STRATEGIC FRAMEWORK FOR WATER SERVICES Presentation to Parliamentary Portfolio Committee on Water Affairs & Forestry 18 February 2004

Outline of presentation Background Process to get to the Strategic Framework Document Structure Policy highlights and issues Challenges identified by SALGA Way Forward

Background More than 11 million, including 9 million rural people served by all spheres of government since 1994 with access to a safe water supply : substantial achievement. Sanitation high priority and increasing speed of delivery. Efficient services essential for economic growth and poverty eradication.

Total population : 46.2million Water Supply Perspective (Figures based on Census 2001 updated to March 2003) Standpipes further than 200m + boreholes Unacceptable River, pool, dam, stream Standpipes less than 200m Water in house or in yard 28.3 m (61.3%) 6.7 m (14.5%) 6.2 m (13.4%) 5 m (10,8%) Total population : 46.2million 5 m (10,8%) Note : These figures reflect access to infrastructure, not necessarily effective services e.g water quality, flow & sustainability 11.2 m (24,2%) . 17.9 m (38,7%)

Total population : 46.2million Sanitation Perspective (Figures based on Census 2001 updated to March 2003) Unacceptable None, pit latrine, buckets, chemical (1.8 m buckets) Flush toilet (connected to sewer systems or septic tank) VIP 24 m 51.9% 4.1m 8.9% 18.1m 39.2% Total population : 46.2million 18.1 m (39.2%) Note : These figures reflect access to infrastructure, not necessarily effective services. 22.2 m (48%)

Process to develop the Strategic Framework “Issues and options” document and consultation thereon: April 02-June 02 Draft ‘White Paper”: Sept 02 Second round of consultation Review with Core Group (DWAF, SALGA, SAAWU, DPLG, NT): Jan - May 2003 Inputs Minister and final edits: Jul - Aug 03 Approved by Cabinet as Strategic Framework: 17 Sept 03 Now official national water services policy

Style of document 10 year vision for sector (not only DWAF) Comprehensive framework (replaces 1994 White Paper) Summary of key policies whilst leaving out “guidelines" & detail

Document structure Preface by minister & sector overview Introduction Sector vision, goals and targets Institutional framework Financial framework Planning framework National norms and standards Regulatory framework Support & monitoring framework Conclusion

Policy Highlights 1: Targets Bold step: targets for sector with dates and responsibilities Developmental targets - Examples: Access to basic services - 2008 / 2010 Free basic services - 2005 / 2010 Transfers - 2005 Sector Invest 0.75% of GDP annually Institutional reform – 2013 (strategy 2004) DWAF reports annually

Policy Highlights 2: Mandates Ensuring access, planning, regulation and provision. Policy,regulation,support and information management. Regional WSP’s for bulk regulated by DWAF and retail WSP’s (regulated by contract with WSA) Municipalities: DWAF: Water Boards:

Policy Highlights 3: Institutional Reform Agreement that reform is required Objectives, principles and approach defined Reform process set out national leadership bottom-up approach case by case national institutional reform strategy + finance for implementation Diverse outcomes likely

Policy Highlights 4: Finances Decentralised fiscal framework MIG (sector specific conditions) Tariff policy & setting (use of ES) Credit control Financial sustainability

Policy Highlights 5: Principles in credit control Compassion Communication Fair and transparent process Warning Restricting and not disconnecting, except if tampering or system failure

Policy Highlights 6: Planning Importance of planning (IDP and WSDP) Integrate water services with water resource planning Water conservation and water demand management strategy as part of WSDP Plan for ongoing operations and maintenance

Policy Highlights 7: Stepping up the ladder Provision of basic services most important priority but is only the first step up the ladder (RDP) Over time water services authorities are expected to provide intermediate and higher levels of service: wherever practical and provided it is financially viable and sustainable to do so Sector to develop financial instruments with funding agencies and National Treasury Review definition of basic services

Policy Highlights 9: Regulation Importance of planning (IDP and WSDP) Local regulation by WSA National regulatory oversight Format of national regulator to be investigated Regulation of regional WSPs Regulatory strategy being developed

