program on New Rural Development (NTP-NRD) which sets overall targets of 95% access for hygienic water and 60% for clean water meeting MOH standards, with differing targets in various provinces. In the longer term, GoV is also committed to meeting the Sustainable Development Goal (SDG6) of “sustainable access to safe4 water supply and sanitation for all by 2030”.However, meeting either the short or longer term targets will be challenging given GoV’s weak fiscal position and shrinking ODA funding. GoV increasingly recognises that private sector engagement can make a substantial contribution to sustainable rural water supply. The private sector can supplement the limited state budget to expand water supply by investing capital, and provide potentially greater innovation, efficiencies and productivity. The privatisation of water supply is a major policy initiative of the national government and requires provincial governments to sell their water supply schemes, often through PPPs or other models. MARD expects that the role of PCERWASS will be transformed from 3 “Clean water” is water that meets the MOH’s water quality standard QCVN 02 for domestic use. “Hygienic water” is water that can be used directly or after filtering and meets the following quality requirements: no colour, no smell, no strange taste and no component which can affect people’s health. Hygienic water can be used as drinking water after being boiled. Source: Ministry of Agriculture and Rural Development. National Rural Clean Water Supply and Sanitation Strategy up to Year 2020. November 3, 2010. 4 Only treated piped water that meets MOH standards is considered as “safe”. (Minh Chau Nguyen, 2016).Aus4Water Investment Design Document (April 2017) 11

a service provider to a quality assurance agency, focusing on its state management function of assisting the PPC to implement sector policy and regulate the sector as well as providing training, technical guidance and support for rural areas and ethnic minorities.The privatisation policy agenda has led to approximately 500 “private” enterprises currently delivering piped household water supply across Vietnam5. Urban water supply has been the fastest to be privatised. Rural water supply enterprises (RWSEs) operate mostly in densely populated areas which are characterised by lower construction costs, greater economies of scale, and higher household incomes to pay for piped water relative to rural and remote area incomes. Therefore, privatisation in densely populated rural environments has progressed faster than the less-densely populated rural and remote areas.

Constraints and Challenges to Private Sector Engagement

Approach to Tariff Setting In an environment where household water tariffs are set by Provincial Peoples Committees (PPCs), the cost of water to the population can be a sensitive political issue. PPCs often set tariffs below the actual cost to supply water and are therefore subsidising water over the long term to poor rural households, more so in less densely populated and/or remote areas where incomes are lowest. Very low ability for cost recovery in water supply makes these rural water supply schemes particularly unattractive to the private sector. It is a classic Catch-22 in so far as clean and accessible water supply to poor rural and remote communities is currently unaffordable, but it will increase household productive capacity and incomes, thereby making households more able to pay for water supply, enabling government to increase tariffs to achieve full cost recovery over time, making water supply schemes a viable privatisation option. PPPs are an attractive option because they provide early support for the private sector to enter the market (particularly in capital costs), and government support over-time can be reduced as tariffs are increased in keeping with the populations increasing household incomes. Attitudes of PPCs can act as a constraint to private sector engagement in rural water supply. The success of privatisation schemes in the Mekong Delta is in part due to favourable attitudes of provincial governments and households towards the private sector and the notion of full cost recovery. In some locations, however, public and government opinion can be cautious, or sometimes resistant, to private sector management of water supply. The effectiveness of the private sector to deliver safe water, relative to the state, in rural locations needs to be demonstrated and proven in order to shift embedded attitudes that are not proven to be founded on the privatisation experience of Vietnam to date. The Aus4Water Program will need to address this constraint through demonstrations, evidence and other techniques that help to change behaviours and opinions. 5 Enterprises include partly privatised state-owned joint stock companies (JSCs) and privately owned small and medium sized enterprises (SMEs).Aus4Water Investment Design Document (April 2017) 12

Low household water tariffs also act as a barrier to private sector engagement. Tariff rates are often set below full cost recovery, and PPCs are unwilling to raise them to ensure access to clean water services for the poorest of the poor. This barrier is driven by assumptions that may prove to be untrue. For example, household ability to pay more for safe water (particularly if tariffs reach full cost-recovery over time) has not been tested in many rural locations.

Gender and Social Inclusion IssuesWomen, in their socially prescribed roles, continue to carry the bulk of responsibility for household water management and for caring for sick family members including those with water-related illnesses. Women’s unpaid care work is rarely counted or acknowledged in economic planning, but creates a significant cost to women in terms of time, health and capacity to take up any other opportunities. Reduction and greater sharing of this workload are key to women’s social and economic empowerment. Lack of access to safe water creates a burden of time and energy for women, and limits their mobility; these factors in turn limit and reduce women’s ability to contribute more broadly to their families’, communities’ and their own development. In addition to the unfair share of the burden of unpaid workload in domestic and care work, which limits women’s time for other economic engagement, women are disadvantaged in the workforce by a range of other factors. Women have less access to education and training, particularly technical and vocational training6. Both higher education and the job market are highly gender-segmented. Gender wage gaps can be due to a range of reasons. A contributing factor is the clustering of women in low-paid sectors, or ‘horizontal gender segregation’ and in lower-paying occupations within sectors, or ‘vertical gender segregation’. Another significant factor is time women spend away from paid work due to family responsibilities not equally shared by men (either breaks from the workforce or working part-time hours to accommodate reproductive responsibilities). However, a significant factor limiting the range of employment options for women is strongly held stereotypes. A recent ILO study on recruitment and promotion confirmed a strong bias towards men in specific roles, particularly senior roles, with advertisements specifying preferred gender in violation of labour laws (UN Women, 2016). The impact of these factors on women is acute. For example, women are more likely than men to be in vulnerable forms of work, while men are three times more likely than women to be employers rather than employees. Women entrepreneurs face gender-specific challenges. The key finding of a 2010 UNIDO study investigating obstacles for women in starting and running businesses found that ‘Vietnamese women entrepreneurs who were covered by the study appear to suffer more from traditional and internal, than from regulatory factors when starting a business. However, once a business is started, and if we reduce the burden of family responsibilities, female entrepreneurs 6 Technical and vocational training opportunities are very limited for both women and men in Vietnam. The 2016UN Women study Towards Gender Equality in Vietnam: Making Inclusive Growth Work for Women, , states that only 16% of the female and 21% of the male workforce has any kind of technical qualification.Aus4Water Investment Design Document (April 2017) 13

seem to be able to take the lead over male entrepreneurs in terms of their perseverance and determination to succeed’.7 A recent study notes a number of issues for women in WASH enterprises, such as gender stereotypes in which ‘the culture decides’ that certain roles are not suitable for women, and the fact that women’s involvement is often hidden due to businesses often being registered in the husband’s name. It also notes positive potential for women to have advantages in being able to achieve specific enterprise aims such as appealing to women who are the main WASH consumers8.Both the burdens of workload and disadvantage in the labour market are even greater for women in rural areas and of ethnic minorities. Educational attainment among women even at primary school level is far below national averages, and access to technical or vocational training is even more constrained than elsewhere9; low education and training levels limit employment options and are correlated with insecure employment arrangements. Other water-related issues also impact disproportionately on ethnic minority women; e.g. water collection across Vietnam is undertaken by women in 65% and by girls in 2% of cases, but by women in 74% and by girls in 5% of cases in ethnic minority communities. REF Women’s ownership of business enterprises is very low in ethnic minority populations, e.g. in Son La, only 17% of enterprises are owned by women10.Though specific data is not available, anecdotal evidence suggests that the water sector remains male-dominated particularly in ownership and in technical and management roles, in both government agencies and the private water sector,11 with women clustered primarily in administrative roles. While some women entrepreneurs are succeeding in small-scale water enterprises, sector reform and norm change are required to increase women’s participation. Greater private sector engagement in water provision brings both opportunities and risks for women’s empowerment. In recent years, NGOs in particular and other stakeholders have worked hard to increase participation of women and other marginalised groups such as people with disabilities, in community water-related decision-making, planning processes, on water committees and in monitoring outcomes. The shift towards private sector delivery entails both opportunities and risks in terms of participation in decision making and in employment opportunities; women are likely to be particularly vulnerable. The Aus4Water Program will need to prioritise efforts that maintain and build upon women’s participation as water supply management shifts from public to private hands.

Upfront capital costs for poor assets

7 Hampel-Milagrosa, A et al, Gender related Obstacles To Vietnamese Women Entrepreneurs, Technical Report, UNIDO, 20108 A Gero & J Willetts: ISF-UTS. Private and Social Enterprise Engagement in Water and Sanitation for the Poor. Incentives shaping enterprise engagement In Vietnam. Working paper 2B. Enterprises in WASH. June 2014.9 The above report states that almost no woman who works in agriculture has received any technical or vocational training.10 DFAT, Gender-Responsive Equitable Agriculture and Tourism Investment Design Document, August 201611 This was evidenced during the design process, where stakeholder meetings were attended predominantly by men.Aus4Water Investment Design Document (April 2017) 14

There are about 15,000 rural water supply schemes (RWSS) nationwide, but more than 26% of these are not functional or provide very poor quality service. The main reasons include lack of local expertise to manage, operate and maintain the schemes, inadequate design and construction, unreliable water sources, and lack of funds to cover operation and maintenance costs (NCERWASS, 2013). Handing over assets to rural water supply enterprises as part of a sale or a PPP would alleviate the ongoing capital expense pressure on government budgets. However, large and upfront capital layouts are difficult for the private sector unless they have a guaranteed income from the scheme. Governments can provide upfront capital support to private enterprises to share the costs, and can also establish a pathway towards full cost recovery by raising tariffs over time. Providing upfront capital support to improve run-down and poor functioning systems (or establish new ones) has been a model utilised in some provinces, but less attention has been paid to tailoring and replication of these models in other provinces. The Aus4Water Program will pay particular attention to supporting provinces learn from PPP models and experiences, and tailor solutions to suit their own particular set of opportunities and constraints.

Legal FrameworkDecree 15 on public private partnerships (PPPs), issued in 2015, represents a significant step in the legal framework for facilitating greater private sector participation. It builds on Decree 117 relating to corporatisation, cost recovery and contract management. GoV Ministries are now in the process of developing circulars and guidelines to support these decrees, but lack clear models and examples that demonstrate what works in various locations and contexts. Supporting regulations and guidelines are a highly effective way to communicate and help provincial governments to implement new approaches to management of water supply. Their absence in encouraging rural water supply privatisation has constrained widespread implementation. The Aus4Water Program will assist the national government (through NCERWASS and MARD) to harvest learning from experiences and demonstrations, design models that are fit for purpose in the various provincial contexts, and communicate these through formal circulars and guidelines.

Access to Advanced TechnologyGovernment policy supports modernisation of the water supply sector using appropriate advanced technology and modern management techniques to raise efficiency, improve services and reduce costs. The partnership between the Australian Water Association (AWA), Vietnam Water Supply & Sewerage Association (VWSA), GoV Ministries and water enterprises in Australia and Vietnam provides a platform for increasing the access of Vietnamese RWSEs to new technologies and management methods which will be explored under the Aus4Water Program.

Constraints and Challenges for the Private Sector


Despite the strong national policy and legal framework on public-private partnership, the rural water supply sector is yet to attract the substantial private sector investment needed to close the gap in water supply access for the country’s rural populations. Challenges for private enterprises include the sometimes unclear and inconsistent regulatory environment across different provinces. Specific issues relating to the enabling environment include the following.

Risks in the enabling environmentMany provincial governments lack reliable information on existing rural water supply assets, and lack a consistent and quality approach to asset valuation and sales.12 In addition, provincial budget for maintenance of assets over the medium and long term is limited, resulting in more rapidly deteriorating asset infrastructure with a large proportion of schemes failing. The consequence is that the government cannot provide potential private buyers with accurate information on the assets that they are trying to sell; a financial gamble for potential buyers.There is lack of clear rules about ownership of assets. Experience shows that RWSEs are more responsive to maintenance and system expansion if they own the assets, however in many locations provincial governments have not provided assets handover and/or are ambiguous regarding ownership. The Aus4Water Program will need to work with national and provincial governments to develop circulars and guidelines that provide clarity in this area. The lack of clear rules and regulations for private RWSEs deters private investment. In the absence of an independent sector regulator, private enterprises and development partners advocate regulation by service contract between the PPCs and service providers. Regulation through contracts occur on a case by case basis, lack provincial and national consistency and can be unreliable in implementation. Currently, private sector participation in the water sector is usually been through invitation or unsolicited bids, followed by a negotiated contract. For large piped systems, competitive bidding and full transparency are necessary to grow the potential number of suppliers and strengthen the market. Aus4Water will need to work with the National Government to introduce standards and regulations that provide quality assurance in competitive bidding and contracting.

Nascent rural water supply market The rural water supply market is nascent and therefore faces constraints across the entire market eco-system, including the potential suppliers. The potential suppliers of rural water supply are few and lack skills in management and operation of rural water supply systems in the provinces. PCERWASS has an important role to play in training and technology transfer to RWSEs or start-ups in the rural water supply sector to enable establishment and operation of modern

12 Although this has been partly addressed by Circular 54 (prepared with DFAT support) that aided GoV to develop a database of rural water supply assets.Aus4Water Investment Design Document (April 2017) 16

consumer-focused water supply business companies in a range of different localities. To be sustainable, RWSEs must be able to recover the full costs for service delivery. Currently, PPCs set rural water supply tariffs at less than full cost recovery levels because of political and affordability considerations. The Aus4Water Program can support the national Government in developing and issuing stronger guidance on the tariff framework that includes a subsidy system to incentivise private RWSEs. For many rural provincial governments engaging the private sector in essential services delivery is a relatively new concept and requires a shift in perspective. Many provincial governments are reluctant to engage effectively with the private sector in areas that have been traditionally the role of government, and have been slow to adopt national government policy which supports PPPs. These attitudes are likely to change as evidence demonstrates the value of privatised water in a well-regulated environment.

Financial constraintsLimited access to low interest loans by private RWSEs deters investment, and makes it difficult for small RWSEs to operate profitably in remote rural areas where construction costs are high, population densities are low and demand is uncertain. Low-interest loans for upfront capital investments in infrastructure, and/or PPPs that cost-share early capital investment, are options that can assist small and medium RWSEs to enter the market. The Aus4Water Program will need to seek out innovative financing models in collaboration with government and banks. The Aus4Water Program can substantially contribute to addressing these barriers by formulating, implementing, and supporting the scale-up of adaptive and flexible models for engaging the private sector. The Program can demonstrate and support governments at all levels to learn and adopt what works in a range of locations and contexts. Policy engagement and support to the national government, and practical hands-on support to provincial replication will be important investments if the Program is to achieve outcomes beyond the demonstration sites.

1.2 Evidence-base/Lessons Learned - Although Vietnam has successfully put in place PPPs in the urban water

supply sector, the rural water supply sector remains under-served. There have been some successes in encouraging private sector engagement in rural water supply (including through Australian funded programs). The top five lessons that we have drawn from experience and evidence to inform this design are:

- PPPs can be effective when a private sector enterprise has support to invest in the upfront capital costs associated with asset improvements and establishment of new piped water supply schemes;


- Provincial governments that provide a guarantee and plan for tariff rate increases over time, that enable full cost recovery to the private sector, are better placed to engage the private sector in rural water supply schemes;

- Remote areas are least likely to be serviced by piped water in the short term but a variety of new technologies can make safe water supply affordable to establish and operate in remote communities;

- Provincial action on privatisation relies upon the proactive issuing of guidelines for implementation of privatised water supply models by the National Government which, in turn, relies upon clarification of models and supporting evidence to inform implementation guidelines;

- Privatisation is most effective in environments that have a clear separation between public and privately owned water supply provide. Clear delineation between the two contributes to private sector growth and certainty in the market.

- The successes to date in private sector engagement in rural water supply have not yet been widely replicated and hence their successes tend to remain geographically contained. Aus4Water Program will learn from these examples to inform design of rural water supply schemes and invest in replication activities that can bring widespread change. The lessons and evidence that have informed the design are highlighted here. Details of how this will be achieved can be found in the Program Logic and Delivery Approach sections, and how replication will be measured can be found in the M&E section.

National Target Program for RWSAS (NTP-RWSS)The third phase of NTP-RWSAS program (NTP3, 2011-15) developed water supply and sanitation facilities and supported hygiene behaviour activities nationwide with funding from GoV, development partners and households. The following projects and programs provided valuable experience and lessons to guide future development of the sector. The Rural Water Supply and Sanitation (RWSS) National Target Program Phase 3 (NTP) (2011-2016) successfully built on two previous phases of joint donor-funded and Government of Vietnam funded (both National and Provincial) support to improve access to safe water for people in rural areas in Vietnam. RWSS NTP3 was an on-budget and on-treasury program, meaning funds were managed through GoV systems. Australia was a lead donor to the program which assisted the GoV to achieve all six water and sanitation target indicators for NTP3. Australia’s central role in helping the GoV deliver on NTP3 has brought it strong relationships as a trusted partner, and credibility within the sector in Vietnam. In addition to the increases in household safe water supply, achievements include improved budgeting and planning (including a 10% increase in recurrent budget allocation for the sector); mainstreaming of gender and poverty considerations in provincial budgets; and a national database for rural water infrastructure Aus4Water Investment Design Document (April 2017) 18

registration and ownership which has increased supply functionality; regular end-user feedback on services; and adoption of a successfully piloted results based financing mechanism by GoV (Output based approach (OBA). Lessons Learned from DFAT’s experience with RWSS NTP3 include:

- GoV was receptive to new approaches being piloted and tested, particularly were they were closely involved in leading implementation, and successful models were scaled-up nationally;

- Provincial level coordination was weaker than at national level, with lesser capacity and commitment in some areas;

- Poverty targeting became increasingly difficult and the program was required to introduce more tailored approaches for different locations;

- Achieving behavioural change that is required for uptake of clean water and for systemic reform, or to implement new approaches and policies, was most difficult to achieve in the poorest locations and more frequent review and evaluation were needed to inform the progress;

- Sustainability of rural piped water schemes was an area of concern particularly in small communities and cooperative managed schemes in remote and mountainous regions, and in areas of high poverty rates; Water tariffs are often not high enough for full cost recovery and therefore not adequate to attract private investors;

- Although piped water is an improvement in water quality, it remains poor and will require further investment into the future (the existence of a well-maintained piped system will allow for this).

- In PPP models, there is no one size fits all approach and active promotion of various models is required.

World Bank Projects and ProgramsOver the past decade, the World Bank provided credit for three significant rural water supply and sanitation projects or programs, as follows:Phase 1 Red River Delta Rural Water Supply and Sanitation, 2005-13: The World Bank provided US$111 million credit for water supply and sanitation in four provinces of the Red River Delta. Under the project, RWSEs were established as state-owned joint stock companies in each province to take over from the provincial project management units (PPMUs) and manage, operate and maintain 87 schemes established through the project. The “enterprise model” focuses on cost recovery and is promoted by MARD as an effective management model.Program for Results RWSAS, 2013-17: The World Bank converted Phase 2 of its investment into a Program for Results (PforR) loan to pilot a new results-based approach. The Bank provided US$200 million credit for eight provinces of the Red River Delta for RWSAS. PforR is a “results based approach”- disbursements are applied to the achievement of outcomes rather than to up-front expenditure. The PforR focuses on “cost-recovery” from beneficiaries. It promotes sustainable services by establishing connections to systems which are “deemed financially sustainable Aus4Water Investment Design Document (April 2017) 19

(full operational cost recovery) and technically viable”. The PforR adopts the “enterprise” and PCERWASS models to help ensure O&M cost recovery and debt repayment. An evaluation of PforR by the Bank in 2014 revealed many positive aspects but also identified the following challenges: (a) the results-focus drives activities, but prioritises better resourced communities and does not provide incentives for targeting poorer households; (b) the PforR has a narrow focus on quantitative results and is not well suited to addressing social and environmental concerns, and; (c) there is potential for harm in high risk areas involving resettlement and ethnic minorities.From 2017, the World Bank proposes to roll out the Results Based Scaling Up Rural Sanitation and Water Supply Program under the new NTP-NRD. The Program incorporate measures designed to address the above challenges. It aims to improve hygiene behaviour, increase and access to RWSAS in 21 participating provinces of the Northern Mountains and Central Highlands regions, including Lao Cai and Son La which may also be included in Aus4Water. East Meets West Output Based Aid: In 2007-2012, the Global Partnership for Output Based Aid (GPOBA), a trust fund managed by the World Bank, awarded grants of US$4.5million to East Meets West Foundation (EMW) to pilot an output-based approach for safe water services to low income rural communities. OBA is a results-based funding mechanism where disbursement of public funds (donor or government) is tied to the successful delivery of predefined outputs. Subsidies were paid on satisfactory establishment of household connections (80%) and continued service after six months of project intervention (20%), based on verification by an Independent Verification Agent (IVA).The first phase of the project included five poor provinces in the central region, while the second phase was expanded to four Mekong Delta provinces, where EMW established an innovative partnership with the private sector to build, own, and operate village water supply systems. The project developed 82 schemes, brought access to affordable clean water to about 36,000 households, and demonstrated the feasibility and merits of private sector involvement in rural water supply. Recognising the project’s growing success, in 2010 AusAID awarded EMW an additional $1.5 million to extend its PPP approach to output-based rural clean water supply in the Mekong Delta. The AusAID program was implemented in parallel with the GPOBA project following the same basic procedures.Three different management models were employed to allow for adaptive implementation: (a) Commune People’s Committee (CPC) owned with private manager, used in the central region provinces, but no longer promoted by MARD given its high failure rates; (b) Cooperative owned and managed model, capable of small scale O&M but needing GoV support for large scale repairs and replacements, and; (c) Small-scale private owner and operator, used in the Mekong Delta, yielding greatest success of the three models in realizing OBA principles, project targets, customer service and sustainability. Aus4Water Investment Design Document (April 2017) 20

Lessons Learned Through the NTP (all phases)Lessons learned from the above programs and projects that are relevant to the proposed Aus4Water Program include the following:

- Institutional development and sustainable policy reforms require long term and substantive donor support;

- Learning should be built into the program design to enable gradual course changes as circumstances require.

