69526 An AMCOW Country Status Overview Water Supply and Sanitation in Kenya Turning Finance into Services for 2015 and Beyond The first round of Country Status Overviews (CSO1) published in 2006 benchmarked the preparedness of sectors of 16 countries in Africa to meet the WSS MDGs based on their medium-term spending plans and a set of ‘success factors’ selected from regional experience. Combined with a process of national stakeholder consultation, this prompted countries to ask whether they had those ‘success factors’ in place and, if not, whether they should put them in place. The second round of Country Status Overviews (CSO2) has built on both the method and the process developed in CSO1. The ‘success factors’ have been supplemented with additional factors drawn from country and regional analysis to develop the CSO2 scorecard. Together these reflect the essential steps, functions and results in translating finance into services through government systems—in line with Paris Principles for aid effectiveness. The data and summary assessments have been drawn from local data sources and compared with internationally reported data, and, wherever possible, the assessments have been subject to broad-based consultations with lead government agencies and country sector stakeholders, including donor institutions. This second set of 32 Country Status Overviews (CSO2) on water supply and sanitation was commissioned by the African Ministers’ Council on Water (AMCOW). Development of the CSO2 was led by the World Bank administered Water and Sanitation Program (WSP) in collaboration with the African Development Bank (AfDB), the United Nations Children’s Fund (UNICEF), the World Bank and the World Health Organization (WHO). This report was produced in collaboration with the Government of Kenya and other stakeholders during 2009/10. Some sources cited may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the collaborating institutions, their Executive Directors, or the governments they represent. The collaborating institutions do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the collaborating institutions concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to wsp@worldbank.org The collaborating institutions encourage the dissemination of this work and will normally grant permission promptly. For more information, please visit www.amcow.net or www.wsp.org Photograph credits: The Water and Sanitation Program An AMCOW Country Status Overview Water Supply and Sanitation in Kenya Turning Finance into Services for 2015 and Beyond An AMCOW Country Status Overview Strategic Overview The architecture of the water supply and sanitation anticipated capital investments are close to requirements, subsectors in Kenya has undergone significant change this assumes households will meet a substantial share of in the last decade, in response to a slow deterioration of costs, especially in rural areas. However, there is currently urban services through the 1980s and ’90s. Initiated with no clear policy on promotion and marketing to encourage a new Water Act in 2002, significant policy revision and households to invest in sanitation. restructuring of institutional roles is still ongoing and will need to be aligned with the new Constitution of Kenya Significant improvements can still be made throughout the 2010. Most of the reform emphasis has been in the water ‘service delivery pathway’ through which finance is turned supply subsectors, especially urban, but sanitation is now into services. Upstream, separation and clarification of roles regaining emphasis with a new policy published in 2007 is incomplete for all subsectors—especially rural and urban and a strategy and investment plan in development. These sanitation—including for governance, regulation, ownership, reforms of the enabling environment are beginning to yield and operations. Levels of disbursement and expenditure can impacts in the coverage and quality of services. Kenya’s still be improved to make the most of increased allocations challenge is to finalize the reform of enabling aspects to the sector from donors and government. such as strategies and investment plans, further clarifying roles and responsibilities, at the same time as significantly Among policy issues, public support for sanitation hardware scaling up resources and systems for implementing the vs. software must be clarified. While finance for a national development of new services on the ground. network of environmental health workers is available they have very limited operational funding and no capital If rates of progress on water supply and sanitation coverage funding to subsidize sanitation. are not accelerated, sector targets in Kenya will be missed in both rural and urban areas. The biggest overall gaps Moving downstream, aspects for sustaining and developing are for rural and urban sanitation, and at current rates of services are comparatively underdeveloped. The equity of progress only a third of the population will have access to resource allocation—particularly in rural water supply—can safe sanitation in 2015. Urban water supply coverage is be significantly improved. Additionally, this subsector lacks currently lower than it was in 1990, though there are signs adequate management systems, finance and capacity to that this downward trend is reversing. Progress has been monitor, maintain, and expand services. made in rural water supply but will need to be accelerated to meet sector targets. In urban areas, water supply and sanitation and sewerage reforms have yet to result in increased coverage, quality, For water supply, financial allocations to the main and equity, with an increasing risk of raw water shortage sector ministry have increased six-fold since 2003/04, due to lags in developing storage, transmission mains, and while development partner contributions have almost treatment capacity. quadrupled since 2006/07. Estimates for required and anticipated capital investment suggest that urban water Finally, in terms of checks and balances, while the supply has sufficient funds for water supply infrastructure, monitoring and evaluation architecture is elaborate, greater but additional funding needs for urgent water storage use of the findings captured by information systems and and bulk transfer schemes will require consideration. reports is needed to drive performance improvements. The Anticipated capital investment for rural water supply falls second AMCOW Country Status Overview (CSO2) has been short of requirements and is highly fragmented, making it produced in collaboration with the Government of Kenya difficult to manage and report on. For sanitation, though and other stakeholders. 