NEPAL WASH Sector Assessment December 2, 2011 Andreas Knapp on behalf of Independent Consultant Team 1

Contents of Presentation Background Policy assessment Institutional assessment Financial assessment Sanitation and hygiene Reform options Investment priorities Proposed Immediate next steps for discussion 2

Background – Why this assessment (1) fragmented sector institutions with overlapping responsibilities a project focus with a range of project implementation modalities 3

Background – Why this assessment (2) lack of coherent results framework to assess sector performance and equitable targeting of resources insufficient, uncoordinated and unpredictable sector financial flows from central to local levels inadequate information and inaccurate analysis of current service levels a tremendous growth of non-state actors, supported by diverse off-budget funding streams 4

Policy assessment Successful sector reforms comprise three stages: Setting policy through political statements, strategies and the like; Creating instrumentation (laws, regulations, capable institutions, hardware, software, trained staff to implement policies; and Implementing policies in a consistent manner, with strong political support. Assessment : NEPAL WASH policies are satisfactory but the instrumentation and consistent implementation have been missing 5

Policy assessment Key policies of the Government include: District Development Committee (DDC) is the prime agency for local planning with input from Village Development Committees; DDCs will implement, coordinate and monitor rural water supply and sanitation; Water User and Sanitation Committees (WUSC) will operate the rural WSS systems; Department of Water Supply and Sewerage (DWSS) will gradually phase out its direct implementation of rural WSS schemes. 6

Institutional assessment The Institutional environment: Multiple organizations implementing WSS systems with competing modalities Duplication of effort and waste of resources Operations & Maintenance: receiving less than building new systems uneconomic sector development since 45% of existing systems require major repairs, rehabilitation or reconstruction. Adequate annual maintenance can maintain system capacity at 20% the cost of new construction. 7

Reinvestment every few years Functionality 0% 100% < 5 years Regular investments Functional ity 0% 100% > 15 years

Institutional assessment The Institutional environment: District level Expected convergence of efforts by multiple agencies has not happened District WASH plans are not prepared DWASHCC marginally functional Resource allocation disaggregated and no evidence for proper targeting No unity of command 9

Institutional assessment The Institutional Processes: Information flows must improve, and collected data must be analyzed and used Inter-organizational coordination and collaboration need become better Different modalities use different practices. 10

Institutional assessment Comparison of Modalities: Cost effectiveness ModalityPer capita cost, US$ Fund Board37 DWSS Rural42 DoLIDAR Rural54 DWSS Urban61 Caveat: Cost comparisons are not statistically significant given varying geographic and hydraulic conditions, cost calculation methodologies, cohorts of schemes, and size of communities 11

Institutional assessment Comparison of Modalities: Functionality ModalityFunctionality of schemes Fund Board97%-100%, self-reported but is likely much lower DWSS RuralUncertain DoLIDAR RuralHigh, self-reported DWSS UrbanUncertain The consultants question the self-reported numbers by Fund Board. NMIP reports that 45% of existing systems require major repairs, rehabilitation, or reconstruction. 12

Institutional assessment Identification and activation of mechanisms to strengthen the implementing agencies at the District level: DWASHCC Enhancing the Capacity of the DWASHCC in planning, implementing, and Monitoring & Evaluation The District (or their regional successors in a future federal state) should have primacy The Finnish rural WSS projects have implemented the District-based policy in 9 out of Nepal’s 75 districts with primacy given to communities and districts. 13

Institutional assessment Agency shares in WASH funds flow* 14 Period Agency TYIP Actual Estimated Allocation DWSS 64%59%78% FUND BOARD 19% 5% NWSC 3% 2% TOWN DEVELOPM ENT FUND 4%5%6% MLD 10%14%9% 100% Source :DWSS, MPPW, GoN; *the funds flow does not include Melamchi, Kathmandu valley and Bagamati Civilisation Integrated Development Committee related funds.

Financial assessment The share of foreign aid was 54% in 2008/09. Concessionary loans were 92% of foreign financing Many other donors support the sector, but their assistance is not reflected in the government red book. Water Aid estimates their financing for 2008/09 as Rs. 716,000 million (14% of total sector financing) Assessment: There is a need to make reporting uniform and monitor the off-budget financing. 15

Poorest 2 nd 3 rd 4 th Richest Sanitation and Hygiene Wealth Quintile Analysis (NDHS-2006)

Reform Options - Institutional  The National Water Supply and Sanitation Coordination Committee (NWSSCC) with appropriate authority and chaired by the Minister of MPPW  All the implementation activities should be centered on the district. The DCC with support of the DWASHCC should be the main planning and implementation body – Primacy of the District and all schemes to be part of the D-WASH plan

Reform Options - institutional  All the relevant technical capacity for implementation support at the district level should be available at the WSSDO (future WASH office at District level)  The Local Development officer (LDO) should be the single point authority to coordinate all the planning, implementation, and monitoring activity in the WASH sector with the technical support of the WSSDO.

Reform Options - financial  All the water sector funds to be transferred based on the DWASH plan to the DDF directly from MoF.  Establishment of a (Maintenance and) Rehabilitation Fund but link annual customer contributions to the revalued fixed assets of each WUSC (2% of fixed assets)  Establishment of a WASH financial database at District and National level

Reform Options: Sanitation and Hygiene  Develop SWAP out of Master Plan – multi sectoral effort  Develop simplified guidelines for Sanitation and hygiene planning at district – VDC and Municipal levels  LDO to take the lead for the multi sectoral H&S program(health, educ…)  Firm up government allocations for implementation of district, VDC and Municipal sanitation action plans 20

Proposed priority Programs 1.The National Hygiene and Sanitation Program as a top priority, multi-sectoral effort and to be financed as a Sector Wide Approach Program (SWAP) – 120 Mill USD 2.The National Functionality Program to provide both convenience and health benefits – 180 Mill USD 3.The National Water Quality Program is being prepared by DWSS – 10 Mill USD.

Suggested follow up Action  MPPW to take the lead with coordinated support from Development partners to formulate a coherent National results framework and WASH program document in line with proposed National Priority Program components and NPPR 2011 recommendations  More in depths work on comparative analysis of implementation and financing modalities and system functionality to inform future harmonized program

 Accelerate implementation of the H&S master plan – establish all institutional mechanisms foreseen in the master plan  Establish NWSCC with SEIU as a secretariat to oversee the reform process  Provide harmonized technical assistance to Districts (DWSS lead role) and revitalize D-WASH CC to prepare and implement D- WASH plans Suggested follow up Action

Implement Joint Sector Review recommendations…