- Introducing and piloting in a few provinces, learning from evidence, scaling up the approach and generating policy reforms proved to be a successful model.

- Use of donor or CSO funds to finance large scale pilot operations allows testing of innovative approaches that are not feasible through government mechanisms.

- The OBA approach provides strong incentives to reduce costs and streamline implementation.

- Donors need to be flexible and ready to re-evaluate the output-based grant levels (subsidies) depending on circumstances.

- Service quality rather than the tariff level appears to be the main determining factor for households’ willingness to pay for clean piped water.

- Small private service providers often lack robust cash flow or access to finance to take on pre-finance risk for OBA. Advances/interim payments may be needed in some cases.

- OBA linked to completion of physical targets does not address sustainability of RWSS, which requires capacity building, asset and adoption of the life cost cycle approach.

- Recent surveys13 show that private service providers have greater economic efficiency, performance and customer service than local authority schemes.

- Public and private rural water supply schemes alike require subsidies to be financially viable. The GPOBA in the Mekong Delta showed that OBA subsidy is about one-fifth of that required for public schemes, and is a highly effective use of public/donor funds.

- Financially viable water supply providers require tariffs that fully recover costs. There is a need for transparent, targeted subsidies from the state budget and/or donors. Such subsidies should use the OBA approach with a fixed payment per connected household.

- OBA has been proven effective in reaching poor households, particularly targeting the lowest 40% of rural populations.

- The project design needs to be flexible, focusing on end goals and not too rigid in implementation modes to achieve the results.

- Active community participation in planning, supervision and management of RWSS is critical to success and sustainability of interventions;

13 Batzella, Emilio and Per Ljung. The Role of Private Entrepreneurs in Enhancing Impact and Ensuring Sustainability of Rural Water Supply in Vietnam. East Meets West Working Paper. June 15, 2014Aus4Water Investment Design Document (April 2017) 21

- Adaptive and targeted capacity building activities to all project stakeholders enhances awareness, engagement and ownership of project financed infrastructure.

- System functionality remains problematic. Future piped water supply investments should favour rehabilitation or expansion of the distribution system.

- Pollution by industry affects water resource safety. A water safety plan developed with community participation should be part of the new RWSS development planning. Water quality testing should be expanded.

- NCERWASS and PCERWASS play key roles in assisting provincial authorities to oversee O&M of piped water schemes and providing training for system management.

- Customers should have a voice in water supply system planning and operation with feedback collected through customer satisfaction surveys.

- Financially autonomous, professionally managed RWSEs with clear ownership of the systems are best positioned to provide high quality, sustainable service.

- Low cost technologies in household or community water treatment provide a potential solution for unsustainable piped water systems in remote mountainous and poor areas.

- Gender equality needs to be a performance criterion for new WASH programs. It is not sufficient to simply count women as beneficiaries. The programs should link access of WASH services to women’s economic empowerment and to household decision-making. The M&E Section details how this program will measure gender equality and women’s empowerment through the Program.

- Behaviour change is difficult especially in poor and remote rural areas. IEC activities should be maintained and drawn on lessons learned from NGOs, to stimulate demand for water and sanitation services and adoption of hygiene practices.

- Access to piped water supply does not guarantee sustainable health outcomes. Water treatment needs to improve to ensure that drinking water is safe.

DFAT trials of new models through InnovationXchange DFAT’s InnovationXchange is funding a new rural water supply project that is trailing new directions in Vietnam, through a joint program between the Australian Water Association (AWA) and East Meets West (EMW). The pilot includes technological innovations as well as process innovations – building upon past experiences and lessons learned. Whilst it is still early days (programs began late in 2016), lessons from this initiative will inform Aus4Water interventions. The technological component (managed by the AWA) includes trial of an installation of household and school-based water filters in areas for which de-centralised collection point systems or piped water connections are not technically feasible or financially viable, and installation of two decentralised Aus4Water Investment Design Document (April 2017) 22

drinking water treatment kiosk and community collection point in Son La where piped water is not feasible. In addition, AWA will also facilitate the development of guidance and educational material to assist managers of remote and rural community water suppliers in managing microbiological, physical, chemical and radiological water quality risks in accordance with the WHO Guidelines for Drinking Water. Process Innovations is managed by East Meets West and builds upon their successful OBA model. EMW will pilot the use of a “Smart Subsidy” intended to increase the business return of enterprises to the point where the tariff can be charged at the cost recovery level and that would be accepted by rural people. The OBA subsidy is paid directly to the private enterprise, on a per household connected basis. It is intended to reduce risks to private enterprises to incentivise their engagement in less densely populated rural and remote areas. The gap between the full cost recovery level and the actual tariff is used to develop the subsidy per household. The smart subsidy will see three new piped water schemes serve 1,000 households in Son La. The scoping and design work that pre-empted the InnovationXchange funding to this program have been usefully employed in the development of this design document. Early results from both are promising and hence these models are integrated into the first design of demonstrations for Aus4Water (see Annex A). Moving forward, the new Aus4Waterprogram will be expected to integrate successes into their own models, and support their replication.

Lessons Learned on Gender Equality There has long been recognition for the need to integrate gender analysis and women’s participation in WASH and RWSS programming. The Dublin Statement on Water and Sustainable Development of 1992 noted that the ‘pivotal role of women as providers and users of water and guardians of the living environment has seldom been reflected in institutional arrangements for the development and management of water resources’ and a need for ‘positive policies to address women's specific needs and to equip and empower women to participate at all levels in water resources programs, including decision-making and implementation, in ways defined by them.’ Despite this, there is wide evidence that gender considerations are still poorly addressed in much WASH and RWSS programming. A recent analysis of documents and assessments in WASH found that gender equality and social inclusion issues are at best acknowledged as goals in general terms, but without comprehensive analysis, guidelines or mechanisms to support gender-responsive implementation and monitoring14. In Australia’s support to the RWSS NTP3, gaps were identified in the extent to which gender considerations were being addressed, and additional measures were introduced in 2014. Efforts to increase women’s participation in WASH often focus on encouraging women to participate in community planning and decision-making including representation on WASH committees, but often without consideration for the implications of adding further to women’s workload nor to the skills and 14 Gender Analysis of New Rural Areas National Targeted Program. World Bank, 2015 - unpublished, referenced in UN Women’s Making Inclusive Growth Work for Women report, 2016Aus4Water Investment Design Document (April 2017) 23

confidence required of women or the humility required of men to enable women to have voice, be heard and influence decisions. Experience indicates that a multi-pronged approach is required to enhance women’s participation and voice while gathering information on time use and other relevant indicators (Fontana and Elson, Public policies on water provision and early childhood education and care: do they reduce and redistribute unpaid work, Gender and Development 22 no. 3, 2014). The World Bank implementation support mission for the Results-Based RWS under NTP identified significant delays in implementing some planned technical assistance including in gender, and the development of guidelines, indicating a relatively low priority placed on these and other social dimensions of the program relative to technical considerations15.Beyond the WASH sector, significant evidence exists for the benefits of investing in women’s economic empowerment, both in terms of a business case for increasing economic returns by strengthening and diversifying women’s engagement and as a social good, towards fulfilling women’s rights. The recent UN Women study Towards Gender Equality in Vietnam: Making Inclusive Growth Work for Women, provides a thorough case and comprehensive data that has been drawn upon in designing Aus4Water. This Program design responds to that report’s recommendations, including the recommendation to facilitate women’s access to employment in jobs and sectors outside of agriculture that are not traditionally ‘female’.

1.3 Strategic Setting and Rationale for Australian/DFAT engagement

Australia and Vietnam have a strong partnership that delivers mutual political, cultural, economic and trade-related benefits. Vietnam plays an important role in promoting regional stability, trade, and economic growth. The Australian Government remains strongly committed to Vietnam’s continuing economic growth and development, and to the partnership:

By helping to stimulate the private sector, upskill the workforce, and support inclusive growth, we will contribute to achieving our shared, overarching goal of promoting prosperity and reducing poverty in Vietnam. (DFAT: Vietnam Aid Investment Plan, 2015-16 to 2019-20).

Australia can best provide this support by leveraging its own resources and expertise to boost Vietnam’s hopes of a successful transition from Government owned water supply to sustainable private owned and/or operated water supply, and substantially increasing coverage in rural areas in so doing. Australia has a rich and unique set of experiences in extending clean water supply to rural areas through public-private partnerships (PPPs), and affordable technologies. Knowledge and technologies developed through our water history can make a valuable (and uniquely Australian) contribution in this priority sector for Vietnam. More specifically, Australia can assist Vietnam to overcome the

15 Results-Based Rural Water and Sanitation under the National Target Program Implementation Support and Technical Assistance Completion Mission, June 2016Aus4Water Investment Design Document (April 2017) 24

challenges in implementing public-private partnership by piloting private sector engagement models in areas where Australia has expertise, technical know-low and long term partnership such as:

- leveraging technologies for the provision of safe water, and drinking water, to remote households that are unlikely to have access to piped water for many years

- trailing a diverse set of PPP ownership – management contracting models that respond to the widely varying rural and remote contexts;

- building partnerships between Australia’s water experts and the nascent water supply industry in Vietnam to support growth of their technical approach.

The Australian Government has a proven history of success in partnering with the Government of Vietnam in the rural water supply and sanitation sector. Since 2005 Australia has provided support to the Rural Water Supply and Sanitation National Target Program (RWSS NTP 1,2 and 3). DFAT has also assisted GoV in regulatory reforms that engage the private sector and other non-Government stakeholders in achieving Vietnam’s development targets. The Aus4Water program can readily tap into our positive relationships and build upon our programmatic successes to date. Aus4Water is consistent with Australia’s New Aid Policy (New Aid Paradigm) launched in mid-2014 recognises the private sector as primary driver of economic growth and poverty reduction. In addition, Australia embraces innovative approaches that promote private sector partnership to deliver growth, job creation and reduce inequality including gender disparity. Aus4Water also aligns with Vietnam-Australian Aid Investment Plan (2016-2020). The Program contributes to two objectives described in the AIP by:

enabling and engaging the private sector for development by assisting the GoV to overcome challenges in implementing public-private partnerships by piloting private sector engagement models in water supply; and

promoting women’s economic empowerment, including ethnic minorities by supporting, and seeking a greater role and opportunities for women in the private water sector and contributing to women’s workload alleviation.

Aus4Water delivers on the GOA specific policy commitments on gender, including the Gender Equality and Women’s Empowerment Strategy (published in 2016) and the requirement that 80% of investments in its portfolio (and 100% in the case of Vietnam) satisfactorily address gender equality.Aus4Water responds directly to Australia’s economic diplomacy agenda and the Government’s commitment to innovation in how we deliver aid. The Australian aid program will partner with the private sector to achieve long-term, sustainable growth outcomes. Aus4Water provides a platform for Australian companies, technologies and technological know-how to directly engage with Vietnam’s PPP push in the rural water supply sector, boosting opportunities for Australian companies in Vietnam. Aus4Water will pilot innovative mechanisms to increase private sector engagement in rural water supply, and support their replication across Vietnam. The Program leverages private investment in rural water supply schemes to Aus4Water Investment Design Document (April 2017) 25

achieve its immediate and intermediate outcomes, and contribute to development goals in Vietnam. Aus4Water represents a sizable contribution to the innovation agenda, and to DFAT’s commitment to private sector led growth as a pathway to development. The investment will capitalise on learning, results, networks and partnerships to promote innovative models and financing mechanisms that recognises the key role of the private sector in development and promotes a closer engagement between the Australian Aid program and private sector stakeholders.

1.4 Innovation and Private Sector Engagement The Aus4Water is grounded in both innovation and private sector engagement. The foundations of the Program are to extend the reach of water supply through private sector engagement and innovation. The Government of Vietnam introduced privatisation of water supply; although successful in urban areas, privatisation has stagnated in rural areas as provincial governments struggle to generate the right conditions for PPPs to take-off in rural areas. Innovation is required to assist provincial governments find pathways for success in this sector. This program invests heavily in designing and showcasing innovation in PPPs and rural water supply technologies, as a learning tool and a spring-board for accelerating the number and reach of sustainable private water supply schemes in rural areas. Innovation includes new and affordable technologies in supply of safe water, and demonstration of a variety of PPP models that address the varying contextual challenges across Vietnam, including in new rural areas that have so far struggled to learn and implement sustainable approaches. Private sector engagement in rural water supply has been shown to offer to provincial governments and their populations a more affordable approach to increasing water supply that is sustainable over the long-term. Provincial governments can no longer afford the high cost of supply and maintenance of water supply and need to put in place the right incentives and contracting methodologies to engage the private sector such that their own resources can be better targeted for quality control and oversight. There are some models that operate with varying degrees of success in rural areas, but these are not widely communicated and marketed such that other areas are learning and replicating their successes. As well, there are PPP models that are new to Vietnam and can be trialled through the Aus4Water program. There are opportunities for the existing private sector to grow through rural water supply schemes, however these companies need skills and capital to allow for such growth. Two particular opportunities are: 1) the extension of successful urban water supply companies into rural areas and 2) the extension of existing rural based companies (such as those in the construction industry) to the water supply sector. In both cases, private sector companies need to first be convinced of the business case for their expansion into this nascent sector, and to learn and adapt their businesses for successful management of rural water supply schemes. The Aus4Water program can assist with both proving the viability for


private sector involvement, and supporting their early engagement in new water supply schemes.


2 Logic and Expected Outcomes

This section details what the Aus4Water Program will achieve. It describes the outcomes, beginning with the theory of change that underpins the program logic model. The program logic model and narrative include the goals that the Program will contribute to and the End of Program Outcomes the Program aims to achieve. Intermediate outcomes that are milestones through the Program are also identified. The theory of action sets out what the Program will do to achieve the outcomes. The principles that guide the Program are also outlined16. The Aus4Water Program is part of Australia’s inclusive economic growth portfolio. The Program will contribute to inclusive economic growth in Vietnam by extending access to water supply to more people in rural areas, including those where need is greatest; growth of the private sector; and improving opportunities for women. The Program will contribute to two overarching goals:Alleviated workload and increased economic opportunities for women.

More sustainable private sector17 enterprises are increasing affordable water supply to rural Vietnam.

Specifically, the program aims to achieve and be measured against the following End of Program Outcomes:

1) Household access to safe water is increased2) Women are meaningfully engaged in private sector water supply 3) More companies draw upon competitive financing, are skilled in water

supply management, and access affordable technologies, to own and operate more rural water supply schemes.

The Aus4Water Program will achieve these three End of Program Outcomes (EOPOs) by supporting the Government and other stakeholders to discover and learn what works best (for government, private sector and households), to increase private sector engagement in rural water supply, and to replicate successful models throughout rural areas across Vietnam. The draft Program Logic is presented at Figure 1 (below). Indicators that are linked to these End of Program Outcomes include:

- 139,200 men and women will have increased access to safe water (34,800 households) as a direct result of the Aus4Waterprogram; and

16 A note on the use of terms: the Aus4WaterDesign Document applies the term “safe water” as opposed to “clean water” or “hygienic water” as used by the Government of Vietnam. The definition of “Safe water” closely correlates to the Government of Vietnam definition for “hygienic water” and therefore the program results can readily be utilised by both governments. The Australian aid program uses the term “safe water” in the Aggregate Development Results (ADR), in keeping with the WHO and UNICEF in the Joint Monitoring Program for Water Supply and Sanitation. In the ADR, safe water is described as “Increased access to safe water includes the number of additional women and men accessing water from an improved water source either through new construction or rehabilitation of water systems.”17 “Private sector” references throughout this document include social enterprises. Aus4Water Investment Design Document (April 2017) 28

- There will be an additional 16 successful private sector operated rural water supply schemes (with 25% being women owned and/or managed) directly attributable to the Program;

- Indirect benefits (i.e benefits accrued as a result of replication support) will be assessed once the program is under implementation.

These EOPO indicators will be validated through the inception period, and reviewed at the mid-term point of the investment, to ensure that they are realistic (i.e. that the inputs of the program can realistically achieve these numbers), and that the program is on track to achieve them. The EOPOs will be achieved only if a range of immediate and intermediate outcomes are achieved by the Program. The outcome hierarchy / Program Logic, for Aus4Water is presented as follows:


Figure 1: Aus4WaterProgram Logic Note: “private sector” references throughout the design include social enterprises.


2.1 Theory of ChangeThis section presents the Theory of Change (ToC) for the Aus4Water Program. The ToC articulates the outcome chains, or steps that will lead to the End of Program Outcomes. The ToC is presented in this section as a series of pre-conditions that are expected to trigger the outcome chains, starting with the Inputs that lead to achievement of intermediate outcomes, which in turn lead to the End of Program Outcomes. Table 1: Aus4Water Theory of Change

If…… Then......

If the Australian Government Program works closely with the Vietnam Government to undertake successful demonstrations of private sector models for water supply ownership and ongoing management……….

then the Australian and Vietnam Governments can utilise Australian and domestic suppliers to support the transfer of affordable technologies and know-how; can involve government agencies, private sector enterprises, NGOs and mass organisations in implementation of demonstrations and learning of new approaches to rural water supply management; and enable the Program to show how the private sector can be engaged successfully to increase coverage of safe water and benefit women.

If the demonstrations draw upon Australian and domestic affordable technologies for rural water supply, and if the demonstrations showcase successful private sector led models for rural water supply – including opportunities for and meaningful engagement of women, and if there is broad-based stakeholder involvement in demonstrations……

then the Program will produce evidence of successful approaches that stakeholders can learn from.

If there is evidence of successful private sector led rural water supply approaches, and if it is widely demonstrated and convincing

then learning will be enabled.


to the key stakeholders……….

If there is learning………. then key stakeholders will have increased knowledge and skills for developing successful private sector led water supply schemes, and the knowledge and skills for accessing affordable finance and technologies.

If there is evidence which leads to increased knowledge and skills about how to make rural water supply schemes viable for the private sector, and if there is facilitated support to get new schemes off the ground……….

then national and provincial governments can facilitate the growth of such schemes through enabling policies, systems and processes.

If there is evidence which leads to increased knowledge and skills about how to promote women’s engagement and economic participation in rural water supply………

then national and provincial governments can implement policies, systems and processes that ensure women’s participation in rural water supply.

If national and provincial government agencies successfully promote women’s participation in rural water supply……….

then women are meaningfully engaged in private sector water supply.

If national and provincial government agencies provide an enabling environment and proactively engage the private sector in rural water supply…….

then more companies will sustainably and affordably own and manage rural water supply schemes.

If women are meaningfully engaged in private sector water supply, and if more companies sustainably and affordably own and manage rural water supply schemes…….

then more households will have access to safe water.