2 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Agreed priority actions to tackle these challenges, and ensure finance is effectively turned into services, are: Sectorwide • Align the Water Act 2002 with the Constitution of Kenya 2010. Rural water supply • Improve management and coordination of works and investment planning. • Enhance targeting of investments by developing and implementing a database to monitor coverage/functionality of rural water supply systems. • Raise funds to reduce the deficit, especially for multivillage bulk supplies. Urban water supply • Agree on final placement of water services assets. • Intensify focus on informal settlements. • Raise funds for storage and transmission projects critical to secure water resources to cope with existing demand and future expected urban growth. • Enforce adherence to corporate governance principles set out by the regulator. Rural sanitation and hygiene • Complete the sanitation strategy ensuring it: o takes a clear stand on hardware subsidies and incorporates this into a subsector costing; o specifies clear roles for and makes full use of the 6000+ environmental health workers for sanitation and hygiene promotion; o puts in place a mechanism for monitoring uptake; and o addresses vulnerable groups. Urban sanitation and hygiene • Ensure the sanitation strategy outlines the role of environmental health workers in urban areas; addresses the high degree of shared sanitation, especially among tenants; and improves coordination among responsible ministries. • Identify and invest in low-cost sewerage options including small-bore sewerage and decentralized, neighborhood- based treatment plants. 3 An AMCOW Country Status Overview 4 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Contents Acronyms and Abbreviations........................................................................................................................... 6 1. Introduction .................................................................................................................................................... 7 2. Sector Overview: Coverage and Finance Trends............................................................................................... 8 3. Reform Context: Introducing the CSO2 Scorecard ......................................................................................... 11 4. Institutional Framework ................................................................................................................................ 13 5. Financing and its Implementation.................................................................................................................. 15 6. Sector Monitoring and Evaluation ................................................................................................................. 18 7. Subsector: Rural Water Supply ...................................................................................................................... 20 8. Subsector: Urban Water Supply..................................................................................................................... 22 9. Subsector: Rural Sanitation and Hygiene ....................................................................................................... 25 10. Subsector: Urban Sanitation and Hygiene...................................................................................................... 27 Notes and References ................................................................................................................................... 29 5 An AMCOW Country Status Overview Acronyms and Abbreviations AfDB African Development Bank MoWI Ministry of Water and Irrigation AMCOW African Ministers’ Council on Water MTEF Medium Term Expenditure Framework CAPEX Capital expenditure NGO Nongovernmental organization CBO Community-based organization NWCPC National Water Conservation and Pipeline CLTS Community-Led Total Sanitation Corporation CSO(2) Country Status Overviews (second round) O&M Operations and maintenance Danida Danish International Development Agency OPEX Operations expenditure DPHO District Public Health Officer PROMIS Project Management Information System DWO District Water Officer PSP Private sector participation ESH Environmental sanitation and hygiene RSH Rural sanitation and hygiene GDP Gross domestic product RWS Rural water supply GNI Gross national income SIDA Swedish International Development GTZ Gesellschaft für Technische Cooperation Agency Zusammernarbeit, a German technical SIM Sector Investment Model assistance agency SIP Sector Investment Plan HH Household SWAp Sector-Wide Approach JMP Joint Monitoring Programme (UNICEF/ UNICEF United Nations Children’s Fund WHO) USH Urban sanitation and hygiene LA Local Authority UWS Urban water supply LIC Low income country WARIS Water Regulatory Information System M&E Monitoring and evaluation WASH Water, Sanitation and Hygiene MDG Millennium Development Goal WASREB Water Services Regulatory Board MIC Middle income country WHO World Health Organization MoE Ministry of Education WS Water services MoF Ministry of Finance WSB Water Services Board MoLG Ministry of Local Government WSP Water and Sanitation Program MoPHS Ministry of Public Health and Sanitation WSTF Water Services Trust Fund Exchange rate 2010 average: US$1 = KES 79.1 6 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 1. Introduction The African Ministers Council on Water (AMCOW) commissioned the production of a second round of Country Status Overviews (CSOs) to better understand what underpins progress in water supply and sanitation and what its member governments can do to accelerate that progress across countries in Sub-Saharan Africa (SSA).2 AMCOW delegated this task to the World Bank’s Water and Sanitation Program and the African Development Bank who are implementing it in close partnership with UNICEF and WHO in over 30 countries across SSA. This CSO2 report has been produced in collaboration with the Government of Kenya and other stakeholders during 2009/10. The analysis aims to help countries assess their own service delivery pathways for turning finance into water supply and sanitation services in each of four subsectors: rural and urban water supply, and rural and urban sanitation and hygiene. The CSO2 analysis has three main components: a review of past coverage; a costing model to assess the adequacy of future investments; and a scorecard which allows diagnosis of particular bottlenecks along the service delivery pathway. The CSO2’s contribution is to answer not only whether past trends and future finance are sufficient to meet sector targets, but what specific issues need to be addressed to ensure finance is effectively turned into accelerated coverage in water supply and sanitation. In this spirit, specific priority actions have been identified through consultation. A synthesis report, available separately, presents best practice and shared learning to help realize these priority actions. 