UNIVERSITY OF ZIMBABWE - Waternet study of the Namibia Water Corporation ... of University of Zimbabwe and Mr. K. Schwartz, ... DBSA Development Bank Southern Africa

UNIVERSITY OF ZIMBABWE

“Assessment of Management Approaches in a Public Water Utility”. A case study of the Namibia Water Corporation (NamWater)

By

Johnson Ndokosho

A thesis submitted in partial fulfillment of the requirements for the Master of Science degree in Integrated Water Resources Management

Department of Civil Engineering

Faculty of Engineering

June 2006

UNIVERSITY OF ZIMBABWE

“Assessment of Management Approaches in a Public Water Utility”. A case study of the Namibia Water Corporation (NamWater)

Supervised

By

Engineer Z. Hoko Dr. P. Robinson

Engineer H. Makurira

Department of Civil Engineering

Faculty of Engineering

June 2006

Declaration

This thesis represents the original work of the author and has not been submitted in any

form for any degree to another University. Where use has been made of the work of

others, it has duly been acknowledged in the text.

Signature:…………………………………………..

Johnson Ndokosho

June 2006

Harare, Zimbabwe

Assessment of management approaches in a public water utility

_______________________________________________________________________________ IWRM Master Thesis. J. Ndokosho June 2006

i

ABSTRACT More than 90% of urban water supply and sanitation services in developing countries have been provided by public utilities. However public provision has been inherently inefficient. Namibia undertook water sector reforms in search for efficiency in public services delivery and created the Namibia Water Corporation (NamWater) for the purpose of bulk water supply. However, the utility had been compounded by poor financial performance. A case study that empirically examined the management approaches of NamWater in relation to the New Public Management (NPM) was carried out in Namibia in the period January to April 2006. The focus of the NPM approach is to mirror private sector methods of organizing and managing so that public utilities would accrue the benefits of effectiveness, efficiency and flexibility often associated with private sector organizations. The study tools used were a combination of literature review, interviews and questionnaires, held with key stakeholders. The study established that NamWater had a high degree of autonomy, although its tariffs and sourcing of external financing are approved by government. The utility is subject to strong reporting framework including financial audits and annual performance reports to the government owner. However, lack of statutory instrument (SI), performance contract and customer charter hampered external accountability. NamWater showed greater market-orientation and had outsourced non-core functions to cut costs, engaged in market-testing exercises but only benchmarked its performance on an adhoc basis. NamWater’s customer-orientation was less impressive compared to NPM-based utilities. Although it had customer-friendly billing and collections systems, the utility lacked basic customer service arrangements such as customer care centre, call centre, customer service quality contracts and customer satisfaction surveys. It was established that NamWater senior management had devolved operational authority to front-line managers. Commensurate with the authority provided, managers are held accountable for performance. NamWater performance indicators such as working ratio, water losses, tariffs and service quality fell well within the yardstick of well-performing water utilities for the past 5 years. It was concluded that NamWater’s management practices generally adhered to the core ideas of NPM, but these core ideas have not been fully implemented. Lack of accountability mechanisms such as a performance contract, a customer charter and SI resulted in difficulties for the stakeholders to hold the utility accountable. It was recommended that NamWater comes up with a performance contract and a customer charter to improve accountability. Government should formulate SI for drinking water. NamWater needs to carry out benchmarking more regularly to improve its performance. It was further recommended that NamWater shift more towards customer-orientation to enhance better revenue collection.



ii

ACKNOWLEDGEMENTS The author would like to thank Waternet for awarding the scholarship to undertake his academic work throughout the duration of the study period. Profound gratitude goes to my three supervisors: Engineer Zvikomborero Hoko and Engineer Hodson Makurira both from the Department of Civil Engineering, University of Zimbabwe, and Dr. Peter Robinson from Zimconsult, Harare, Zimbabwe, for providing supervision and guidance to this work. A lot of thanks and appreciation go to Dr. I. Nhapi of University of Zimbabwe and Mr. K. Schwartz, Institute for Water Education, UNESCO-IHE for being resource persons. I am deeply indebted to NamWater for allowing me access to the company and for providing valuable data and information. My gratitude extends to many NamWater customers for participating in the study survey, as well as to the Ministry of Agriculture, Water and Forestry for providing relevant data for this study. Special thanks to A. Shilomboleni, E. Shiimi, L. Shiinda, S. Nembungu, J. Heita, R. Hasheela, Z. Shariff and G. Masilo for their assistance and support throughout this work. Thank you all who provided ideas, support, advice and motivation.



iii

CONTENTS ABSTRACT........................................................................................................................ i ACKNOWLEDGEMENTS ............................................................................................. ii CONTENTS...................................................................................................................... iii LIST OF TABLES ............................................................................................................ v LIST OF FIGURES .......................................................................................................... v CHAPTER 1...................................................................................................................... 1 1.0 INTRODUCTION....................................................................................................... 1

1.1 Background .............................................................................................................. 1 1.2 Problem statement................................................................................................... 2 1.3 Rationale................................................................................................................... 2

1.4.1 Main objective ..................................................................................................... 3 1.4.2 Specific objectives ............................................................................................... 3

1.5 Scope of study .......................................................................................................... 3 CHAPTER 2...................................................................................................................... 4 2.0 LITERATURE REVIEW .......................................................................................... 4

2.1 The bureaucratic paradigm.................................................................................... 4 2.2 Evolution of a New Public Management approach .............................................. 4

2.2.1 The New Public Management (NPM) ................................................................. 6 2.2.2 Commercialization in Namibia ......................................................................... 10

2.3 Legal and policy framework within which NamWater operates. ..................... 11 2.3.1 The Constitution of the Republic of Namibia .................................................... 11 2.3.2 The Water Act, No 54 of 1956 ........................................................................... 12 2.3.3 Water Resources Management Act, No. 24 of 2004.......................................... 12 2.3.4 The Namibia Water Corporation, Act No. 12 of 1997 ...................................... 13 2.3.6 Water Supply and Sanitation Sector Policy (WASP) of 1993 ........................... 13 2.3.7 The National Water Policy of 2000................................................................... 13

CHAPTER 3.................................................................................................................... 14 3.0 STUDY AREA........................................................................................................... 14

3.1 Water consumption and demand ......................................................................... 16 3.2 Socio-economic situation....................................................................................... 16

3.3.1 Organizational structure ................................................................................... 19 3.3.2 Broad Responsibilities of NamWater departments ........................................... 19

CHAPTER 4.................................................................................................................... 23 4.0 MATERIALS AND METHODS ............................................................................. 23

4.1 The analytical framework of the study................................................................ 23 4.2 Data collection methods ........................................................................................ 24

4.2.1 Literature (secondary data sources) ................................................................. 24 4.2.2 Interviews .......................................................................................................... 24 4.2.3 Questionnaire .................................................................................................... 25 4.2.4 Site observation ................................................................................................. 25

4.3 Sampling ................................................................................................................. 25 4.4 Performance ........................................................................................................... 25 4.5 Validity of data....................................................................................................... 26 4.6 Data Analysis ......................................................................................................... 26



iv

CHAPTER 5.................................................................................................................... 27 5.0 RESULTS AND DISCUSSIONS............................................................................. 27

5.1 External autonomy (decentralization of authority to NamWater) ................... 27 5.1.1 Policy formulation .............................................................................................. 27

5.1.2 Regulation ......................................................................................................... 27 5.1.3 The legal authority of the utility ........................................................................ 29 5.1.4 Availability and quality of resources ................................................................ 30 5.15 Political commitment and support ..................................................................... 32

5.2 External accountability for results....................................................................... 33 5.2.1 Performance contract/agreement...................................................................... 33 5.2.2 Accountability to the Owner.............................................................................. 34 5.2.3 Accountability to the Regulator......................................................................... 34 5.2.4 Accountability to financial institutions ............................................................. 35 5.2.5 Accountability to customers .............................................................................. 35

5.3 Internal functioning of the utility......................................................................... 35 5.3.1 Corporate Culture ............................................................................................. 35

5.4 Market orientation ................................................................................................ 37 5.4.1 Out-contracting ................................................................................................. 37 5.4.2 Bench-marking .................................................................................................. 38

5.5 Customer orientation ............................................................................................ 38 5.4.1 Results of customers’ questionnaires ................................................................ 39 5.5.2 NamWater current practices on customer-orientation ..................................... 41

5.6 Decentralization of authority within NamWater................................................ 42 5.7 Internal accountability for results........................................................................ 44

5.7.1 Between the Board of directors and the management team.............................. 44 5.7.2 Managerial Accountability (within NamWater)................................................ 44

5.8 Performance ........................................................................................................... 45 5.8.1 Observations from Table5. ................................................................................ 46

CHAPTER 6.................................................................................................................... 48 6.0. CONCLUSION AND RECOMMENDATIONS................................................... 48

6.1 Conclusion............................................................................................................ 48 6.2 Recommendations ................................................................................................ 48

CHAPTER 7.................................................................................................................... 50 7.0 REFERENCES.......................................................................................................... 50 APPENDIX 1: ANALYTICAL FRAMEWORK (INTERVIEWS QUESTIONS)... 54 APPENDIX 2: CUSTOMER ORIENTATION QUESTINNAIRE............................ 60 APPENDIX 3: NAMIBIA WATER QUALITY GUIDELINES ................................ 62



v

LIST OF TABLES Table 1. Conceptions of NPM by different authors............................................................ 7 Table 2. Perennial rivers in Namibia ................................................................................ 15 Table 3. Past, current and future water demand in Namibia per major user group .......... 16 Table 4. NamWater's performance indicators for 2004/05 financial year ........................ 45 Table 5. Performance indicators from 2000 - 2005 .......................................................... 46

LIST OF FIGURES Figure 1. Map of the study area ........................................................................................ 14 Figure 2. Namibia's mean annual rainfall isohyets .......................................................... 15 Figure 3. NamWater's customer by type........................................................................... 18 Figure 4. Distribution of debt per customer type.............................................................. 19 Figure 5. Organizational setup of NamWater ................................................................... 20 Figure 6. Factors that influence effective autonomy of a utility....................................... 24 Figure 7. Accountability between NamWater and its environment.................................. 33 Figure 8. Staff turnover in NamWater from 2001-2005 ................................................... 37 Figure 9. Local authorities' perception on NamWater customer orientation.................... 39 Figure 10. Mines' perception on NamWater's customer-orientation ................................ 40 Figure 11. Private customers’ perceptions on NamWater's customer-orientation............ 40 Figure 12. Accountability for result within NamWater .................................................... 44



vi

ACRONYMS

APHA American Public Health Association AWWA American Water Works Association CEO Chief Executive Officer CSOs Civil Society Organisations DBSA Development Bank Southern Africa DRWS Directorate of Rural Water Supply DWA Department of Water Affairs ECA Economic Commission for Africa EIB European Investment Bank GDP Gross Domestic Product ICWE International Conference on Water and Environment IMF International Monitoring Fund JNB Water Johannesburg Water Utility, South Africa HPWSC Haiphong Provincial Water and Sewerage Corporation KFW Kreditanstalt Fur Wielderaufbau MAWF Ministry Agriculture, Water and Forest MDGs Millennium Development Goals MoH Ministry of Health NAMWATER Namibia Water Corporation NPM New Public Management NWSC National Water and Sewerage Corporation, Uganda OECD Organization for Economic Co-operation and Development SABS South Africa Bureau of Standards SAP Structure Adjustment Programme SANASA Water Supply and Sanitation Corporation (Sociedade de

Abastecimento de Agua e Saneamento), Campinas, Brazil SIMAPAG Municipal Drinking Water and Sewerage System of Guanajuato (Sistema Municipal de Agua Potable y Alcantarillado de Guanajuato), Mexico SOEs State Owned Enterprises SONEDE National Water Supply Authority (La Société Nationale d'Exploitation et de Distribution des Eaux), Tunisia UFW Unaccounted For Water UNCED United Nations Conference on Environment and Development US$ United State dollar WUP Water Utility Partnership WHO World Health Organization WEF Water Environment Federation WRB Water Regulatory Board



1

CHAPTER 1

1.0 INTRODUCTION

1.1 Background In 2000 some 1.1 billion of the world’s people did not have access to safe water and twice as many (2.4 billion people) lacked access to improved sanitation (UNDP, 2003). Africa accounts for some 300 million people (30%) who are without access to safe water sources (WHO/UNICEF, 2004). The Millennium Development Goals (MDGs) recognize water provision as an essential service and aim to halve by 2015 the proportion of people without sustainable access to safe drinking water (UNDP, 2003). Southern Africa is characterized by an uneven distribution of water resources over both space and time (Robinson, 2002). The region is mainly wet in the north and east and receives between 1000 and 4000 mm of rain per annum (Rothert and Macy, 2001). However the southern parts of the region is considered dry and Namibia, for example, receives only 250 mm of rain per annum. The urban population in the Southern African region has more than doubled in the past three decades and is estimated to surpass the 180 million mark by 2025 (UNDP, 2001). Meanwhile renewable fresh water abstractions are projected to increase plunging more than half of the region into the water stress category by the same year (Gleick, 2000). Addressing an enormous challenge of meeting the ever-increasing demand for water and sanitation services require effective functioning water utilities. Since 90% of urban water services in developing countries have been provided by state-owned, monolithic water organizations (WUP, 2001; UNDP, 2003; Baietti et al, 2006), broad reforms have been undertaken in the public sector in many African countries, including Namibia. The reforms have been driven by a combination of economic, social and political factors, which have triggered the search for efficiency and cost reduction in public service delivery. Moreover, the reforms sought to incorporate the principles adopted at the United Nations Conference on Environment and Development (UNCED) and International Conference on Water and Environment (ICWE) held in Rio and Dublin in 1992 respectively. Both the Agenda 21 which is the policy document that was expected to guide international actions and the Dublin principles advocate for the concept of water as an economic good (Agenda 21, 1992; GWP, 2000). In line with the principles endorsed in Rio and Dublin the Namibian government promulgated policies aimed at recovering full costs of supplying water services (Hyens et al, 1998). In addition, the reforms led to the rationalization of the public water sector, which in turn resulted in the restructuring of the Department of Water Affairs (DWA) in Namibia. The Namibia Water Corporation Limited (NamWater) which is a state-owned water utility was established as a result of the rationalization policy and it is charged with the bulk water supply function formerly a responsibility of DWA. The aim to reform the DWA was to separate water provision tasks from policy-making functions in order to improve water service delivery, reduce state subsidies for water and increase efficiency (Beukman, 2002; Hynes, 2004). Public sector reforms including urban water sector has been characterized by two main approaches which are increasing private sector participation, and the New Public



2

Management (NPM) (Hood, 1991; Osborne and Gaebler, 1992; Pollitt, 1993; Flynn, 2002). Although private sector participation was widely promoted by powerful financial lending organizations, the overwhelming majority of water services remained in a public domain (Schwartz, 2003). NPM is a generic term for a set of broadly similar administrative doctrines which dominated the public sector reform agenda of most Organization of Economic Co-operation and Development (OECD) countries such as United Kingdom, New Zealand and Australia from the early 1980s (Hood, 1991; Pollitt, 1993). These ambitious public sector reforms initiatives were aimed at making the public sector management more effective, economic, efficient and accountable. NPM captures most of the structural, organizational and managerial changes taking place in the public services of OECD countries. The focus of NPM approach is to adopt private sector management principles and techniques in public sector (Hood, 1991) so that the public sector would accrue the benefits of effectiveness, efficiency and flexibility often associated with private sector (Lane, 1994; Peters, 1996). NPM style reforms have registered marked achievements in overhauling public services of OEDC countries in terms of effectiveness and performance (OECD, 1995). The World Bank (WB), International Monetary Fund (IMF) and OEDC have been keen advocates of NPM reforms across the world, thus NPM principles have been introduced not only in industrialized countries but also in developing countries such as India, Chile, Thailand, Jamaica (Talbot and Pollitt, 2000) as well as in Africa (Oluwo, 2002; ECA, 2004). The principles of NPM are in general characterized by an emphasis on out-put controls, the disaggregation of bureaucratic organizations and the decentralization of management authority, the introduction of market and quasi-market mechanisms and customer oriented-services (Hood, 1991; Osborne and Gaebler, 1992; Pollitt, 1993; OECD, 1995; deLeon and Green, 2000) 1.2 Problem statement Water services in Namibia have been publicly provided since 1920 (Ernest & Young, 1996), but public water services have been inherently inefficient (Hyens, 2004). In an effort to address this inefficiency the Namibian government created NamWater to take over the bulk supply function from the DWA in 1998. The utility has been empowered by its Act to base its tariffs on a full cost recovery basis. Subsequently NamWater has successively raised bulk water tariffs in order to achieve the target of cost recovery. In spite of these increases, NamWater has been compounded by poor financial performance over the years as indicated by high financial losses it incurred. During 2002/03 financial year, NamWater registered a loss of about US$4 million equivalent and during 2003/04 financial year it incurred a loss of US$12 million equivalent resulting in accumulated losses estimated at US$ 16 mil (NamWater, 2005). Tynan and Kingdom (2002) underscore that a well run utility needs adequate funding to pay for its capital investments, and meet its operational costs. Failure to recover costs leads to under investment in assets and deterioration of infrastructure which in turn result in weakened operations and declining service quality. 1.3 Rationale The rationale of this study is that many countries consider NPM practices effective for public sector management as shown by the increasing numbers of countries that have



3

introduced NPM principles (Hood, 1991; Osborne and Gaebler, 1992; Pollitt, 1993; Rhodes, 1996). Case studies of a number of well-performing water utilities in developing countries such as NWSC (Uganda), SIMAPAG (Mexico), SONEDE (Tunisia), JNB Water (South Africa), ONEA (Burkina Faso), SANASA (Brazil) and HPWSC (Vietnam) showed that they adhere to NPM tenets (Baietti et al. 2006). It is therefore important to research NPM approach in NamWater. Moreover, poor financial performance being experienced by NamWater calls for a shift from a business as usual attitude to a new approach in order to abate this undesirable situation. The utility has recently embarked upon a new business strategy aimed at transforming the company for the next five years from its current state to a new position of excellence. It is therefore anticipated that this study will contribute in some ways to the overall turnaround strategy of NamWater especially in the area of management. 1.4 Objectives 1.4.1 Main objective The main objective of this study is to examine and compare the management approaches that NamWater employs in relation to NPM principles as well to assess the performance level of the utility. 1.4.2 Specific objectives

1. To analyze the external environment in which NamWater operates and assess

factors such as external autonomy and external accountability. 2. To analyze the internal functioning of the utility using the core ideas of NPM

consisting of factors such as corporate culture, market-orientation, customer-orientation, decentralization of authority within the utility and internal accountability for results.