The theory of change presented above depends upon the Program facilitating the direction of change at every step. Monitoring and evaluation will provide the Program with outcome information so that it may track progress against this theory of change. Where outcomes are not as expected, or anticipated, the Program will need to adjust and review this theory of change. However, the ambition presented in the theory of change should be tempered by the assumptions regarding time taken to embed change at each step in the change process. For example, the willingness to change will be influenced, to varying degrees, by the political economy that either supports and/or constrains the changes. Therefore, the effectiveness of incentives for change will have varying impact on behavioural and systemic change. Similarly, socio-cultural factors may constrain the pace of change, particularly in relation to achieving women’s economic empowerment in contexts where gendered divisions of labour obstruct change. For example, in some locations traditionally defined roles and responsibilities for men and women will take time and effort to change and will need to include men in the change process.

2.2 Anticipated Change-viewDFAT can expect to see a range of changes in keeping with the Theory of Change as a result of the Aus4Water Program. This section provides a “change-view” at key points in the Program life-cycle: at 2 years and at 5 years.After two years of implementation……

- 19,000 men and women (4,750 households) will have increased access to safe water.

- There will be four new private sector water schemes (one in each of the demonstration sites) with 25% women’s participation (as owners and/or managers).

- There will be at least three provinces where the Program is supporting various demonstrations. Those demonstrations will each trial different ways to overcome the various constraints in the rural water supply sector. For example, there will a demonstration for how to improve access to safe water for remote communities who are unlikely to obtain piped water systems for some years; and a demonstration for how to build a market conducive tender, contracting and financing approach for a sustainable PPP.

- The demonstrations will each show how to engage women in water supply decision making and in technical and managerial roles in the private sector.

- The demonstrations will have close engagement and learning with the relevant PCERWASS and PPC, who will utilise the experience to develop more models for privatisation in their province.

- NCERWASS will be working with the Program to collate and analyse the outcomes to date from the demonstration models to elicit evidence of the


most effective approaches to sustainable water supply in various rural contexts. They will be working with MARD to develop a series of regulations and guidelines for PPCs and PCERWASS’s to support them move forward on privatisation.

- NCERWASS and the Program will have reached out to numerous other selected provinces and facilitated field studies to the demonstration sites to promote learning and encourage action on private sector engagements. The Program and NCERWASS will have followed-up with promising provinces and offer further support in establishing their program of privatisation.

- NCERWASS and the Program will have initiated at least one national event that promotes rural water supply privatisation (target audiences are private sector providers and provincial governments) and utilises the evidence to date from the Program to show how success can be achieved.

- The demonstration models and outcomes will be the subject of a range of promotional activities throughout Vietnam that seek to encourage more private enterprise into the market, and more provincial governments dedicated to quality privatisation approaches.

After five years of implementation…….- The Program will have supported 139,200 men and women to have

increased access to safe water (34,800 households).- The Program will have supported 16 private sector rural water supply

schemes to be successful (with 25% being women owned and/or managed).

- The Program will have supported further outcomes, albeit less directly than through the demonstrations. Indirect benefits (ie. Benefits accrued as a result of replication support) will be assessed once the Program is under implementation.

- The Government of Vietnam has a quality series of rules, regulations and guidelines in place that support all rural provincial governments to shift to sustainable and affordable private water supply management.

- NCERWASS provides facilitation to PCERWASSes as they implement new schemes, including technical support, training and mentoring, etc.

- The Program has started new and innovative demonstrations in partner provinces, designed to expand the options available to provinces in privatising rural water supply.

- The eco-system for the sector (research, communications, facilitation support, etc) has strengthened and this, in turn, has strengthened the number and quality of private sector providers.

- The evidence of sustainable private sector owned rural water supply schemes, and the potential models, are widely understood across rural areas in Vietnam and provincial governments have shifted their attitudes to be more favourable of this approach.

- Pilots have been scaled-up such that the number of private sector rural water supply schemes has doubled as a consequence of the Program, and the rate of change is continuing to increase.


- The newly established rural water supply schemes are proving sustainable and provide quality safe water to households.

- Women are engaged in technical and managerial roles in the private rural water supply sector, and women are earning a livelihood from owning and operating small-scale filtration systems in remote locations.

There is potential for the Program to be extended for an additional five years. This will be dependent upon the achievement of change in the first five years, and the extent of need for further support given the changed context.

2.3 AssumptionsThere are several assumptions in the theory of change that the Program will rely upon to achieve the end of program outcomes. Whilst they may not be visible in the above outlined theory of change, they are essential building blocks for the program to move from inputs to outputs and outcomes. The Program’s success relies upon the following assumptions holding true:We assume that……

- the Government of Vietnam will continue to support a policy for private sector engagement in rural water supply.

- the Government of Australia can deliver skills, technologies and experiences that are not readily available in Vietnam, to the Government of Vietnam in support of achieving their development targets for rural water supply;

- there is interest from many provincial governments in adopting private sector led approaches to rural water supply.

- The Program can introduce effective models to address socio-cultural constraints to change, particularly in relation to the factors that constrain women’s economic empowerment;

- The program can introduce effective methods to overcome constraints to change arising in the political economy of reform;

- the promotion of successful demonstrations will lead to growing interest from provincial governments and private sector companies.

- rural water supply schemes can be made viable and attractive for the private sector and that the private sector players will have an interest in buying into rural water supply.

- learning through demonstration, communication and marketing of successful approaches, and facilitating new schemes in their start-up phase, will be enough to substantially increase the number and reach of private sector rural water supply schemes in Vietnam.

- there will be interest and capacity to partner with the program from target provincial governments.

If these assumptions were not to hold true, then achievement of the outcomes is at risk. Therefore, the risks that are generated by these assumptions have been detailed in the risk matrix at Annex D, and risk mitigation strategies have been developed.


2.4 Principles for ImplementationThese Principles identify the values that underpin the Aus4Water investment. They capture what is important and should inform the implementation of an investment. The following principles inform Aus4Water’s implementation, they are:

1. Aus4Water embraces innovation; testing and piloting new ideas for achieving outcomes, introducing new and affordable technologies, being willing to learn from successes and failures, and bringing successes to scale through support for replication.

2. Collaboration and joint implementation: working as a single unit with the key government counterparts, and implementing through Vietnamese entities (government, private sector and civil society).

3. Catalyse widespread change: the implementation stakeholders will need to focus their efforts on intentionally effecting widespread change across Vietnam’s rural water supply sector, through marketing, communications, and replication strategies.

4. Address barriers to women’s economic empowerment: the program will need to adopt proven effective strategies to address the socio-cultural and political economy constraints to women’s economic empowerment.

5. Leverage private sector funds: the investment made through this initiative will leverage private sector investment for development outcomes.

6. Social accountability: the Program invests in and places high value on inclusive processes and outcomes that are accountable to people in communities, particularly women, people with disability, ethnic minorities and other marginalised groups.


3 Delivery Approach

3.1 Aid ModalitiesSelection of the aid modalities for Aus4Water was informed by the Vietnam development context, and the unique expertise and experiences that Australia can offer in support of the Program outcomes. For that reason, the Program will work in partnership with the Government of Vietnam to undertake Demonstration and Replication activities that rely on the following:

- co-creation of new knowledge and technology transfer: transfer sharing of Australian and domestic technology and technological know-how to build on local knowledge in the supply of affordable remote and rural water supply solutions;

- technical assistance; supply of technical assistance in water supply management, operations and maintenance; innovation in public-private partnership and enterprise development; monitoring and evaluation, and communications and marketing;

- government grants: funding to Government of Vietnam (NCERWASS, PCERWASS) to enable it to work in collaboration with the program implementation;

- other grants: provision of grants to non-government partners (international and domestic) to test innovation in affordable rural water supply schemes;

- co-financing: The Program could potentially co-finance a demonstration, and/or pilot, and/or research, or other activity with a third party.

The mix of aid modalities within this Program will enable the Program to work with a range of different stakeholders to achieve the outcomes. The design team considered an approach that would see the entire Program delivered by the Government of Vietnam through on-budget financing. However, this approach does not allow the flexibility that will be required to manage innovation and to work closely with various implementing partners. Aus4Water is built upon the ability to find and demonstrate a range of innovative solutions to the problem of a sluggish uptake of private sector engagement in rural water supply schemes. The aide modalities available to the Program therefore need to support diversified approaches to be innovative. No single modality will suffice. For example, the Program includes grants to the private sector for innovation through a business challenge fund, and to the Australian Water Association to work in partnership with the Vietnam Women’s Union to introduce small scale filtration systems, and government grants to PCERWASS to support Program implementation in target provinces and Aus4Water Investment Design Document 37

to support cross-Provincial communications and learning. A program that operates through a single aid modality does not offer the flexibility that this Program requires in implementation. The Aus4Water Program will be managed by a Managing Contractor (MC) who will work in partnership with the Government of Vietnam to draw upon the afore-mentioned broad range of aid modalities to achieve outcomes. However, the risks of engaging an MC for implementation includes issues of sustainability beyond the life of the Program, and a lack of ownership and commitment from the key stakeholders (such as national and provincial governments) to the Program outcomes. The Aus4Water design overcomes these risks by establishing a Program Team that includes both the MC staff as well as NCERWASS staff, and providing annual funding to NCERWASS to resource their participation in the program. The respective roles and responsibilities of the MC vis-à-vis NCERWASS are elaborated in the following section. The Program Annual Work Plan will be planned collaboratively with Government of Vietnam (NCERWASS) and approved by both national Governments through the Steering Committee mechanism (see chapter titled: Governance and Management Arrangements). Aus4Water activities will also be incorporated into the annual work-plan of NCERWASS, ensuring the program is closely tied to Government of Vietnam objectives and planning.

3.2 Delivery ModelThe delivery model of the Aus4Water Program is best described as demonstration and replication, as summarised in the diagram below.

Aus4Water Investment Design Document 38

The Program will use demonstrations to promote successful approaches to private sector engagement in rural water supply in Vietnam; using the demonstrations to build knowledge and skills of key stakeholders. Those key stakeholders will be supported to replicate those approaches most suited to their context; particularly in the early stages of establishing inclusive private sector led water supply schemes.

Foundational ActivitiesThere are a number of activities that are foundational to the Program and will need to be established early in project implementation. They include:

- Establishment of the Joint Steering Committee (utilising a Partnership Brokering approach)

- Establishment of the NCERWASS Agreement- An Orientation Process for key stakeholders- Development of the Aus4Water Strategic Framework- Commissioning of a State of the Sector Survey

The Joint Steering Committee is the peak governance body for the Program and is discussed further in the section: Management and Governance arrangements. Establishment of the NCERWASS Agreement will detail the roles and responsibilities of NCERWASS and the MC in implementation of Aus4Water, and the resourcing support to NCERWASS. It is expected that NCERWASS will receive funds from the Program for approximately 1-2 staff to be assigned responsibilities for the Program, over the life of the Program. This funding is referred to as “Core Funding”. The assigned NCERWASS staff members will be key members of the Aus4Water Program team (albeit operating from within NCERWASS and not necessarily with full-time responsibilities on the Program). The MC will complete the Program team staffing (MC staffing is outlined in section Management and Governance arrangements of this design). It is preferred that the MC Program team be co-located with NCERWASS if possible. NCERWASS will also receive “activity funds” on an annual plan to undertake specific tasks and activities that are specified in the annual plan. An orientation process for the Joint Steering Committee and NCERWASS will be conducted based on a needs assessment. The orientation process will ensure that these key stakeholders have a robust and shared understanding of the key elements of the program design, including introducing the demonstration models and Program Principles, and introducing gender planning and budgeting principles. The MC will be responsible for providing this, in consultation with DFAT at Hanoi Post. The Managing Contractor team will be responsible for development of the Aus4Water Strategic Framework during the Program inception Aus4Water Investment Design Document 39

period, and will be expected to work closely with the partners in its development. The Strategic Framework will be a high-level document, approved by the Joint Steering Committee, and guide the Program throughout its five years of implementation. This Investment Design Document will form the basis for the Strategic Plan. The Program Logic and service delivery model will be reviewed and refined through the strategic planning process. Although the Strategic Framework will adopt much of what is in this Design Document, the process of its development is critically important to establishing a shared and in-depth understanding of the Program between the stakeholders, and developing a strong sense of ownership for the Program. The Program team will commission a State of the Sector Survey early in implementation. This survey will provide detailed information to the JSC and the Program team which will inform the Aus4Water demonstration designs, and approach to marketing, communications and replication. It will act as a baseline of information for the Program M&E which can be replicated in year 4 of the Program in order to check on progress against End of Program Outcomes. In addition, it will be a valuable piece of research for Program stakeholders, including national and provincial governments. The State of the Sector Survey will include the following information:

- Survey of private sector companies currently engaged in rural water supply including: number and size of businesses; skills sets and background business sector; type of business (fully private / joint stock company / etc); gender disaggregated data on staffing; location of operations; etc.

- Provincial profiles including piped and treated water supply coverage; percentage of RWSSs that are privately operated; types of PPP models in operation.

- Tailored provincial sampling surveys seeking comparative data on the five dimensions of women’s economic empowerment (WEE M4P) (comparing access/no-access, level of access to RWSS, etc.);

- Survey of the eco-system that supports private sector engagement in RWSS including training courses available, research and uptake of research information, networks and trade shows; conferences; etc.

- Survey of perceptions of private sector stakeholders; their experiences in RWSS schemes, suggestions for improvements, training needs, etc.

Depending upon the usefulness of the State of the Sector report to government counterparts, the Program may consider commissioning such a report more frequently.

Component One: Demonstrations


Aus4Water will work with key stakeholders to design a small number of demonstration projects (four in the first year, with potential for more in following years depending upon need). The demonstrations will be funded through the Program, will trial innovative approaches to private sector engagement in rural water supply, and be designed and implemented to take account of different variables, particularly context. The demonstration sites will initially be rural provinces: Son La, Khanh Hoa, Dong Thap and Nam Dinh provinces, with consideration given to additional province(s) – to be determined during the implementation phase.

- Son La has been chosen because it is a remote and mountainous area where PPPs in rural water supply are most challenging. It also the site of other Australian Government aid investments, the Aus4Equality Program and EMW and AWA work under InnovationXchange, which seeks to increase women’s economic empowerment and increase in access to water supply services respectively. The Aus4Water Program can leverage the existing relationships to build a demonstration site(s).

- Khanh Hoa province, situated on the south coast, has experienced a severe drought in recent years. In addition to the economic impacts of agricultural downturn, over-exploitation of underground water, rapid urbanisation (with its attendant pressures on infrastructure), and surface water pollution, has create enormous challenges for the provincial government to ensure safe water supply for residents, industry, services and farming. MARD has specifically requested this province be included in the project.

- Nam Dinh province, a short distance from Hanoi, is a large rural area with medium density population that has demonstrated its commitment to working with Australia on privatisation of its rural water supply. The Australian Water Association has been supporting a feasibility study and preparation of tender documents for a large-scale water scheme and therefore brings to the Aus4Water Program existing relationships and foundational work on water supply schemes. The provincial government has a strong interest in supporting PPPs; and, it is close proximity to Hanoi makes it a convenient demonstration site for other large heavily populated provinces in the Red River Delta18.

Dong Thap province in the Mekong Delta has an important agriculture base but faced increasing salinity in recent years. The

18 Nam Dinh is one of four provinces where a private RWSE was established as a joint stock company during implementation of the Red River WSS Project funded by World Bank. References indicate that the state is a major shareholder. The JSC was a spin off from the Provincial Project Management Unit in PCERWASSS. PCERWASSS still exists and continues to provide the state management function for rural water supply in Nam Dinh.Aus4Water Investment Design Document 41

Government of Vietnam has placed a high priority on increasing access to safe water in the Mekong Delta, and aims to have 90-95% safe water coverage by 2030. The Aus4Water Program can contribute to the achievement of this goal in Dong Thap, with promising replication opportunities in other Mekong provinces. In addition, the Australian Government has invested AUD 160 m (2011-2017) in co-financing the design, supervision and construction of the Cao Lanh Bridge across the Mekong River to facilitate trade and economic growth in the region. The bridge will link people and markets in the Mekong Delta to the rest of South-East Asia and beyond. Safe water supply will add-value to the economic outcomes of this investment.

Initial DemonstrationsThis Investment Design Document has developed three demonstration concepts that will be the subject of design throughout the first year of the Program. These demonstrations take account of, and build upon, models that already have some traction in Vietnam, and/or have experience success elsewhere. Where the Aus4Water model differs from previous programs is its emphasis on replication of successes; the Program will achieve targets in household access to safe water at the demonstration sites, but it expects to influence attainment of an even higher number of households with access to safe water through support for replication activities in provinces outside of the demonstration sites. Attached at Annex A are concepts for the first three demonstrations. The Program team will need to verify these concepts, add further details, and change where necessary in case circumstances change. The State of the Sector Survey that will be commissioned by the Program within its first six months, will inform these designs and provide a solid evidence base for each individual investment. The concepts will be developed into designs within the first year of the Program. A summary is provided here:

1. Smart Subsidy for Private Enterprises as Investors in Piped Water Supply

This demonstration builds on the Smart Subsidy approach adopted in other DFAT-funded initiatives, and will expand rural water supply systems delivered by private enterprises in selected locations using an innovative results-based financing mechanism. Smart subsidies incentivise the private sector by agreeing to pay a bonus for each new safe water connection to households, thereby reducing the burden associated with early capital outlay and enhancing water supply scheme viability.


2. Small Scale Water Treatment with Private Entrepreneurs as Investors and Water Vendors

This demonstration activity builds on the DFAT-funded Australian Water Association (AWA) Technology Innovation planned for implementation in Son La Province in 2016-17. The proposed pilot will engage with women and men private entrepreneurs to install small water treatment units and sell high quality drinking water to community members in selected communes such as in remote and mountainous areas where there is high demand for drinking water but where treated, piped water supply is unaffordable or infeasible. The proposed ultrafiltration treatment units are low cost, simple to operate and maintain, and do not require electricity or consumable chemicals.

3. Challenge Fund with Private Entrepreneurs in Water-Related Activities

This demonstration activity will establish a small Business Challenge Fund that encourages enterprises with innovative ideas to grow their businesses through rural water supply schemes. The Challenge Fund will be a competitive grants process that aims to build skills for business growth in the water sector through the challenge fund process, as well as provide funds for the best ideas that are developed through the competition.

Concept NotesThe first step in the process of producing Demonstrations is to develop a concept note for approval by the JSC. Concept notes that are approved will then proceed to the design stage. The attached demonstration concepts are incomplete and will need to be given more detail before proceeding to approval and design stage. The Program team (NCERWASS and MC) will be responsible for developing the concept notes, together with the relevant PCERWASS and PPC, ensuring that the concepts are viable and likely to produce the intended results. Concept notes should approximately 5 pages and include the following:

- Title and Background: including what is the specific problem that is being addressed and what has taken place previously to address the problem;

- Outcomes or objectives: clearly state the outcomes and/or objectives of the demonstration project;

- Key Stakeholders and beneficiaries: a summary of the key stakeholders implementing the demonstration, and the immediate beneficiaries;

- Preliminary risk assessment: a desktop review of the risks to key stakeholders and beneficiaries, and any political, social and environmental risks that may arise;


- Activities and timelines: a summary of the planned activities to achieve the project objectives, and expected timeline;

- Communications, marketing and replications Strategy: an overview of how the demonstration will achieve reach and learning, and lead to replication;

- Budget: a broad overview of the budget for implementation. Development of concept notes will be kept internal to the Aus4Water Program team in order not to raise expectations and potentially waste the time of project stakeholders. In addition, concept notes should not be too detailed or time-consuming, the Program does not want this process to over-bureaucratise the development of demonstrations.

Detail DesignThe detailed design of demonstrations will be undertaken with key stakeholders who may also be the implementers of demonstration activities. This potentially could be the PCERWASS, and/or AWA with VWU, and/or a private sector company. Detailed designs, and the inputs required to develop them, will vary depending upon the nature of the proposed demonstration. For example, the design for the Smart Subsidy project will require a feasibility study as an input, and may have a number of large institutional implementing partners, both of which will mean a larger investment of time and resources for the design process. Some activities under the demonstration models will specifically target women, for example the Challenge Fund will provide support to women-owned businesses to develop business plans and to compete in the market, the Smart Subsidy Scheme will give preference to RWSEs who can demonstrate ways they actively engage women both in the community and in their workforces, and the Water Treatment projects are designed to be an attractive option for women entrepreneurs. To work in each of the target provinces for demonstrations, Aus4Water will need to build relationships with the People’s Provincial Committee (PPC) and the PCERWASS. The building of these relationships, and subsequent joint work to design and implement a demonstration, will be facilitated by the NCERWASS. An agreement will be established based upon the design. Detailed Designs will need to be fully self-contained – meaning they will need to provide the following types of information (although not all designs will need all the information);

- Background and context- Rationale for the Demonstration- Program Logic and Delivery Approach- Management and governance arrangements- Location and implementation plan


- M&E Framework and Plan- Community engagement plan - GESI strategy- Communications and marketing strategy- Replication strategy- Feasibility study (potentially required) or project proposal

The development of the designs will require varying degrees of internal and external resourcing, depending upon the complexity of the scheme. For example:

- The design for the Smart Subsidy demonstration will require a feasibility study and technical inputs that assist the provincial government to prepare documents for tender.