7 An AMCOW Country Status Overview 2. Sector Overview: Coverage and Finance Trends Coverage: Assessing Past Progress percent) of Kenyans to have access to improved water supply by 2015. On current trends this will be missed by 7 The most recent official estimates of access from the percentage points (Figure 1). For sanitation, the JMP trend Government of Kenya put water supply coverage at 42 line portrays access increasing from 26 percent in 1990 to percent and sanitation coverage at 31 percent in 2006 31 percent in 2008. Figure 1 shows that this is in line with (urban and rural areas combined). The chances of meeting the government’s 2006 estimate, but less than half way to ambitious government targets for 2015, of 76 percent the MDG target of 63 percent. in each case, appear slim.3 The Government’s estimates and targets are taken from the Sector Investment Plan Investment Requirements: Testing the (SIP 2030),4 which forms the focus of the CSO2 report in Sufficiency of Finance assessing the adequacy of coverage trends and finance. The SIP’s definition of water supply coverage is stringent, Past rates of coverage will need to be accelerated with revising 2006 household survey results downwards on the additional finance. The costings presented here are those basis of quality and proximity of water supplies.5 developed by the Government of Kenya in its Sector Investment Model (SIM), which underpins the SIP 2030. The CSO2 also benchmarks countries’ own estimates The SIM estimates of capital investment requirements of coverage using internationally comparable data from (CAPEX) to meet government targets for water supply the UNICEF/WHO Joint Monitoring Programme (JMP).6 and sanitation are compared with anticipated public For water supply, the JMP estimates are more positive, CAPEX and the assumed contribution from households, with coverage increasing from 43 percent in 1990 to based on user contribution policy (Figure 2). Investment 59 percent in 2008. The Millennium Development Goal requirements for operations and maintenance (OPEX) are (MDG) target is, however, for almost three-quarters (72 assessed separately. Figure 1 Progress in water supply and sanitation coverage Water supply Sanitation 100% 100% 80% 80% Coverage Coverage 60% 60% 40% 40% 20% 20% 0% 0% 1985 1990 1995 2000 2005 2010 2015 2020 1985 1990 1995 2000 2005 2010 2015 2020 SIP estimates SIP target JMP estimates MDG target JMP estimates MDG target SIP estimate SIP target Sources: SIP and JMP 2010 report. 8 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond The SIM suggests anticipated CAPEX is sufficient for For sanitation capital (‘hardware’), total annual investment water supply, if urban and rural areas are taken together requirements are estimated by the SIM at US$386 million (Figure 2). Anticipated public CAPEX for water supply in per year (Figure 2). The SIM suggests that public investment the years up to 2015 is estimated at US$386 million per is expected to leverage around 82 percent of these costs year. Total annual CAPEX requirements are estimated at from households in rural areas, and 48 percent in urban US$303 million per year, of which US$246 million per year areas (user contributions of 5 percent for on-site sanitation is expected to come from public finance.7 As per the SIM, and 100 percent for sewerage). This means that, overall, this assumes that around 25 percent of the capital costs US$108 million per year is expected from public finance. for water supply in rural areas will be met by households, However, clarification of official government policy on and 0 percent in urban areas. However, it should be noted user contributions to sanitation is urgently required, and is that while there is sufficient finance for capital at the in development. Anticipated public investment of around sector level, disaggregating urban and rural subsectors US$100 million per year has been identified for sanitation, shows that additional funding is required for rural water though as discussed below, not all of this is for capital supply (considered in detail in Section 7). investment. Figure 2 Required vs. anticipated expenditure for water supply and sanitation Water supply Sanitation Required CAPEX Required Required CAPEX OPEX Required OPEX 0 100 200 300 400 500 0 100 200 300 400 500 US$ million/year US$ million/year Public CAPEX (planned) Public CAPEX/software (planned) Household CAPEX (assumed) Household CAPEX (assumed) CAPEX deficit Source: SIM/CSO2 costing. Table 1 Coverage and investment figures—SIM/CSO2 costing8 Coverage Target Population CAPEX Anticipated Assumed Total requiring requirements public CAPEX HH Deficit access CAPEX 19909 2006 2015 Total Public Domestic External Total % % % ‘000/year US$ million/year Rural water supply 32% 38% 75% 1,522 247 189 95 34 129 39 78 Urban water supply 91% 59% 80% 334 56 56 98 158 256 0 – Water supply total 43% 42% 76% 1,856 303 246 193 193 386 39 – Rural sanitation 27% 32% 75% 1,700 272 48 37 7 44 203 26 Urban sanitation 24% 29% 78% 532 115 60 39 18 58 52 5 Sanitation total 26% 31% 76% 2,232 386 108 76 26 101 255 31 9 An AMCOW Country Status Overview If JMP data and their respective MDG targets are switched Table 2 for government coverage data and targets investment Annual O&M, SIM estimates requirements would be: lower for rural water supply and Subsector O&M sanitation, but higher for urban water supply. Investment US$ million/year requirements for urban sanitation are similar. Rural water supply 65 Urban water supply 59 There are a number of reasons why the above depiction of Water supply total 124 investments may be over-optimistic. The first is operation Rural sanitation 4 and maintenance (O&M) requirements (Table 2). As in Urban sanitation 13 many countries, in Kenya there is an implicit assumption Sanitation total 17 that O&M costs will be recovered from users, though in practice this is not always achieved. If any annual O&M requirement has to be subsidized from the public purse, and sanitation, rather than water resource management, for example to utilities that do not achieve operational raw water availability is an important consideration. cost recovery, it reduces the amount available for capital Kenya’s water resource situation, particularly for urban investment. areas, has become precarious. The CSO2 estimates an additional US$150 million per year is required to urgently Another major reason for caution is the ineffectiveness of develop additional water storage and transfer, up to user contribution policies. This is a particular concern for 2015—though no government costing or allocation has sanitation. For on-site sanitation there is an expectation been developed as yet. Other policy assumptions behind that households will contribute 95 percent of capital the costing models can, of course, increase or decrease costs, but the state still has a duty to safeguard public the investment requirements. The SIM technology mix is health by encouraging households to shoulder the relatively high-end. Almost a quarter of rural households expense of building facilities. Policy is unclear on how this to be served in the remaining MDG period are to be will be financed. The SIM estimates additional software served with private, piped household water supply, while investment requirements of around US$30 million per 40 percent of the urban population to gain access to year. Part of the anticipated public