3. To assess NamWater performance using key financial and operational indicators. 1.5 Scope of study

• Although this research acknowledges that NPM approach has shortcomings, the focus of this research is only on the advantages of NPM approach.

• The research recognizes that agricultural water constitutes about half of total water supplied by NamWater but due to very low tariffs at which agricultural water is sold, its contribution to the utility’s total income is insignificant. Therefore the study focused mainly on domestic water which generates more than 90% of NamWater’s income.

• NamWater is a bulk water supplier and does not distribute water within local authority areas and only supply water to isolated rural communities who live close to its infrastructure. Therefore the water supply information contained in this study is limited to the bulk water supply.



4

CHAPTER 2

2.0 LITERATURE REVIEW 2.1 The bureaucratic paradigm The Bureaucratic paradigm also known as the Public Administration approach refers to the traditional approach in which public sector organizations are managed (Hood, 1991; Lane, 1994). Bureaucracy, it was claimed, is plagued by progressive inflexibility based on complex hierarchical rule-based systems and top-down decision making processes which become increasingly distant from public expectations (Yamamoto, 2003). In addition it leads to the orientation of staff to be organization-oriented rather than customer-oriented. The principles that underlie the bureaucratic paradigm are as follows (Barzelay, 1992):

1. Specific delegations of authority define each role in the executive branch. Officials carrying out any given role should act only when expressly permitted to do so either by rule or instructions given by superior authorities.

2. Top-down structures are considered conducive to efficiency in the public sector. 3. Tasks are organized on a rule-governed basis. Officials should apply these rule

and procedures in a uniform manner. 4. Public employees orientate towards the tasks within the public sector in terms of

vocation or sense of duty. As such motivation of public sector employees is inherently different from motivation of private sector employees.

5. Each position of an employee is to be remunerated according to a contract which pays the individual a fixed monthly salary.

According to this approach public sector organizations are permanent and stable organizations that implement hierarchical and rule-based management. As such, the traditional public administration approach has a strong procedure-based approach, in which effectiveness and efficiency are expected to be achieved as long as the employees follow the transparent and explicit procedures of the organization (Peters, 1996; Larbi, 1999). The bureaucratic paradigm has, however, been subject to considerable criticism. The main criticisms against this model is that it has led to inefficiency of service provision, rigidness and an internal orientation of staff in which the focus is more on procedure than on results (Metcalfe and Richards 1990; Pollitt ,1993; World Bank 1997). Shirley and Xu, (1997) come to the conclusion that State-Owned Enterprises (SOEs) under the public administration regimes had non-commercial objectives, their managements were more bureaucratic than entrepreneurial, impeded by government intervention in details of management, lacking incentives to improve performance, and without accountability for results”.

2.2 Evolution of a New Public Management approach For over two decades a wave of public sector management reforms has swept through developed, transitional and developing countries (Larbi, 1999). This has been a product of a number of factors, including the economic and fiscal crises many countries have had



5

to go through as well as the search for efficiency and effectiveness in public services (Dunleavy and Hood, 1994). In developed countries such as the United Kingdom (UK) for example increased pressure forced the government to cope with economic problems, including high rates of unemployment and inflation, and the long standing criticism of the quality and efficiency of the public services (Osborne and Gaebler, 1992; Pollitt, 1993; Yamamoto, 2003). The government of UK was determined to promote a change to improve the ineffective and inefficient situation and introduced a set of drastic reforms. Osborne and Gaebler (1992) reported that NPM movement gained in popularity and in early 1990s was adopted by the administration of the United States of America (USA) which despite its strong economy had faced problems in the civil service similar to those seen in the UK. In the wake of accumulated debt in many Organization of Economic Co-operation and Development (OECD) countries (OECD, 1995), and drastic external environmental change such as “deregulation and globalization”, the role of the public sector was severely questioned and pressure for management change in the public sector was strengthening. The OECD, the World Bank (WB), and the International Monetary Fund (IMF) have been keen advocates of the NPM around the world and NPM has been expanding to more countries (OECD, 1995; Halligan, 1997; Olowu, 1999). The literature provides evidence that in most developing countries, economic crisis has been the most important factor driving the introduction of ambitious reforms in the public sector since the early 1980s (World Bank, 1995). In Africa, for example, the failure of public administration institutions is believed to have triggered the crises of the late 1970s and early 1980s. Their reform was therefore widely thought to be critical to recovery (Polidano, 1999; Hope, 2001). In addition policy deficiencies, bad and excessive management of the economy, large-scale institutionalized corruption, weak and demoralized public services, low productivity and political instability, all contributed to a worsening of the crises (Larbi, 1999). Loss-making SOEs contributed significantly to budget deficits and thus to the fiscal crisis (World Bank, 1995). To illustrate, in the case of Ghana, there were 235 SOEs at the beginning of the Economic Recovery Programme (ERP) in 1983, most of which piled up considerable losses and hence made little contribution to state revenue. Government subsidies to the SOE sector increased considerably from 1.1 billion cedis in 1982 to 7.35 billion in 1986 (Larbi, 1999). Faced with dwindling aid flows, mounting debts and rising interest rates most African countries turned to the International Monetary Fund (IMF) and the World Bank for financial assistance. These powerful financial institutions used the Structural Adjustment Programmes (SAPs) to put pressure on most states to embark on complementary public administration and management reforms. In the view of the WB and IMF the apparatus of government in many states were far too extensive, intrusive, expensive and inefficient (World Bank, 1995; Larbi, 1999). In particular, the size of public sector employment was considered too large and the wage bill constituted an increasingly high share of government expenditure at the expense of critical operating expenditure (ECA, 2004). Another reason for management reforms was the fact that most public economic and social services were poorly managed and their infrastructure had suffered serious decay due to years of neglect and lack of funds for maintenance. As a result of these deficiencies, there was inefficient delivery of a wide range of social services. The reform



6

of these public services therefore became imperative in order to improve their performance (Shirley and Xu, 1997) and to apply cost recovery measures (ECA, 2004).

2.2.1 The New Public Management (NPM) The NPM approach has originated in the (OEDC) countries such as UK, Australia and New Zealand as a more market-oriented and output-based approach to the bureaucratic model of public administration (Hood, 1991; Pollitt, 1993; Lane, 1994; OEDC, 1995). It captures most of the structural, organizational and managerial changes taking place in the public services of these countries. According to Pollitt (1993) NPM has variously been defined as a vision, an ideology or a bundle of particular management approaches and techniques (many of them borrowed from the private for-profit sector). NPM is thus seen as a body of managerial thought (Ferlie et al., 1996) or as an ideological thought system based on ideas generated in the private sector and imported into the public sector (Hood, 1991). NPM shifts the emphasis from traditional public administration to public management, pushing the state towards ‘managerialism’ (Hood, 1991). A review of the literature suggests that NPM is not a homogenous whole but rather has several, sometimes overlapping, elements representing trends in public management reforms in OECD countries. Its components and features have been identified by a number of writers, including Hood (1991), Flynn (1992), Pollitt (1993), Osborne and Gaebler (1992), Dunleavy and Hood (1994) and Ferlie et al. (1996). The doctrinal components of NPM have been expanded upon and have evolved over the past decade. For example, the core ideas of the UK’s Citizens Charter initiative, launched in 1991, added a consumer/customer dimension to public management (Talbot, 1994). Moreover, different aspects of NPM have been stressed by different commentators. Table 1 summarizes the conceptions of NPM held by some of the key writers on the subject. It is apparent that there are several parallels and overlaps, but also important differences in the way NPM is perceived. It is worth noting, for example, that Hood (1991) original conception of NPM did not explicitly feature the issue of consumers’ rights. However the UK’s Citizens Charter brought the issue of consumers to prominence and has since become a key feature of most NPM discussions (Talbot, 1994). Osborne and Gaebler (1992) approach also contains some important differences in emphasis from the general NPM approach, and especially from the more ideological politics associated with it. Unlike the ideologically driven NPM underpinned by the public- bad private- good ethos in the UK (Talbot, 1994), Osborne and Gaebler assert their belief in government. They also assert that privatization is not the only, or often the most appropriate, solution and that in some cases, bureaucracies work better (e.g., in social security). Beyond these differences, there is much in common with the different views on NPM. The main assumption behind NPM is that “management is where it takes place and that instruments used to organize and motivate personnel are as applicable in the public sector as they are in the private” (Peters,1996). Thus, NPM advocates that public sector organizations adopt practices that have long been associated with the private sector in order to accrue the benefits of efficiency, flexibility and consumer orientation that are often associated with private sector organizations (Pollitt, 1993; ECA, 2004).



7

Table 1. Conceptions of NPM by different authors (Source: Larbi, 1999) Hood, 1991;

Dunleavy and Hood, 1994

Pollitt, 1993 and 1994 Ferlie et al., 1996 Osborne and Gaebler, 1992

hands-on professional management

decentralizing management authority within public services

decentralization; organizational unbundling; new forms of corporate governance; move to board of directors mode

decentralized government: promoting more flexible, less layered forms of organization

shift to disaggregation of units into quasi-contractual or quasi-market forms

breaking up traditional monolithic bureaucracies into separate agencies

split between strategic core and large operational periphery

catalytic government: steering not rowing

shift to greater competition and mixed provision, contracting relationship in the public sector; opening up provider roles to competition

introducing market and quasi-market type mechanisms to foster competition

elaborate and develop quasi-markets as mechanisms for allocating resources within the public sector

competition within public services: may be intra-public or with a variety of alternative providers

stress on private sector styles of management practice

clearer separation between purchaser and provider function

split between public funding and independent service provision

driven by mission not rules

greater emphasis on output controls

stress on quality, responsiveness to customers

stress on provider responsiveness to consumers; major concern with service quality

customer-driven

explicit standards and measures of performance

performance targets for managers

more transparent methods to review performance

result-oriented government: funding outputs not inputs

stress on greater discipline and parsimony in resource use; reworking budgets to be transparent in accounting terms

capping/fixed budgets strong concern with value-for-money and efficiency gains

enterprising government: earning not spending

changing employment relations

downsizing market-oriented government: leveraging change through the market

Deregulation of the labour market

Anticipatory government: prevention is better than cure



8

In general, NPM incorporates four basic ideas (Osborne and Gaebler, 1992; Pollitt, 1993):

1. Market-orientation (making greater use of markets and the introduction of market-style incentives)

2. Customer orientation (or client focus) 3. Decentralization of authority to and within the service provider (reducing the

burden of hierarchical rules and fostering greater discretion at lower points in the government hierarchy)

4. Accountability for results both within the service provider as well as externally 5. Corporate Culture

Market-orientation is achieved in the urban water supply and sanitation sector in the form of increased out contracting of services and tasks through service contracts (World Bank, 1997; Schwartz, 2003). The public utility hires a third party to carry out specified tasks and services. The rationale for contracting out is to stimulate competition between service-providing agencies in the belief that competition would promote cost-saving, efficiency and flexibility in the delivery of services (Larbi, 1999; World Bank, 1997). Besides cost saving, outcontracting improve the quality of services, introduces the latest technological advances and an active outcontracting policy can be used to substantially reduce employees in the utility (Hope, 2002; World Bank, 1995). Bench-marking is the way of introducing a more competitive style into the public sector by allowing utilities to measure their performances and search for the best practices that can be adapted to one’s own organization to close the performance gaps that has been noticed (Walsh, 1995; BNWP, 2001). Since the water sector offers limited scope for direct competition benchmarking of performance is needed to help understand how well a water utility is performing (Nickson, 1997). Access to comparative information (benchmarking) will support the development of well-run companies and provide key stakeholders with the information they need to do their jobs better, helping different stakeholders in the following specific ways (World Bank, 1997):

• Utility managers and employees: to adopt realistic targets and convince authorities of the need for change. Such improvements might be in the areas of revenue streams, capital costs, or general financial management of the utility.

• Governments: to monitor and adjust sector policies and programs; • Regulators: to ensure that customers get value and that providers have incentives

to perform and will stay financed if they do; • Customer groups and NGOs: to exercise "voice" in an informed manner; • Aid agencies and advisers: to identify what works, advise their clients accordingly

and demonstrate and promote successful tried approaches the advice with convincing before-and-after stories; and

• Private investors: to identify viable markets and opportunities for creating value.

Customer-orientation means that the services of the utility are adapted to the needs of the customers (Rhodes, 1996). NPM principle of customer orientation involves an increasing emphasis on improving the quality of services, setting standards for quality and



9

responding to the customers priorities (Yamamoto, 2003). It concerns with issues such as; to what extent do public utilities “listen” to clients, work to better meet their needs, solicit their views regarding standards and level of service, or answer promptly to their complaints? (Baietti et al, 2006). The advantages that an increased customer-orientation is expected to have include (Osborne and Gaebler, 1992):

1. Customer-oriented service provision increases the accountability of the service provider to its clients.

2. Customer-oriented service provision depoliticizes the provision of services 3. Customer-oriented service provision stimulates innovation. If the utility gets its

funds from the customer instead of a government agency, the utility is more likely to investigate innovations, which will increase customer satisfaction.

4. Customer-oriented service provision is likely to be more efficient as it better matches supply and demand for services.

Decentralization of authority; decentralizing of management and disaggregating of public services are strands of NPM derived from managerialism (Hood, 1991; Ferlie et al., 1996). The trend toward decentralized management in public services is part of the effort to debureaucratize the public services as well as delayer the hierarchies within them. The purposes of decentralization are the creation of manageable units and the delegation of authority, enabling quick and flexible decision-making which reflects users’ demands. The key concern here is to give managers freedom to manage their units in order to achieve the most efficient output (Hood, 1991). According to Osborne and Gaebler (1992) the advantages of decentralized organizations over centralized organizations is that they are more flexible and can respond quickly to the changing needs of the customer, they are more effective since the employees who work on the frontline are closest to customers and problems and often better suited to develop best solutions (Hope, 2002). Furthermore, decentralization stimulates innovations as often innovative ideas tend to develop from within the employees rather than being sent down by management. Employees also become motivated in decentralized organizations when they are entrusted with considerable decision-making powers which reflect a sign of respect and trust in them. Larbi (1999) adds that decentralization is meant to reduce overload and congestion at the centre and speed up operational decision making and implementation by minimizing the bottlenecks associated with over-centralization of powers and functions at just one or two points in the hierarchy of a public service organization. Thus management decentralization seeks to increase the operational autonomy of line managers and agencies, leaving only broad policy guidelines to be worked out at the centre (Hope, 2001). Accountability for results; commensurate with the autonomy and flexibility allowed, the out-put orientation element of NPM requires public organizations and staff to work to performance targets, this breaks up traditional input controls and rule-governed process orientation (Dunleavy and Hood, 1994). Resource allocation and rewards are linked to measured performance (Hood, 1991), so that transparency and accountability may be strengthened. Accountability is strengthened through the requirement for clear statements of goals, targets, and indicators of success and performance measurements based on pre-determined standards/indicators of achievement “management by objective”



10

(Hood, 1991). A utility is usually accountable to a variety of groups such as the owner, regulator, government, financial institutions, customers and customer organizations and non-governmental organization (Schwartz and van Dijk, 2003). The accountability mechanisms to which a utility is subject to include (Thyne, 1998):

• The use of performance contracts or agreements between the utility and the government.

• Public reporting of performance. • The application of the regulatory regime to which the utility is subject. • The application of requirements imposed on the utility by financial concerning

financial reporting by financial organizations that lend money or provide grant to the utility.

• The application of the customer service charters or the like that the utility is bound to.