- The design for the small-scale water filtration schemes could be achieved by providing a grant to the Australian Water Association and/or the Vietnam Women’s Union who, together with PCERWASS and communities, will develop a project proposal and implement the project together.

- The design for the Business Challenge Fund can potentially be completed by the Aus4Water Program team together with an independent assessment panel for assessing business plans submitted by applicants.

- Larger scale designs may trigger Decree 16 and therefore require full Government of Vietnam approval before proceeding. The JSC is expected to advise on this at the concept note stage.

Generating EvidenceThe demonstrations will need to generate high quality evidence such that successes can be identified and replicated. The Program team will include a M&E specialist who will facilitate design and implementation of M&E for each of the demonstrations – ensuring that the Program can develop a convincing argument for provincial governments and the private sector to undertake PPPs, and making visible the success factors that will need to replicate. The Demonstration implementing partners will be responsible for their own M&E Framework, but the Program team will support and guide them and utilise the data to produce material for marketing and communications.Key questions that demonstrations should address and answer, so that they can be useful tools for learning, marketing and replication include:

- How can governments facilitate private sector engagement at provincial level?

- How can private sector enterprises increase their skills for water supply management?


- How can government incentivise private sector at a level that maintains household affordability for all?

- How can embedded gendered norms be overcome to allow for Program results to be achieved?

- How can gender planning and budgeting at PCERWASS be achieved?

- How are women included at all levels of private enterprise? - How to increase the percentage of the female workforce in water

supply technical areas?- How to overcome the high cost of early capital investment?- How can technology help make water supply more affordable?- How to ensure that PPPs are sustainable in the long term?- How can provincial agencies such as PCERWASS shift their role

and function from supplier to state management?- How can governments and the private sector build demand for

safe water in low demand areas? - How are all segments of the community, particularly women and

marginalised groups, best enabled to be meaningfully engaged in planning, design, M&E and accountability in the context of private sector RWSS?

The Program will invest in monitoring and evaluation of each demonstration in order to identify and learn lessons, and to capture the key selling points for engaging governments and private sector in replications.

Government Partnerships in DemonstrationsThe Program will work closely with NCERWASS to establish the relationships required for implementation in the above-mentioned provinces. NCERWASS will be responsible for opening doors and making introductions for the Program to the relevant PPC and PCERWASSes. They will work seamlessly with the MC appointed Program Team to build the relationship and develop the detailed plans for demonstrations and pilots in the selected localities. In this way, NCERWASS becomes a key stakeholder in the learning from demonstrations. NCERWASS will receive an annual grant from the Program in order to support this participation; this will be detailed in the NCERWASS Agreement. The Program Team will need to develop a close working relationship with PCERWASS at all demonstration sites as key implementing partners and demonstration site managers. The MC may need to appoint provincial coordinators (or similar) to support ongoing facilitated learning, project coordination, and quality assurance of Program demonstrations. PCERWASS are likely to receive Program funds for implementation; the amount depends upon the design of the pilot model and will be detailed in the design document. Aus4Water Investment Design Document 46

Component Two: ReplicationThe Program will invest in communications and marketing of the demonstrations to engage and build momentum for PPPs amongst provincial governments and private sector companies. The Program will also invest in providing support for replication – identifying interested provinces and/or businesses through the communications and marketing, and supporting them to develop their own schemes.

Communications and MarketingCommunications and marketing will target provincial governments (particularly PPCs and PCERWASSes) and private sector companies that may have an interest in expanding their company into the rural water supply market. Aus4Water will fuel this interest with solid evidence and know-how (drawn from the M&E work) that demonstrates the business case for PPPs in this sector. Communications and marketing activities will include the following:

- Study tours and site visits to the demonstration sites to learn about particular approaches to private sector water supply schemes;

- Support for conferences, seminars and trade shows, that bring sector stakeholders together and provide a platform for learning;

- Working through the mass organisations to promote women’s participation in the water sector, including as entrepreneurs;

- Issuing of briefs, guidelines and tools through government, business networks, mass organisations, and NGO channels;

- Promotional videos and other innovative tools that can reach the target audiences.

The primary audiences for communications and marketing are:- National Government in relation to policy and guidelines for

Provinces;- Provincial Governments in relation to their role in shaping the

enabling environment;- Private Sector in relation to positioning themselves to make rural

water supply viable; - Vietnam Women’s Union in relation to their role in empowering

women for water supply management, particularly in remote locations; and

- Consumers.Through these mechanisms, the Program will be well-positioned to identify points of traction with either government or private sector agents, and work more closely with them to move towards replication of the demonstration.


There are several NGOs in Vietnam that currently undertake successful campaigns in the water and sanitation sector (PSI and IDE are two that are worth seeking out). Aus4Water can fund these groups to undertake targeted marketing. For example, the household water filtration system demonstration is most suitable for remote communities. To market these technologies to new areas, an NGO with an established presence may be the best vehicle. In addition, Vietnam’s mass organisations have substantial reach and influence and may be excellent partners for communications and marketing in specific circumstances.

Replication activitiesSupporting replication of the Program demonstrations is a critical delivery approach that supports governments and private sector companies to embed the learning accrued through demonstrations in the form of new RWSS. The replication activities are the point where this Program will be leveraging its investments to date and to multiply outcomes; significantly increasing the number of rural households with access to safe water in Vietnam. Replication support may include sharing of tools (e.g. types of contracts or measurements to establish PPPs), some training and mentoring of the leadership involved in new scheme development, and strategic and/or technical advice. Aus4Water will support NCERWASS to facilitate PCERWASS in developing new RWSS. The support will take the form of both resourcing to ensure that NCERWASS has the human and financial resources to facilitate replication with new provincial governments, and technical support where needed. NCERWASS’s role, with Aus4Water support, will be to roll-out a package of support to PCERWASS’s and PPCs as they design new PPPs, supporting them in their early stages of development to ensure they become viable. Aus4Water will (in addition to the provision of financial resources to support human resourcing) assist by developing guidelines and tools that make it easier for PCERWASS and PPCs to develop their PPPs to be successful. Aus4Water may also provide additional technical advisory support on a case by case basis. Policy change and national government leadership on helping PPCs and PCERWASSs to make the shift towards greater privatisation are essential ingredients for success of this Program. Aus4Water will support NCERWASS to work with its parent ministry, MARD, to develop policy and produce circulars that provide the guidance and leadership required to pursue widespread change. Aus4Water will work through business networks (such as VCCI), training and research institutes, and similar groups to reach out to the business community and market opportunities in the rural water supply sector.


The Program will fund an annual conference and trade show (potentially through NCERWASS) and use it is a vehicle for communicating program successes and helping private sector stakeholders to learn new technologies and approaches. The AWA may be a useful partner to Aus4Water in showcasing affordable technologies through such events. The Program will also connect with businesses through the Challenge Fund, and potentially by offering training courses to private sector stakeholders in particular aspects of PPP development and implementation. Government Partnerships in Communication and ReplicationAus4Water will rely heavily upon its partnerships with GoV at the national level to support communication and replication activities. The relationship with MARD will be supported through the MARD role on the Joint Steering Committee (see Governance and Management Section) and their role as the peak Ministry with responsibility for rural water supply. It is the responsibility of MARD to issue regulations and guidelines at the national level for PCERWASS, and their voice carries weight at the provincial level. Therefore, communications, marketing and replication will rely upon a close relationship with MARD in scaling-up efforts. Aus4Water will also work with MPI, MOF and MOH to support broader policy issues such as water tariff reform, new incentives for rural water enterprises and strengthen water quality control measures. Lessons learned from implementation will be actively shared through the Rural Water Supply and Sanitation Coordination Unit. This is an independent unit in MARD, associated with the International Cooperation Department and acts as a coordination mechanism between government and RWSS stakeholders.The role of NCERWASS in communications and replications is more hands-on. NCERWASS will be responsible for facilitating the provinces (particularly PCERWASSes) to understand and implement new guidelines and regulations. The Program will support NCERWASS to become expert at communicating the demonstration successes and facilitating change at the provincial level. NCERWASS will need to provide technical support for implementation of new schemes that are based upon demonstration, support the required changes to the provincial policy framework, and equip PCERWASSes with new skills for quality control of private providers in rural water supply. The Program will provide direct support to NCERWASS and to participating PCERWASS to develop their skills and experiences for these roles and responsibilities, employing an incubator model that provides services and capacity development early with a staged reduction and exit overtime as milestones are reached.

Gender Equality and Women’s Economic Empowerment


This will take a ‘twin-track approach’ of both targeting women specifically in some activities and also ensuring that gender considerations are addressed throughout every aspect of the Program. Over recent years, the business case for increasing women’s participation in the economy has grown increasingly strong – both in terms of leadership and improving rates and conditions for workforce participation. It follows, that private sector development in the water sector will benefit from greater gender balance at all levels and functions. In addition, privatisation of the water supply sector risks increasingly excluding women from water supply issues and decision making. Currently, many communities based water schemes are operated by women, however private sector companies in the water supply sector are male dominated (at managerial and technical levels). A shift to the private sector risks excluding women. Alongside the demonstration RWSS activities, the Aus4Water Program will support women’s empowerment and inclusion throughout the privatisation process through a range of activities that may include: demonstrations of the business case for women’s inclusion; communications strategies that seek to build a normative private water sector environment that is inclusive of women; setting of targets and incentives e.g. preferential weighting for businesses employing women in technical and management roles; linking the private water sector, where appropriate, with Australian bodies such as the AWA’s Women Leaders in Water Network, initiatives such as the Science in Australia Gender Equality program, and materials such as VicHealth’s Equal Footing manual. These activity suggestions are not intended to be prescriptive but rather act as a useful set of ideas to be explored during inception. The specific activities for Aus4Waterwill need design through the inception phase, and through each of the demonstration model designs and replication activities. The Program will pay attention to building and embedding community engagement processes that maximise meaningful, inclusive participation by all. To support better gender and water outcomes requires changes not only in women’s but also men’s socially-prescribed roles. Effort will be made to build support and reduce resistance among men to women’s economic and decision-making engagement; and to encourage and motivate men to take on a fairer share of water-related and caring responsibilities within their households. Cost effective behaviour change methods will be supported through demonstrations. The Government of Vietnam has a relatively strong mandate to improve women’s empowerment and gender equality, and have achieved good results. However, there remains socio-cultural and political economy constraints to achieving women’s empowerment and gender equality,


including in the RWSS. The starting point for NCERWASS and target PCERWASS in terms of readiness to act for improving women’s empowerment is difficult to gauge. The design team found no particular champions at either provincial or national government levels, however the design team had limited time and access to form an evidence based opinion. The Managing Contractor will need to explore in more depth where there are entry points for working with our government partners, and both create and exploit opportunities to generate greater awareness on gender issues, and greater commitment to change. To support their efforts, the Managing Contractor should work closely with proactive gender equality and women’s empowerment groups in Vietnam who have experience in shifting government policy and behaviours, and map out a way forward, ensuring that each demonstration (and replication) design is inclusive of gender outcomes. The Program will link with other gender-focused activities of the Australian aid program in Vietnam. Activities under the Aus4Equality program, particularly in Son La and Lao Cai provinces, may be utilised to support demonstration sites for this Program. Coordination between these different programs may also yield efficiencies through leveraging shared networks, and sharing materials and expertise. The DFAT funded Mekong Business Initiative has been working with the GoV to include preferential policies for women own businesses in the SMEs support laws which are currently being put in place. This may provide opportunities for Aus4Water to support the growth of women owned businesses in the rural water supply sector. In addition, there are new opportunities for women entrepreneurs to obtain access to finance through the DFAT funded Mobile Banking for the Poor in Vietnam project. The initiative is a partnership between The Asia Foundation (TAF), Vietnam Bank for Social Policies (VBSP) and MasterCard to deploy a mobile banking platform for low income populations. The program will specifically target women-led micro-businesses and therefore could become a useful partner to the demonstrations and replications of Aus4Water. Capacity building within the Program will include technical, leadership and management training targeting women entrepreneurs and potential entrepreneurs and linking new or potential women water entrepreneurs with those already active and successful in the water sector. The Program will strive for gender balance and inclusion of gender expertise in the NCERWASS Program Management Office (PMO) and Steering Committee. Gender capacity building will be provided for the PMO, Steering Committee and other key bodies and agencies including selected private sector actors. This is more likely to take the form of dialogue and coaching rather than relying on stand-alone gender training. The Women’s Union will be supported and incentivised as a key partner in promoting gender equality within the program.


Assessing change for women will be central to the program’s MEL approach. Monitoring of demonstrations will include gender-responsive measures including assessing time saving, access to decision-making and income, and other benefits for women and girls. The program will demonstrate application and adaptation of existing gender-responsive tools such as Plan International Vietnam’s Gender and WASH Monitoring Tool. All monitoring data will be sex-disaggregated.


4 Monitoring and Evaluation

The changes (or outcomes) that Aus4Water seeks includes change for individuals (particularly women) as well as systemic changes to the rural water supply sector. Including provincial and national governments. The design recognises that to achieve the outcomes changes are required on a number of fronts, especially to the role of provincial government in water supply management, and to the behaviour of private sector enterprises. Success therefore needs to be measured across these various domains of change. The approach to Monitoring, Evaluation and Learning that is outlined here takes account of these complexities.

4.1 Rationale for Monitoring, Evaluation and Learning (MEL)

Due to a strong need to learn and demonstrate outcomes from this investment Aus4Water will invest in MEL and ensure it’s embedded in the Program. Aus4Water’s theory of change relies on the production of key knowledge products from its Monitoring and Evaluation activities under components 1 and 2. Existing evidence that demonstrates the value of PPPs in rural water supply have not been sufficiently varied to suite the multiple contexts of rural Vietnam, and are therefore not widely applicable to provinces outside of the target area. What is more, a lack of investment in demonstration and replication means projects to date have not achieved the momentum required to impact wider change. Aus4Water seeks to change that outcome by investing in utilising learning and evidence to trigger government and market interest. In the M&E, the knowledge building role of the program, and the marketing role, it will be important to track what has changed as a result of Aus4Water, using the following four clusters or domains:

Household access to safe water supply Women’s participation and economic empowerment; Private sector participation in rural water supply; Government leadership on private sector engagement.

There are strong accountability, management and learning drivers for good M&E under Aus4Water. Aus4Water will be accountable for reporting on its performance against the private sector engagement, aid for trade and gender equality policy objectives. Aus4Water will need to demonstrate additionality (i.e. that aid funds are not used to displace


private funds), monitor and test the effectiveness of the new interventions, and draw out the key lessons that will successfully attract more governments and private sector companies to PPPs. This initiative also presents an opportunity for the Australian Government to further understand and learn how best to work with the private sector to support the achievement of Australia’s development goals. The Program relies upon robust evidence to catalyse widespread change. The evidence will be drawn from a relatively small number of stakeholders (governments and private actors in three provinces) to demonstrate the variety and benefits of PPP approaches, utilising the demonstrations to influence other provinces and companies or private entrepreneurs to also invest in PPPs.

4.2 PurposeThe purpose of the M&E Framework is three-fold:

To support the management of Aus4Water to track progress; inform decision-making; support continuous improvement and inform knowledge products.

To enable accountability to the Australian public and the Department (DFAT), specifically reporting against the Aid policy, on how the funding was invested and what it achieved.

To learn from the investments and build and share evidence and knowledge across provincial government and private sector audiences.

4.3 PrinciplesThe following principles inform the way in which the M&E activities should be planned and delivered:

- Gender sensitive: to enable data to be collected, analysed and reported disaggregated by gender and for all M&E activities to be delivered in a gender sensitive way. This means enabling participation of women and ensuring that women are not adversely affected by taking part in the MEL activities.

- Adaptability and flexibility: to ensure that investment directions and decisions can shift in response to learning to date, particularly sensitive to the variety of provincial contexts that impact program models.

- Learning focused: ensuring that M&E contributes to broad-based learning, particularly for national and provincial governments.


- Replication focused: the M&E Framework will need to utilise methods that can measure the “take-up” of learning by provincial governments and private sector actors as a consequence of marketing and communications.

4.4 Key Evaluation QuestionsThere are five Key Evaluations Questions (KEQs)which align with DFAT’s evaluation criteria, specifically the effectiveness (KEQ1 and 2), impact (KEQ2), sustainability (KEQ3) and efficiency (KEQ4 and 5) criteria. Gender is addressed in KEQ 4 and KEQ5.

1. Have the Program demonstrations started to be replicated in at least 50% as many locations?

2. Has the program led to an increase in private sector engagement in rural water supply? And has this led to increased quality and reach of safe water?

3. To what extent has the government adopted policy and practice reforms from the program (national and provincial)?

4. How have women achieved participation, increased economic opportunities and empowerment from this project economic.

4.5 Have women been engaged in RWSS as entrepreneurs and employees in operations and management roles? Approach

The approach for the MEL Framework has been influenced by the private sector engagement focus, and by the women’s empowerment focus, and by the expectation that M&E outcomes will be need to accrue to the Program, and throughout the life of the program, in order that they provide evidence for marketing and communications materials and events that will be the foundation to replication. The MEL activities will need to enable gender disaggregated reporting and be planned and delivered in a gender sensitive way. The demonstrations approach of Aus4Water results in a hierarchy of M&E that builds evidence from across numerous activities that together build the evidence base and learning for replications. Each demonstration activity will have its own M&E Framework, developed by the Program Team at the design phase. Each implementing partner for demonstrations (e.g. PCERWASS, Vietnam Women’s Union, AWA, etc.), will need to undertake these M&E activities as part of their agreement with the Managing Contractor. The findings from each of the demonstrations inform the differentiated PPP models for different provincial contexts. The M&E Framework at the goal and EOPO level, applies whole of Program


approaches to learning and evidence building. The hierarchy of M&E reporting is as follows:

Figure 3: M&E Hierarchy

Given the important role that M&E and learning play in the conversion of demonstrations to replications, the M&E function of the Aus4Water program will need to be well-resourced – both through the MC and NCERWASS, and well-resourced for the demonstration implementing partners.

4.6 Aus4Water MEL FrameworkThe M&E Framework presented here presents indicators for each of the levels of the Program Logic. The Aus4WaterM&E Framework will include these indicators and the key evaluation questions (KEQs) detailed above, however the Aus4Water Program Team will review and verify them during the inception period. The Program Team may also add any process-orientated or input related M&E indicators as required. Given that the first round of concept notes will be in development at the same time, the M&E Framework and Plan finalisation will be informed by, and inform, the demonstration concepts.The Aus4Water M&E Framework will capture the overall approach for M&E (including the purpose, KEQs, principles, quality expectations, resourcing and milestones) and will articulate the reporting and learning activities at the initiative and component level. All M&E activities for all components and demonstrations will be developed using a gender sensitive approach. As part of contributing to DFAT’s and international evidence on M&E with this investment, the M&E Framework will also draw on and align with indicators on gender equality and private sector development recommended by the Donor Committee for Enterprise Development (DCED).Aus4Water Investment Design Document 56

At the whole of Program level, the M&E Framework will focus on utilisation of measurement methods that enable reporting against several indicators. For example, the State of the Sector Survey will be carried out in the first year of the Program and again in the fourth year of the Program, enabling it to be used as a source of data for numerous indicators in the Performance Indicators table presented below. In addition, the Program Team should ensure that there is consistency of indicators and measures across the demonstrations to ensure that data can be both aggregated and compared. For example, gender indicators and data collection methods should be consistent across the demonstrations where-ever possible, to enable M&E to capture and report on whole of Program outcomes for women.Also, at the whole of Program level, the M&E Framework will coordinate (but not necessarily implement) M&E activities across the demonstrations to ensure that the learnings are identified and utilised in marketing and communications, and to inform replications. These activities will include the capture and analysis of data, reflections on the initiative from the stakeholders, and the creation of evidence and knowledge products that support replication. These activities will draw on all M&E outputs from the M&E activities delivered at demonstration level and require additional data collection and analysis activities at the Program level.The Key Evaluation Questions will need to be verified by the incoming Program Team, who will also need to develop the sub-questions. Once developed, the Program Team will draw upon the M&E data to develop baseline information, including the State of the Sector Survey. The KEQs will be utilised to guide development of the M&E Framework, and also by DFAT in the conduct of a mid-term and end of term independent evaluation of the Program. Synthesis of results and findings from the demonstrations and other activities will also be used as data for the evaluations. Table 2: Performance Indicators and measures

# Outcome Indicator and/or monitoring question

Data collection method

GOALS

1 1. Alleviated workload and increased economic opportunities for women.