investment shown in sanitation are expected to connect to mains sewerage.10 Figure 2 (Sanitation) is in fact going to software, in paying Greater emphasis on cheaper technologies would, of the salaries of 6,000+ environmental health workers course, reduce the investment requirements, but may also employed by the Ministry of Public Health and Sanitation reduce the quality (and safety) of services. (MoPHS). However, the amount of time these workers dedicate to sanitation and hygiene is limited because they These considerations are only part of the picture. are given no specific budget for promotion materials. If a Bottlenecks can, in fact, occur throughout the service public contribution of 5 percent of the capital cost of on- delivery pathway—all the institutions, processes, and actors site facilities is insufficient to increase coverage without that translate sector funding into sustainable services. additional software support, then anticipated public Where the pathway is well developed sector funding investment needs to increase—whether for hardware should turn into services at the estimated unit costs. subsidies or software. Where it is not, the above investment requirements may be gross underestimates. The rest of this report evaluates A further major consideration, which is not depicted in the service delivery pathway in its entirety, locating the Table 1, is the additional cost associated with water transfer bottlenecks and presenting the agreed priority actions to and storage. Though the CSO2 focuses on water supply help address them. 10 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 3. Reform Context: Introducing the CSO2 Scorecard Water supply and, to a lesser extent, sanitation in Kenya in 1999, but the resulting strategy to operationalize the have undergone significant reforms since the ’90s, when policy was not developed until 2007, followed by a SIP it became clear that the government’s ambitious long- in 2009.12 The sanitation subsector is somewhat behind: term targets, set in the early ’80s, would not be reached. an environmental sanitation and hygiene policy was This recent history puts the service delivery pathway in published in 2007, and the accompanying strategy and context, which can then be explored in detail using the investment plan are in development.13 However, several of CSO2 scorecard, an assessment tool providing a snapshot the enabling reforms initiated with the 2002 Act present of reform progress across the ‘building blocks’ that make ongoing challenges, including embedding the Sector-Wide up the service delivery pathway. The CSO2 scorecard Approach (SWAp) adopted in 2006. Furthermore, with the assesses the building blocks of service delivery in turn: enactment of the Constitution of Kenya 2010, the Water three building blocks which relate to enabling services; Act 2002 will need to be reviewed to be brought into line three which relate to developing new services; and three with the new supreme law. which relate to sustaining services. Each building block is assessed against specific indicators and scored from 1 to Further along the service delivery pathway, key challenges 3 accordingly.11 to developing new services efficiently include the need for criteria to match resource allocation at national level By the ’90s, sector performance in Kenya had with need at local level; and for systems to monitor deteriorated, particularly in urban areas, exacerbated output more effectively. The final, downstream end by the government’s limited funding to the sector, poor of the service delivery pathway relates to sustaining management of utilities, mismanagement of funds, and services—as Figure 3 indicates Kenya’s subsectors an unprecedented growth in demand. Poor performance, however, only became a significant impetus for change with civic pressure, expressed through formal complaints Figure 3 procedures and the media, over several public health Average scorecard results for enabling, crises directly related to poor water services in the ’90s. sustaining, and developing stages of the service Macroeconomic reform initiatives promoted by bilateral delivery pathway, and peer-group comparison agencies and international finance institutions also played a part in catalyzing reform. Enabling To date, reform effort has concentrated ‘upstream’ in the service delivery pathway—on the enabling environment for service delivery. Figure 3 indicates that Kenya’s enabling building blocks score well against its peer group, reflecting extensive policy and planning reforms as well as strong budget allocation. Much of this arose with a new Water Act in 2002, giving rise to a new set of Water Sector Institutions (WSIs), including an independent regulator (the Water Services Regulatory Board, WASREB). Ownership was devolved to the regional level with the Sustaining Developing creation of Water Services Boards (WSBs), who in turn Kenya average scores were intended to allocate responsibility for operation to local water services providers, and encourage community Averages, LICs, GNI p.p. >US$500 management. A new Water Policy had been produced Source: CSO2 scorecard. 11 An AMCOW Country Status Overview perform below the peer-group average, reflecting the Sections 4 to 6 highlight challenges across three thematic need to monitor the functionality of rural water points, areas—the institutional framework, finance and monitoring to improve cost recovery in urban and rural areas and to and evaluation (M&E). The related scorecard indicators reduce nonrevenue water. For sanitation there is a need which give an empirical basis for evaluation are highlighted to establish whether the cadre of public health extension in the section (each of the nine building blocks is scored workers is having an impact on the household uptake of against three indicators). The scorecards for each subsector toilet facilities. are presented in their entirety in sections 7 to 10. Table 3 Key dates in the reform of the sector in Kenya Year Event 1952 Water Act Cap372 1957 Establishment of Mombasa Pipeline Board, first ‘commercial’ supplier 1988 Establishment of NWCPC 1990s Corporatization and commercialization of municipal providers (Nyeri, Eldoret, and Kericho) 1995 First management contract, Malindi 1999 Water Policy 2002 Water Act 2002 2003/04 Establishment of WSIs 2005 Transfer plan published 2006 Launch of SWAp and first Annual Sector Conference 2009 Sector Investment Plan 2010 The Constitution of Kenya 2010 12 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 4. Institutional Framework A major aim of the institutional reforms following the WS providers’ performance. Despite gaining prosecution Water Act 2002 was to clearly separate roles among powers in 2008 WASREB’s mandate and capacity to different institutions in order to minimize duplication and enforce license provisions, issue regulations, and make maximize efficiency. Related scorecard indicators, which tariff reviews and determinations is yet to be fully exercised. look at the extent to which national targets have