Policy Highlights 10 Mechanisms of Support Capacity building grant Knowledge networks (peer to peer) Advisory service (expertise on demand) Guidelines and tools (practical) Strategic support initiatives Skills development (education, training and capacity building)

STRATEGIC FRAMEWORK FOR WATER SERVICES Challenges identified by SALGA

Institutional Reform and Section 78 Need to proceed with institutional reform to reduce costs and increase accountability Section 78 assessments are ahead of the institutional reform process due to legal requirements Defining the scope of the section 78 assessments are a challenge when regional options could be considered, therefore such areas require specific focus. Ensuring sufficient capacity to undertake & support these activities remain a challenge

Transfer Challenges Joint implementation of the transfer policy remains a challenge, particularly with regard to: agreement on the condition of assets to be transferred the number of staff to be transferred the financial impact on the recipient municipality “Joint Response Team” approach in dealing with the implementation challenges is welcomed

Sanitation Meeting sanitation targets are a major challenge in the current policy environment Increased capital and operating funds required to meet the sanitation challenge, including free basic sanitation DWAF needs to clearly define basic sanitation for dense (often urban) areas. Current policy only caters for less dense (rural) areas, in the form of a VIP per household. This option is not viable in most dense settlements

Free basic services policy The message reaching communities is 'free services' and not 'free basic services' Communication needs to be improved to prevent negative (financial) impacts on municipalities

Planning Planning initiatives of municipalities, national and provincial government need to be properly aligned. Also relevant to water services & resource planning. Linking planning activities of the departments of housing, education and health to municipal planning requires more effort.

Support DWAF support needs to be closely integrated with the work being done by SALGA and must be targeted to those municipalities most in need of assistance. Continued cooperation between SALGA & DWAF through the Masibambane (sector) approach should ensure optimal use of resources

STRATEGIC FRAMEWORK FOR WATER SERVICES WAY FORWARD DWAF SALGA Collaboration

Way Forward: Implementation DWAF and SALGA ‘Communication Roll Out’ to ensure municipalities and sector understand implications of the SFWS SFWS is a framework – much of the detail is still to be clarified SALGA / DWAF Summit of October 2003 resulted in Declaration to cooperate and jointly implement the SFWS All further work to be done through sector task teams

Implementation (2) Institutional Reform Principles of Reform Sector task team established (SALGA, DWAF, NT, DPLG, SAAWU) Consultant support in place Strategy development to be completed by June 2004 Principles of Reform WSA’s are responsible WSP’s accountable to WSA Bottom-up process National government will lead process Incremental and case-by-case Existing and sound business case Accountability of regional WSPs to WSA Transform, rather than establish new institutions

Implementation (3) Regulatory Strategy development initiated Review of sector legislation scoping initiated (amendments to WS Act) Strategic Assessment of “State of Sector” reporting initiated Developing a format and scoping of report

Implementation (4) Institutional Support Strategy being initiated Funding MIG: sector conditions set (next slide) Investment modeling to be done at provincial & municipal level Measuring target achievement complex Sector collaboration Great achievements, but much still to be done, particularly in some provinces Capacity in sector still a challenge

MIG Conditional Grant – cross cutting and sector specific conditions For basic services only (backlog & the poor) DWAF and SALGA engaged with other sector stakeholders to set policy and procedures DWAF concerned about capacity of some municipalities to implement MIG DWAF must support LG on implementation of projects through MIG

Transfer Challenges The target for transfer of all DWAF owned schemes is June 2005 Currently slightly behind schedule Possible special arrangements where municipalities are weak in terms of administrative and / or technical capacity Limpopo a particular challenge

Transfer Progress 11 Transfer Agreements signed (8 municipalities and 3 water boards) Negotiations at advanced stage with 21 municipalities (likely to be concluded before 2003/4 financial year end). This represents 34% of agreements. 48 schemes have been transferred Total asset value transferred is R648.5m 316 staff transferred R25.9m has been transferred to municipalities and water boards for refurbishment

Water is Life ! Sanitation is Dignity !