No of households with increased economic participation and income for women.

UN Gender Equality Indictors.

Tailored provincial sampling surveys seeking comparative data on the five dimensions of women’s economic empowerment (WEE M4P) (comparing access/no-access, level of access to RWSS, etc.),


commissioned by the program in year 1 (baseline) and in year 5 together with the State of the Sector report.

2 2. More sustainable private sector enterprises are increasing affordable water supply to rural Vietnam

No of households with access to safe water in Vietnam; No of RWSS managed and/or operated by private sector agents.

NTP target information from GoV; State of the Sector report commissioned by Program in year 1 (baseline information) and in year 5.

EOPOs

3 Household access to safe water is increased

34,500 households in target communities have attained access to safe water as a direct result of the program;

139,000 men and women in target communities have attained access to safe water as a direct result of the program

16 private sector rural water supply schemes are successful (with 25% being women owned and/or managed) as a direct result of the program;

Indirect benefits (i.e. benefits accrued as a result of replication support) will be accessed once the Program is under implementation. 90% of new water supply schemes that are fit for purpose and functioning after two years.

GoV regular data collection for NTP progress;

Program collected and collated data on RWSS and households served (including the demonstrations and the replications)

4 Women are engaged in private sector water supply management

No. of water enterprises that are women-owned and/or have management and technical positions (target 25% through the program); No. of women engaged as private entrepreneurs;

No of women employed in operational and management roles in participating RWSEs or associated enterprises (target of 25% through the program);

No of women participating in household and community decision-making on water supply;

No of women who report saving time on household chores as a result of program activities.

Program Team baseline and monitoring data for project locations; Project collects gender-disaggregated data on staff in participating RWSEs; Survey on women’s experiences and perceptions in target communities.

5 More companies draw upon of enterprises managing RWSS – Government data base of


competitive financing, are skilled in water supply management, and access affordable technologies, to own and operate more rural water supply schemes.

including disaggregated by gender and location;

No. Of enterprises utilising models or technologies demonstrated by the program.

private sector technologies; program team collects data on models and technologies replication; baseline and end-of-project State of Sector survey.

INTERMEDIATE OUTCOMES

6 National and provincial government agencies have implemented policies, systems and processes that promote women’s participation in rural water.

Quality of new policy development and policy implementation on women’s participation by PCERWASS in target provinces and by NCERWASS at national level.

Regular qualitative monitoring assessments of policy and policy implementation. The Program will establish a baseline of selected policies (i.e. policy regarding PPPs inclusion of women in technical roles) and undertake annual assessment of policy uptake against the baseline in selected provinces.

7 National and provincial government agencies proactively facilitate private sector engagement in rural water supply including enabling policies, systems and processes.

Quality of new policy development and policy implementation on private sector engagement by PCREWASS in target provinces and by NCERWASS at national level; no. of PPP systems going to tender in target provinces and beyond; No. of PCERWASS transitioning role from water supply implementation to quality control

Regular qualitative monitoring assessments of policy and policy implementation

8 Water supply companies have increased skills; knowledge of and access to new technologies; better financing options; and bankable business plans for rural water supply ownership.

Gender-disaggregated profile of skill set among enterprises; Range and type of technologies and financing used by participating enterprises; Self-reporting of improved business planning capability among participating enterprises

Quantitative and qualitative State of the Sector Survey before and after; Self-assessment among participating enterprises

9 National and Provincial governments have more skills, knowledge and motivation to make water schemes viable for private sector ownership, and are facilitated in developing new schemes at start-up stage.

No. of PPP systems assigned by tendering meet six-month satisfactory service delivery requirements.

PCERWASS quality monitoring results provided to NCERWASS.

10 NGOs, CBOs, and mass organisations have improved skills and knowledge to facilitate private enterprise development in rural water supply.

No of private entrepreneurs supported to establish or grow their business by NGOs, CBOs and mass organisations.

Data on no. of enterprises operating in selected provinces. Baseline collected through the State of the Sector Survey and progress assessed through a follow-up State of the Sector Survey in year 4.


11 Evidence of successful approaches is convincing and demonstrated to governments, civil society, and private sector enterprises, and learning from demonstrations is achieved.

No of private entrepreneurs supported to establish or grow their business by NGOs CBOs and mass organisations.

Count by Program Team of number of demo site visits and number of replications by government, civil society and private sector enterprises.

Immediate Outcomes

12 Government agencies, private sector enterprises, NGOs, and mass organisations are involved in implementation of demonstrations and learned new approaches.

No of Government agencies, private sector enterprises, NGOs, and mass organisations are involved in implementation of demonstrations and learned new approaches; No that are implementing new approaches six-month on.

Simple evaluation form and survey at end of demonstrations and follow-up after six months.

13 Demonstrations successfully show how private sector engagement can increase coverage of safe water, and open opportunities for women.

Learning achieved by visitors to demonstrations sites; learning achieved through communications and marketing events and products; changed attitudes or behaviours resulting from learning (e.g. no of people who are actively exploring privatisation models six month following their introduction to the program).

Simple evaluation form and survey by PCERWASS that host visitors to demos with follow-up six months after to assess changed attitudes or behaviours.

14 Australian and domestic suppliers support the sharing of affordable technologies and know-how.

Information on number of suppliers and knowledge sharing activities.

Aus4Watercollect data from activities.

Outputs

15 Demonstrations of varying approaches to sustainable private sector engagement in rural water supply are in place throughout rural Vietnam.

Actual number and variety of demonstrations that are in place vis-à-vis the target number and variety.

Program Team progress reports on demonstration implementation.

Note 1: The table below shows the assumptions behind the target indicators for achieving great access to safe water, and the assumptions behind targets for achieving increased number of private rural water supply schemes. It was developed utilising outcome data from other RWSS programs in Vietnam.

Province 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 Total no of Households

No of people (assumes 4

person households)

Son La 500 500 1,000 1,500 3,500 14,000

Nam Dinh 1,000 1,800 2,500 2,800 8,100 32,400

Khanh Hoa 1,000 1,800 2,500 2,800 8,100 32,400

Dong Thap 1,000 1,800 2,500 2,800 8,100 32,400

Sub-total 27,800 111,200


Household filters (assumes 1,500 filters each serving 5 households)

1,250 1,250 2,000 2,500 7,000 28,000

Total 4,750 7,150 10,500 12,400 34,800 139,200

No of enterprises per province 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021

% women owned / managed

TOTAL

Son La 1 1 1 1 25% 4

Nam Dinh 1 1 1 1 25% 4

Khanh Hoa 1 1 1 1 25% 4

Dong Thap 1 1 1 1 25% 4

Total number of enterprises 4 4 4 4 16

Note 2: The indicators and measure methods will be review and verified or changed during the inception period.


5 Implementation Arrangements

5.1 Management and GovernanceAus4Water will be jointly implemented by the Australian Government and the Government of Vietnam with the support of a Managing Contractor. The Ministry of Agriculture and Rural Development (MARD) has overall policy responsibility for the rural water supply sector, and is supported to implement its role by the National Centre of Rural Water Supply and Sanitation (NCERWASS). NCERWASS will therefore be the implementing partner agency to the Aus4Water Program, and be resourced through the Managing Contractor to support it in fulfilling its role as outlined in this design document. Provincial Centres of Rural Water Supply and Sanitation (PCERWASS) will also be key implementing partners for demonstrations at the provincial level and therefore receive support from the program to fulfil this role.

Joint Steering Committee (JSC)A Joint Steering Committee (JSC) will be established for the Program. The JSC will be chaired by the Vice Minister of the Ministry of Agriculture and Rural Development (MARD) and DFAT. The JSC will provide high level oversight and policy guidance to the Program. The key tasks of the JSC are to approve the Strategic Framework, review the Annual Work Plan developed for the Program, review and provide assessment on progress reports, make recommendations to improve effectiveness of the Program and serve as a mechanism to coordinate internal and external resources to leverage greater impact. The JSC will also endeavour to resolve problems that arise during Program implementation, and learn lessons from the demonstration projects. The Joint Steering Committee will meet bi-annually or as required, and membership will include representation from Ministry of Planning and Investment (MPI), Ministry of Finance (MOF), Ministry of Health (MOH), Vietnam Women’s Union (VWU)19, and PCERWASS representatives from the demonstration Provinces, and representatives from the beneficiary group as observers. The proposed structure is outlined in the following diagram.

19 The Vietnam Women’s Union will be involved in implementation, particularly in relation to building small scale women’s owned enterprises in remote settings, and will also advise the JSC on women’s inclusion in decision making and implementation of demonstrations and subsequent policy development. Aus4Water Investment Design Document 62

Figure 4: Governance Structure

Governance Roles and Responsibilities

Joint Steering Committee The JSC for Aus4Water provides a forum for strategic level decision making that includes key Government of Vietnam and Government of Australia stakeholders. The MC will attend steering committee meetings but will not be a voting member of the committee. The JSC will:

(a) Review and approve the Aus4Water Strategic Framework (includes the Communications and Marketing Strategy and the Replication Strategy)

(b) Review and approve the Annual Plan (c) Review the Progress Reports(d) Approve Concepts Notes and Designs for demonstration projects(e) Provide coordination and liaison amongst Government of Vietnam

stakeholders at the national and provincial levels(f) Support Aus4Water Implementation events and activities; (g) Identify and recommend opportunities for Aus4Water; and(h) Promote sector coordination and learning, replications, and policy

development. The Program team (includes both NCERWASS and MC staff working on the Program) will provide secretariat support to the JSC, and will be required to draft the JSC Terms of Reference for their approval at their inaugural meeting.

DFAT PostAus4Water will be managed by the Hanoi Post staff. DFAT will require some resourcing to support monitoring activities, and independent


expert advice and inputs throughout the life of the Program. Aus4Water has set aside funds for this purpose. The roles and responsibilities of DFAT include the following:

- Maintain on-going high level diplomatic relationships that support the Program implementation

- Manage the contract with the MC, and approve sub-contracting / grant arrangements

- Ensure the contract is being well implemented by the Managing Contractor (MC) and conduct contractor performance assessments

- Provide input and feedback on reports and plans- Proactively identify and address any contracting issues as they

might arise- Facilitate the implementation of activities and knowledge building

with the stakeholders - Identify and help to manage problems and risks to the Program or

regarding the Program.

Managing ContractorDFAT will engage a MC to manage the overall Program implementation. The MC will assume key responsibility for Program delivery and quality of Program outputs and outcomes, including all key documents such as the Strategic Framework. The MC will work in partnership with NCERWASS as the key national level implementing partner to the Program. The MC will utilise a Partnership Brokering approach to establish the Joint Steering Committee. The process ensures that the different stakeholders clarify and agree key interests, priorities and roles and responsibilities (including national and sub-national government partners). The outcome is a Partnership Agreement that establishes optimal communication protocols, stakeholder commitments to the process and their individual roles and responsibilities, outcomes from the partnership (e.g. bilateral relationships etc.), and other areas of mutual interest. It is supported through a four-stage cycle – 1) Scoping and Building; 2) Managing and Maintaining; 3) Reviewing and Revising; 4) Sustaining Outcomes. The partnership should be subject to 6 monthly health checks, particularly in the first years of operation.The MC will support NCERWASS’s participation in the Program through the provision of an annual grant; the details of which will be developed collaboratively in the Program inception period, and set forth in a formal Agreement that will be approved by the JSC. The MC will support NCERWASS to strengthen its role in facilitating PCERWASSes to implement national level regulations and guidelines, and invite NCERWASS participation on the MC’s Program Team.


The MC will directly manage some of the demonstration activities, particularly the Business Challenge Fund, and potentially the promotion of low-cost technologies from Australia. However, embeddedness of learning and sustainability demand that, as far as possible, the MC will channel funds to responsible third parties for demonstration, marketing and communications, and replication support. Third parties such as governments and mass organisations are a part of the fabric of Vietnamese society and will be responsible for the Program outcomes long after the Program has been completed. Importantly, women’s economic empowerment outcomes will rely heavily upon the MC’s ability to ensure implementing partners are addressing socio-cultural barriers, and utilise proven effective methodologies to generate normative change that supports sustainable behavioural and systemic change. The MC will need to be cognisant of the PPC as a critical stakeholder; no demonstrations and/or reforms at provincial level can occur without their support. Other critical stakeholders is the national government are implementing partner to Aus4Water, NCERWASS and MPI, MOF and MOH as policy making agencies The MC will need to ensure that NCERWASS are closely involved in all demonstration activity designs, and facilitating PCERWASSes in demonstration activity implementation.

The MC will be contracted by DFAT through a competitive tender process. Tenderers will be asked to propose to DFAT how they intend to manage and implement the Program based upon this Design, and in keeping with the following roles and responsibilities. Leadership and Management of Aus4Water:

Strategic leadership and advice that supports DFAT and Government of Vietnam stakeholders to engage in appropriate levels of decision making, learning, and implementation;

Management of a Program team and budget in keeping with the high quality of performance and financial management the is expected by DFAT;

Close and effective working relationships and partnership with NCERWASS and other Government of Vietnam stakeholders, and DFAT;

Design demonstration projects that are well-informed and address key constraints to private sector involvement in water supply management;

Provision of grants to implementing partners who have capacity to implement demonstrations, and support their implementation role throughout;


Accountability for Program performance, progress and outcomes to DFAT, and to the JSC:

Achievement of outcomes in keeping with the design, program logic and annual plans;

Quality oversight of program inputs and outputs (including the Strategic Framework and demonstration designs);

Evidence of achievement of outcomes and progress; High quality planning and reporting; Foster linkages and opportunities for Vietnam to utilise Australian

and domestic technologies in water supply schemes. Technical Engagement:

Provision of technical support to government and other stakeholders regarding efficient and effective water supply management schemes, PPPs, social inclusion, policy development; and other areas requiring specialist expertise not readily available;

Technically sound concept notes, designs, and implementation of demonstration projects;

Support for technical verification of demonstration projects; Capacity building of implementing partners and key stakeholders

on technical matters, including support for NCERWASS and PCERWASS in fulfilling their key roles and responsibilities in demonstrations and in replication activities;

Provision of innovative and affordable technical solutions to challenging problems in water supply;

Support for the identification of risks and benefits, from a technical perspective, of water supply scheme options and choices facing governments and private sector providers.

Women’s Empowerment and Social Inclusion:

Mainstream gender and social inclusion across all activities of the Program and with JSC, NCERWASS and relevant PCERWASS;

Priority regard for women’s empowerment and social inclusion in the design and implementation of demonstrations and subsequent policy making;

Embed women’s inclusion in the shift between community based water supply schemes to private sector based water supply schemes;

Capacity building of key stakeholders and implementing partners on women’s empowerment and social inclusion issues;


ensure demonstrations show how the private sector agents and governments can integrate gender and social inclusion into their own PPPs and other efforts to increase safe water supply;

Identification of costs and benefits of social inclusion approaches to demonstrations and policy outcomes.

Monitoring and Evaluation:

Design and delivery of a Monitoring and Evaluation Framework for the Program, and for each of the demonstrations to be funded by the Program;

Harness evidence from the Aus4Water Program and from similar projects that builds an evidence base that provides solid information to key stakeholders who may want to replicate the models;

Support to the Program replication efforts by providing timely evidence and advice on models that would suit their contextual needs;

Support to NCERWASS and PCERWASS to understand and utilise M&E frameworks to support rural water supply activities;

Support to the marketing and communications function through the provision of useful, accurate and contextually specific evidence;

M&E data that meets the needs of key stakeholders and includes disaggregated data that demonstrates results related to gender equality; social inclusion and diversity;

Thorough reporting on Program progress and outcomes, fed into Program management for use in annual planning and implementation of the Program.

Communications and Marketing:

Collaborate closely with NCERWASS and MARD to effectively communicate and market demonstration results and potential in rural provinces across Vietnam;

Use evidence and lessons learned to proactively communicate and market their value to private sector agents and to rural provincial governments across Vietnam;

Utilise innovative communications and marketing methods to engage targeted private sector agents and governments in replication of Program successes;

Organise strategic events that showcase the benefits and approaches to private sector managed water supply schemes.


Replication:

Follow-up on all opportunities to replicate program successes in rural provinces across Vietnam;

Provide technical and other support, with NCERWASS, to provincial governments seeking to implement new water supply schemes based upon the models the Program has demonstrated;

Invest in building the capacity of GoV to support replication activities;

Invest in learning activities for provinces new to, or lacking in capacity for, implementation of private sector led water supply programs;

Support MARD and NCERWASS investments in policy development that promote private sector water supply schemes, and support for policy implementation.

Administration:

Administration of DFAT funds in keeping with the Commonwealth Procurement Rules, Commonwealth Grants Rules, and other laws and regulations that pertain to Commonwealth funds;

Provide secretariat support to the Joint Steering Committee Ensure that reports are timely, of a high quality, and meet

standards expected of the governments of Australian and Vietnam;

Maintain a project office (potentially, and preferably, collated with NCERWASS or MARD);

Manage all logistics capabilities associated with the Program; Maintain ready access to a pool of technical expertise that may be

required for short-term inputs into the Program. Throughout the inception period, the MC will work with NCERWASS and DFAT to refine and add detail to the above table, including an additional column for GoV stakeholders such as NCERWASS. It will be revisited on a regular basis thereafter. It should be noted that the above table cannot replace the importance of goodwill and communication between the relevant stakeholders.

National Centre for Rural Water and SanitationNCERWASS is the key implementing partner to the Aus4Water Program at the national level and will therefore be a beneficiary of support as well as a provider of support to the Program. NCERWASS will benefit from the Program through support from the Program to build its capacity for


supporting the private rural water supply sector eco-system, and for supporting PCERWASS to privatise rural water supply and shift to a quality assurance and enabling environment role. NCERWASS will be support the Program success by facilitating constructive working relationships between the Program and national and provincial level key stakeholders, particularly MARD (through which national level regulations and guidelines are developed), PCERWASS and PPCs (through which private sector water supply schemes will be developed and implemented). They will also support widespread communication and promotion of demonstration outcomes to build demand for RWSEs, and work together with the MC to support monitoring and evaluation activities, as well as communications. It is envisaged that NCERWASS and the MC will together develop a Program Work Plan in close consultation with the PCERWASS and PPCs in target provinces. Examples of the types of activities that may be incorporated are:

- Work together with target province PCERWASS, PPCs, and the MC to design and implement the demonstration projects;

- Undertake monitoring and evaluation activities of the demonstration projects together with the MC and participating PCERWASS;

- Support the showcasing of demonstrations to private sector stakeholders and to provincial government outside of target areas;

- Facilitate the wide distribution of communications and marketing materials that incorporate lessons learned from the demonstrations, to rural PCERWASS;

- Host a conference or seminar series that showcases the best results;

- Support training activities for private sector and provincial government agencies to build knowledge and skills for managing public private partnerships (PPPs) in water supply.

NCERWASS will receive a grant from DFAT (through the MC) to implement Program associated activities as set out in the NCERWASS Agreement and detailed in the Annual Work Plan. In addition, NCERWASS will receive funds to support the staff salary costs of 1-2 people who will be responsible for Program coordination and implementation within NCERWASS, to support marketing and communications, and replication support, and for NCERWASS coordination with PCERWASS and other government departments as required.