Performance-based agreements can be utilized not only to hold utility managers accountable for improving performance, but also to ensure that governments as owners do their part (Baietti et al, 2006). As a general rule, agreements should be simple and easy to understand and should include other important elements, such as (a) they should clearly specify the responsibilities of each party, including performance targets that are being sought; (b) performance targets should be attainable by that party that is bound by them; (c) the indicators to measure compliance should be realistic and few; (d) the contract should specify format and frequency of reporting on progress; and (e) the sanctions should also be realistic (Thyne, 1998, Hope, 2001). Corporate culture; NPM applies proven private sector management tools to the public sector (Hood, 1991) with flexibility regarding the hiring and firing of staff as well as their compensation (Hope, 2001). Like in private sector, top executives in public sector must possess professional management skills in order to shape the moral, social, and behavioral norms that inspire staff and managers to excel (Baietti et al, 2006). Corporate culture is established through clear mission statements and performance objectives for service quality and coverage. It shapes the beliefs, core values, attitudes, and ability of the staff to set priorities to achieve the mission. 2.2.2 Commercialization in Namibia In its effort to improve efficiency in the public sector the Namibian government created 52 SOEs over the last decade (Larri, 2002). Among these SOEs is the Namibia Water Corporation a bulk water supplier which is run on commercial basis. Commercialization refers to publicly owned entities required to act like private companies (Robinson, 2005). Although government retains ownership, commercialization implies greater autonomy (from government) for the business unit created (Hope, 2002; Larri, 2002). The challenge lies in ensuring that the unit remains accountable (operates within government policy frameworks) while at the same time has an independent management function (Friedrich, 1998; Larbi, 1999). The investigation undertaken to determine the feasibility of government involvement in commercial bulk water supply activities revealed that it would be more beneficial to commercialize bulk water supply services (Ernest & Young, 1996). The main reasons,



11

among many, were that the government should not run the core business of a service industry, but concentrate on policies, legislation, regulations and strategies to facilitate development by improving conditions in the water sector (Heyns, 2004). There was also a need to split the regulatory function and the social responsibilities of the government from that of a service provider (Ernest & Young, 1996; Nickson, 1997). In view of many other funding priorities, the government had limited funds available in the national budget for capital investments and it was found that the long-term planning required to establish expensive water supply infrastructure, was seriously constrained by the conservative annual government budget allocations (Friedrich, 1998). It was also impossible for the government to build up capital reserves to finance major maintenance work on the water supply infrastructure. A commercial company would be in a much better position to do long-term planning, attract capital investments from the private sector or to borrow money from commercial banks to establish water projects that would be operated on a full cost recovery basis (Heyns, 2004). The inequitable government water tariff system was heavily subsidized and cost recovery had no bearing on budgets or expenditure. When DWA was supplying bulk water, it was apparent that government was losing money through subsidizing the price of water for big business and municipalities. Furthermore, while the DWA was responsible for billing for bulk water consumption, money was received by the Treasury, which made it very difficult to know whether the cost of water was actually being recovered (Heyns, 2004; Larri, 2002). This situation could be improved by a company which would be operated on business principles to recover water supply costs whilst it supplies water more efficiently. The inadequate remuneration structure of the government department also made it difficult to recruit competent technical personnel or to terminate the services of less competent people (Larri, 2002). A commercial company can offer better service conditions, lay people off after negotiations according to a due process and recover personnel costs through the services provided. This assessment confirmed the advantages of removing the bulk water supply responsibility from DWA and government eventually chose to commercialize the bulk water supply function which led to the creation of the Namibia Water Corporation (NamWater) in April 1997 (Hyens, 2004). 2.3 Legal and policy framework within which NamWater operates. 2.3.1 The Constitution of the Republic of Namibia Article 95 of the constitution states that: “The state shall actively promote and maintain the welfare of the people by adopting policies aimed at maintenance of ecosystems, essential ecological processes and biological diversity of Namibia and utilization of living natural resources on a sustainable basis for the benefit of all Namibians, both present and future”. This article is a guiding principle which provides the basis for proper legislation to achieve those goals in the Namibian society (Heyns et al, 1998). The constitution is also clear on the ownership of water, as reflected in Article 100 which states that: “Land, water and natural resources below and above the surface of the land and in the continental shelf and within the territorial waters and the exclusive economic zone of Namibia shall belong to the state if they are not otherwise lawfully owned”.



12

2.3.2 The Water Act, No 54 of 1956 This Act was promulgated some 50 years ago by the government of South Africa and it has been in place before the Namibian independence in 1990. The Act continued to apply until the Water Resources Management (WRM) Act of 2004 becomes operational. The water Act deals mainly with resource management, bulk water supply and ownership of water. Some relevant issues embodied in this Act include:

(a) The prohibition of sinking, enlarging or deepening of any borehole or well without a permit.

(b) The prohibition of the use of subterranean water in subterranean water control areas without a permit.

(c) Discretionary powers of the Minister to control, regulate, limit or prohibit the impounding, storage, abstraction, supply or use water.

(d) Prevention of pollution of water

Due to the establishment of NamWater, the Water Act was amended to take cognizance f the powers and duties of the Corporation in the water sector, and generally, to provide for the more efficient use of and control over water. The provisions of the Water Act apply to the NamWater except insofar as any provisions of the Act are inconsistent with the provisions of NamWater Act of 1997. However this Water Act is outdated and a WRM Act that has been passed by the Parliament in December 2004 replaces it once operationalised.

2.3.3 Water Resources Management Act, No. 24 of 2004 (Republic of Namibia, 2004). This Act focuses on the management, development, protection, conservation and use of water resources. It establishes a Water Advisory Council, a Water Regulatory Board and a Water Tribunal. The Act replaces the Water Act 54 of 1956. The new Act is not operational yet and it will come into force on a date to be announced by the Minister. The relevant section to NamWater operations is the establishment of a Water Regulatory Board (WRB). The objectives of the WRB are to exercise control over water and effluent pricing in the water supply and effluent discharge industries, and provide quality independent assessment of water pricing proposals by the water utilities and suppliers. The functions of the Board are; To determine, by notice in the Government Gazette, with the concurrence of the Minister responsible for Finance, the maximum charges, fees and tariffs relating to;

• The supply of water by water utilities and suppliers to any water user for domestic, commercial, industrial or agricultural use,

• The issue of a licence to abstraction and use water under this Act, • The issue of a permit to discharge effluent or to construct effluent treatment

facility or disposal site, and the receipt of effluent by any person, under this Act, • The evaluation or examination of an effluent treatment facility or disposal site.



13

This Act provides for a complete deregulation of the water sector and has opened up the market for competition. 2.3.4 The Namibia Water Corporation, Act No. 12 of 1997 (Republic of Namibia, 1997) This Act established the Namibia Water Corporation (NamWater), regulates its powers, duties and functions. The most important aspects of the Act are that NamWater:

(i) Be managed on a full cost recovery basis (operations, maintenance and capital) (ii) Manage the water resources of Namibia in a sustainable manner, and (iii)Provide water at a cost that is affordable to the consumer.

2.3.5 State Owned Enterprises Bill of 2005 (Republic of Namibia, 2005) This bill deals with the efficient governance of the SOEs and the monitoring of their performances, restructuring SOEs, establishes the SOEs Governance Council and define its powers, duties and functions. If this bill is passed in its current form it will have major implications in the entire operations of NamWater in terms of the introduction of governance and performance agreements with Board members and management staff of the NamWater, approval of annual budgets of NamWater, and the determination of remuneration and other service benefits of the Chief Executive Officer (CEO) by the Board with the concurrence of the portfolio Minister. Whilst the Constitution and Acts provide global guidelines towards the development of the natural resources, more specific policies are required for the management of these resources. For water and sanitation sector, Government promulgated the following policies (Zijlma, 2004): 2.3.6 Water Supply and Sanitation Sector Policy (WASP) of 1993 Cost recovery, user participation and sustainability are key words in this policy (Zijlma, 2004). The WASP document states that the provision of improved water supply should contribute toward improved public health, reduce the burden of collecting water, promote community based social development, support basic needs and stimulate economic growth. This policy document has served for the basis for the wide ranging changes in water management in Namibia, most notable the establishment of the Directorate of Rural Water Supply (DRWS), NamWater and the Water Supply and Sanitation coordinating Committee (WASCOM) (Hyens et al, 1998). 2.3.7 The National Water Policy of 2000 This policy concentrates on resources management issues and instead of replacing the 1993 Water Policy, it complemented it. The objective of the 2000 Water Policy is to provide a framework for equitable, efficient and sustainable water resources management that is in line with internationally accepted best practices in IWRM. The main thrust of the institutional reforms proposed in the 2000 Water Policy is to improve functional capabilities and to increase management capacity in order to meet the technical, environmental, social, economic and legal challenges in water management.



14

CHAPTER 3

3.0 STUDY AREA The study area is Namibia, an arid country located on the western side of the Southern African subcontinent and lying between latitudes 17° and 22°S, and longitude 11° and 25°E. The country covers an area of 824,300 square kilometers. Its neighboring states are Angola, Zambia, Zimbabwe, Botswana and South Africa (Fig. 1).

Fig. 1. Map of the study area (Source: USGS, 2001)

Namibia is the driest country in Sub-Saharan Africa (SSA) (Bethune et al, 2005). The rainfall is highly variable in time and space, from less than 50 mm/a at the coast to over 700 mm/a in the northeastern part (fig.2). Of the total rainfall, 83% evaporates, 14% is



15

used up by vegetation, 1% recharges groundwater and only 2% becomes runoff and may be harnessed in surface storage facilities (Bethune et al, 2005).

Fig. 2. Namibia's mean annual rainfall isohyets (Adapted from Atlas Namibia, 2002)

To worsen the water scarcity, the only perennial rivers are on Namibia’s southern and northern borders, some 1,700 km apart, and they all originate in neighbouring countries as Table 2 shows:

Table 2. Perennial rivers in Namibia (Source: GEP, 2004)

River system

Average volume of water/year (Mm3) Origins

Length within Namibia (km)

Zambezi 40, 000 Angola, DRC, Zambia 340 Okavango 5, 400 Angola 470 Kunene 5, 100 Angola 344 Cuito 4,500 Angola Joint with Okavango Orange 3,400 S.A / Lesetho 580 Kwando 915 Angola 340

At present there are pumps installed in the perennial rivers, with a capacity to abstract 150 Mm3 of water per year. The total developed potential of the internal water resources, plus the perennial river abstraction can yield 400 Mm3/a (Heyns et al, 1998). Namibia has a population of 1.83 million people (Central Bureau of Statistics, 2003) and per capita water consumption is 144 Mm3/a (Lange and Hassan, 1998). The interior parts of the country, water sources have a potential of 510 Mm3/a and comprise surface runoff, groundwater and the utilization of unconventional water sources, such as wastewater (Heyns, 2004). Of the estimated 200 Mm3/a safe yield capacity of the dams that can be developed on the ephemeral river systems, only about 90 Mm3/a have been developed. It is also estimated that the long-term sustainable safe yield of the groundwater sources is 300 Mm3/yr and, of this potential, 150 Mm3/a have already been developed (Heyns et al.,



16

1998). At present approximately 56% of water used is drawn from dams, rivers and unconventional sources whilst the remaining 44% is abstracted from groundwater sources. 3.1 Water consumption and demand About 70% of the rural population and 95% of the urban population have access to safe water supplies for domestic use (Central Bureau of Statistics, 2003). The country does not have heavy industries and the relatively small quantity of water consumed by the small service industries is therefore included in the urban domestic water consumption. Only 5% of the water supplied is used for mining, but it has always been subject to full cost recovery (Heyns, 2004).

Table 3. Past, current and future water demand in Namibia per major user group.

(Source: Hyens, 2004) User groups Annual use (Mm3) 2000 % 2005 % 2010 % Domestic 67 22.3 75 19 80 16.7 Stock 77 25.7 80 21 80 16.7 Industry 6 2 7 2 8 1.6 Mining 14 5 19 5 24 5 Irrigation 136 45 209 53 288 60 Total 300 100 390 100 480 100

Water use by category of major consumer groups in the year 2000, 2005 and the estimated future water demand by 2010 (Table 4) led Hyens (2004) to make the following observations:

• Future demand for irrigation water will most likely only be met by water from the perennial border rivers, and all these rivers being transboundary, Namibia will have to negotiate access to this water with the other riparian states.

• In 2000 agriculture consumed 71% of total water supplied in Namibia but only contributed 4.4% to the GDP whilst the mining sector that consumed only 5% of water supplied contributed 12.8% to the GDP. Agriculture is therefore not an efficient user of water, but this is mainly due to the inefficiency of irrigation in an arid environment. In spite of this, the agriculture sector employs about 29% of the active workforce of about 432,000 people in Namibia and provides a subsistence livelihood (self-employment) for about 300 000 people in the rural areas. The mining sector is relatively very small and employs only 1% of the active workforce.

3.2 Socio-economic situation Sources of income in Namibia are agriculture, fishing, mining and tourism. The annual per capita GDP was estimated at US$ 2870 in 2005 which placed Namibia under a middle-income country category. Namibia is one of the countries with highly unequal distribution of income with 25% of the population holding 75% of the total wealth. Its



17

Gini Coefficient, which provides a measure of equity, was 0.60 in 2005 (UNDP, 2005) compared to Tanzania (best in SADC) at 0.35 and Japan (best in the world) at 0.24. Namibia’s Human Development Index (HDI) which measures the average progress of a country in human development is 0.62, in relation to the best performer in SSA Seychelles at 0.82 and Norway (best in the world) at 0.96 (UNDP, 2005). Namibia’s Human Poverty Index (HPI) is 25 which compares poorly with Mauritius (best in SSA) at 11 and Uruguay (world best) at 3.6. In terms of land ownership, 40% is owned by 0.3% of the population leaving 99.7% of population to share only 45%, since 15% of land is state-owned. 3.3 Background of the Namibia Water Corporation (NamWater) NamWater is a public limited company (PLC) established by an Act of Parliament which is Act no. 12 of 1997 to fulfill the following objectives;

1) The primary business is to supply bulk water to customers, in sufficient quantities, of a quality suitable for the customers’ purposes in a cost-effective, environmentally sound and sustainable manner across the entire country.

2) The secondary business is rendering water related services, supplying facilities and granting rights to the customers upon their request.

In pursuits of its objectives, the Corporation should perform the following functions (Republic of Namibia, 1997):

a) Explore, develop and manage water resources for the purpose of water supply. b) Acquire, plan, design, construct, extend, alter, maintain, repair, operate, control

and dispose of waterworks. c) Supply water to customers within and outside the borders of the Republic of

Namibia. d) Investigate, research and study matters relating to water resources, waterworks,

and the environment. e) Take such action as the Corporation may consider necessary or as a Minister may

direct, for the purpose of conserving or augmenting water resources in Namibia. f) Render services, provide facilities and lease rights, subject to the payment of

relevant charges. g) Establish training facilities and train personnel, and h) Perform any other function as may be necessary or expedient for the achievement

of the Corporation’s objects. The utility controls bulk water infrastructure in the country which comprise of:

1. More than 130 water schemes 2. 15 major storage dams 3. 10 water purification plants 4. 120 water towers to provide pressure to reticulation systems 5. Several pipe networks 6. 300 km of lined canals 7. More than 500 productive boreholes 8. 175 potable water reservoirs 9. 22 pumped storage dams



18

NamWater offers primarily two products, namely potable and irrigation water. Secondary water services involve mostly laboratory services. The Corporation supplies potable water to 32 out of 36 (municipalities and town councils), 21 village councils, and to the Ministry of Agriculture, Water and Forestry which purchases water in bulk for rural communities. NamWater also supply water to some isolated rural communities who live in close proximity to its transmission networks. At present potable water, representing about 47% of total water supplied is the source of more than 90% of NamWater’s income. In contrast irrigation water which represents roughly 40% of total water supplied contributes only about 1% of total income (NamWater, 2005) due to very low charges for raw water (US$ 0.02 m3).

NamWater had 6121 customers in 2005 made up mainly of the following groups: • Local Authorities (Municipalities, Regional, Town, Village councils) • Government (Directorate of Rural water supply) • Mines • Private customers (individual consumers situated in proximity to bulk water

infrastructures but outside local authority areas). More than 80% of NamWater customers are private contributing only 1% of its revenue. Fig. 3 shows the percentage of NamWater customer by type.

83%

8.1%6.7%

1.3% 0.7%0.3%

Private Consumers Mines RW committeesR & V councils Ministries Municipalities

Fig. 3. NamWater's customer by type (RW: Rural water, R: Regional, V: village) (Source: NamWater, 2005)

By 2004, NamWater was owed a total of US$18.6 by various customers in outstanding debt as shown in fig.4. Local authorities (municipalities, regional, town and village councils) are the worst defaulters, followed by rural committees. Private customers, who consume only 1% of water, make up 7% of outstanding amount, a disproportionately



19

high component (NamWater, 2004). More than 70% of the debt is older than 120 days and NamWater is doubtful in recovering it.