been In relation to the tariff regime, areas for attention include set, policies, and institutional roles put in place, show that defining responsibility for tariff reviews in rural areas all subsectors perform similarly, but below the average and for small providers; the design of the existing retail for Kenya’s peer group (Figure 4). This section considers tariff structure and price adjustment methodology; and institutional challenges in detail, building on the snapshot remuneration for WSBs including the lease fee paid to provided by scorecard indicators with in-depth analysis. local authorities.17 Figure 5 presents the intended architecture for the sector and subsectors.15 Assets and staff: Concluding the transfer. The creation of new WSIs required the transfer of water Regulation: Empowering WASREB. While several supply and sewerage assets from the MoWI, local promising initiatives have emerged from WASREB, such as authorities (LAs), the National Water Conservation and two comparative benchmarking reports on water services Pipeline Corporation (NWCPC), and other public bodies (WS) providers,16 the regulator could be strengthened to the WSBs, and staff to both WSBs and WS providers. further. WASREB does not have total authority over MoWI issued a Transfer Plan for assets in 2005 but that regulation, with potential duplication of responsibilities elapsed in 2008 before all aspects had been executed. with WSBs and the Ministry of Water and Irrigation Legal inconsistencies, stakeholder opposition, and limited (MoWI) over inspecting, monitoring, and reporting on the funding for required studies and investments appear to be the main blockages, making managing and financing assets more difficult. The WSBs have taken administrative Figure 4 responsibility for most assets formerly belonging to the Scorecard indicator scores relating to MoWI but have not received the deeds of ownership, institutional framework compared to peer while district water officers (DWOs) formally report to group (see endnotes)14 WSBs but continue to receive direct funding from the RWS MoWI for asset development. Liabilities, particularly outstanding infrastructure development loans from before the transfer began, put the financial viability of WSBs and some larger WS providers at risk. The status of water assets belonging to LAs, nongovernmental organizations USH UWS (NGOs), NWCPC, and other public corporations is not yet agreed upon. The incomplete asset transfer directly impacts the financial viability of WS providers. First, the lease fees paid to LAs by them—over US$14 million since 2004 in the case of the Nairobi utility—are a drain on the sector as they are not being reinvested RSH by the LAs. Second, it compromises the ability of WSBs Kenya average scores to access investment finance from the market as the Averages, LICs, GNI p.p. >US$500 assets are not on their books. In terms of staff transfer, Source: CSO2 scorecard. the delays reduce cohesion, with staff transferred from 13 An AMCOW Country Status Overview Figure 5 Institutional roles and relationships in the water supply and sanitation sector Sewerage and Water supply related hygiene General sanitation and School Urban promotion hygiene promotion Sanitation Sanitation Sector MoWl MoPHS MoE leadership Regulation WASREB National NWCPC WSTF Service development WSBs LAs Regional and provision WS providers & DWOs DPHOs Local MoWI: Ministry of Water and Irrigation. Policy lead on water WSBs: Water Services Boards. Ownership of assets previously supply, oversight of WSBs and water services providers (including belonging to central government, MoWI or parastatals; may also their sanitation activities); limited service provision through DWOs. ‘acquire… use of assets’ belonging to local authorities. Can operate MoPHS: Ministry of Physical Health and Sanitation. Policy lead on as Water Service Providers (below) or bulk service providers. Provide Environmental Sanitation and Hygiene (ESH). hygiene promotion associated with sewerage. MoE: Ministry of Education. Supervision of ESH in schools. WS providers: Water service providers. Operation and LAs: Local authorities. Supervision of urban sanitation. management. Can include local authority owned companies, NGOs WASREB: Water Services Regulatory Board. Technical standards and CBOs. and tariffs, issues licenses and tariff guidelines. DWOs: District Water Officers, local MoWI officials. NWCPC: National Water Conservation and Pipeline Corporation. DPHOs: District Public Health Officers, local MoPHS officials. Bulk supply development. Additional bodies: Kenya Water Institute (capacity development); WSTF: Water Services Trust Fund. Provides grants for capital Water Appeal Board (dispute resolution). investment in underserved areas. Source: CSO2 analysis. different institutions still under the terms and salaries struggling to recover even O&M costs. At the still smaller, of their previous employers, and limit WSIs’ ability to nonnetworked level of water kiosks in peri-urban areas, select new staff based on merit. A new transfer plan WASREB has developed management standards. was drafted and submitted for inclusion in the Gazette in early 2010.18 However, in late 2010 the asset transfer Private sector participation: Enabling a positive has again been put on hold pending the alignment of contribution. The role of local entrepreneurs is the Water Act 2002 with the new Constitution. The emerging in public sanitation, secondary water supply underling financial implications of the assets and their (through kiosks, trucks or tankers) and spare parts for transfer will nevertheless persist requiring a clear and rural water supply. Large-scale private investment is conclusive decision. unlikely due to the complex institutional setup in the sector, still evolving tariff regulation, and low political Operations: Creating viable service providers. Since support for private sector participation (PSP). At medium- 2004, 118 WS providers have registered, including scale, open competition for contracts for WS provider a large number of small independent providers, operation and management has been limited. Despite community-based organizations (CBOs) and NGOs, but a relatively competitive domestic market in technology many are still unregistered. A rationalization process has and related services, contracting private enterprises to begun, ‘clustering’ several small providers where this provide specific services (such as monitoring, billing, or improves viability; many meanwhile remain unclustered, rural water supply O&M) is rare. 14 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 5. Financing and its Implementation The scorecard indicators relating to finance range from promising exceptions).20 For urban water supply especially, the development of a SWAp and costed investment planning for water storage and transfer has been lacking. program, to the overall sufficiency of finance and extent No new water resources have been developed for Nairobi of utilization (foreign and domestic). As can be seen from