EU Delegation in Benin – Infrastructure section Lease Contracts in Rural Water Supply Case of Benin Sami Järvinen Nairobi 20/10/2010

EU Delegation in Benin – Infrastructure section Outline 1. Water Sector in Benin 2. Professionalised management of water infrastructure: lease contracts 3. Problems with professionalisation 4. Benefits and lessons learned

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES 1. Water sector in Benin Total population 8 million, of which 5 million rural Water supply rates at end of 2009 – Rural: 55% (MDG: 67%) – Urban: 57%(MDG: 75%) – ► Sector on track for achieving MDGs Water resources abundant, but unevenly distributed – Only 3% of available water in use

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Strong donor presence Water sector 80% funded by donors Numerous donors intervene in the sector – NL, DK, DE, EU, WB, Japan, UNICEF... Government-led donor coordination is systematic and active Streamlining of procedures and dissemination of information still need to be much improved

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES EU contribution Sector Budget Support – 5 m€ of a total budget of 15 m€ – Semi-urban water supply systems Water Facility – 6 projects ongoing – 21 m€ – 54 of Benin's 77 municipalities (see video)

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Decentralisation (1) Municipalities created in 1999 First municipal elections 2003 and second 2008 Municipalities are contracting authority for water supply since 2003 – Central government legally gave up this responsibility to municipalities – → But so far it hasn't given the corresponding resources.

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Decentralisation (2) 2010: Municipalities still short on resources – Financial resources: Municipalities spend on average 3€ / inhabitant / year – = moderate progress (Ivory Coast 9€, but Togo and Burkina 1,5€) – Human resources: most municipalities only have 1 person as technical staff for all infrastructure

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES 2. Delegated management of water infrastructure Small pipe systems (AEV) traditionally managed by user associations (UA) 2008: Ministry decree obliges municipalities to put AEVs in delegated management – Lease contracts via open tenders obligatory for all new AEVs – End of 2009: 130 of Benin's 350 AEVs are managed professionally by leaseholders

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Why professionalize? Management of small pipe systems by UAs has been inadequate – Around 15% of water infrastructures out of order – UAs have failed to perform periodic maintenance and to collect savings fund for major rehabilitations Professionalisation could provide economies of scale, economic incentives and legal obligations for better maintenance

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Modalities of delegated management 1. Municipality – Leaseholder (45%) 2. Municipality – Leaseholder & UA (38%) 3. Municipality – Leaseholder produces, UA distributes (3%) 4. Municipality – UA (14%)

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES 3. Problems in installing lease contracts UAs reluctant to give up their role Leaseholders not found for some pipe systems – Some water supply systems commercially unviable – Lack of professional entrepreneurs Lack of municipal competence for evaluating tender offers

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Problems in management by lease contracts Professionalism is still embryonic – Technically capable staff is rare – Financial monitoring inadequate – Transmission of information from leaseholder to municipality and government is weak Contractual compliance not observed or not enforced – Systematic follow-up is lacking – Sanctions inexistant

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES 4. Lessons learned (1) Despite problems, management of pipe systems is improving thanks to professionalisation Municipality – UA contracts are temporary, permitting UAs to get pro UAs tend to sell water at lower price, but this is not sustainable in the long run Contract types involving actual leaseholders provide for the best professionalism

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Lessons learned (2) Contract types involving leaseholders face the challenge of low economic viability  Solution: grouping several pipe systems under one contract New pipe systems can most easily be contracted to leaseholders Existing systems often meet with local populations' resistance to leaseholders  Solution: three-part contract involving UA alongside leaseholder

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Lessons learned (3) Professionalisation is a long process, the benefits of which cannot yet be assessed after 2-3 years of experience  Experience from developed countries and from Asia give an encouraging example Public-private partnerships involve a learning curve – Touchstone: the first renewal/replacement of equipment after 4-5 years of use Consolidation of 50 stakeholders into 3-4 fully professionalised actors?

EU Delegation in Benin – Infrastructure section EU DELEGATION IN BENIN – SECTION INFRASTRUCTURES Thank you for your attention!.