7%10%

16%

9%

58%

Private customers Mines Rural committees Ministries Local authorities

Fig. 4. Distribution of debt per customer type (Adapted from NamWater, 2005)

3.3.1 Organizational structure The Board of Directors is the highest body of NamWater (fig. 5) and it exercises overall control of the direction and strategies of the corporation on behalf of the Government. Below the Board of directors is the Chief Executive Officer (CEO) who manages NamWater’s daily activities. The CEO is assisted by four general managers who head four departments. These are Water Supply, Finance and Asset Management, Corporate Services and Engineering and Scientific Services.

3.3.2 Broad Responsibilities of NamWater departments (a) Department of Water Supply The main functions of this department are: Operating of infrastructure

• Abstraction of raw water from rivers, dams and boreholes • Operation and management of water treatment plants and pump stations • Operation and management of borehole schemes • Water supply and distribution to consumers

Sales

• Meter reading and processing meter reading data • Invoicing, revenue collection and debt management • Managing and maintaining of customer information system (CIS) and meter

reading database.



20

Fig. 5. Organizational setup of NamWater

Customer Services

• Deals with issues such as connection/disconnection of water supply, meter changes, fault reports, water-related advice, water education, inspections, water bills and other queries, information on payment schemes and complaints.

(b) Department of Engineering and Scientific Services consists of the following divisions: (i) Civil Engineering, (ii) Mechanical/Electrical Engineering, (iii) Planning and Investigations. The Civil Engineering division is responsible for the design of the civil infrastructure (pipelines, reservoirs, pump stations) and establishment of water supply infrastructure. It supervises and controls quality of external designs by consultants and external contractors, invitation and evaluation of tenders, contract administration, and dam safety inspections and monitoring. The Mechanical and Electrical Division is responsible for the in-house design of M and E infrastructure. It manages and supervises all engineering contracts which are designed and/or executed by private consultants/contractors. It also provides internal and external specialized technical services such as instrumentation and telemetry systems, mechanical and electrical installations, workshop services, condition monitoring of water supply equipment and plant, fleet management systems and management of heavy equipment.

General Manager,

Water Supply

General ManagerEngineering & ScientificServices

General Manager,Finance & Asset Management

Chief executive Officer

Regional & Area Managers for water supply

Heads of Divisions:Civil Eng.Mechanical &Electrical EngPlanning & Investigation

Heads of division: Financial Acc.Mgnt Acc.ProcurementAdministrative SupportFixed Asset ManagementInformation systems

Heads of DivisionCorporate planningMarketingPublic relationsHR admin.& servicesLegal servicesSecurity

Board of Directors

Chief internal Auditor

General Manager, CorporateServices

Senior Manager, Business Development

Senior Manager, Maintenance planning

Company Secretary

General Manager,

Water Supply

General ManagerEngineering & ScientificServices

General Manager,Finance & Asset Management

Chief executive Officer

Regional & Area Managers for water supply

Heads of Divisions:Civil Eng.Mechanical &Electrical EngPlanning & Investigation

Heads of division: Financial Acc.Mgnt Acc.ProcurementAdministrative SupportFixed Asset ManagementInformation systems

Heads of DivisionCorporate planningMarketingPublic relationsHR admin.& servicesLegal servicesSecurity

Board of Directors

Chief internal Auditor

General Manager, CorporateServices

Senior Manager, Business Development

Senior Manager, Maintenance planning

Company Secretary



21

The main functions of the Planning and Investigations Division are: • Conducting of pre-feasibility and feasibility studies and financial analyses

associated with the establishment of infrastructure, • Planning infrastructure development • Groundwater investigations, exploitation and drilling • Aquifer monitoring and control • Monitoring of surface water sources, assessment of sustainability and availability • Flood management and control • Provision of laboratory services • Internal monitoring and control of quality to be supplied to customer. • Efficiency monitoring of water purification plants.

(c) Department of Finance and Asset Management This Department comprises the following six divisions: (i) Financial Accounting, (ii) Management Accounting, (iii) Procurement, (iv) Administrative Support, (v) Fixed Asset Management and (vi) Information Systems. The Financial Accounting division is responsible for the following functions:

• General ledger • Working capital management • Financial reporting • Investments • Loan portfolio • Payroll

The Management Accounting division is responsible for the preparation of monthly management accounts, preparation of annual operating budget, costing exercises and calculation of tariffs. The Procurement division is responsible for managing the procurement policy, procurement, and administration of tenders. The Administrative Support division is responsible for: Managing administrative support functions, cell phones, copies, faxes, building maintenance and telephones. The Fixed Asset Management division is responsible for; Programme management, Project Management, Infrastructure capital budget, Fixed assets management. The Information Systems division is responsible for; Helpdesk function, website support, system security, network management, electronic communication and resource centre.



22

(d) Department of Corporate Services. The department consists of divisions and sections such as corporate planning, Human Resources Administration and Services, Marketing, Public relations, Legal, and Security Services. This department is responsible for coordinating the provisions of the service functions to meet corporate needs and organizational objectives as well as ensuring that NamWater is served by a competent and motivated staff component. (e) Maintenance Planning Division This division operates as a single unit headed by a Senior Manager. It is responsible for the overall planning of all maintenance activities, carries out day-to-day maintenance service, controls and manages all heavy equipment, and carries out maintenance inspections on all water infrastructures throughout the country. (f) Business Development Division This is a newly created division and is headed by a Senior Manager. Its main function is customer care and business development needs of NamWater. It is also responsible for proactive debtor management by assisting defaulting Local Authorities to manage their finances better and reduce water losses. (g) The Internal Audit Division This Division carries a distinct function and hence it operates independently from other departments. Its broad function includes ensuring that the resources of the Corporation are utilized in effective and efficient manners through robust internal auditing systems.



23

CHAPTER 4

4.0 MATERIALS AND METHODS The study employs a case study method. This method was used because of its ability to use many different sources of evidence during data collection (Yin, 1994) and hence drawing out data through an in-depth study.

4.1 The analytical framework of the study (Adapted from the World Bank –BNWP project # 033, involving 11 water utilities across the world, and developed by Schwartz and van Dijk, 2003) The analytical framework in this study centered around the New Public Management approach. As the core ideas of NPM operate at different levels, both externally and internally to the utility, NamWater’s case study was analyzed from two perspectives. The first step involves analyzing the relationship between the utility and the external environment in which it operates and the second step concerns analyzing the internal functioning of the utility. In analyzing the external environment of the utility, two core ideas of NPM which are decentralization of authority to the utility (i.e. the degree of autonomy) and accountability for results were investigated. Autonomy is considered to encompass the legal authority granted to the management of the utility minus the limitations imposed by the external environment (Schwartz and van Dijk, 2003). The legal authority involves the general governance structure and the decision-making powers that the management of the utility has. To a large extent the way the utility functions in intrinsically linked to the external environment it operates in. For example as shown in fig.6, the legal authority bestowed upon a utility is in practice restricted by the external environment which includes policy formulated by higher levels of government, measures imposed by a regulatory body, political commitment and support, lack of resources and conditions in the labour market (Schwartz and Dijk, 2003). The degree of autonomy was therefore established by examining the policy framework in which the utility operates, by investigating the regulation to which the utility is subject, by analyzing the legal authority of the utility and by determining the external limitations imposed on the utility. Apart from policy framework and regulatory measures, other limitations are the availability and quality of resources and political support and commitment. The quality and availability of resources relates to human resources, financial resources and natural resources. The availability of satisfactory resources is a pre-condition for a utility to be well-functioning. If these resources are not available the ability of the utility, regardless the legal authority it may have, will be severely constrained. The final determinant of the degree of autonomy is the political support and commitment that the utility receives. As”all public decisions are, in final analysis, political”. Political support and commitment is a pre-condition for successful water services provision (Schwartz and van Djik, 2003).



24

Fig. 6. Factors that influence effective autonomy of a utility (Schwartz and van Dijk, 2003)

The internal functioning of the utility focused on factors such as corporate culture, market orientation, customer orientation, decentralization of authority within the utility and internal accountability for results.

4.2 Data collection methods The following methods of data collection were used

• A desk review of literature (secondary data sources) • Interviews • Questionnaires • Site observation

The combination of methods was deemed necessary as the research was looking at multiple issues from various sources.

4.2.1 Literature (secondary data sources) To supplement the case research, the study drew from a wide body of literature in the areas of public sector management, with particular focus on the water supply and sanitation sector. Namibia’s water laws and policies were reviewed in order to understand the legal and regulatory frameworks within which NamWater operates. Data was collected from books, journals, and archival materials including NamWater annual reports, business plans, publications and articles on NamWater operations. 4.2.2 Interviews Interviews were used primarily to seek the opinions of key stakeholders such as NamWater managers, NamWater Board of Directors, Government representatives and civil society. Interviews held with government officials focused largely on legal and institutional arrangements, regulation framework that NamWater is subject to and the relationship between NamWater and government. Interviews held with NamWater

Degree of effective autonomy of the utility

Availability and quality of natural resources

Political commitment and support

Conditions of the labourmarket

Policy framework

Legal authority of the utility

RegulationAccess to financial resources

Degree of effective autonomy of the utility

Availability and quality of natural resources

Political commitment and support

Conditions of the labourmarket

Policy framework

Legal authority of the utility

RegulationAccess to financial resources



25

management (the Board and Managers) largely focused on core ideas of NPM such as corporate culture, market orientation, customer-orientation, decentralization of authority, accountability for results. Furthermore general issues related to water service provision; operation and maintenance, human resources, management and organizational issues were also covered. One to one interviews were used and this gave the researcher an opportunity to clarify and ask follow up questions when necessary. (Interview questions are presented in Appendix 1) 4.2.3 Questionnaire A standard questionnaire was used to essentially seek information from customers on their perceptions and experiences of being served by NamWater (Appendix 2). It was administered on various customer groups such as local authorities, mines, and private customers and centered on issues of customer involvement and customer focus, awareness of service provider, quality of services, affordability, reliability of water supply and customer complaints resolutions. The mode of administration of this instrument was both by hand and by telephone, where resources could not permit personal interviews.

4.2.4 Site observation Several site inspections and observations of NamWater infrastructure (water treatment plants, canals, dams, etc) were carried out to gain an understanding of the general utility management aspects. NamWater headquarters (Windhoek and Okahandja) and regional offices were visited for the purposes of observing a range of issues including customer treatments, queues, and complaints. 4.3 Sampling Customers were randomly chosen from a pool of local authorities (irrespective of their sizes) throughout the country, and mining companies respectively. A conscious decision was made to target private customers in specific villages and farms that receive water directly from NamWater. The sample size was a total of 64 questionnaires, with 50 questionnaires representing 1% of private customers, 10 questionnaires representing 31% of local authorities, and 4 questionnaires representing 66% of the mining companies. A 100% sampling response was achieved.

4.4 Performance The performance levels were measured using key indicators provided by the World Bank report compiled by Tynan and Kingdom (2002). The categories to measure performance were: a) Cost recovery (working ratio) b) Commercial performance (collection period) c) Coverage and access (connection charge as a % of per capita GDP) d) Asset maintenance (UFW) e) Service quality (number of hours of service to customers per day). f) Price and affordability (Ratio: Affordability of 20 l per day)



26

4.5 Validity of data Validity was defined as the extent to which the research findings correctly represent what is happening in a situation (Hussey and Hussey, 1997). Validity is concerned with the soundness, and the effectiveness of the measuring instrument. Construct and face validity, internal validity and external validity were the three important types of validity. These were respectively addressed through elimination of bias and avoidance of making general conclusion from the findings. Furthermore, data was validated by comparing the collected data to what is contained in the past records and publications.

4.6 Data Analysis Data analytical strategy in this study is the pattern-matching (Yin, 1994) where an ideal pattern of an organization that adheres to the NPM is described, and a comparison between the ideal pattern and the pattern that is found in reality in NamWater was made. The data collected through customers’ questionnaire was analyzed using Microsoft excel.



27

CHAPTER 5

5.0 RESULTS AND DISCUSSIONS 5.1 External autonomy (decentralization of authority to NamWater) 5.1.1 Policy formulation Many government agencies are responsible for making policies that NamWater should adhere to. The Ministry of Agriculture, Water and Forestry (MAWF) is responsible for formulating policies related to water supply and sanitation sector. Standards for drinking water are set by MAWF in conjunction with Ministry of Health (MoH).The specific policy issues are covered under section 2.3 in this document. The Office of the Prime Minister makes policies regarding governance of all SOEs. Labour policies are set by the Ministry of Labour and Social Services. Despite these multitude organizations only a few agencies such as MAWF and MoH influence the functioning of NamWater in practice with some ministries predominantly play an indirect role through sector policies and regulations. (a) Permits for water resource use NamWater is required by both the old Water Act of 1956 and the Water Resources Management (WRM) Act of 2004, to obtain abstraction permits in order to promote the sustainable use of the country’s water resources. Currently the DWA is responsible for issuing of abstraction permits for raw water in the country. Abstraction permits are valid for a period of 5 years. A statutory body to be known as the Water Regulatory Board will in future be in charge of issuing abstraction permits (Republic of Namibia, 2005). 5.1.2 Regulation (a) Quality standards There has been a serious shortcoming in the legislation as existing Acts (Water Act of 1956 and NamWater Act, 1997) do not provide for a regulatory body that deals with matters relating to water quality setting. However, the WRM Act of 2004 has given the responsibility of setting quality standards to the Water Regulatory Board. This body is yet to be formed. Currently, the MAWF and the Ministry of Health (MoH) have considerable influence over water supply sector and are responsible for setting quality standards for drinking water. Statutory Instrument (SI) for drinking water quality standards in Namibia is presently non-existent and as a result, NamWater uses a combination of World Health Organization (WHO) and national drinking water guidelines. The national guidelines for drinking water were approved by the Cabinet of the Transitional Government (approval 461/85) in 1988 (before the Namibian independence) and are shown in Appendix 3. Drinking water is classified into two groups in these guidelines. Group- A is water with an excellent quality whilst Group B is water with good quality. The objective of NamWater is to ideally supply water with quality equivalent to Group –A, however, if this is not possible (due to quality at the source),



28

then to supply water complying with the minimum requirements of at least a Group B type. The MoH which is the custodian of the nation’s health is responsible for ensuring compliance with water quality guidelines. However the agency has limited capacity on the ground to effectively monitor the standards and the lack of SI makes it difficult to enforce compliance. To a large extent NamWater has a self-policing approach in meeting water quality guidelines. In NamWater Act, statutory duties are imposed upon the Corporation to analyse water collected, water treated and water being supplied to its customers. The Act also imposes duties upon the Corporation to comply with the regulations made by the Minister in respect of preserving water quality, and develop and protect water sources including the prevention of pollution caused by its operations. Water supplied by the Corporation’s water schemes is sampled regularly and analysed at NamWater laboratories to determine its chemical and bacteriological quality. Each year NamWater is required to submit a report to the MAWF where water quality issues must be outlined. The analytical methods employed in NamWater laboratories are based on national and international accepted procedures e.g. The South African Bureau of Standards (SABS), American Public Health Association (APHA), American Water Works Association (AWWA) and the Water Environmental Federation (WEF). For NPM principles to work there is need for explicit standards and measurable targets, which the public agency has to achieve (Hood, 1991). (b) Economic Regulation The MAWF regulates economic activities of NamWater. The Corporation submits its business plans for approval and also submits annual reports in which it outlines its economic performance to the Minister. Although NamWater does not have a complete authority to set tariffs it is able to put forward proposals that are inconsistent with its overall revenue requirements. The utility reviews tariffs annually and aims to achieve full cost recovery as outlined in Box 1.

Box.1. NamWater’s Water Tariff Policy: Full cost recovery depends on:

• Capital development costs of water schemes • Development cost (infrastructure) • Interest on the development costs (financial costs tied up in each scheme) • Audited value of existing capital • Rate of depreciation (set by management) • Variations in depreciation period for capital (set by management) • Interest cost (loan repayments) • Maintenance and Operational cost • Overhead costs • The interest rate used



29

The revised tariff increases are submitted to government by way of Cabinet submission a year ahead of implementation. This was so that the State could budget for its water consumption ahead of the tabling of the annual Budget. Government institutions used to default as a result of unbudgeted expenditure. The final tariff approval lies with the Cabinet, after which tariffs are published in the government gazette. Klein and Irwin, (1996) as well as Nickson (1997) point out that the water sector has unique characteristics that limit competition since the network of pipes is a major element of the total cost of water and can be operated efficiently only as a monopoly. This monopolistic nature underscores the need to introduce strong regulatory arrangements to control water prices and protect consumers (Haarmeyer and Mody, 1997). The MAWF and the cabinet provide this financial oversight. According to proponents of NPM historically the agencies that performed the regulatory functions also had the roles in water provision, resulting in what has been termed poacher-game-keeper problem. The poacher-game keeper problem has been identified as one of the main underlying causes of poor performance in public water utilities (Foster, 1996). Subsequently, the key feature of NPM approach is the separation of the service provision from the regulatory functions (Larbi, 1999). In the Namibian context, there is a separation of these functions with NamWater responsible for bulk water provision and MAWF responsible for regulation. However, the MAWF is not a suitable body to regulate NamWater as it lacks the necessary human and technical capacity to effectively undertake such a function. The lack of SI for quality standards validates this observation. For economic regulation, MAWF needs capacity in financial analysis, an ability it currently lacks. Regulation, moreover, requires fact finding and investigation all of which need funds (GWP, 2003). The envisaged Water Regulatory Board is therefore anticipated to improve the regulation of both the tariffs as well as quality standards.