since 1994. Domestic and commercial users are increasingly Figure 6, average indicator scores are high across most drilling private boreholes, with uncertain implications for subsectors—rural water is affected by its large financing groundwater. deficit. However, as outlined below, there are a number of outstanding challenges in the way financial resources are Budgeting: Directing finance effectively. The move obtained, allocated, and disbursed. to three-year rolling budgets with the Medium Term Expenditure Framework (MTEF) in 1999, as well as more Planning: Linking inputs, outputs, and need. A number recent public financial management reforms, appear to of strategies and plans have been developed. The latest, have paid dividends for the water sector as a whole.21 dealing specifically with financing, is the SIP 2030 and The MoWI’s budget has increased in absolute terms from accompanying Strategic Sector Investment Model (SIM). US$64 million in 2003/04 to US$379 million in 2009/10, as Baseline data (no detailed investment plans were provided well as relative to GDP, from 0.4 percent in 2003/04 to 0.9 by the WSIs) and ownership of the SIP within the sector percent in 2008/09, implying it has more than kept pace could nonetheless be enhanced. In general plans and with inflation. The majority of the capital budget growth strategies are not always linked to each other, to available has gone to water supply and sanitation (which account resources, and to specific sector targets, reducing their for over 80 percent of the MoWI’s allocation) rather than contribution as consistent and achievable roadmaps for irrigation. However, additional clarity in the Ministries’ the sector (the Water Services Trust Fund’s Strategic Plan budget structure is still needed to enable more transparent and the Pro-Poor Implementation Plan for WS providers are tracking of urban versus rural and water supply versus sanitation allocations. The budget has also yet to be fully realigned to the new water sector institutions (WSBs and Figure 6 WS providers) with 25 percent of the budget still going Scorecard indicator scores relating to financing through prereform institutions including the NWCPC and its implementation compared to peer group19 and the DWOs 15 percent and 10 percent in 2009/10, respectively, set to increase to 18 percent and 14 percent RWS by 2011/12). Allocations to the MoPHS for ‘Environmental Health Services’ began in 2008/09 and doubled to US$34 million for 2009/10: most of this appears to pay the salaries USH UWS of 6,000 environmental health workers, but specific financing for education and promotion resources are not discernible (see rural sanitation subsector focus). The lack of clarity extends back to the institutional arrangements, with the MoWI and MoPHS sitting in different budget RSH sector working groups. The Ministry of Local Government Kenya average scores (MoLG) also has a responsibility for urban sanitation Averages, LICs, GNI p.p. >US$500 but no separate budget line. As a proportion of GDP Source: CSO2 scorecard. the 2008/09 allocation to sanitation (0.06 percent) was 15 An AMCOW Country Status Overview still only 10 percent of what was recommended by the (WSTF) employs an allocation formula to target finance on eThekwini declaration, to which Kenya is a signatory, the basis of need and quality of projects. Criteria include though with the assumed user contributions this would a poverty index, water and sanitation coverage in the case be well above the 0.5 percent GDP.22 A key challenge to of the WSTF’s Community Project Cycle (for rural areas) the sanitation subsector is to ensure this leveraging of user as well as value for money and community participation contributions. measures in the case of the Urban Project Cycle. But this equity-focused finance is a small proportion of the total Expenditure: Delivering resources efficiently. sector budget (around 4 percent of the projected 2010/11 Utilization of funds by the MoWI has fluctuated between budget). Even if fully executed only around 15 percent 94 percent and 76 percent—rates that are higher than of the 1.86 million people requiring access each year to many other countries in the region, but which could still meet Kenya’s target would be reached.25 Yet the WSTF be improved. In a review of the 2008/09 third quarter, the has many of the ingredients of a good practice service MoWI was found to be one of the three ministries with delivery mechanism—pooling of donor and domestic highest underspending.23 According to a recent budget funds, transparent criteria for project selection, a clearly performance report this can be attributed to liquidity set out project cycle—so it presents an opportunity to be issues limiting and delaying releases from the Ministry built on and scaled up. of Finance (MoF), shortfalls in the MoWI’s budget in turn delaying transfer of funds to districts, tax exemption Donor finance: Aligning and harmonizing. Between delays, postelection disturbances in 2007/08, and limited 2006/07 and 2009/10, development partner funding to adsorption capacity among the new WSIs.24 Development the sector increased at a significant annualized rate of partner funding also shows underspending in some 53 percent, from US$54 million to US$191 million. As instances, which the MoWI attributes to limited adsorption can be seen from Figure 7, the proportion of anticipated capacity among WSIs (because of slow procurement and investment varies by subsector, with urban water supply implementation processes), as well as accounting delays. set to receive 58 percent of anticipated public investment from external sources, and rural sanitation 8 percent Sector trust funds: Enhancing equity. Currently the (with a further 8 percent from NGOs). In 2009/10 only sector-specific fund, the Water Services Trust Fund almost 80 percent was provided as loans, mostly flowing Figure 7 Overall annual and per capita investment requirements and contribution of anticipated financing by source Rural water supply: Urban water supply: Rural sanitation: Urban sanitation: Total: $246,875,780 Total: $56,280,831 Total: $271,969,273 Total: $114,510,128 Per capita: $162 Per capita: $169 Per capita: $174 Per capita: $226 Domestic planned investment External planned investment Assumed household investment Gap Source: SIM and CSO2 costing. 