Provincial Centre for Rural Water Supply and SanitationThe key implementing partner to the Program at provincial level is the PCERWASS, responsible for provincial rural water supply management in


accordance with the MARD’s Decision 45/2008/QD-BNN and Circular 15/2015/TT-BNNPTNT respectively. PCERWASSes throughout Vietnam have a dual accountability: they are accountable to the PPC (the executive arm of provincial government responsible for formulating and implementing provincial policy), and are accountable for national policy implementation through NCERWASS to MARD. Their role in implementation of demonstrations and subsequent reforms is critical to the success of this Program. PCERWASSes in the target demonstration provinces will be closely involved with design of their demonstrations, and be responsible for implementation of their demonstrations with support from the MC and NCERWASS (with roles and responsibilities of each detailed in the demonstration designs). PCERWASSes will likely receive a grant from the MC to support implementation as detailed in the budget for the design. The MC and NCERWASS will together support PCERWASS in technical implementation, monitoring and evaluation, and the development of provincial level enabling environments including by way of regulations, tender and contracting approaches, and the shift in the role of PCERWASS from primarily water supplier to include quality assurance and regulations of the water supply sector. Examples of the activities that PCERWASS will carry out include:

- Contribute to the design of the demonstration projects in their localities and support approvals for demonstrations through the PPCs;

- Take responsibility for implementation of demonstration projects, including management of Program grant funds;

- Engage in community participation and mobilization for demonstration project planning, design and implementation;

- Engage and manage consultants for feasibility studies, designs, and bid preparation for demonstration projects;

- Carry out the monitoring and evaluation activities of the demonstration projects and report to NCERWASS and the MC;

- Support the showcasing of demonstrations to private sector stakeholders and to other provincial government agencies;

- Host training activities for private sector and provincial government agencies to build knowledge and skills for managing PPPs in water supply in their province.

Roles and Responsibilities summary tableThe Governance and Management model suggested here enables flexibility in how the demonstrations are implemented; utilising different vehicles to demonstrate different approaches. For example, the implementing partners for demonstrations may include direct funding to VWU, Youth Union, banks, and/or water supply companies. It also allows Aus4Water Investment Design Document 70

for a whole-of-sector approach to marketing and replication – targeting and drawing upon a wide number of stakeholders and audiences. Clarity regarding the roles of each of the key stakeholders is important to maintaining smooth implementation throughout the life of the Program. It will be important that the DFAT team, the MC and the joint Program Team continuously work to find the right balance between their roles and responsibilities. The following roles and responsibilities offer a starting place to work from:


Table 3: DFAT and MC Roles and Responsibilities

FUNCTIONS DFAT Hanoi Post

Managing Contractor NCERWASS PCERWASS

Activity Implementation

Oversight of the MC implementation.Co-chair of JSC.Monitor progress and outcomes.Support implementation of activities at national and provincial level.

Quality inputs and outputs that progress Program outcomes. Accountability, planning and reporting. Relationship building with key stakeholders, and working in partnership with NCERWASS and PCERWASS. Implementation of activities, including through agreements with third parties.Funds management.

Coordination of PCERWASS involvement in the Program. Support development of MARD regulations and guidelines. Collaborate with MC and PCERWASS on demonstration design and implementation. Communications and marketing of outcomes. Support for replication through PCERWASSes in non-demonstration locations.

Collaborate on design of demonstration activities. Manage demonstration activities in their province and grant funds that support implementation. Manage approvals and learning through the PPCs and other relevant provincial agencies. Host other provincial visits to demonstration sites and support their learning. Assist Provincial People’s Committee (PCC_ in development of provincial level regulations and create the enabling environment in keeping with lessons learned from demonstrations.

Management and Reporting

Primary responsibility for receiving and approving reports from the MC.Primary responsibility for contract management, including payments, approvals, aidworks, etc.

Prepare all reports for DFAT.Prepare the Strategic Framework (collaboratively with stakeholders) for JSC approval. Provide required inputs for reports from NCERWASS to MARD.Manage all MC staff. Work cooperatively with the program staff that are appointed by NCERWASS.

Support and collaborate with the MC in preparation of annual plans and reports for the JSC.Manage NCERWASS contributions to the Program, including grants funds provided by the MC.

Track progress of demonstrations and report to the MC (with support from the MC for M&E tools). Provide regular reports of opportunities and challenges to the MC to enable continuous improvement of the demonstration and learning for future projects. Report progress to the PPC and other relevant provincial agencies.




Strategic Relationships and Representation

Build strategic relationships between Australian Government and Government of Vietnam, particularly those on the JSC. Represent or support representation of the Program at events and engagements.

Build and maintain strong relationships with NCERWASS, and with PPCs, PCERWASS and other key GoV stakeholders. Build and maintain strong relationships with stakeholders that are implementing the program including VWU, AWA, and others. Support the building of strategic relationships between Australian Government and program relevant sector stake-holders. Represent or support representation of Australian Government at in-country events and engagements.

Develop and assist the MC to form collaborative working relationships with PCERWASS in target provinces. Work collaboratively with the MC program team to facilitate implementation across all components. Assist build effective working relationships between MARD and the MC in support of technical assistance to develop appropriate regulations and guidelines. Promote women’s participation in all strategic relationships.

Maintain effective relationships with NCERWASS and MARD to contribute to national efforts to roll-out privatization. Work strategically with the PPC and other relevant provincial agencies throughout program design and implementation, ensuring they have robust information for representation of the Program. Develop and maintain strong relationships with the VWU and other community stakeholders who can inform and support the Program.

Coordination Support and manage the MC, providing opportunities for the MC to achieve success in Program implementation. Coordinate with other relevant DFAT activities. Liaison with other donors

Support in-country coordination of activities that will be occurring in different locations and with different implementing partners. Promote inter-governmental coordination (e.g. for the purposes of cross-provincial learning, to usher in new policies, etc). Communications and coordination with counterpart governments.Communications with other donors regarding Program activities.

Coordinate national level agencies in support of the Program. Coordinate with the Program team to support implementation of the Program, M&E, and reporting to JSC. Coordinate with PCERWASS in design and implementation of demonstrations. Coordinate with the Program to support all communications and marketing strategies and events.

Coordinate with PPCs and other provincial level agencies in support of the Program. Coordinate with the Program team and NCERWASS in design and implementation of the Program. Coordinate field visits for other provincial government agencies to learn from the demonstrations.




involved in the sector.

Strategic Communications and Information sharing

Identify, coordinate and manage strategic communications . . Keep DFAT and the Minister for Foreign Affairs informed of progress. Manage communications and coordination of activities with DFAT Canberra. Manage JSC communications with support from the MC.

Inform Embassy of program activities and progress – highlighting relevant points for aid diplomacy. Support diplomatic events. Coordinate briefing materials as required. Prepare all papers for JSC meetings. Regular communications with DFAT Hanoi to support coordination of activities and to keep DFAT informed of Program progress and risks.Liaison and communications with key Government stakeholder, NCERWASS, PCERWASS and MARD. Frequent communications with Program implementing partners such as VWU, AWA, PCERWASS, etc.Engage the JSC and convene meetings

Inform MARD of program progress through the JSC and on an ongoing basis to support development of regulations and guidelines. Communicate success to relevant national government Ministries and to provincial governments. Support bilateral events. Support preparation of materials for the JSC meetings.Provide the Program and PECERWASSes with relevant and accurate information regarding the regulations of GoV that pertain to rural water supply.Work with the Program to design and implement information sharing strategies for all of Vietnam’s rural provinces.

Ensure PPCs and other provincial agencies are well-briefed on program progress and promote outcomes. Provide PPC will regular reports and briefing on the program. Support PPC to implement community communications and education regarding the role of private sector in rural water supply. Share information with the Program on the progress, constraints, and challenges of the demonstration projects.

Marketing and Comms, and Replication

Support marketing and communications activities

Proactively identify opportunities for learning across Provinces through diverse and innovative marketing and communications. Work with NCERWASS to target the private sector water supply companies and promote

Work with the Program to design a range of communications and marketing strategies and events and take leadership in their implementation. Work with the Program team to develop

Employ effective marketing and communications strategies to promote the outcomes of demonstrations to both provincial government and provincial communities.




that support knowledge sharing, learning and replication. Assist the program team and the JSC to identify new and innovative approaches to marketing, communications and replication. Promote knowledge and learning from the MC across relevant DFAT sections, and from those sections to the MC.

opportunities that emerge from the Program. Engage third parties (e.g. governments, NGOs, MBOs) to implement marketing, communications and replication activities. Together with NCERWASS, design and issue a range of models and tools to support provinces to shift to greater use of private sector in rural water supply. Provide hands-on technical support (together with NCERWASS) to provinces that have demonstrated a willingness to adopt privatization approaches.

models and tools that support provinces implement private sector engagement strategies, and take leadership in their distribution. Coordinate communications and marketing events with the Program support. Take leadership in providing technical support to provinces wanting to implement privatization strategies.

Support the PPC and other relevant provincial ministries to replicate demonstrations throughout the province (potentially drawing upon technical support through the Program and/or through NCERWASS).


5.2 BudgetAus4Water will run for five years (July 1st 2017 to June 30th 2022), with a total budget of AUD $ 22.5m. A summary budget is included below, with a detailed budget attached at Annex B Table 4: Aus4Water Budget Summary (Tbc)

Implementation of Aus4Water is a value for money proposition for the Australian Government, with almost 75% of funds going directly to project activities, including demonstrations, marketing and communications, and replication activities. Activity Costs also include funds to resource NCERWASS as a joint partner and Program Team member. The Long-Term Advisor (LTA) and STA personnel costs include the MC’s Program team for the life of the Program, as well as an unallocated pool of national and international STA to draw upon as required. The only specified personnel are those positions identified in this design, all other positions are not specified and will be up to the MC to allocate.

5.3 Planning and Reporting CycleThe reporting cycle for the Program will be set out in the Program Operations Manual. The Inception Phase of the Program will see the development of all key Strategies and Plans. Progress reports will be required to report against them. All reporting, including monthly financial reports, should be submitted to DFAT in keeping with the Head Contract.

ReportingProgress reports will be submitted every six months. A six-monthly progress report will be submitted mid-way through the year, and an annual progress report will be submitted to the JSC with the Annual Plan. Both DFAT and the JSC will review and approve the reports. Annual progress reports will include the following:

- Highlights from previous period- Update on progress against the annual work plans- MEL data and analysis demonstrating progress towards outcomes

including:o Outcomes from demonstrationso Evidence produced through other sourceso Number of rural water supply connections (from

demonstrations and from replication)


o Women’s participation rates in rural water supply at community level and in professional capacities (in public and private sectors)

o Take-up of approaches that lead to new water supply schemes

o Take-up of replication support and successful completion - Marketing and Communications activities - NCERWASS and PCERWASS activities related to the program- MBO activities and reach- Business challenge fund progress- Innovation - Risks and Mitigation Strategies- Future directions- Financial report

Six-monthly progress reports will be shorter versions of the annual report. DFAT Post will work with the MC to develop an agreed reporting template to be throughout the life of the Program.Financial Reporting: The MC will provide DFAT with regular financial updates to enable ongoing up-to-date management of expenditure and forward commitments on a monthly basis. The Planning and Reporting hierarchy is summarised in the diagram below:

Figure 5: Planning and Reporting Hierarchy


Aus4Water Strategic Framework: established jointly by GoA and GoV to provide strategic direction for the life

of the Program

Annual Plans: Established jointly to ensure targets are met and the Program is on track to achieve

outcomes

Progress Reports: to measure progress of Program implementation against the

expectations set in the Annual Plan.

5.4 Implementation PlanThis implementation plan focuses on the first year of operations and the key milestones that need to be achieved. Attached at Annex B is a draft Aus4Water Year One Implementation Plan chart that sets out the key activities and associated timeframes. The implementation plan presented here will inform, and be superseded by, the Inception Plan (to be submitted by the incoming MC at the end of month one), and there-after by the Annual Plan (due in November 2017).

Inception Phase (Jun to Dec 2017). Note: dates are indicativeIt is anticipated that the MC will be mobilised by July 1st 2017. Given the importance of robust partnership development to the success of the Program (particularly with NCERWASS and target PCERWASS), the inception phase will last six-months. The Inception Phase begins with mobilisation of key staff, followed by an intensive period of orientation and strategic and annual planning, and preparation for the implementation phase. The MC will be required to hold a partnership workshop in order to support the JSC members and NCERWASS to gain a shared and detailed understanding of the design. This will be followed by a Strategic Framework and Planning Workshop in August 2017 that will provide opportunity for JSC stakeholders to engage in strategy development and planning. The MC will be expected to operate collaboratively both through workshops and on a day to day basis with GoV. This will be followed by the inaugural JSC meeting to be held in early Sept 2017. Between July and September 2017, the MC will work closely with NCERWASS to develop the NCERWASS Agreement (see governance and management section), also to be approved at the inaugural JSC in Sept 2017. Approval of the Strategic Framework and Annual Plan will take place at the JSC meeting in December 2017. The highest order deliverable will be the development of the Aus4WaterStrategic Framework, that sets forth the strategic direction for the program and guides it throughout implementation. The Aus4Water Strategic Framework will be largely based upon this Design Document, including its Program Logic, Delivery Method, GESI Strategy and M&E Framework. Although similar to the Design Document, the process of developing the Aus4Water Strategic Framework allows the governing body of Aus4Water an opportunity to engage with and approve the content, supporting a high degree of ownership from the JSC. The first Annual Plan, and all subsequent Annual Plans, will be developed in keeping with the Strategic Framework. The Aus4Water Strategic Framework will also include the Monitoring and Evaluation Framework, a Marketing and Communication Strategy, and a


Replication Strategy that will guide implementation of these aspects of the Program over its five-year life. The Annual Plan will be developed through a consultative process with GoV and DFAT (and other stakeholders as necessary) and will detail the activities that will take place in the coming calendar year (Jan to Dec 2018), how they will progress achievement of outcomes, how they will be managed, and the M&E Plan for the year. The JSC will approve the Strategic Framework and the first Annual Plan at their meeting of Dec 2017. The MC will, within the first three months of operation, deliver the Operations Manual, inclusive of the following:

- management and governance arrangements- annual planning cycle- financial management manual- grants management manual- fraud and anti-corruption measures- risk and risk management approach- child protection and environmental and other safeguards- security

The State of the Sector Survey will be commissioned early in the inception phase; it is a critical tool for planning of demonstrations, replication efforts, and monitoring and evaluation of progress. The State of the Sector Survey is not only a tool for sector wide planning, it will collate baseline data for the Program (and GoV) to measure its progress. It will include information on: the number, size and type of private sector rural water suppliers; household access; provincial preparedness and progress in privatisation; success factors; constraints and opportunities; etc. Three concept notes will be put to the JSC for approval in its inaugural meeting to be held in September 2017. They will then proceed to design. Two of those designs (the Business Challenge Fund and the Small-Scale Water Filtration scheme) are expected to be conducted in-house with NCERWASS and the relevant PCERWASS, and put forward to the JSC for approval in its December 2017 meeting. The third scheme will be subject to a more complex feasibility and design process and therefore will be approved mid-2018.

Implementation PhaseThe Implementation Phase of Aus4Water begins 1st Jan 2018. By this time, the JSC will have approved the Aus4Water Strategic Framework (includes the Communications and Marketing Strategy, the Replication Strategy and the M&E Framework), and the Annual Plan for the 2018 year (Jan – Dec 2018) which supersedes this Implementation Plan. In Aus4Water Investment Design Document 79

addition, the JSC will have approved at least three concept notes at its inaugural meeting scheduled for early September 2017, and at least two designs at its meeting in mid-Dec 2017. Therefore, the implementation of the approved designs will proceed from January 2018, and continuing design work on the third design will proceed. From January 2018, the two designs that will begin implementation are the Business Challenge Fund and the small-scale water filtration systems demonstration. The Aus4Water Program Team (includes the MC and the NCERWASS appointed staff) will take forward agreements with the relevant provincial governments for implementation to proceed (particularly the PPCs, the PCERWASSes and the VWU) which will likely include resourcing for implementing partners where required. The third concept, the Smart Subsidy for private enterprises, will still be in design phase because the design requires more intensive efforts including feasibility study and tender document preparation.The first six months of the Implementation Phase (from Jan 2018) will require the M&E personnel of the Aus4Water Program Team to support implementing partners to establish their M&E systems, train implementing partner staff for M&E, and establish the reporting system. The M&E personnel will also need to identify similar donor supported projects and cooperate with those projects to capture data and evidence that they produce. For example, the East Meets West NGO is a recent recipient of a grant from the DFAT InnovationXchange to implement an output based aid approach to rural water supply. There is potential for this project to be included as one of the demonstration projects, meaning Aus4Water will work collaboratively with East Meets West to accrue M&E data and capture lessons and evidence. The World Bank supported output based aid program may also offer useful lessons and evidence. M&E will also identify how it will service the information and evidence needs of the Program’s marketing and communications responsibilities. Marketing and Communications functions of Aus4Water will have started implementation of the Marketing and Communications Strategy since September 2017, following its approval at the inaugural JSC.

5.5 Procurement Arrangements Aus4Water will be contracted through an open and competitive tender process in the first half of calendar year 2017. Tenderers will be expected to nominate all specified personnel of the program. The tender price is expected to be approximately AUD $21.5 million for the five-year program of work, with an anticipated start date of July 1st, 2017. The MC will be required to have robust financial management systems and processes because much of the program’s activity funds will be channelled through third party systems, including the GoV. The MC will


need to become familiar with DFAT’s most recent Assessment of National Systems (ANS 28th Feb 2015) so that it may manage risks associated with using partner government systems. The report finds that the overall fiduciary risk that funds will not be properly controlled or used for intended purposes is assessed as moderate to high. Similarly, the overall risk of corruption associate with using GoV systems is assessed as moderate to high. This notwithstanding, the ANS finds that the GoV Public Financial Management reform program is positive and that DFAT funds can be channelled through GoV with ongoing assessment and risk mitigation measures. The report goes on to detail the issues and the mitigation measures. A critical inclusion in the Operations Manual will be the Financial Management Manual, and the Grants Management Manual, which will detail how the MC will manage risks associated with funds on-budget (i.e. through GoV systems) as well as how grants or other organisations and groups will be managed.

5.6 Sustainability With its focus on supporting and facilitating greater private sector engagement in inclusive water supply for the long-term, Aus4Water will aim for sustainability in two key ways: firstly, by directly delivering outcomes for communities through the demonstration models; and secondly by supporting learning from and adoption of the models on a wider scale, significantly enhancing the potential for Vietnam to achieve universal access to safe water. Critical for sustainability is building the capacity of national (NCERWASS) and local government (PCERWASS) agencies through action-orientated learning, and technical facilitation to undertake replication with private sector and government stakeholders. Capacity building activities should be informed by strategies that have proven to work in the Vietnam context. Action-orientated learning (or learn by doing), mentoring and coaching, and facilitated peer learning, have been utilised to good effect in previous RWSS programs. Training is most effective when it is part of a larger program of support for learning and development, i.e. it is a part of the development solution. In addition, capacity needs include soft skills (communications), generic skills (strategic planning, M&E as a tool for decision making, risk management, etc.), as well as technical skills (water supply management, quality control and testing, etc.). The MC will need to review capacity needs of partners and stakeholders (across soft skills, generic skills, and technical skills), on an ongoing basis to ensure that capacity and systemic change is becoming embedded through the program. In particular, the MC will need to embed capacity building strategies in its replication strategy for the Program, and for each replication activity that it undertakes.