5.1.3 The legal authority of the utility (a) Legal, status, and ownership NamWater is incorporated under the Company Act, of 1973 as a public company and wholly owned by the government of Namibia. The State is the sole shareholder of the Corporation. The Minister of Agriculture Water and Forestry exercises the rights and powers, and performs the duties and functions of the shareholder of the Corporation, on behalf of the State. The legality of NamWater’s operation is established in terms of the Namibia Water Corporation Act of 1997. According to Forster (1996), studies on water utilities in South America revealed that public utilities that have been organized as government -owed company, operating under a company law tend to be more autonomous and efficient than those that operated under public laws. There is fundamentally no legal or organizational difference between a government-owned company and a privately-owned utility apart from the government ownership of the company’s shares (Schwartz, 2003). Greater autonomy in a public agency/company gives the management the freedom to manage by setting clear goals and targets that lead to improved performance (Hood, 1991, Pollitt, 1993, Flynn, 2002). For this reason, transforming of government departments to autonomous government-owned companies with corporate structure similar to commercial market-oriented enterprises



30

had been promoted across the world by NPM proponents as means of stimulating more efficient management (Foster 1996). (b) Governance Structure The Board of Directors is the highest governing body of NamWater. It has legislative authority to perform the functions, determine the policies and control the affairs of the corporation. The Board is responsible for the overall corporate governance of the corporation and approves its goals, strategic directions and budgets. Comprehensive monthly reports are provided to the Board to enable it to monitor performance. The Board consists of five members and its composition is diverse, with members drawn from a variety of backgrounds. Board members are appointed on the basis of professionalism and not as political representatives. One of the directors is a staff member from the MAWF and this member is not eligible to be a Chairperson. Another member is a full-time employee of NamWater whilst the other three are nominated representatives from external groups such as the Engineering Council of Namibia, Namibia Chambers of Commerce and Industries, and Institute of Chartered Accountants of Namibia or the Law Society of Namibia. The Minister of Water appoints all Board members and their term of office is three years. The Board appoints the CEO. The Board has several committees such as Audit, Tender, Remuneration and Human Resources, and Business Turn Around, which assist in achieving its goals. The adoption of new forms of corporate governance and a move to a Board of Directors model in the public services is a dimension of NPM tenet (Ferlie et al. 1996; Larbi, 1999) that NamWater had embraced. This form of governance reduces the power of elected representatives and minimizes the influence of labour unions on management (Hood, 1991; Hope 2002). This practice has been a noticeable phenomenon in the United Kingdom (Ferlie et al., 1996) and is being adopted in water utilities in African countries as such as JNB water and NWSC in South Africa and Uganda (Mwoga, 2003; Baietti et al, 2006). The benefits expected from this type of management decentralization are that of bringing service delivery closer to consumers, improving NamWater responsiveness to public demands, improving the efficiency and quality of the utility, and empowering lower units to feel more involved and in control. The appointments of board members who possess professional management skills improve efficiency in the public sector by reducing political interference which characterizes the bureaucratic systems (Pollitt, 1993). Moreover the NamWater Board members’ positions are contractualised to short-terms which are renewable depending on their performance. This practice is indeed inconsistent with NPM ideology of giving manager “freedom to manage”. 5.1.4 Availability and quality of resources The quality and availability of resources such as human resources, financial resources and natural resources are preconditions for a utility to be well-functioning (Schwartz and van Dijk, 2003). If these resources are not available the ability of the utility, regardless the legal authority and autonomy it may have, will be severely constrained.



31

(a) Human resources Although NamWater has a competent workforce, less than 30% of employees have formal qualification (NamWater, 2005). This situation may hamper the Corporation’s ability to meet its responsibilities in future. Most of current workforce was transferred from the DWA to NamWater at its creation. NamWater management has adequate autonomy to recruit qualified competent staff. The labor market conditions are favourable for recruitment. However, in some instances, the quality of new staff members was found to be unsatisfactory, and additional training was required. Vacancies are first advertised internally. If no suitable applicant is found internally, vacancies are publicized externally. According to (Nickson, 1999) the capacity of water utilities to perform well is clearly related to the quality of its staff, which in turn is partly a function of the pay and conditions on offer. However, NamWater offers competitive remunerations and better conditions of service compared to government departments (NamWater 2003/04). Therefore human resources do not appear to restrict NamWater’s autonomy. (b) Financial resources NamWater has various sources of funding and does not receive subsidy from central government. The customers who pay for the services rendered generate most of the revenue. The government which is a customer also provides loans at low interest rates (4%) and on favourable repayment terms. Repayment terms are 25 years, with a five-year grace period. Foreign lending organizations that have provided loans to NamWater are the Kreditanstalt fur Wiederaufbau (KFW), European Investment Bank (EIB) and the Development Bank of Southern Africa (DBSA). These loans have been granted at low interest rates (between 2% and 3%) and with repayment terms of up to 20 years (Ernest & Young, 1996). The international loans are however subject to the approval of both the Minister of Finance and the Minister of Water. The approval by government is not meant to interfere in the operations of the utility but rather to protect its shares as the owner. NamWater can also obtained loans from local banks on its own credentials although the interest rates may be high. At the moment government provides 60% of capital loans to the Corporation whilst 40% is funded by outside providers. NamWater has been experiencing non-payment problems as a result of customers failing to settle their accounts and this pose a real challenge to the utility in sustaining its services. (c) Natural Resources The limited availability of the surface water resources in the interior of the country is due to climatic condition which is characterized by low rainfall and high evaporation rates. NamWater sources water from the ground – 46% and surface water - 54% (Tjipangandjara, 2001). The use of perennial rivers which are shared with other basin countries is limited and subject to international agreements. However those sources are of critical importance to Namibia, not only to supplement ephemeral water sources but also to sustain future socio-economic development (Hyens et al, 1998). Most of the open surface waters in the country are constructed dams. There are 15 major dams on ephemeral rivers holding more than 6Mm3 of water. Although ephemeral systems can still be developed, the extent to which it can be done is limited.



32

Namibia is also endowed with substantial reserves of groundwater in specific geographical features (Heyns et al, 1998). However due to the arid, environment, the groundwater sources are sensitive to exploitation and are exhaustible. Water from groundwater sources is generally of good quality but there are some areas that have water containing high concentration of hardness. Water in major surface storage dams in Namibia is generally of good quality with a total dissolved solids ranging between 80 and 800 mg/l (Ernest & Young, 1996). The water generally only requires clarification and disinfection to render it suitable for human consumption. The distribution of major sources is generally not consistent with the distribution of major concentrations of population and economic development. It is therefore necessary to transport water over great distances between source and bulk supply points. There is no constraint in terms of quality and quantity of raw water at the moment.

5.15 Political commitment and support The final determinant of the degree of autonomy is the political support and commitment that the utility receives. As” all public decisions are, in the final analysis, political”. Political support and commitment is a pre-condition for successful water services provision (Paul, 1990). NamWater enjoys an excellent relationship with the Government. The Cabinet and line Ministers render immense political support to the utility. The Cabinet has, for instance, been approving tariff increases of 12% on an annual basis despite opposition from many quarters of society. The Minister of Water is also highly supportive of the utility and often comes out publicly to defend NamWater’s pertinent decisions such as reduction of water supply to the defaulters and tariff increases (McClune, 2004). The Minister’s office is also used by aggrieved customers and workers’ union as a first port of call when they have conflicts with NamWater. Politicians tend to use water provision as a tool to garner support from electorates, and therefore issues related to improving water services and social equity are willingly supported by politicians. Mwoga (2003) observed the same trend in Uganda. NamWater is allowed to terminate service provision to defaulters. However the utility has not been able to do so considering that local authorities are by far the worst defaulters (fig.4). These authorities re-distribute water to a larger number of end-users which makes service cut-off penalty very difficult. The reluctance to suspend services is primarily because of the social perception that water is a human right and hence citizens cannot be refused water but not due to political pressure. In cases where a local authority defaults for 3 months the utility reduces the water supply by half in an effort to force it to pay. This practice has however been a target of wide criticisms from Civil Society Organizations (CSO’s) for apparently depriving the poor and vulnerable access to water (McClune, 2004). Conversely Eberhard (1999) suggests that enforcement is necessary to overcome a tradition of non-payment in which a number of users never pay their bills and become free riders. Private customers whom NamWater can disconnect from water supply with relative ease make up only 7% of the outstanding amount. Recently the utility has put in place a proactive strategy of debt management whereby it renders assistance to defaulting local authorities in the management of their water reticulation systems to reduce water losses, billing and revenue collection as well as building capacity in these areas. It also entered into pre-payment agreements with non-paying customers in



33

an effort to maximize its collections. These interventions are still in their infancy but indications are that they will enable NamWater to recover costs. 5.2 External accountability for results NamWater is accountable to various external stakeholders, which include government, regulator, customers, donors and financial institutions as shown in fig.7. Fig. 7. Accountability between NamWater and its environment (Adapted from Schwartz and van Dijk, 2003)

Commensurate with the autonomy that has been provided, NamWater management is held accountable for different results to different actors and the mechanisms by which the utility is held accountable vary.

5.2.1 Performance contract/agreement There is currently no performance contract/agreement between NamWater and the government but the utility is in the process of formulating one with concurrence of MAWF. A performance contract is a written agreement between government the management of public enterprises directly delivering public services, wherein quantifiable targets are explicitly specified for a given period and performance is measured against targets at the end of the period (World Bank, 1997; Larbi, 1999). As part of the performance-orientation based on NPM principles (Hood, 1991; Ferlie et al. 1996), the common purposes of performance contract are to clarify the objectives of service organizations and their relationship with government, and to facilitate performance evaluation based on results instead of conformity with bureaucratic rules and regulations of the past (Hope, 2002). In the absence a performance contract it is difficult for the government to hold NamWater accountable for the performance.

NamWater

Board of Directors

Customers

RegulatorFinancing Institutions

Government

NamWater

Board of Directors

Customers

RegulatorFinancing Institutions

Government



34

5.2.2 Accountability to the Owner NamWater submits annual reports to the MAWF (representing owner) at least within six month after the end of each financial year. The report should outline the company’s operations and activities during the financial year including a copy of financial statements audited externally. A copy of the auditor report as well as statements containing the performance of all waterworks managed and controlled by the utility should also be included in the report. The government expects the utility to be run on a full cost recovery basis and reach a point of break even on total expenditure (both operational and infrastructural development). NamWater is also expected to make a surplus in order to invest further in water supply infrastructure and make the water supply business viable and sustainable to the country. However the utility did not manage to make a surplus in 2005, and hence had to rely on government to source investment financing. The Board meets with the Minister once a year to discuss wide range of issues regarding the operations of the utility and the way forward. In case NamWater performs substantially worse than expected, the ultimate sanction that the Minister can impose would be the removal of the Board of Directors. Over the period under review, no Board members have been dismissed in this manner. 5.2.3 Accountability to the Regulator In principle there is no independent regulator in Namibia’s water sector. The government is tripling as the owner, the customer and has the roles of a regulator through the MAWF and MoH. NamWater has a self-regulation approach but MAWF and MoH carry out surprise quality tests sampled at various locations. The utility’s quality control section carries out regular monitoring and reports to the management on monthly basis. These reports are made available to the regulatory authorities for review purposes. Information on the quality of water supplied for domestic purposes must be included in an annual report for submission to the Minister. The utility has also statutory duty to avail such information to its customers and to the public on request. If NamWater fails to adhere to the national guidelines for drinking water, the regulator has no authority to apply any penalties on the utility but it stands to lose business because the product will not sell. If water is not bought, there would be serious financial ramifications on the side of the utility and therefore it can not afford not to comply. There is currently no independent economic regulator and hence MAWF and Cabinet that approve water tariffs act as watchdogs to protect the interest of customers. In accordance with the Act, the utility is entitled to capitalize a portion of its profits for the financing of future capital works, and any amounts so capitalized and not immediately required to be expended, be deposited into the reserve account (NamWater Act, 1997). However, NamWater has not been able to establish such an account due to a poor financial situation experienced in the utility since its creation. At the moment NamWater uses some of its budget and external funding to invest in new infrastructures. To this end the utility has established dams, boreholes, water purification works, canals, pipelines and storage reservoirs, with a total value in excess of US$166 million equivalent (NamWater, 2005). Every year the utility allocates 10% of its operational budgets for maintenance purposes.



35

5.2.4 Accountability to financial institutions NamWater has to prepare annual financial reports for submission to various financial lending institutions where the utility got funds. These reports are audited by firms acceptable to the international lending agencies. The credit agreements usually specify reporting requirements which if not adhered to could lead to penalties being imposed on NamWater. Thus far no such penalties have been imposed on the utility. 5.2.5 Accountability to customers NamWater has no customer charters which spell out the rights of the customers and the service they are entitled to. There are also no formal customer organizations to which NamWater is accountable. Adoption of customer charters has been highly promoted in NPM approach as a way to make public service agencies more accountable to the customers (Hood 1991; Larbi, 1999). ECA (2004) also underscores that customers should be consulted about the level and quality of public services they are to receive, and they should have equal access to the services to which they are entitled. In the absence of the customer charter in NamWater, consumers have little power to hold the utility accountable for the quality of service it provides.

5.3 Internal functioning of the utility

5.3.1 Corporate Culture NamWater CEO and the management team have shaped the corporate culture by establishing clear vision and mission statements, and performance objectives for service quality. Corporate culture shapes the beliefs, core values, attitudes, and ability of the staff to set priorities to achieve the missions. NamWater’s corporate values are; service and quality, human dignity, growth, accountability, value-adding orientation, integrity (NamWater, 2005). (a) Vision and Mission statements of NamWater The vision of NamWater is “We shall be a company of excellence in the water industry.” NamWater mission is “We shall provide quality water and related services to the satisfaction of all stakeholders, taking cognizance of the environment, scarcity of and dependency of all on water. These vision and mission statements have been formulated in 2004, and are meant to provide a guiding purpose and clear long-term direction to all NamWater employees to move the company from its current undesirable state to a new position of excellence. The vision has a five-year time frame, and annual progress is reviewed and corrective action taken to ensure achievement of the vision. The statements are well understood by staff members and are internally visible in all NamWater offices. The introduction of mission and vision statements in a public utility is a strand of NPM that stresses the use of private sector style management practices (Hood, 1991). Osborne and Gaebler (1992) assert that public sector organization should be driven by clear statements of goals and targets rather than by rules.



36

(b) Internal communication Generally, information is shared in NamWater through meetings at various levels and the use of Information and Communication Technology (ICT) such as the internet memos and e-mails. Staff members are informed of management decisions through the heads of departments, divisions and sections mostly on a need to know basis. NamWater has equipped most of its offices across the country with computers to ensure the flow of information. The development and availability of information and communication systems are considered as an essential component in the creation of accountability in a public organization (Greer, 1994). When a decision is taken, information about that decision and its outcomes must flow to all those to whom the decision maker is accountable (ECA, 2004). Without such an information flow, and without the information system to carry that flow, there can be no accountability. The use of ICT is in line with the NPM principle of parsimony (cost-cutting) and “do more with less” (Dunleavy and Hood, 1994). (c) Staff training NamWater has institutionalized training programs in order to keep abreast with technology changes and improvements in managerial know-how. It regards staff skills as a critical input to improve staff performance and it allocates funds for training purposes every year. In 2004/05 financial year NamWater invested US$ 67. 000 equivalent or 0.13% of its annual operational budget on staff training. Training is carried out in-house and through courses with accredited external service providers. Human resources development is a practice that is consistent with NPM as it empowers the employees to excel in their performance (Larbi, 1999; deLeon and Green, 2000). (d) Promotions and salary adjustments Promotions and salary adjustments in NamWater usually take place due to a combination of the following factors; performance review, years of service, collective bargaining, education and availability of vacancies. There is no automatic promotion and if a position falls vacant staff members meeting the requirements apply and a normal selection process ensued. The successful candidate is then promoted to the high position. This practice is strongly promoted by NPM approach as it leads to competition among the employees that in turn result in greater performance in the public organizations (Pollitt, 1993). NamWater has institutionalized performance reviews as a basis for salary increases. Such systems provide senior management the ability to reward the specific contributions of staff to stated goals and objectives. Salary and promotions were also based on seniority, reflecting overall experience. This provides incentive for workers to stay with the utility. In addition salary increments occur through wage negotiations between the management and its bargaining partner (workers union). (e) Staff turnover NamWater has a higher staff turnover estimated at 45% in real terms, effectively reduced staff members from 1134 in 1998 to about 620 in 2006. In 2001, the turnover reached an all time high of 16% (Fig.8) resulting from voluntary exit packages offered at a time as



37

part of the downsizing exercises. Apart from that sudden increase in 2001, the annual staff turnover is usually below 10% and predominantly occurs in lower levels. Therefore, NamWater shows a stable employment and provides good career prospects for medium to high levels.