16 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond through partners’ own payment systems (63 percent) This coordination task carried out by the Water Sector rather than government payment systems (37 percent). Working Group, comprising sector ministries, WSIs and The proportion not routed through government systems donors, would be greatly enhanced if the SIP or a revision may in fact be higher because the figures do not capture of it were used as a common framework. funding routed via NGOs (estimated at an additional 10 percent in the SIP 2030). The SWAp and the Sector Market finance: Embracing innovation. Innovative Conference (Joint Annual Review) were launched in forms of finance are emerging in Kenya. A local bank, 2006 (relaunched in 2009) including the agreement K-Rep, has provided micro-finance loans totalling US$1 of ‘Partnership Principles’,26 and smaller multilateral million (an average of US$68,000) to viable community cooperation agreements have been made between projects in rural areas with the support of the Global the MoWI and donors such as Danida, SIDA, UNICEF, Partnership on Output Based Aid. The WSTF plans to and GTZ. Although the SWAp has provided a useful employ a similar mechanism for projects outside its usual, forum for discussing sector issues, harmonization and poverty-targeted locations.29 In February 2009 the first alignment still need to be improved in practice.27 Key infrastructure bond was issued by the Central Bank of issues include limited donor awareness and engagement Kenya. Of the maximum amount of US$240.5 million, with the SIP as a viable sector plan, low levels of donor US$54 million will be used to fund water projects— financing to the WSTF, an increasing number of agencies mostly dams and sewerage.30 The bond was 45 percent (10 in 2005, 16 in 2008) and projects (35 in 2005, 80 oversubscribed, indicating the potential for WSBs or in 2008), and increased funding flowing to the water the most viable large WS providers (for example, the sector from domestic nonwater sector-specific trust NCWSC) to issue project-specific bonds. Such initiatives to funds.28 Coordinating such a fragmented sector—relative leverage market finance require the sector to continue to to other countries in the region—is a real challenge. demonstrate its commercial viability. 17 An AMCOW Country Status Overview 6. Sector Monitoring and Evaluation In Kenya, the M&E architecture is elaborate and has The WASREB’s two Impact Reports have set a promising evolved rapidly since 2002, moving away from project example for performance monitoring of WS providers,32 monitoring towards an integrated sectorwide monitoring and its information system, WARIS, has consolidated data system. Scorecard indicators relating to M&E are found on WSB and WS provider performance, including Key throughout the service delivery pathway, from the Sector Indicators. However, the broader picture shows presence of an annual review (for which Kenya scores well) that strong links within and between different stages of to the monitoring of output and consistency of household the M&E cycle are not yet in place. Over the past two years surveys in monitoring water supply and satiation outcomes. increasing numbers of plans and strategies have been Overall, however, average indicator scores indicate there is developed, with limited guidance on complementarities to much to be improved (Figure 8). As explained below, the existing documents.33 In terms of links between stages, it linkages within and between different stages in the M&E is not clear that findings captured in information systems cycle could be strengthened. Fostering accountability is a and reports are used to drive performance improvements. further challenge considered in this section. The NWCPC’s poor performance in the 2007 Value for Money Study does not appear to have had consequences Monitoring and evaluation: Strengthening feedback. and its budget allocation is set to increase.34 Nor does the Figure 9 demonstrates the need to streamline the M&E M&E system yet dovetail fully with the planning system. architecture in Kenya’s water, sanitation, and hygiene The Annual Sector Review provides a useful forum for (WASH) sector. Specific M&E roles have been designated, discussion of progress against sector plans and targets, for example, a Technical Audit and Performance Contract and sets and reviews its own sector undertakings, while Monitoring Unit within the MoWI and an M&E officer the MoWI’s annual Performance Review picks up on eight in the MoPHS’ Department of Environmental Health. of the Key Sector Indicators. Nonetheless it appears several plans and strategies are not being individually monitored or evaluated, including the MoWI’s Pro-Poor Implementation Figure 8 Plan—a concern given the ambition of this initiative to Scorecard indicator scores relating to sector M&E, improve equity through careful targeting.35 While at the compared to peer group31 aggregate level information on physical output is available, this has yet to be broken down by location, type, and cost RWS of investments. Accountability structures: Improving information and participation. Accountability extends beyond effective M&E structures, to ensuring that institutions USH UWS foster the civic attitudes that allow them to respond, and be seen to respond, to users and other institutions. Customer representation is beginning to be developed, for example WASREB’s Water Action Groups. All WSIs have created websites, and the MoWI and some others issue RSH regular newsletters updating stakeholders on reforms. Kenya average scores Nevertheless, the quality of online information varies. For Averages, LICs, GNI p.p. >$500 example, the Water Sector Policy is not available on any website. Annual reports addressed to the public are issued Source: CSO2 scorecard. by only a few WSIs. The WSTF’s Community and Urban 18 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Figure 9 The monitoring and evaluation cycle in the Kenyan water sector Quarterly/annual performance, accounting Policies for water and Various plans, strategies, and license reports provided by WSIs to MoWI sanitation, as well as performance contracts and and WASREB; project evaluations and sector government plans such as investment plans developed performance reports provided to donors; Vision 2030 (and being developed) by MoWI, quarterly/annual public expenditure reviews MoPHS, Ministry of Health and for sector ministries Objectives Ministry of Environment and Natural Resources. Reports Plans Three systems already: for WASREB (‘WARIS’), WSTF (‘PROMIS’), and WSBs (for asset 3 MTEFs management). There are also systems to monitor Information encompassing WASH Budgets WSS services in urban areas (‘Maji data’), Systems services (infrastructure, and provide a sector overview (MoWI sector environment and Indicators information system) in development health); Additional district budgets and Proliferation of indicator sets: 16 Key Service Indicators, 11 Minimum Service Level special funds at the Indicators, 19 WSS Performance Indicators, 18/19 license and SPA indicators, >60 local level WASREB indicators. Also ‘Sector Undertakings’, agreed at annual sector review Source: CSO2 analysis. Project Cycles include promising community participation percent of householder respondents knew someone who measures, which are also recommended by the MoWI’s had given a bribe to receive water services. The MoWI’s Value for Money Study and Pro-Poor Implementation performance contract now requires that corruption Plan, though replicating this capacity in other WSIs has is monitored, and the fact that it is discussed at all is a yet to be achieved. Finally, Kenya’s WASH sector is still significant step. Confidence in sector reforms (which in confronting the challenge of corruption: a recent survey turn leads to willingness to pay) will depend on prompt by Transparency International (2009) identified that 12 and visible action in response to corruption issues. 