Revise key ways of support to include NCERWASS and PCERWASS role in supporting sustainability through building capacity and ongoing support and mentoring. Sustainability is achieved when private sector enterprises gain full cost recovery from the provision of safe water to households. It is anticipated that the upfront capital costs may need to be subsidised, as well as some ongoing costs through subsidised water tariffs for poor households in the short-term. However, over the medium to long term, provincial governments can increase tariffs to cost-recover levels as households become more economically viable due to the time savings, and positive health related impacts, of readily accessible safe water directly to their household; freeing up currently constrained time and resources for productive activities. The Program will support NCERWASS, PCERWASS in the implementation of their own ongoing role in meeting national water supply targets; both the demonstrations and the learning they generate, and the capacity built among staff of these agencies, will contribute in the long-term to the achievement of national water supply targets. Through a collaborative partnership with key GoV and other stakeholders, and comprehensive communication and marketing of learning from the demonstrations, the expectation is that GoV will channel their own limited budget for RWSS into subsidising replication of successful models in future, knowing that the models are cost-effective ways to achieve GoV targets. Close scrutiny will be given to all aspects of the demonstration models before replication, including assessing optimal levels of subsidies required for successful replication. The Program will provide initial support for replication and ongoing learning to build not only a strong knowledge of what works and why, but also to provide flexibility to enable approaches to be replicated in ways that respond to specific contexts.Preliminary consideration has been given to the sustainability of each of the proposed demonstration projects, outlined in the summaries at Annex A. Across the three proposed demonstrations, key sustainability strategies will include: early and sustained communication between the Program Team, specific implementing partners, local authorities and participating communities; participatory processes to incorporate key stakeholders’ knowledge and concerns in design, implementation, monitoring, evaluation and learning; ensuring increased and more meaningful engagement of women in the water sector, thus helping the sector better reflect and be relevant to its consumer base; ensuring the program focuses upon and implements tools that support changes to gendered norms that constrain women’s economic empowerment at community levels and institutions; capacity development of key stakeholders to ensure success of ability to replicate demonstrations; monitoring and quality control checks throughout construction and at


specified times following completion; and ongoing dialogue between key stakeholders on policy development and practice, particularly in relation to engagement of the private sector in RWSS. Financial sustainability of the demonstration models will be specifically planned for, such as through road-mapping full cost recovery water tariffs within the Smart Subsidy demonstration. The Program will contribute to building a robust and diverse private sector in RWSS for the longer-term, by fostering capacity development of existing and new RWSEs in demonstration model projects, including supporting business planning through the Challenge Fund. The Program aims to increase economic opportunities for women, by creating employment opportunities within the private water sector. Achieving real and sustainable economic empowerment for women is challenging, due to the entrenched nature of disadvantage women face in a gender-unequal society and in specific gender-unequal sectors. Gains made for women in non-traditional areas of the economy are hard-won and can easily be lost. The Program aims to build on the successes of women already in the sector and those enabled to enter as a result of Program activities, by maximising their experiences for the purposes of learning and by promoting and supporting their potential as role-models to other women and to men in the sector. The Program also aims to alleviate women’s workload by reducing time spent on water-related tasks associated with their socially-assigned gender roles. Women’s domestic workload can be reduced by provision of labour and time-saving interventions, and/or by men taking up a greater share of necessary domestic tasks. For women in target locations where new or improved water supply technologies will be implemented either by demonstration projects or by subsequent replication projects, workload will be reduced through easier access to safe water closer to home. Achieving norm change to facilitate men’s behaviour change is difficult to achieve. Whilst acknowledging that the degree of effort required to achieve widespread norm change is beyond the scope of this Program, the Program will coordinate with organisations who are undertaking this work, such as VWU, UN Women, NGOs and CSOs, and with other programs such as DFAT’s Aus4Equality program. The Program will also take every opportunity to reinforce the importance of and benefits to be gained by men sharing a fairer load of women’s domestic workload. Reducing women’s workload on unpaid domestic and care tasks can free them up to take up other opportunities such as training and new job opportunities; thus, the achievements of the program in this regard will contribute to enabling women to take up the training and employment opportunities offered within the demonstration and replication projects.


5.7 Gender Equality Addressing gender inequality and narrow gender roles are central to water supply and management issues, and to economic development, and are therefore a priority for this Program. To achieve this, Aus4Water takes into consideration the roles, capacities, status, needs and interests of women, girls, men and boys at all levels, and identifies ways to correct imbalances. The Program will achieve several outcomes to contribute to greater gender equality, namely: alleviated workload for women; increased economic opportunities for women within the water sector; and increased and meaningful engagement of women in all aspects of RWSS programming. These outcomes are linked and to some extent interdependent.Improved access to water can reduce women’s workload. Women benefit most when safe water is piped directly to the home, without which women still spend significant time collecting water or making it safe for consumption by boiling or other treatment methods. The Program will facilitate improved access including by supporting private sector engagement in piped water systems. In other cases, particularly in remote mountainous communities in Son La province, decentralised water treatment units are more feasible than treated, piped water at least in the short-medium term. In these cases, the Program will contribute to reducing women’s workload but to a less significant extent. The Program will increase women’s economic opportunities in two ways: firstly, by contributing to reducing their workload, thus freeing them up to potentially take on training and employment opportunities that are otherwise difficult for women to access. Secondly, the Program will actively promote and pursue opportunities for women to gain paid employment in the private water sector, either in jobs within RWSEs or as entrepreneurs. This will include a focus on breaking barriers to women accessing traditionally male-dominated technical and management roles. The Program will achieve this building understanding in the sector of the benefits of having a workforce that more closely reflects the sector’s key client base, and by providing a range of incentives to RWSEs who employ women, particularly in technical and management roles, within the demonstration models. Achieving both a reduction in women’s workload and an increase in women’s economic opportunities and outcomes, requires a shift in intra-household division of labour towards men assuming a far greater share of unpaid domestic and care work. While this requires norm change that is difficult to achieve and is largely beyond the scope of the Program, the Program will link with other organisations and programs that are working on achieving this, and will make every effort to reinforce communication on the importance of this change.


As the water supply sector is male-dominated, many measures will be required to increase understanding of gender basics, and to develop practical skills to produce more gender-transformative outcomes. Capacity building in gender analysis and budgeting will be provided to all key stakeholders, including government and private sector. Generalised, stand-alone and one-off gender training tends to have limited effectiveness; therefore, the Program will take a targeted and ongoing approach to gender capacity building. Capacity building needs will be assessed during the project design process and plans documented in the GESI Strategy for each project. Effort will be made to ensure that any gender training is tailored to the specific audience so that participants leave with a clear sense of why change towards gender equality is important in relation to their own lives and work, and with a concrete idea of what they need to do differently and the knowledge they will be supported to do it. Accountability and incentives to change are also key in achieving change, particularly in a traditionally male-dominated field where it is much easier to continue with ‘business as usual’ rather than to adopt new ways. Therefore, the gender strategies for the Program overall and for the specific project designs must include specific requirements, targets and ways to measure performance in relation to gender-equality measures, and penalties for non-performance. The recent UN Women study Making Inclusive Growth Work for Women, recommends a simple set of three principles to guide programming to ensure that women gain economic benefit, i.e. that gender-equitable economic programs recognise 1) that unpaid care work is vital for producing and maintaining human capabilities; 2) that material conditions and social practices make it more difficult for women than for men to access decent jobs and the productive resources for remunerative self-employment in either agriculture or trade; and 3) that goods, income time and other resources are often not equitably distributed within families. It recommends measures that 1) reduce and redistribute unpaid care work; 2) redress gender asymmetries in labour and other markets; and 3) facilitate re-allocation of resources to vulnerable members in a household. These principles are a useful guide for developing Aus4Water’s gender strategies. A final way in which the Program will address gender inequality will be through fostering increased and meaningful engagement of women (and other marginalised groups) in target communities in all aspects of RWSS planning, design, monitoring and holding duty-bearers accountable for outcomes. This will move beyond simply setting quotas and targets, to identifying and working to address obstacles to women having a voice and genuine influence over decisions at both household and community levels. To achieve this, the Program will partner with relevant


organisations with gender expertise, including VWU and other NGO and CSO agencies as appropriate. Many good practice examples, tools and frameworks exist for both developing a deeper understanding of and better addressing gender dimensions of WASH programming. The recent UN Women Towards Gender Inequality for Women report highlights a 2002 evaluation conducted by Centre for Natural Resources and Environmental Studies (CRWES) and DANIDA that ‘provides an excellent template and a step-by-step approach for how to conduct proper gender assessment of rural water and sanitation projects’. More recently, Plan International has implemented a strong gender focus in their WASH programs and has introduced a Gender and WASH Monitoring Tool, which has recently been assessed by CRWES and the Institute for Sustainable Futures, University of Technology, Sydney. A plethora of other tools and frameworks exist that can be readily adapted for use in any RWSS program. The Program’s Gender Strategy will include recommendations on gender analysis tools and frameworks that can be most useful for adaptation to each demonstration model and to the Program overall.The Program has common elements with another significant DFAT investment in gender equality programming, the Aus4Equality (GREAT) program. The synergies between the two programs relate particularly but not only to activities in Son La province. Aus4Water will link with Aus4Equality in a number of ways, including learning from program’s in-depth consultations with ethnic minority women, sharing of approaches and lessons learned for increasing women’s access to financial services and the use of non-literacy based methods for greater engagement of women particularly ethnic minority women, and potential sharing of expertise. Although being implemented in different provinces from Aus4Water, there is also scope for considerable cross-sharing with DFAT’s WEAVE program, particularly in relation to mutual sharing of tools and frameworks.The M&E Framework presented in this design document (to be elaborated upon at implementation), includes measures of change on the specific outcomes the Program aims to achieve, and will identify meaningful ways for women in communities to participate in monitoring and holding duty-bearers to account for results of water projects, such as through collaborative reviews and citizen scorecards. Monitoring of women’s economic gains under the program should consider measuring aspects such as: profitability of enterprises and benefits to women relative to men; pay and conditions for women relative to men in RWSEs; levels of control over income enjoyed by women entrepreneurs; and any risk of gender-based violence associated with women gaining increased income. It is recommended that a framework such as the Gender


Equality Continuum be adopted to guide design and assessment of individual projects. Recruitment for the Program Team will require at least some level of understanding of and commitment to gender equality in all team members, including technical, management and support staff. Extensive ongoing training and mentoring will be provided to enable the team to integrate gender across all program approaches and activities, rather than leave this as the responsibility only of the GESI specialist.

5.8 Disability and Inclusion The Program will target marginalised groups and individuals in a number of ways, including in selection of locations e.g. including target locations that fit in the lower quintiles of socio-economic development and where people of ethnic minorities live. The Program will develop an Inclusion Policy and Strategy during the inception phase as part of the Aus4Water Strategic Framework. The Program will take an intersectional approach to inclusion, acknowledging that one form of disadvantage can be compounded by another, the identity and situation of individuals are impacted by multiple factors, and women or all people living with a disability (PWD) are not homogenous groups with identical needs. People with disability comprise a significant segment of Vietnam’s population. Census data state that 7.8% of the Vietnamese population or 6.7 million people were living with a disability in 200920, however this is likely an underestimation of the true extent of disability in the country. While little specific data exists, and while GoV provides strong social protection supports relative to comparable countries, PWD and their households are likely to be living in economically precarious circumstances, even if in paid employment21. Vietnam has an active disability civil society movement, promoting the human rights of PWD and providing a range of services.Access to water can make a significant difference to the quality of life of PWD, but conscious effort is required to ensure that water programs address their rights and meet their needs. Rights and needs of PWD will be considered and addressed at all stages of Aus4Water, ensuring that PWD have equitable access to all Program opportunities and benefits, have a voice and influence in all decision-making, and that any water supply infrastructure or services built are accessible to all. The Program’s Inclusion Policy and Strategy will be developed in consultation with disabled people’s organisations (DPOs) and will be aligned with the Convention on the Rights of Persons with Disabilities, 20 UNFPA. People with disabilities in Vietnam: Key findings from the 2009 Viet Nam Population and Housing Census Hanoi: United Nations Population Fund, 2011.21 Palmer M, Groce N, Mont D, Nguyen OH, Mitra S. The Economic Lives of People with Disabilities in Vietnam. Federici S, ed. PLoS ONE. 2015;10(7):e0133623. doi:10.1371/journal.pone.0133623.Aus4Water Investment Design Document 87

DFAT’s Development for All 2015-2020 Strategy for strengthening disability-inclusive development in Australia’s aid program of May 2015 and its companion document, Accessibility Design Guide: Universal design principles for Australia’s aid program (Accessibility Design Guide). The principles of ‘nothing about us without us’ will be applied, within a framework of ‘reasonable accommodation’ to ensure that necessary measures are incorporated into all planning and implementation to facilitate meaningful participation by PWD. DPOs may also be engaged in providing capacity building in disability rights and inclusion to the Program Team and other stakeholders.The Program will ensure that participatory community-based processes at every stage from design through implementation and monitoring and evaluation give voice to and consider the perspectives of PWD. To achieve this, the Program will learn from and draw upon best practice by NGOs and DPOs in disability-inclusive WASH. Within the operation of the demonstration models, the Program will seek to actively promote employment opportunities for PWD along with other people from marginalised groups, e.g. by incorporating PWD in groups to be engaged through the Challenge Fund, seeking PWD among potential entrepreneurs and promoting the concepts of affirmative action with RWSEs engaged in the Program. The Program will also be alert to and actively guard against potential inadvertent exclusion of (e.g. through assumptions of heteronormativity), or discrimination against, people of diverse sexualities and genders.

5.9 Risk Management Plan The Risk Management Plan in Annex D provides details of the risk analysis and proposed mitigation measures. The overall level of risk is assessed as Low Risk. Key risks identified relate to the Development Risk, Operational Risk and achievement of objectives/results. Some of the most significant risks are as follows:

Risk: PPCs do not provide incentives or conditions that enable public-private-partnerships. Lessons learned from previous investments in the sector show that: to be financially viable, water supply providers require tariffs that fully recover costs, clear rules about ownership of assets and land and access to affordable finance. These risks are hard to mitigate in poor rural locations. The Program will need to mitigate these risks by tailoring the PPP model to the circumstance, maintain a policy dialogue to test assumptions regarding household tariff affordability, and having robust service contracts setting out the obligations, rights, tariff roadmap, service levels and performance requirements of each party.


Risk: Lack of interest from private enterprises. This is most problematic in the poorer provinces particularly in the central region, central highlands and northern mountainous areas. This risk will be mitigated primarily by raising awareness of private enterprises of the opportunities available through the Program, selecting project designs that are appropriate for the local conditions (e.g. household water treatment units where piped supply is not feasible) or selecting provinces which are conducive to PPP.

The overall fiduciary risk related to fraud, misuse or improper control of DFAT funds is assessed as moderate to high. (Refer also to DFAT’s Assessment of National Systems). These risks will be mitigated by ongoing dialogue with GoV relating to improving the procurement system, use of the GoV Public Financial Management system, due diligence checks on implementing partners, a rolling program of audit spot checks of DFAT program funds, and engagement of an IVA.

5.10 SafeguardsDFAT Safeguards for the Australian Aid Program are applied to environmental protection, displacement and resettlement, and child protection. The Managing Contract will be required to adhere and apply these safeguards throughout the Program. The MC will refer to the DFAT website for the most up to date versions of DFAT Safeguards. Water supply and management activities have the potential to fall into a medium environmental and social safeguard risk category and/or have a major impact on the environment, including direct and indirect social and cultural impacts in the absence of avoidance and mitigation measures. During detailed design of Aus4Water if an activity is classed as having at least a medium environmental and social risk the MC must prepare a proportional impact assessment of the proposed action and an associated environmental and social management plan to avoid and mitigate such risks and impacts. The Aus4Water program will adhere to both GoV requirements and international performance standards (e.g. IFC) for undertaking social and risk impact assessments. The MC should also refer to the AWA led feasibility study in Nam Dinh province where environment and social safeguards have been analysed as recently as 2016. Each project will be undertaken through participatory design processes that cover among other things the environmental impacts and measures before works are commenced. A Complaints Mechanism will be developed as part of the project’s operational policy, to allow


communities to raise concerns or grievances on the execution of the project works and environment issues.

Child Protection The Program will apply the Australian Government Child Protection Policy for the Australian Government’s aid program, originally released January 2013 and reprinted June 2014, the Child Protection Policy Guidance of September 2016, and any updates released throughout the course of the Program. The policy applies to the MC and its personnel, partners and subcontractors who are using DFAT funds. DFAT’s policy sets out standards that provide a framework for managing and reducing the risks of child exploitation and abuse. The Policy recognises the shared and collective responsibility of all adults to prevent child exploitation and abuse and DFAT’s own responsibilities as the Australian Government’s overseas aid agency, to working with its partners to prevent and respond to child exploitation and abuse. It further recognises that child sex offenders often seek employment or volunteer placements in organisations that work with children in Australia or overseas in order to access vulnerable children and therefore the policy is designed to protect children across the world from (or from further) exploitation and abuse and sexual, physical and psychological violation. The goal of the policy is to protect children from exploitation and abuse of all kinds in the delivery of Australia's overseas aid program. Aus4Water is obliged, under DFAT’s Child Protection Policy, to have a DFAT-compliant Child Protection Policy. The nature of the Aus4Water investment may involve program personnel being in contact with children, for example during program processes at community level, which may occur in remote locations and include overnight stays in communities. The design process for each individual demonstration model will need to assess the risks specific to that activity, using the DFAT Guidance on Establishing Child Protection Risk Context.

Displacement and ResettlementAus4Water will be required to adhere to DFAT’s Displacement and Resettlement of people in development activities, July 2015 (or its subsequent updates). Displacement may be physical or economic and may occur as a result of development activities such as the building of economic or social infrastructure. Displacement occurs wherever communities are required to move, or when their access to land is restricted, as a consequence of the activity. Resettlement of affected communities to alternative locations needs to be well planned and supported to ensure positive outcomes. Appropriate risk assessments and mitigation measures need to be in place in order to ensure positive


outcomes for vulnerable people who may be affected by the activities, directly or indirectly. Although it is not envisaged that the implementation of Aus4Water will result in displacement or resettlement, the MC will need to be mindful of, and adhere to, the DFAT guidelines. In relation to the piped water supply schemes, some small-scale displacement and resettlement or compensation issues may potentially be involved relating to loss of land, crops or property e.g. in the case of reservoir or water treatment plant construction. Any such issues will need to be considered in the designs of each demonstration model and fully assessed as part of feasibility studies.

Environmental Safeguards Aus4Waterwill engage with the private sector to increase safe water supply for the rural populations in three provinces. It will develop (a) piped water supply systems focusing on rehabilitation and extensions from existing systems, and; (b) neighbourhood and community based water treatment using appropriate modern technologies. The Program will include technical assistance for project implementation and improved water supply system management, operation and maintenance procedures, accounting and customer relations. This may be provided through either short or long term technical advisory support to the Program. The role of PCERWASS in supporting this process will be strengthened, specifically its technical support role for private water service providers and household/community based water treatment units.The investments under the Program are expected to have many positive environmental and public health impacts through the provision of safer, more reliable water supply facilities. The potential adverse environmental effects of RWSS Program activities are generally well known and understood by the implementing authorities. The potential environmental impacts may include water source protection and reliability, management of collected sediment or sludge from water sources, and use of chlorine for water disinfection. Climate change will be addressed primarily by selecting resilient water sources or through appropriate technical design (e.g. large raw water storages to improve dry season reliability). Arsenic contamination and saline intrusion of groundwater are problematic in some provinces and will be excluded through environmental screening. A water safety plan will be prepared with community participation for each sub-project to identify and mitigate risks associated with water quality from catchment to consumer. The participating provinces also have some sensitive habitats or physical/cultural resources that need to be considered, including national parks, nature reserves, historic sites and protected areas.


Given the proposed scope, small scale of individual investments, the geographic focus, and previous GoV experience with DFAT safeguards, Aus4Water is not expected to have significant adverse impacts on the environment. It is expected that these effects will be manageable with known and demonstrated mitigation measures.The Program is subject to DFAT “safeguards”, which aim to prevent and mitigate undue harm to people and their environment in the development process. The Program relies primarily on partner systems to implement programs and manage social and environmental risks, but requires that partner comply with DFAT equivalent safeguard principles. Institutional arrangements for environmental management, including environmental impact assessment, are legislated and established at all levels of government. However, a common problem is the ineffective implementation of mandated requirements and responsibilities due to lack of institutional capacity and financial resources. To address this concern, an environmental capacity building program will be provided for the implementing agencies to better implement environmental management. The capacity building program will focus on improving GoV’s environmental management, including in the areas of: implementation and oversight of the environmental assessment system within the Program; planning, site selection and technical design of water supply systems; screening of environmental effects and public consultation; practices for identifying and avoiding arsenic-affected aquifers in designing groundwater supply; sampling and monitoring of water quality; and use of strategic planning techniques such as water safety plans, improved information systems or other techniques.To mitigate potential negative impacts, an Environmental Management Plan (EMP) will be developed to guide implementing agencies and contractors in development of water schemes and provision of household connections. Where necessary, the EMPs will form part of the design process for demonstration activities. All sub-projects will be screened against a negative checklist and projects that triggered certain safeguards policies will be rejected. A sub-project Environmental Assessment Report will be developed for each sub-project and reviewed by the Project Team. The Environmental Assessment will assess each sub-project for its potential safety, construction, and operation related adverse impacts.