132

58 64 58 63

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005

no o

f em

ploy

ees

employees

Fig. 8. Staff turnover in NamWater from 2001-2005 (Source: NamWater, 2005)

Downsizing is an element of NPM’s decentralized management in which public sector is rationalized and trimmed in order to achieve “leaner” (smaller or compact) and “meaner” (cost-effective) public service (Osborne and Gaebler, 1992; Larbi, 1999). It arises from the concern for the size and cost of employment, which has not only contributed to the growing fiscal crisis and budget deficits, but also depressed real wages and maintenance of capital budgets (Ferlie et al. 1996). With the workforce downsized most services is outsourced to the third party as part of market-orientation approach discussed in section 5.4. 5.4 Market orientation 5.4.1 Out-contracting NamWater outsourced largely non-core functions and activities by way of public tendered contracts. The nature of functions and activities that have been out-contracted include; (a) Engineering designs and Engineering projects implementation, (b) Larger and specialized maintenance of infrastructure and equipment, (c) Installation of mechanical and electrical infrastructures, (d) Drilling of boreholes, (e) Security services General cleaning of the premises and their surroundings, (f) Fleet and building maintenance, (g) Information and technology services, (h) Information and telecommunication technology services, (i) Hiring of auditing firms to carry out external auditing functions, (j) Post and courier services.



38

The criteria for outsourcing in NamWater include; the highly specialized nature of the services such as those that are not under the scope of skills of the professional staff, and non-recurrent services that could be learned, but the cost would be too high for the utility. The value for outsourced functions and activities ranged between 10 -15% of a total annual operational budget which is comparable to JNB Water (10%) and SANASA (20%). NamWater partially involve in market-testing exercise. Market-testing is a process of benchmarking the price of internal functions to determine whether the utility is best suited for undertaking that function or whether it should be contracted out. Functions and services that are cheaper if provided by a third party are then outcontracted. The rationale for contracting out is to stimulate competition between service-providing agencies in the belief that competition would promote cost-saving, efficiency and flexibility in the delivery of services (Larbi, 1999; World Bank, 1997). NamWater out contracts security services to a third party for example, but because the third party provides the same services to multiple enterprises, it can develop economies of scale which lowers the unit price cost for NamWater. Moreover, a third party can be penalized for poor quality, delays and lack of reliability (ECA, 2004). Besides cost saving, outcontracting improve the quality of services, introduces the latest technological advances and an active outcontracting policy has been used to substantially reduce employees in NamWater. Outcontracting is a key feature of NPM approach (Osborne and Gaebler, 1992). 5.4.2 Bench-marking NamWater had benchmarked its service quality and water operations against other comparable utilities in Africa through the Water Utility Partnership (WUP). The areas that NamWater had benchmarked on include operation efficiency, water losses, collection efficiency and cost recovery. However the utility only participated in benchmarking on an adhoc basis. There is also no clear-cut pattern of using data collected from other utilities to improve performance within NamWater. The NPM approach calls for the introduction of competition in the public sector as it is considered to lead to greater efficiency and high performance (Hood, 1991; Osborne and Gaebler, 1992). However, the water sector offers limited scope for direct competition and for this reason, inter-utility performance comparison is needed to help understand how well a utility is performing. Therefore, NamWater needs to undertake benchmarking activities more often and emulate good practices from other utilities in order to improve its performance. 5.5 Customer orientation NamWater is dependent on its customers for the substantial share of its revenue. Although it is a monopolistic provider it needs to keep the customer satisfied and willing to pay for services. The utility offers multiple options for its customers to pay their water bills such as payment through the post (by check), electronic payment systems and over-the-counter transaction either by cash or by cheque. Although NamWater has a customer services section discussed under 3.3.2 (a), the utility lacks important customer arrangements such as a customer charter, customer care centre, call centre and service level agreements compared to other water utility such as NWSC, PWD and JNB Water. There is no formal follow-up procedure to ascertain if the complainants have been



39

satisfied or not. NamWater does not actively seek the views and opinions of its customers about is its services through mechanisms such as customer satisfaction surveys and customer meetings as it is a norm with well performing water utilities. 5.4.1 Results of customers’ questionnaires A questionnaire meant to gauge how the customers view NamWater customer orientation revealed the results shown in figures 9, 10 and 11 respectively. (Y- Yes, N – No, UN – Unsure) a) Awareness of service provider (PC – private sector, LA –local authority) Only 4% of private customer respondents that did not know that NamWater is their water supplier. These respondents were all rural dwellers who pay their water bills collectively through rural water committees but do receive water from NamWater. All other customer categories were aware of NamWater as their water supplier. b) Customer involvement Customer involvement in this context concerns with finding out if customers opinions and views were ever sought by NamWater about its services. According to 80% of LA and 76% of PC respondents, NamWater has never engaged them in anyway to seek their opinions. 20% of LA respondents said they are constantly sharing ideas with NamWater managers in their areas. 75% of the mine respondents said NamWater constantly seeks their opinions on a wide range of issues including tariffs.

Local authorities perception

020406080

100120

Aw

aren

ess

of se

rvic

epr

ovid

er

Cus

tom

erin

volv

emen

t

Cus

tom

erfo

cus

Affo

rdab

ility

of w

ater

Qua

lity

ofse

rvic

e

Wat

erqu

ality

perc

eptio

n

Com

plai

nts

reso

lutio

n

Perc

enta

ge

Total % Y Total % N

Fig. 9. Local authorities' perception on NamWater customer orientation c) Customer focus NamWater is not customer focused said 80% of LA and 70% of private customers, whilst 20% of LA and 20% of PC respondents said the utility is customer-focus. All the respondents from the mines feel NamWater is customer-focused.



40

d) Affordability of water Water was said to be affordable by 100% of respondents from the mining sector, whereas 70% of LA respondents mentioned that their residents can not afford current water tariffs and feel annual increases (12%) should be scrapped altogether. Over and above NamWater tariff increases, LAs also charge handling costs from end-users. Water is currently affordable said 60% of PC respondents but fear future increases over-burden them. Water services were expensive and unaffordable said 40% of PC respondents.

Mines' perceptions

020406080

100120

Aw

aren

ess

of se

rvic

epr

ovid

er

Custo

mer

invo

lvem

ent

Custo

mer

focu

s

Aff

orda

bilit

yof

wat

er

Qua

lity

ofse

rvie

Wat

erqu

ality

perc

eptio

n

Com

plai

nts

reso

lutio

n

Perc

enta

ge

Total % N Total % N

Fig. 10. Mines' perception on NamWater's customer-orientation

Private Customers' perception

020406080

100120

Aw

are

ofse

rvic

epr

ovid

er

Custo

mer

invo

lvem

ent

Custo

mer

focu

s

Aff

orda

bilit

yof

wat

er

Qua

lity

ofse

rvic

e

Wat

erqu

ality

perc

eptio

n

Com

plai

nts

reso

lutio

n

Perc

enta

ge

% Y % N % UN

Fig. 11. Private customers’ perceptions on NamWater's customer-orientation



41

e) Quality of service According to 80% of the LA respondents, NamWater provides good quality of service. For 20% of LA respondents NamWater services quality was not satisfactory as they go for hours without water. This is because the two LAs are defaulters and NamWater reduced their supply by half to force them to pay their bills. All respondents from the mines and private customers (100%) said they were happy with the service quality. f) Water quality perception Water supplied by NamWater is perceived to be of good quality by all mines, Private Customers’ and 80% of LAs’ respondents respectively. Water quality was said to be poor by 20% of LAs claiming that water has a high concentration of hardness which causes health problems to first-time consumers, also caused scaling in geysers, and clogged showerheads, taps and water meters. These LAs received water from ground sources and NamWater said that plans are underway to resolve the problem. g) Complaints resolutions Complaints received from customers entail incorrect billing, unaccredited payments, high meter readings, disconnections, water quality and numerous others. All (100%) mines, 70% LAs and 50% PC respondents were satisfied with the way their complaints have been dealt with. Complaints were not resolved satisfactorily according to 30% LAs and 50% PC respondents. 5.5.2 NamWater current practices on customer-orientation Even though customer care instruments are not yet well developed, issues of customer satisfaction enjoy centre stage in the utility. Customers are encouraged to contact the utility if they need any assistance via telephones, internet, fax, mail and of course face-to-face at offices. Customers often come to NamWater in person to register complaints, make enquiries and pay accounts. Telephone is the common method used by customers to report breakdowns, make complains, make enquiries and request for services. It is NamWater’s policy to attend to all customers’ problems and resolve them as promptly as possible. (a) Communication with customers NamWater considers customer communication as a vital part of its operations and it has embarked upon a general communications programme with its customers and other stakeholders. The purpose of the communication programme is to disseminate information to its customers through ongoing information by way of weekly bulletins via the printed and electronic media. In 2001, NamWater launched a road show to 15 towns countrywide to explain its operations to customers. This road show allows NamWater to share information and learn from its customers (Namibia Economist, 2001). The utility educates the general public about a numbers of water-related issues ranging from NamWater’s mandate, tips of sound uses of water to public presentations at annual Trade Fairs. In addition customers are frequently informed about services changes or interruptions via newspapers, complemented with radio and TV announcements.



42

(b) Feedback from customers NamWater seeks the opinions and views of its customers about services received by way of suggestion boxes. Permanent suggestion boxes are available at strategic positions in NamWater’s offices across the country to gather customers’ views. These views indicate the areas where customers think improvements are required. There is little indication to show that these views actually get incorporated in decision making process. In its new Business Plan for the next five year (2005- 2010), NamWater envisage to establish a customer care centre, conduct customer satisfaction surveys and take corrective actions if necessary. In NPM framework emphasis is placed on improving the quality of service, setting quality standards and responding to customers needs (Pollitt, 1993). The utility should focus on what the customers want, not what administration thinks they need. To improve efficiency, productivity and integrity in the public service, efforts should be primarily focused on creating a culture of commitment to identifying and meeting customer requirements throughout organizations (ECA, 2004). In general, public utilities have not excelled at being customer-oriented, and this has been largely attributed to the way public utilities have been funded (Schwartz, 2003). Within NPM realm, emphasis is placed on recovery of costs from the users and this make service providers accountable to the clients (Yepes, 1990). Although NamWater depend almost entirely on its customers for revenue, its customer care approach did not significantly change from when it was part of DWA. This could be attributed to the fact that NamWater staff did not change from public service culture to a business culture (NamWater, 2005). Since its establishment a yearly increase of tariffs by 12% has been introduced. As a result local authorities increased their tariffs to end-users accordingly resulting in large price increases which end-users are not prepared to pay. In addition, NamWater does not regularly engage in public awareness campaigns to explain the need for raising tariffs. This lack of customer oriented approach may be attributed to non-payment for services which result in poor cost recovery by NamWater. In contrast Nieto (2003) reported that SIMAPAG (public utility, Mexico) revenue collection improved considerably through a combination of prices increases and awareness campaigns to explain to the users the need to increase prices by 1% every month.

5.6 Decentralization of authority within NamWater NamWater has a flat organization structure with fewer layers as opposed to being a tall vertical hierarchy which is characteristic of a traditional bureaucratic organization. There are five layers (levels) between the entry level and the CEO. The utility has divided the country into six areas of operation namely Cuvelai, Brandberg, Namib, Okavango, Khomas and Karas. Each has an office under the supervision of the area manager. There is a cash office in each area where consumers pay their accounts, make enquiries, complaints etc. All the billings for services rendered are done centrally at head office level. All collected revenues are deposited into NamWater account which is controlled centrally by the head office to ensure financial prudence. The Board of Directors makes all decisions on loan agreements and capital sourcing. However loans from international lenders are subject to government approval.



43

With respect to the procurement of goods and services, there is devolution of financial management with each level granted a purchasing ceiling/threshold. The Board of Directors procures goods and services above the value of US$166 000 equivalent, whilst NamWater Tender Committee procures goods and services between the value of U$ 8333 – US$ 166 000 equivalent. Regional Managers can procure goods and services of the value between US$ 833 – US$ 8333 equivalent whilst Area Manager can procure goods and services of up to US$ 833.000 equivalent. The procurement of assets follows the same order as above. On out-contracting of services, all decisions regarding such activities are done at head office level to ensure competitive prices are obtained and for quality control. Decisions related to the rehabilitation of existing facilities in operational areas are done at area levels. Regarding maintenance of assets, each area has a maintenance team that make decisions on carrying out routine maintenance functions. However if there are major maintenance works to be undertaken the decisions are usually made at the head office level as it may involve large amount of money which can only be approved at high levels. Decisions on replacements of water metres as well as on strategy to reduce water losses in the system are made at area levels because they are the closest to the point of impact and any delay may have serious consequences to the operations of the utility. Regarding human resources, line managers have full discretion to recruit or dismiss staff but not at lower levels. Dismissal is subject to various checks in accordance with legislation and cannot be undertaken lightly and without just cause. This practice breaks up centralized bureaucracy-wide personnel management. The demotion and promotion of staff are ultimately done by the CEO, but the initiation would have started at lower levels by relevant line managers. All decisions relating to the remuneration and incentives for staff members are determined by the Board of Directors. The CEO is hired and fired by the Board of Directors, whilst the Board members are appointed and dismissed by the Minister. On customer management, operational areas have the powers to reduce water supply to defaulting customers if they fail to pay their account within 90 days. The areas also decide on ways to deal with customer complaints provided that they can reasonably resolve them.

Decentralizing of management of public services is a strand of NPM (Hood, 1991; Ferlie et al., 1996) that gives managers freedom to manage their units in order to achieve the most efficient output (Hood, 1991). Decentralized management in NamWater ensures that the utility is more flexible and can respond quickly to the changing needs of the customers, employees who work on the frontline are closest to customers and problems and hence develop best solutions. Furthermore, decentralization stimulates innovations as often innovative ideas tend to develop from within the employees rather than being sent down by management. Employees also become motivated when they are entrusted with considerable decision-making powers which reflect a sign of respect and trust in them.



44

5.7 Internal accountability for results Accountability within the utility involves holding staff and managers responsible for the performance that their decisions have produced. Internal accountability therefore relates to the mechanisms that operate within the utility from the lower levels to higher levels. It is based on the link that autonomy - performance targets – accountability (Schwartz and van Dijk, 2003). There are two kinds of accountability within the utility, first between the service provider and the Board of Directors and secondly within the organization also referred to as ‘managerial’ accountability (fig.12).

Fig. 12. Accountability for result within NamWater

5.7.1 Between the Board of directors and the management team NamWater management team systematically reports to the Board of Directors for the performance six times a year. There are well-defined objectives, targets, and measurable indicators contained in the business plan approved by their Board and used to monitor progress toward targets. Failure to meet objectives may result in corrective action. However, if the management team performs substantially poorly the ultimate penalties that the Board can impose include firing any member of such a team. In 2003, the Board dismissed the NamWater CEO for poor performance. 5.7.2 Managerial Accountability (within NamWater)

• NamWater has institutionalized annual performance reviews of management staff which have become part of the management and staff performance efficiency assessment system. The performance of staff is measured and assessed against output in a manner that is perceived to be transparent.

• Staff performance of lower levels staff is assessed by immediate supervisors using a standardized performance appraisal forms during the probation period. No annual assessment applies in these categories.

• NamWater does not use internal performance contracts for permanent employees, however, there are performance contracts for casual employees which specify

Owner

Board of Directors

Top Management

Lower level & middle management

Service provider

Owner

Board of Directors

Top Management

Lower level & middle management

Service provider



45

exactly what is expected of them and the renewal of such contracts depend largely on how such employees perform.

The emphasis on out-put control is a key feature of NPM approach (Hood, 1991; Pollitt, 1993). Both the Board’s insistence on the management team and the management team on employees to account for results constitute the seriousness of the utility’s desire to perform well. To focus on results rather than on procedure means that managers and staff aim to deliver on expectations. The setting of specific performance targets, in a format that can be monitored, is intended to provide a basis for evaluating performance and improving accountability in the public utility (ECA, 2004). Based on the above one can deduce that NamWater approach is in line with NPM principle. 5.8 Performance Performance monitoring is the determination of the degree of achievement of the strategic and operational objectives set out in the strategic plan. It is viewed as an essential tool to measure the quality of the organization’s management process, designed and implemented to carry out its function and conduct its business (BNWP, 2001). Performance measuring and monitoring often takes place through the use of performance indicators. Performance indicators measure the efficiency and effectiveness of the water utility. Efficiency is a measure of the extent to which the resources of the water utility are utilized optimally to produce the service, whilst effectiveness is a measure of the extent to which the targeted objectives are achieved. The NPM approach emphases the efficient management of the public sector inorder to lead to high performance in service delivery. Table 4 shows financial, operational and personnel indictors for the 2004/05 financial year.