6 Annexes


6.1 Annex A: Concepts for Initial Demonstrations 1. Smart Subsidy for Private Enterprises as Investors/Service Providers in Piped Water SupplyProject Description

This demonstration project builds on the “Smart Subsidy” approach adopted in other DFAT-funded initiatives, namely: (a) the Global Program for Output Based Aid (GPOBA), 2007-11, and; (b) the InnovationXchange planned for 2016-17. The project will engage with the private sector to develop or expand piped rural water supply systems using an innovative results-based financing mechanism. The systems will produce safe water meeting MOH standards.Project Approach

PCERWASS in participating provinces will be the implementing agency for the project. Based on agreed selection criteria, PCERWASS will: (a) identify target communes, suitable RWSS schemes and candidate RWSEs, and; (b) engage consultants to prepare feasibility studies (FS), baseline socio-economic surveys, financial analyses, technical design and bid documents. The Program Team and DARD will appraise the FS which will be approved by the PPC.The PPC will be required to commit to a roadmap for tariff increases to progressively achieve full cost recovery (FCR) tariffs over a number of years. A Smart Subsidy will be calculated by financial modelling as a grant to account for the shortfall between the agreed tariff roadmap and FCR tariffs based on life cycle costs. PPCs will be expected to contribute to the capital cost of the scheme. Households will pay about 10% of the scheme capital cost as their connection fee using their own funds or VBSP loans. The table shows a funding plan for a typical scheme. RWSEs will be carefully selected and provided with capacity building in water supply management, O&M and community relations, with a strong focus on gender-responsive approaches and communications. Selection criteria for RWSEs will include: technical, management and financial capability, and evidence of customer satisfaction for existing RWSEs.Transparent, competitive bidding by the RWSEs will be based on technical and financial proposals with a preferential weighting given to enterprises that employ women in management or technical roles. 80% Aus4Water Investment Design Document 94

Capital Cost Sources of Funds - ExamplePer Connection Smart Subsidy $200 25%$800 PPC Contribution $80 10%

HH Contribution (VBSP) $80 10%PE Capital $120 15%Bank Loan to RWSE $320 40%TOTAL $800 100%

Note: RWSE pre-finances capital costs.

$ Per ConnectionSources of Funds Based on Smart Subsidy

of the Smart Subsidy amount (paid on a per connection basis) will be disbursed to the RWSE after verification of household connections by the Program Team and the remaining 20% after verification of six months of satisfactory services. The subsidy will pay a supplement for every connection by the poor and near poor. The RWSE will need collateral for the loans from a commercial bank in form of property, land or other assets. Measures to Ensure Project Sustainability

Measures to ensure project sustainability include: (a) early and sustained communication by the Program Team and PCERWASS with local authorities and communities; (b) beneficiary participation in scheme planning and implementation; (c) execution of a service contract between the RWSE and PPC, including the agreed water tariff roadmap and clear rules about ownership of water supply assets and access to land; (d) capacity building by the Program Team and sector specialists for: (i) RWSEs in water supply management, and; (ii) for PCERWASS in the project approach, project implementation, and water quality testing. Gender equality-related outcomes will be supported with inputs of highly practical support for key stakeholders (eg NCERWASS and participating RWSEs) to building understanding of the importance and benefits of ensuring women’s meaningful participation and social inclusion, and in skills in gender analysis and budgeting, and strengthening gender equality measures within businesses and organisations. PCERWASS will provide ongoing oversight, technical support and water quality monitoring for completed schemes.Range of Locations, Provinces and Subproject Types

The Smart Subsidy approach will be tested in a range of locations and provinces, with a number of demonstrations in terms of scheme type (new, expansion or take-over of failed schemes), scheme size, supply sources and technology, including low cost advanced technologies.

2. Small Scale Water Treatment with Private Entrepreneurs as Investors and Water VendorsProject Description

This demonstration project builds on the DFAT-funded AWA Technology Innovation planned for Son La Province in 2016-17. The proposed project will engage with community PEs, PCERWASS and the VWU to install small ultrafiltration water treatment units and establish financially sustainable village-based water businesses in selected communes. The businesses will treat local water sources and sell high quality drinking water in selected communes, such as remote and mountainous areas, where there is high demand for drinking water but where treated, piped water Aus4Water Investment Design Document 95

supply is unaffordable or infeasible. AWA will provide management and technical support and capacity building for the project.The proposed ultrafiltration membrane treatment units are low cost, simple to operate and maintain, and do not require electricity or consumable chemicals. They will be installed in a school or health clinic initially for demonstration purposes. Treatment units will be sold to PEs to install and sell treated water for neighbourhood supply (1,000-5,000 Litres/day), for village supply at kiosks (10,000-40,000 Litres/day) or for delivery to households in containers by handcart, motor bike or other vehicle. Project Approach

Using a participatory approach, PCERWASS, the VWU and AWA will assist CPCs and communities to identify PEs and suitable subproject sites, undertake project planning, prepare water safety plans and formulate subproject proposals. PCERWASS will provide support to PEs and households for project design, construction supervision, O&M and management of the treatment units and help to establish sustainable water businesses. The VWU will receive an incentive payment to facilitate participatory planning, and assist PEs to install and operate the treatment facilities, establish their water businesses and develop customer relations. Site selection criteria for the water treatment facilities include: (a) a nearby, reliable raw water or piped water source that the technology can treat to drinking water standards; (c) customer demand for drinking water and willingness to pay a small charge to recover capital and operating costs, including a salary for a local owner/operator; (d) available land for the water facilities, and; (d) support by the CPC and communities for the project. Measures to Enhance Sustainability

Measures to enhance project sustainability include: (a) early and sustained communication by PCERWASS, VWU and AWA with local authorities and communities; (b) beneficiary and VWU participation in project planning, site selection and implementation of the water treatment facilities; (c) capacity building by AWA for: (i) PEs, PCERWASS and VWU in the project approach, water treatment technology, O&M and business management, and; (ii) PCERWASS in community mobilization, water safety plans, project implementation, project design, construction supervision and water quality testing. PCERWASS will arrange licensing of the water businesses with DPI, provide ongoing oversight and technical support, help to establish supply chains, and undertake periodic water quality monitoring.


Aus4Water, together with PCERWASS and AWA, will explore and implement methods for transforming gender relations where these are proving difficult to shift utilising the approaches defined above, for example in remote and rural ethnic minority communities. The Gender Action Learning System (GALS) is a good example of such a methodology that has been employed in Vietnam to good results. It is a community led empowerment methodology that works with both men and women to map out and plan for change that is beneficial to the entire community. A small amount of seed money would be provided for the installation of the treatment units in a school or clinic, for capacity building, incentive payments to the VWU and as a subsidy for purchase and installation of the treatment facilities by PEs. Additional training would be provided to women wanting to run or work for small-scale water treatment enterprises to assist them to gain confidence and community acceptance in succeeding and growing their businesses, potentially extending their range of products and services to include sanitation and hygiene-related products and even to move into larger scale piped water systems in the longer term.Range of Locations, Provinces and Subproject Types

The Small Scale Water Treatment Facilities will be tested in a range of locations and provinces, with a number of demonstrations in terms of treatment unit size, business type (household, neighbourhood or kiosk), and method of water delivery to households. The provision of small treatment units providing high quality drinking water may also be tested in areas where there is potential to enhance tourism opportunities through home-stays and ecotourism, possibly linked with ceramics, textiles or handicrafts businesses, with an emphasis on building economic opportunities for women and other marginalised groups.

3. Challenge Fund with Private Entrepreneurs in Water-Related Activities Project Description

This demonstration project will establish a small Business Challenge Fund (BCF) to support the private sector to develop innovative business models related to rural water supply. The BCF will provide technical assistance, training, mentoring and grants of up to 49% of the total investment to business models that are innovative, inclusive and commercially viable. The fund will also help women-owned enterprises to grow their businesses.The BCF will use a competitive bidding process and build skills for business growth in the water sector, as well as provide funds for the best models developed through the competition. A successful proposal must Aus4Water Investment Design Document 97

demonstrate that the proposed activity has strong development benefits and good prospects of achieving commercial viability within a specified timeframe. The most important feature of the BCF is the challenge, which will be clearly articulated and promoted through the eligibility and selection criteria in order to produce a large pipeline of applicants that fit the needs of the program. To be eligible to participate, private sector businesses will need to demonstrate they have a proven track record; can contribute at least 51% of the project funds; are in a sound financial position; and will use the challenge funds within a specified time frame. Projects will be assessed with regard to: commercial sustainability after the grant period ends; social benefits to rural communities; avoidance of social or environmental harm; cost effectiveness; likelihood of broader impacts in the wider market; innovation in the project; potential for up-scaling, and; financial and technical capacity to implement. Preference would be given to projects that can demonstrate significant and genuine empowerment of women. Consideration may be given to focusing a round on specific target issues, such as innovative ways to support more women to access technical skills through training or other means.Project Approach

The BCF will be managed by the MC whose role is to encourage private sector applicants, advise bidders and the assessment panel, disburse the grants, guide companies during implementation, oversee monitoring and communicate project results. Grant decisions will be made by an experienced, independent assessment panel comprising private sector business people, specialists in gender and social inclusion, and water supply specialists. The panel will assess business plans and select projects against the selection criteria. The BCF’s main activities include: (a) fund establishment; (b) fund marketing; (c) managing bidding rounds; (d) contracting and managing grants; (e) linking with business and disseminating information; (f) managing the program and reporting outcomes; (g) rigorous results measurement and evaluation program, and; (h) additional activities to promote high performing projects. The MC will publicise the fund to a variety of potential bidders through media, key connectors such as banks, chambers of commerce and GoV agencies. In addition, direct marketing will be by personal contact – targeted and face to face meetings with key businesses. Business PlansApplicants will be required to submit an initial proposal for review by the assessment panel. Successful candidates will be invited to develop a full proposal in a business-plan format. The panel will then select winners based on the selection criteria and the completed applications. Aus4Water Investment Design Document 98

Focused support from the MC will be critical in helping the applicants and may include: (a) tailored rural water sector business planning workshops; (b) connecting applicants with: successful water supply businesses or organisations canvassing new technologies (such as AWA); research centres, and other networks depending upon applicant profiles, and; (c) a study tour for applicants to a demonstration site that is of relevance to their particular area of interest. Provision of support to business planning will include a strong equity principle, aiming to level the playing field for women and others likely to have lower formal education levels and/ or limited experience in developing business plans of in commercial bidding or other competitive processes. Support to Implement the Business ModelThe support offered through the process of business planning is designed to spark interest and facilitate successful private water supply, delivery or treatment models. Winning proposals will receive further technical and financial support for implementation of their business plans. The BCF’s role will extend beyond financing to help shape project design, facilitate access to credit, enhance product design, ensure gender inequality and social inclusion are addressed in all activities, help commercialise products and improve project management and business skills. Specific incubators and/or funding offers will be available to enterprises that are women-owned or who take on women in significant numbers in senior levels or technical roles.


6.2 Annex B: Budget Tables

Table 5: Aus4Water Budget Summary (Tbc)


Table 6: LTA Personnel Table

Personnel

Long-term personnel ClassificationMonthly rate Unit SY1 SY2 SY3 SY4 SY5 Total

Team leader D4

Water specialist N\A

GESI specialist N\A

M&E specialist N\A

*Project coordinators (x4) N\A

Accountant N\A

Accounting staff \ cashier N\A

IT (MIS) staff N\A

Administrative staff N\A

Administrative staff N\A

Unallocated N\A

Total Long-term personnel

Short-term personnel ClassificationStrategic Program Advisor D4

M&E Specialist C4

Water specialist C4

Gender specialist B4

Investment \ PPP D4

Unallocated

Short term local consultant N|A

Total short-term personnel


Advisor support cost

Team leader accomodationHanoi \ Vietnam

Team leader mobilisation \ demobilisation

International travel

Total support cost

Notes:

*One project coordinator per province


Table 7: Operations Budget

Items Unit SY1 SY2 SY3 SY4 SY5 TotalOffice RentalOffice maintenance and operation including electricity and water

Office consumable

Car rental

Domestic travelOffice set up (equipment and furniture)

Table 8: Activity Budget (tbc)

Table 9: Management Fees (tbc)


6.3 Annex C: Aus4Water Year One Work PlanFigure 6: Aus4Water Year One Work Plan



6.4 Annex D: Risk Matrix

Probability of Risk OccurringImpact of Risk Occurring

Negligible = 1 Minor = 2 Moderate = 3 Major = 4 Severe = 5Almost Certain = 5 Moderate = 2 Moderate = 2 High = 3 Very High = 4 Very High = 4

Likely = 4 Moderate = 2 Moderate = 2 High = 3 High = 3 Very High = 4

Possible = 3 Low = 1 Moderate = 2 High = 3 High = 3 High = 3

Unlikely = 2 Low = 1 Low = 1 Moderate = 2 Moderate = 2 High = 3

Rare = 1 Low = 1 Low = 1 Moderate = 2 Moderate = 2 High = 3

Risks Source P I IRR Impact on Program Options to Ameliorate the Risks RE RRR Approach to Mitigate ImpactExternal Risks

Slow roll-out of GoV policy and mechanisms for PPPs

GoV 4 4 3 Private sector interest in the program diminishes

Work in close partnership with NCERWASS and PCERWASS to support effective policy roll-out

Creation of Joint Steering Committee to facilitate policy development across whole of government

Demonstrate success of PPPs and support replication including of policy and mechanisms

Government members of JSC lobby line agencies

GoV, DFAT 2 Redirect project investment to models that rely less on policy. change whilst maintaining efforts to support policy reform.

Natural disaster (e.g. floods or landslides) may harm built facilities

EnvironmentAnd/or GoV re mitigation

3 3 3 Reduce efficiency and effectiveness of investment

Lack of access to safe water

Identify natural risks in feasibility studies Early mitigation measures developed in designs Work with provincial governments to put in place DRR for water

facilities.

PPC, PCERWASS, MC

1 Design water facilities to withstand natural disasters, or re-site facilities to avoid disaster-prone areas.

Development RisksLessons learned from demonstration projects do not inform GoV policy and practice

GoV ; MC; AusForEquality JSC.

4 5 4 Effectiveness of Program diminished and outcomes not reached

Policy dialogue with Steering Committee and MARD Adequate resourcing of marketing and communications and replication Work closely and collaboratively with GoV partners to ensure ownership

of learning

Joint Steering Committee, MARD, DFAT

2 Redirect investment to models that rely less on policy reform or where learning has been taken on board.

Lack of interest from private sector

GoV (prov & nat); MC; Finance sector.

3 5 3 Limited or no private sector investment

Program decisions based on findings from State of the Sector survey conducted at

Select provinces where conditions are conducive to PEs Raise awareness among PEs regarding program opportunities Use high profile advocates and champions to attract PE interest

MARD, NCERWASS, PPCs, PCERWASS, MC

2 Redirect investment to models or locations where private sector is stronger or can be successfully fostered.


Risks Source P I IRR Impact on Program Options to Ameliorate the Risks RE RRR Approach to Mitigate Impact Connect with enterprise networks including women enterprise networks Investigate and understand obstacle and tailor program to address them Selection criteria and incentives for PEs

Lack of follow-through on commitments from PPCs

PPCs 4 5 4 PPCs do not provide conditions or incentives to enable PPP

Reduce efficiency and effectiveness of investment

Lack of budget for provincial implementing agencies

Project fails to achieve outcomes

Select provinces where PPCs enable and incentivize PPPs Work closely with provinces at outset to establish that commitment is

strong PPCs required to demonstrate commitment through budgets and annual

plans Dialogue with MPI/MoF to agree provincial budget which includes

Aus4Water Program and to work with National Assembly to approve it MOU with PPCs to include program in annual budget Early and sustained consultation with PPCs Promotion to and education of PPCs about the potential benefits of

engaging in the program

MPI/MoFMARD, NCERWASS, PPCs, PCERWASS, MC

1 Make no further investment in non-performing provinces.

Non-transparent selection of RWSEs or private entrepreneurs

PPCs & PCERWASS

5 4 4 Limited private sector investment

Sub-optimal outcomes Less cost effective Diminish consumer trust

in private water sector

Transparent selection criteria and process in selecting private entrepreneurs

Expert review of tendering and tender prices Competitive bidding for larger projects Strict adherence to GoV tendering guidelines Evaluate proposals for detailed design and supervision and civil works

that are above cost estimates


2 Blacklist corrupt entrepreneursShift project location.Raise issue at JSC for determination of appropriate action.

PEs not interested in remote areas with difficult access, poor and scattered population

PPCs & Prov Govts; NCERWASS

4 3 3 No/limited private investment

Special policy measures for PEs carefully sought out for each case Transparent negotiation of contracts Dialogue with PPC on tariff subsidy and access road investment costs Intensive IEC activities to increase safe water demand


1 Dialogue with PPC on preference policy.

Poor performance, high failure rate by private sector stakeholders

Private companies in program; NCERWASS & PCERWASS; MC.


Reputational damage Households less willing

to connect Low sustainability and

low functionality of

TA for capacity building and training of PEs in water supply management, operation, maintenance, accounting, customer relations and communications

Selection criteria an due diligence for PEs MARD-based M&E continuous oversight/early warning of problems Good technical practice (e.g. clustering of communes) to capture

economies of scale Application of national tariff policy??


2 Ongoing TA for capacity building and training of PEs.M&E to continue after subsidies have been paid.Adjust smart subsidy to enhance sustainability.PPC service contact with private service provider sets out the


Risks Source P I IRR Impact on Program Options to Ameliorate the Risks RE RRR Approach to Mitigate Impactsystems

Program would have poor reputation

Program outcomes undermined

Strict construction and equipment quality supervision Regular test of water quality by PCERWASS Hot line/communication channel with community on water quality

continuity Strengthened role of PCERWASS in periodic technical support and

government regulation updating for PEs and household/community based water treatment units.

obligations of all parties.

Gender not given proper treatment in selection of PEs

MCJSCPPCs & PCERWASS

4 4 3 Women are not empowered

Low participation by women in management /technical roles


Low employment of women

Ensure program has strong connections with VWU at all levels Selection criteria for PEs to prioritize women led enterprises and PEs

having women in management, financial and technical roles and/or employing high percentage of female labourers

Capacity building and gender training for government authorities, implementing agencies and private sector

MARD-based M&E, continuous oversight/early warning of problems


2 Ongoing capacity building, gender training and monitoring.

Safeguards are not respected

MCPPC & PCERWASSGoVJSC

3 5 3 Adverse environmental or social impacts

Reputational damage to private sector, GoV and DFAT


Prepare high quality EMPs, Resettlement Plans and EAs Carry out due diligence before investments made Ongoing environmental monitoring TA for capacity building and training in EA and environmental monitoring

of provincial, district, commune and private sector actors MARD-based M&E, continuous oversight/early warning of problems


1 Ongoing capacity building, training and independent monitoring.

Investment and O&M costs are too high to enable RWSEs to profit

GoVPPCs

5 4 4 Limited private sector’s interest

Special preference policy measures applied Targeted subsidies provided to RWSEs Concrete roadmap for increasing water tariff developed

PPCs, PCERWASS, MC

2 PPC to accept different water tariffs in different areas of the province.

Water quality not ensured after project finishes

MCJSCPPCs & PCERWASS

3 3 3 Reduced sustainability People’s health not

significantly improved

O&M training for PEs Strengthened role of PCERWASS in periodic technical support and

government regulation updating for PEs and household/community based water treatment units.

PCERWASS, MC 2 Intensive capacity building by PCERWASS for RWSEs and PEs in water treatment operation and maintenance.


Risks Source P I IRR Impact on Program Options to Ameliorate the Risks RE RRR Approach to Mitigate Impact Set up water quality monitoring system by PCERWASS Accessible for people water quality testing service Hot line/communication channels Promote community supervision mechanism

Operational RisksInsufficient cooperation between MARD, MOF, NCERWASS, PPCs and PCERWASS

JSCDFATMC


Clearly define roles and responsibility of GoV ministries at all levels Regular review of project implementation by Steering Committee and at

provincial level

MARD, MOF, NCERWASS, PPCs and PCERWASS, MC

2 Adjust roles and responsibilities as necessary during project implementation.

Low capacity of PCERWASS to implement sub-projects

NCERWASS & PCERWASSMC


TA for capacity building in project implementation, water supply system management, operation and maintenance, M&E, gender mainstreaming

MARD-based M&E, continuous oversight/early warning of problems

MARD, NCERWASS, PCERWASS, MC

1 Strengthen implementing agencies by capacity building or by recruiting additional staff or consultants

Potential fraud risk involving implementation partners

MC 3 3 3 Reduce efficiency and effectiveness of investment

Technical assistance to improve standards for financial management Due diligence checks on implementing partners Rolling program of audit spot checks of DFAT program funds Engage independent verification agent

MOF, MARD, PPC, IVA, DFAT, MC

1 Monitoring of funds flows.


Documents

Aus4Water - Home - Department of Foreign Affairs and …dfat.gov.au/.../aus4water-draft-investment-design.docx · Web viewUnder the project, RWSEs were established as state-owned