Table 4. NamWater's performance indicators for 2004/05 financial year

Financial indicators Total running costs (Operations) US$ 50 mil/a Average tariff (per/ m3) US$ 0.78 Total revenue US$ 52.6 mil/a Total water sales US$ 48.3 mil Working ratio 0.63 Collection period (in months) 1 Operational indicators Water supply coverage Urban 98%, Rural 80% Number of people served 1.2 mil (estimate) Total water produced 63.5 Mm3/a Metered water consumption 61.5 Mm3/a Average hours of water per day 24 hours Water losses 3 – 8 % Personnel indicator Number of staff 620 Labour costs 30% (US$15 mil)



46

Tynan and Kingdom (2002) using data from 246 utilities from 51 developed and developing countries proposed performance targets for developing countries water utilities. Table 6 shows the performance achieved by NamWater for five years against the yardstick of Tynan and Kingdom (2002).

Table 5. Performance indicators from 2000 - 2005

5.8.1 Observations from Table5. a) Cost recovery According to Tynan and Kingdom (2002) a simple measure of cost recovery is the working ratio which is the ratio of total annual operational expenses, excluding depreciation and debt, to total annual pretax collections from billing and subsidies. A working ratio of less than 1 means that the utility recovers all operating costs plus some or all of its capital costs. NamWater’s working ratio for 2004/5 financial year is 0.63 compared to 0.68 which is the proposed yardstick for developing countries. This implies that NamWater covers its operating costs possibly due recent debt management measures such as pre-payments that the utility introduced to enhance better revenue collection. (b) Asset maintenance A crude measure of asset maintenance is unaccounted for water which is a difference water supplied and water sold as a percentage of water supplied. Over the period under review, the levels of water losses in NamWater have been within Tynan and Kingdom (2002) recommended target of less than 23%. The low level of water losses is ascribed to the fact that Namibia is water stricken country and NamWater carries out both planned and corrective maintenance to keep water losses in the transmission systems down. The utility spends 10% of its annual operational budget on maintenance.

Performance Indicator 2001 2002 2003 2004 2005 Yardstick

Working Ratio N/A N/A N/A N/A 0.63 0.68 Asset maintenance; UFW 20% 15% 15% 8% 3 – 8%

23%

Commercial performance; Collection period (months) 2 1 1 1 1

<3 Service coverage (Urban) 98% 98% 98% 98% 98% 100% Tariff US$/m3 (% per ca income/month)

0.50(0.35%)

0.56(0.41%)

0.62(0.28%)

0.70(0.30%)

0.78 (0.32%)

3 % / ca income/m

Connection fees (% per ca GDP) 8% 9% 7% 7% 8%

< 20%/ca GDP

Service quality; Continuity of service (Hours) 24 24 24 24 24

24



47

(c) Commercial performance Sound commercial is important to a well-run utility if it is to achieve high levels of cost-recovery. The utility must bill customers for what they consume and must collect payment in a timely manner on the bills that have been issued (Tynan and Kingdom, 2002). NamWater’s policy on revenue collection is one month, which falls well within Tynan and Kingdom’s recommended period of three months and less. (d) Coverage and access Coverage refers to the degree to which the population of the service area is connected to the network and Tynan and Kingdom recommended service coverage to be 100%. Namibia falls short of this target at 98% of urban population who currently have access to safe water. To expand services to new customers, connection fees should be affordable to customers. The connection fees are currently at 8% of per capita GDP which falls well within a yardstick of no more than 20% of per capita GDP. The connection fees should therefore be affordable to many new customers. (e) Service quality The quality of service has several dimensions which are water availability, water quality, water pressure and customer relations. Water availability is captured by the continuity of service (hours per day). NamWater equates the recommended yardstick of 24 per day of water availability. (f) Price and affordability Average price of water increased by 12% per annum from 2001 to 2005 and currently stand at US$ 0.78 / m3 or 0.32% of per capita GDP/month in relation to the yardstick of 3% of monthly income. These rates are however higher than those of South Africa (US$ 0.68), Belgium (US$ 0.75) and Singapore (US$ 0.68) (Baietti et al, 2006) countries that have much higher per capita GDPs than Namibia. Within the NPM framework the adoption of user fees and charges is a way of making service providers accountable to their clients (Yepes, 1990). The key rationale of the introduction of user fees in Africa has been to raise additional revenue in the face of increasing demand for services (Greer, 1994). User fees also serve to increase market discipline by preventing the over-use of services by consumers apart from improving quality and fostering responsiveness to the needs of consumers. In Namibia an achievement of near full cost recovery by NamWater means that financial involvement of the government in the bulk water sector is reduced, releasing valuable and scarce funds for other national concerns. Full cost recovery for bulk water supply will also have beneficial effects on the efficiency of water usage, financial sustainability of the water sector and environmental sustainability of Namibia’s scarce water resources. However there has been some evidence that user fees have made access to water services more difficult for the poor. Therefore, exemption systems need to be designed so that poor people are not excluded from crucial water services.



48

CHAPTER 6

6.0. CONCLUSION AND RECOMMENDATIONS 6.1 Conclusion

1. NamWater’s management approaches showed that the utility generally adhered to the principles of NPM; however these principles have not been fully and consistently implemented.

2. The utility had been afforded a considerable degree of external autonomy, although understandably, this autonomy is naturally limited, particularly in setting tariffs and sourcing external financing.

3. On external accountability, NamWater is subject to strong reporting requirements for performance to the MAWF but accountability mechanisms such as performance contract/agreements (set specific targets) and a customer charter (specify customers rights) are non-existent. Statutory instrument for drinking water quality is also not available essentially resulted in weakened regulatory regimes.

4. The utility subscribed to good corporate culture and capable of attracting and retaining qualified staff, implying that salaries have been set along market references.

5. NamWater demonstrated a strong market-orientation and out-contracts functions and services of about 10-15% of its annual operating budget. The utility only benchmarks its services and operations on an adhoc basis.

6. Apart from customer-friendly billing and collections systems, and the use of suggestion boxes, the utility had largely demonstrated weak customer-orientation. There is no customer facilities such as customer care centre, call centre and customer meetings. In addition the utility had not carried out customer service quality surveys, or formulate customer contracts specifying service standards which consumers are entitled to and which can be used to hold the utility accountable.

7. On decentralization of authority, the Board has devolved authority to NamWater management and the management in turn has further delegated it to front-line managers to ensure efficiency.

8. On internal accountability, the employees are accountable to the management and in turn the management is accountable to the Board of directors for the results they produced. The Board is accountable to the government (the owner).

9. NamWater’s performance indicators from 2001 - 2005 fall well within the yardstick of well-performing water utilities.

6.2 Recommendations

1. The regulatory authority needs to formulate water quality standards to which the utility can be held accountable.

2. NamWater should come up with mechanisms such as performance contract with the government and customer charter to improve accountability.



49

3. Benchmarking of performance with other utilities need to be intensified to improve good performance.

4. It is further recommended that NamWater seriously adopt a culture of customer orientation by engaging in practices such as customer surveys, customer meetings, customer education and campaigns in order to enhance customers trust and willingness to pay for services rendered which leads to better revenue collection.

5. While NPM is not a panacea to all NamWater’s problems, the utility must find a mix of attributes that would work for it in its external environment and Namibia setting.



50

CHAPTER 7

7.0 REFERENCES Agenda 21, (1992). Rio de Janeiro, A/CONF.151/26 Vol I-III. Baietti A., W. Kingdom and M. van Ginneken. (2006). Characteristics of well performing

public water utilities. Water supply and Sanitation sector board of World Bank group.

Barzealay, M. (1992).Breaking through Bureaucracy, University of California Press, San Francisco.

Bayliss, C. (2002). Water Privatization in Africa. PSIRU. University of Greenwich. London, United Kingdom.

Beukman, R. (2002). Access to Water: some for all or all for some? IUCN-ROSA. Pretoria. South Africa.

BNWP. (2001). Indicators for water supply and sanitation, market development for private water utility management in the ECA region. Bank Netherlands Water Partnership.

Chanda, O. (2002). Regulating the water and sanitation sector in Zambia. National Water Supply and Sanitation Council. Lusaka.

Central Bureau of Statistics. (2003). 2001 Population and Housing Census. National Report. National Planning Commission. Windhoek.

Dawson, S. and C. Dargie., (2002). New Public Management: A Discussion with specific to UK Health. In: McLaughlin. K, S.P. Osborne and E. Ferlie (eds.). New Public Management: current trends and future prospects, Routledge.

deLeon, P. and M.T. Green, (2000). Cowboys and the new public management: Political corruption as a harbinger. Graduate school of public affairs. University of Colorado (Denver).

Dunleavy, P. and C. Hood, (1994). From old public administration to new management. Public Money and Management, 14(3):9-16.

Eberhard, R. (1999). Supply pricing of Urban Water in South Africa. Volume 2. Palmer Development Group.

ECA (Economic Commission for Africa). (2004) Public Sector Management Reforms in Africa; Lessons learned. Development Policy Management Division. Addis Ababa, Ethiopia.

Ernest & Young, (1996). Business Plan for the Namibia Water Corporation. Department of Water Affairs. Windhoek.

Flynn, N. (2002). ‘Explaning the NPM. The Importance of Context’: In McLaughlin, K., S.P. Osborne and E. Ferlie (eds), New Public Management: Current Trends and Future Prospects. London and New York: Routledge.

Foster, V. (1996). Policy issues for Water and Sanitation Sectors. Oxford Economic Research Associates (OXERA). United Kingdom.

Friedrich E.S. (1998). "Commercialization and Privatization - Implications for Labour Relations in Namibia". Seventh Round Table on Labour Relations. Windhoek.

GEF. (2004). Country Pilot Partnership on Sustainable Land Management (SLM). Global Environmental Facility. New York.

Gleick, P.H., (2000). The World’s Water. The Biennial Report on Freshwater Resources, 2000 – 2001. Island Press, Washington DC.



51

Greer, P. (1994). Transforming Central Government: The Next Steps Initiative, Buckingham and Open University Press, Philadelphia.

GWP-TAC, 2000. Integrated Water Resources Management. Global Water Partnership, Stockholm.

GWP, (2003). Sharing knowledge for equitable, efficient and sustainable water resources management. Global Water Partnership, Stockholm.

Halligan, J., 1997. New public sector models: Reform in Australia and New Zealand. In J. E. Lane (ed.), Public Sector Reform: Rationale, Trends and Problems, Sage, London, pp. 17-46

Haarmeyer, D. and A. Mody. (1997). Worldwide water in privatization: managing risks in water and sanitation. Financial Times Energy, London.

Heyns, P., S. Montgomery, J. Pallett and M. Seely (Eds.). (1998). Namibia’s water, A Decision Makers’ guide. DRF and DWA, Windhoek, Namibia.

Heyns, P. (2004). Water Institutional Reforms in Namibia. Department of Water Affairs

Hood, C. (1991). A public management for all seasons. Journal of Public Administration, Vol. 69 (1).

Hope, K.R. (2001) ‘The New Public Management: Context and Practice in Africa’, International Public Management Journal, Vol. 4, No. 2.

Hope, K.R. (2002) ‘The New Public Management – a Perspective from Africa’: In McLaughlin, K., S.P. Osborne and E. Ferlie (eds), New Public Management: Current Trends and Future Prospects. London and New York: Routledge.

Klein M. and T. Irwin. (1996). Regulating water companies. World Bank. Washington D.C.

Lane, J. E. (1994). Will public management drive out public administration? Asian Journal of Public Administration, 16(2):139-151.

Lange,G.M., and R. Hassan. (1998). Natural Resource Accounting: a tool for sustainable macroeconomic policy in southern Africa. Policy Brief IUCN ROSA.

Larbi, G.A. (1999). The New Public Management Approach and Crisis States. UNRISD Discussion Paper No. 112, September 1999.

LARRI (2002). Privatization the Namibian way: From commercialization to the sale of state Assets. Labour Resource and Research Institute. Windhoek, Namibia.

McClune, J. (2004). Water Privatization in Namibia: Creating a new apartheid? Labour Resource and Research Institute. Windhoek, Namibia

Metcalfe, L. and S. Richards (1990). Improving Public Management, 2nd edition, Sage, London.

Mwoga, J. (2003). Performance –based contracting as a tool for water sector reform: the case of performance contract and management contracts in urban water utilities in Uganda. UNESCO- IHE.

Namibia economist .(2001). Telling about NamWater. Windhoek. Namibia. NamWater Annual Report. (2003/04). Windhoek, Namibia NAMWATER. (2005). Strategic Plan. Namibia Water Corporation, Windhoek. Namibia. Nickson, A. (1997). The public-private mix in urban water supply. International review

of administrative sciences, vol.63, pp. 165-186. Nicklson A, 1999, Does NPM work in less developed country? The case of urban water

supply sector. University of Birmigham . Journal of International Development



52

(777 – 783). John Wiley & Sons, Ltd. Nieto, R. (2003). Municipal potable water and sewers system of Guanajuato, Mexico.

World Bank. Washington D.C. OECD (1995). In search of results. Performance Management Practices, Paris: PUMA. Olowu, B. (1999) ‘Redesigning African Civil Service Reforms’, Journal of Modern

African Studies, Vol. 37, No. 1. Onjali, J., (2002). Good intentions, structural pitfalls: Early lessons from urban water

Commercialization attempts in Kenya. Center for Development Research. Copenhagen.

Osborne, D. and T. Gaebler (1992). Reinventing Government: How the Entrepreneurial Spirit is transforming the Public Sector, Addison-Wesley, Reading.

Paul, S. (1990). Institutional Reforms in Sector Adjustment Operations: The World Bank’s Experience, World Bank Discussion Paper No. 92, Washington, D.C.

Peters, B (1996). Models of governance for 1990’s, In: Kettl, D & Milward, H., The state of public management, Johns Hopkins University Press, Baltimore.

Polinado, C., (1999). The new Public Management in developing country. IDPM Public Policy and Management working paper no. 13. University of Manchester.

Pollitt, C. (1993). Managerialism and the Public Services: The Anglo-American Experience, 2nd edition, Blackwell, Oxford.

Republic of Namibia. (1997). Namibia Water Corporation Act, Act 12. Government Gazette December 1997.

Republic of Namibia. (2004). Water Resources Management Act, Act 24. Government Gazette December 2004.

Republic of Namibia. (2005). State Owned Enterprises Bill. National Assembly, (B. 17 – 2005).

Rothert, S., and Macy, P., (2001). Obstacles and constraints to implementing water conservation/water demand management in Southern Africa. In: An untapped river. International rivers network, California.

Robinson, P.B., (2002). “All for some”: Water inequity in Zambia and Zimbabwe. Zimconsult. Harare.

Rhodes, R. A. W. (1996). "The New Governance: Governing without Government." Political studies XLIV: 652-667.

Schachtschneider, K., and N. Nashipili, (2002). Water Demand Management Study of Namibian Tourism Facilities. Final report presented to Water Research Fund for Southern Fund for Southern Africa (WARFSA), Harare.

Schwartz, K., (2003). Mimicking the private sector: Reforms in water supply and sanitation sector. UNESCO-IHE Institute for water education, Delft.

Schwartz, K. and van Dijk, M.P.(2003). Public Modes of engagement, Unpublished draft guidance document , UNECO-IHE Institute for water education, Delft.

Shirley, M. and C. L. Xu (1997). Information, Incentives, and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises (http://www.worldbank.org/pub/decweb/workingpapers) accessed on 20 January 2006.World Bank, Washington, D.C.

Talbot, C. (1994). Reinventing Public Management: A Survey of Public Sector Managers. Reactions to Change, The Institute of Management, Northants.



53

Thyne, I. (1998). Government companies as instruments of state action. Public Administration and development, Vol. 18, pp. 217-228

Tynan, N. and Kingdom B., (2002). A Water Scorecard. Performance targets for water utilities. The World Bank Group. Washington DC.

Tjipangandjara, K.F. (2001). Commercial of Bulk water supply sector: The Namibian experience. Volume II, Papers & Presentations, Reform of the Water Supply & Sanitation Sector in Africa. Pp 197-201.

UNDP. (2001). Human Development report 2002; making new technologies work for human development. United Nations Development Programme. Oxford University Press, New York.

UNDP.(2003). Human Development Report 2003, Millennium Development Goals: A compact among nations to end human poverty. New York, Oxford University Press.

UNDP. (2005). United Nations Human Development Report 2005; most and least livable countries. United Nations Development Programme. Oxford University Press, New York.

Walsh, K. (1995). Public Services and Market Mechanisms: Competition, Contracting and the New Public Management, Macmillan, London.

Weimar, D.L. and A.R. Vining (1991). Policy Analysis: Concepts and Practice, 2nd edition, Prentice-Hall, Englewood Cliffs.

WHO/UNICEF, (2004). Meeting the MDG Drinking Water and Sanitation Target: A Mid-term assessment of progress. World Health Organization and United Nations Children’s Fund, Geneva, Switzerland.

World Bank. (1995). Bureaucrats in Business: The Economics of Government Ownership, Oxford University Press, New York.

World Bank. (1997). The World Development Report l997: The State in a Changing World, Oxford University Press, New York.

WUP. (2001). Water Utility Management- Project 3, Water Utility Partnership. Abidjan, Cote D’ivoire. www.wup.org.

Yamamoto, H. (2003). New Public Management – Japan’s practice. Institute for International Policy Studies, Tokyo. Japan.

Yepes, G. (1990). Management and operational practices of municipal and regional water and sewerage company companies in Latin America and the Caribbean. Washington DC. The World Bank.

Yin. R. K. (1994). Case study research: design and methods (2nd edition). Thousands oak, CA: SAGE.

Zijlma, S. (2004). 10 years of Rural Water Supply 1993 – 2003. Directorate of Rural Water Supply. Windhoek.



54

APPENDICES

APPENDIX 1: ANALYTICAL FRAMEWORK (INTERVIEWS QUESTIONS) THE UTILITY AND ITS ENVIRONMENT 1) Establishing the Degree of Autonomy (a) Policy formulation

• Which organization is responsible for setting quality standards for water supply?

• What service standards are specified? • Which organization is responsible for determining the institutional set-up of

the water supply and sanitation sector? (b)Regulation

• What organization is responsible for ensuring that the utility meets the standards for water supply and wastewater treatment that have been set?

• What organization is responsible for ensuring that the service standards for provision of services have been met?

• Which organization is responsible for economic regulation of the utility? (c) The Legal authority of the utility

• Description of the legal status of the utility (what type of organization is he utility?)

• Which organization owns the utility? • What is the general governance structure of the utility as specified by laws

and statutes? • What are the responsibilities of the utility and to what criteria must the utility

adhere (for example financial self-sustainability) as defined by law and statutes?

(d) Other External Limitations

• What is the nature of political support and commitment to the utility? • Description of the working relationship between the political environment and

the utility; • What is the condition of the labour market? • Is it possible to attract qualified staff to the utility? • What is the availability and quality of natural resources required for providing

water and sanitation services? • From what sources does the utility have access to financial resources? • Is the availability of financial resources sufficient?



55

2. External accountability for results • Is the utility subject to a performance contract or the like with the government? If so,

what are the characteristics of this performance contract? • What are the penalties and rewards that this contract allows for? • To what extent have measures allowed by the contract been implemented by the

government? (a) Regulation Quality • What is the procedure (reporting requirements, etc.) that is used to regulate the

utility’s achievement of the specified standards for water supply treatment? • What are the measures (penalties and rewards) that the regulator has to ensure that the

utility complies with these standards? • To what extent has the regulator applied these measures to the utility? (b) Tariffs • What is the procedure used for establishing tariffs of the utility (i.e. tariff setting

procedures)? • Is the utility subject to minimum investment requirements? • If so, what are these requirements and what is the procedure in which these

requirements are determined? • What are the measures that can be taken to ensure that the utility complies with these

standards? • To what extent have these measures been applied? (c) Financial Institutions • What are the reporting requirements that the utility must adhere to in order to satisfy

the institutions that have provided loans or grants to the utility? • What are the measures that the financial institutions can take when the utility has not

met these requirements? • To what extent has the application of such measures occurred? Customer Organizations • Is there a formal customer organization, which represents the interests of the

consumers? • If so, what are the powers of this organization? • To what extent are these powers used? • Are customers in any other (formal) way involved in the functioning of the utility? • Does the utility publicly report on its performance? Non-governmental Special Interest Groups • Are there any non-governmental special interest groups, which have involved

themselves with the functioning of the utility? • What has been the nature of their involvement? • Has the utility been subject of many media reports? • If so, what has been the nature of these media reports?



56

INTERNAL FUNCTIONING OF THE UTILITY 1. General Description, Organizational Structure of the Utility and Company Objectives Aspects of this dimension that should be described include:

• History of the utility • Organizational chart • Description of the functional differentiation within the organization and the

deployment of staff over the different functions • Broad responsibilities of the departments in the utility • General description of the financing of the utility operations and investment • The mission, vision and objectives of the utility. 2. THE FOUR CORE IDEAS OF NPM The four core ideas of NPM are market-orientation, decentralization of authority within the utility, customer-orientation and internal accountability for results. (a) Market orientation

The use of outcontracting of tasks and responsibilities in service provision

• What is the degree of outcontracting • What is the nature of the services and tasks that are outcontracted and what is the

nature of these outcontracting arrangements • What is the process by which services are outcontracted (is there a public tender, etc.?) The use of bench-marking in the utility • What is the nature and scope of the bench-marking activities that the utility

implements? The use of performance contracts within the utility (personnel contracts) • Does the utility use internal performance contracts? • If so, what is the nature of such contracts? • To what extent are such contracts used? (b) Customer-orientation To assess to what extent a utility has adopted a consumer orientation the following aspects are to be investigated: • To what extent is the utility dependent on its customers for financing? • Are any instruments/practices employed to establish what the opinions of the

customers are concerning the functioning of the utility? (for example, customer surveys, customer councils, focus groups, customer interviews, etc.)

• How are the results incorporated in the operation of the utility? • Are any instruments in place which arrange for ‘rights’ of the customers? (for

example, customer charters, customer contracts, etc.) • Do these arrangements also incorporate compensation payments in case the utility

fails to meet its responsibilities?



57

• Are any instruments/practices in place to train employees of the utility in dealing with customers? (customer service training)

• What are the ways in which customers can get access to the utility? (phone, in person, internet, etc.)

• To what extent are customers involved in decision making in the utility? (suggestion boxes, customer councils, etc.)

• What has been the number and nature of complaints over the past years? • Has the number increased or decreased? • Has the nature of the complaints changed? • How does the utility use the information generated by the complaints? (d) Decentralization of responsibilities within the utility Financial Management At what level within the utility decisions are made about: • The billing and collection for services • The determination of the tariff structure • The setting of water tariffs and connection fees • The entering of loan agreements (decisions about capital sourcing) • The appointment of an external auditor

Operations Management The case study should provide information about the level at which decisions are made with respect to: • The procurement of goods and services • The procurement of assets • The definition of internal work processes and standards • The outcontracting of activities • Rehabilitation of the existing network and facilities • Expansion of the network • Maintenance of assets • The monitoring and replacement of meters • The strategy for reducing unaccounted for water • Increasing energy efficiency

Human Resources Management In the category of human resources management, information regarding the level at which the following decisions are made should be included:

• The hiring and firing of individual staff members • The promotion and demotion of individual staff members • The determination of the salary and incentive structure of employees • The hiring and firing of the Managing Director • The appoint and dismissal of Board Members Customer Management The case study should indicate at what level decisions are made relating to:

• The termination of service provision to defaulters • The way in which customer complaints are dealt with



58

• Educational and PR campaigns • Establishing the alternative ways in which bills can be paid

3. ACCOUNTABILITY FOR RESULTS Between Owner and Board of directors

• What are the reporting requirements that the Board of directors must adhere to? • How often do the owners meet with the management oversight agency? • Do the owners provide clear and measurable targets that must be achieved by the

Board of directors? • What are the measures that the Owners can take if performance is not in line with

the expected and agreed upon performance targets? • Have these measures ever been used?

Between the Board of director and the Service Provider

• What are the reporting requirements that the service provider must adhere to? • How often do the Board of director and the management of the service provider

meet? • Does the Board of director provide clear and measurable targets that must be

achieved by the service provider? • What are possible measures that the Board of director can take when the service

provider does not achieve the agreed upon performance targets? • Have these measures ever been used? • Can the Board of director reward the Management of the service provider for

achieving performance targets? • If so, how and how frequently are these rewards used?

Within the Service Provider (managerial accountability)

• How is the performance of the employees evaluated? • To what extent are the accountability mechanisms based on procedural

accountability and to what extent on the achievement of performance targets? • Does the utility use (internal) performance contracts? (either personnel contracts

or contracts between departments) • If performance is evaluated against set performance targets, what measures are

available to punish or reward the employee with failing to achieve or succeeding to achieve the performance targets?

• How does that system of penalties and rewards work? • How often are penalties imposed? • How often are rewards imposed?

PERFORMANCE Financial Indicators

• Unit Operational Cost • Average tariff • Total revenues per population served/GDP • Ratio of industrial to residential charges • Connection charge



59

• Contracted-out service costs as a proportion of operational costs • Investments - net fixed assets/capita • Efficiency Indicators

Working ratio Operating ratio Collection period Accounts Receivable/collection period Percentage contribution to investment

Operational Indicators

• Water Consumption Water coverage Number of connections Composition of users (connection) Number of people served Total water produced Total water distributed Total water sales Metered water consumption Proportion of connections that are metered Proportion of water sold that is metered

• Water Distribution System Length of piped water system (mains) Number of pipe breaks

• Unaccounted for Water Water losses Composition of unaccounted for water

Personnel Indicators Labour productivity (staff/’000 water connections or staff/’000 water population served,);

• Labour cost as a proportion of Operational Costs; • Staff costs as a percentage of company expenditures • Annual training budget per staff member



60

APPENDIX 2: CUSTOMER ORIENTATION QUESTINNAIRE

MASTER IN INTEGRATED WATER RESOURCES MANAGEMENT

RESEARCH QUESTIONAIRE ON CUSTOMER ORIENTATION (Please check box or fill in space provided)

Name of the Customer……………………………………………….. Date………………………………….

1. Awareness of service provider Which organization supplies you with drinking

water

Government

NamWater

Others

2). Customer involvement

(a) Have you ever been contacted by NamWater about it

operations?

Yes No Unsure

(b) Have you been involved in any customer surveys

/meetings aimed at gauging customer satisfaction?

Yes No Unsure

(c) Does NamWater consult you about tariff decisions Yes No Unsure

(3). Affordability of water

(a) How much do you pay per cubic metre of water?

(b) Is that price affordable? Yes No Unsure

(c) If your answer to be is no, what do you think should be

done?

4). Quality of service

(a) Are you happy with the quality of service NamWater

provides?

Yes No Neutral

(b) If your answer to 4a is no, what do you suggest should

be done?



61

5). Water quality perception

(a) Does NamWater supply good quality water? Yes No Unsure

(b) How is the taste? Good Bad Unsure

(c) Any smell? Yes No Unsure

6). Complaints resolution

(a) Have you ever made a complaint to NamWater Yes No Unsure

(b) Which medium did you use?

(c) Were you happy with the way your complaint/s was handled? Yes No Unsure

(d) Had NamWater resolved your complaints? Yes No Unsure

7). Customer- focus

(a) Do you think NamWater is customer focus Yes No Unsure

(b) If your answer for 7a is yes, what do you suggest should be

done to make the utility more customer-focused?



62

APPENDIX 3: NAMIBIA WATER QUALITY GUIDELINES

Namibia Water Corporation Ltd.

GUIDELINES FOR THE EVALUATION OF DRINKING-WATER FOR HUMAN CONSUMPTION WITH REGARD TO CHEMICAL, PHYSICAL AND BACTERIOLOGICAL QUALITY

1. INTRODUCTION 1.1 Water supplied for human consumption must comply with the officially

approved guidelines for drinking-water quality. 1.2 For practical reasons the approved guidelines have been divided into three basic

groups of determinants, namely:

• Determinants with aesthetic or physical implications, see TABLE 1 attached.

• Inorganic determinants, see TABLE 2 attached. • Bacteriological determinants, see TABLE 3 attached.

2. CLASSIFICATION OF WATER 2.1 The concentration of and limits for the aesthetic, physical and inorganic

determinants define the group into which water will be classified. See TABLE 1 and TABLE 2 for these limits.

GROUP A: Water with an excellent quality GROUP B: Water with good quality GROUP C: Water with low health risk GROUP D: Water with a higher health risk, or water unsuitable for

human consumption



63

2.2 Water should ideally be of excellent quality (Group A) or good quality (Group B), however in practice many of the determinants may fall outside the limits for these groups.

2.3 If water is classified as having a low health risk (Group C), attention should be

given to this problem, although the situation is not critical yet. 2.4 If water is classified as having a higher health risk (Group D), urgent and

immediate attention should be given to this matter. Since the limits are defined on the basis of average lifelong consumption, short term exposure to determinants exceeding their limits is not necessarily critical, but in the case of extremely toxic substances such as cyanide, remedial procedures should immediately be taken.

2.5 The group in which the water is classified is determined by the determinant

which complies the least with the guidelines for the quality of drinking-water. 2.6 The bacteriological quality of drinking-water is also divided into four groups,

namely:

GROUP A: Water which is bacteriologically very safe GROUP B: Water which is bacteriologically still suitable for human

consumption GROUP C: Water with a bacteriological risk for human consumption

which requires immediate action for rectification GROUP D: Water which is bacteriologically unsuitable for human

consumption

3. FREQUENCY FOR BACTERIOLOGICAL ANALYSIS OF DRINKING-WATER SUPPLIES

The recommended frequency for bacteriological analysis of drinking-water supplies is given below in TABLE 4.

TABLE 4 FREQUENCY FOR BACTERIOLOGICAL ANALYSIS

More than 100 000 twice a week 50 000 - 100 000 once a week 10 000 - 50 000 once a month

Minimum analysis once every three months



64

4. PROMULGATION

The Cabinet of the Transitional Government for National Unity has approved the guidelines for evaluating drinking-water for human consumption with respect to the chemical, physical and bacteriological qualities, by Cabinet’s Approval 461/85 and reporting on the evaluation of drinking-water according to the new guidelines took effect as from 1 April 1988. GENERAL MANAGER: ENGINEERING & SCIENTIFIC SERVICES June 1998.

TABLE 1 DETERMINANTS WITH AESTHETIC/PHYSICAL IMPLICATIONS

DETERMINANTS UNITS LIMITS FOR GROUPS A B C D*

Colour mg/l Pt** 20 - - - Conductivity mS/m 250C 150 300 400 400

Total hardness mg/l CaCO3 300 650 1300 1300 Turbidity N.T.U.*** 1 5 10 10 Chloride mg/l Cl 250 600 1200 1200

Chlorine (free) mg/l Cl 0.1-5.0 0.1-5.0 0.1-5.0 5.0 Fluoride mg/l F 1.5 2.0 3.0 3.0 Sulphate mg/l SO3 200 600 1200 1200 Copper µg/l Cu 500 1000 2000 2000 Nitrate mg/l N 10 20 40 40

Hydrogen Sulphide µg/l H2S 100 300 600 600 Iron µg/l Fe 100 1000 2000 2000

Manganese µg/l Mn 50 1000 2000 2000 Zinc mg/l Zn 1 5 10 10

pH**** pH-unit 6.0-9.0 5.5-9.5 4.0-11.0 4.0-11.0 * All values greater than the figure indicated. ** Pt = Platinum Units. *** Nephelometric Turbidity Units. **** The pH limits of each group exclude the limits of the previous group.



65

TABLE 2 LIMITS FOR INORGANIC CONSTITUENTS IN DRINKING WATER

Determinants Unit Limit for Groups

A B

C D*

Aluminium µg/l Al 150 500 1000 1000 Ammonia mg/l N 1 2 4 4 Antimony µg/l Sb 50 100 200 200 Arsenic µg/l As 100 300 600 600 Barium µg/l Ba 500 1000 2000 2000

Beryllium µg/l Be 2 5 10 10 Bismuth µg/l Bi 250 500 1000 1000 Boron µg/l B 500 2000 4000 4000

Bromine µg/l Br 1000 3000 6000 6000 Cadmium µg/l Cd 10 20 40 40 Calcium mg/l Ca 150 200 400 400

mg/l CaCO3 375 500 1000 1000 Cerium µg/l Ce 1000 2000 4000 4000

Chromium µg/l Cr 100 200 400 400 Cobalt µg/l Co 250 500 1000 1000

Cyanide Free µg/l CN 200 300 600 600 Gold µg/l Au 2 5 10 10

Iodine µg/l I 500 1000 2000 2000 Lead µg/l Pb 50 100 200 200

Lithium µg /l Li 2500 5000 10000 10000 Magnesium mg/l Mg 70 100 200 200

mg/l CaCo3 290 420 840 840 Mercury µg/l Hg 5 10 20 20

Molybdenum µg/l Mo 50 100 200 200 Nickel µg/l Ni 250 500 1000 1000

Potassium mg/l K 200 400 800 800 Selenium µg/l Se 20 50 100 100

Silver µg/l Ag 20 50 100 100 Sodium mg/l Na 100 400 800 800 Tellium µg/l Te 2 5 10 10 Thallium ug/l Tl 5 10 20 20

Tin µg/l Sn 100 200 400 400 Titanium µg/l Ti 100 500 1000 1000 Tungsten µg/l W 100 500 1000 1000 Uranium µg/l U 1000 4000 8000 8000

Vanadium µg/l V 250 500 1000 1000



66

* All values greater than the figure indicated.

TABLE 3 BACTERIOLOGICAL DETERMINANTS

DETERMINANTS LIMITS FOR GROUPS (COUNTS) A** B** C D*

Standard plate counts per 1 ml 100 1000 10000 10000 Total coliform counts per 100 ml 0 10 100 100 Faecal coliform counts per 100 ml 0 5 50 50

E. coli counts per 100 ml 0 0 10 10 * All values greater than the figure indicated. ** In 95% of the samples. NB If the guidelines in Group A are exceeded, a follow-up sample should be

analysed as soon as possible.

Documents

UNIVERSITY OF ZIMBABWE - Waternet study of the Namibia Water Corporation ... of University of Zimbabwe and Mr. K. Schwartz, ... DBSA Development Bank Southern Africa