19 An AMCOW Country Status Overview 7. Subsector: Rural Water Supply Priority actions for rural water supply • Improve management and coordination of works and investment planning, tackling the fragmented funding flows between the districts, NWCPC, WSBs, NGOs and the WSTF, and other trust funds. • Enhance targeting of RWS investment by developing and implementing a database to monitor coverage/ functionality of rural water supply systems, equivalent to WASREB’s ‘WARIS’ system for WSBs and WS providers. • Raise funds to reduce the deficit in RWS, especially for multi-village bulk water supplies. According to the government’s own estimates used in US$129 million per year, which should be able to leverage the SIM, coverage stood at 38 percent in 2006, leaving household contributions of US$39 million per year (based a significant shortfall relative to the 2015 SIP target of on subsidy policy). The SIM also estimates additional OPEX 75 percent. The JMP estimates that coverage is higher, requirement of US$65 million per year—currently this is however, having increased from 32 percent in 1990 to 52 either a real or deferred burden on public finance, since percent. Piped coverage (household connections) remains recovery of operations and maintenance costs from user limited in rural areas. JMP and government estimates differ fees is rare for rural and small town schemes (see below). in what is counted as improved access, and so cannot be directly compared (government estimates are adjusted for Figure 12 shows the scorecard results for the rural water water quality and collection time). supply service delivery pathway. The scorecard uses a simple colour code to indicate: building blocks that are largely in The SIM’s estimate of required investment for the place, acting as a driver on service delivery (score>2, green); government target indicates a shortfall of US$78 million per building blocks that are a drag on service delivery and year (Figure 11), assuming anticipated public investment of require attention (score 1–2, yellow); and building blocks Figure 10 Figure 11 Rural water supply coverage Rural water supply investment requirements 1 0.8 Coverage 0.6 Required CAPEX Required 0.4 OPEX 0.2 0 1985 1990 1995 2000 2005 2010 2015 2020 0 100 200 300 400 SIP estimate SIP target US$ million/year JMP, improved JMP, piped Public CAPEX (planned) Household CAPEX (assumed) CAPEX deficit Sources: SIM and JMP 2010 report. Source: SIM and CSO2 costing. 20 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Figure 12 Rural water supply scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use 2 2.5 1 2.5 1 1.5 1.5 0.5 1.5 Source: CSO2 scorecard. that are inadequate, constituting a barrier to service delivery Figure 13 and a priority for reform (score <1, red). Average RWS scorecard scores for enabling, sustaining and developing stages of the service The subsector scorecard indicates that most concerns for delivery pathway, and peer-group comparison the subsector relate to downstream aspects of the service Enabling delivery pathway (Figure 12), though Kenya also scores worse than its peer group for enabling building blocks (Figure 13). In terms of developing services, the equity building block scores poorly. Indicators for this building block include the use of allocation criteria to target funds: in Kenya this is currently restricted to the project cycles of the WSTF, which also uses participatory planning for investment decisions. The strict criteria and limited resources of the fund mean that many communities may not qualify. As for other Developing Sustaining subsectors, reliable data on output (where and to what standard services are being developed) is lacking. Kenya average scores There are also concerns about sustaining existing services Averages, LICs, GNI p.p. >US$500 (maintenance and expansion). Indicators for maintenance Source: CSO2 scorecard. include the presence of regular functionality surveys—the first of which was conducted in 2009, finding only 58 percent of rural water sources to be functional36—and whether user financing covers O&M costs (rarely, on available evidence, score for expansion reflects the absence of mechanisms even in small towns). Willingness-to-pay studies are rarely to support planning and financing for schemes—WSBs used to establish cost recovery plans despite indications have few resources to support small schemes, coordination that people in rural areas can spend 15 percent of their between the responsible institutions has been limited. A monthly income on water. The role of DWOs in providing bright spot among indicators for use is that collection time back-stopping support is limited and the majority of rural for rural water is relatively low, with only 17 percent taking schemes are not registered as WS providers. The low more than 30 minutes to collect water. 21 An AMCOW Country Status Overview 8. Subsector: Urban Water Supply Priority actions for urban water supply • Align the 2002 Water Act with the Constitution of Kenya 2010 and agree final placement of water services assets. • Intensify focus on informal settlements, extending formal infrastructure and cutting out vendors. • Raise funds for storage and transmission projects critical to secure water resources to cope with existing demand and future expected urban growth, including the Nairobi storage and Mzima pipeline projects. • Enforce adherence to corporate governance principles set out by the regulator. Access to improved water supply in urban areas has prospect but both the 2009 Housing and Population dropped over the review period against a background of Census and sector data from service providers reported rapid urban growth: the JMP trend line shows a decline by the regulator WASREB indicate that this negative long- (from 91 percent in 1990 to 83 percent in 2008), while term trend may be reversed. The Census reports access the SIP estimate, with its stricter definition of coverage, is to piped water supply in urban areas at 53 percent, below even this, at 59 percent (Figure 14). However, even considerably higher than the 44 percent reported by the with the drop in coverage reported by the JMP, somewhere JMP in 2008. In addition, though based on a different between 3 and 6.5 million people in urban Kenya gained definition of coverage, WASREB reports a rise in supply- access to improved sources of drinking water over the side coverage from 39 percent in 2005/6 to 45 percent 1990 to 2008 period, highlighting the challenge that in 2008/9.38 keeping up with urban population growth poses.37 Reaching the government’s SIP target is estimated to Reaching the SIP target of 80 percent seems a distant Figure 14 Figure 15 Urban water supply coverage Urban water supply investment requirements 1 0.8 Required Required Coverage 0.6 CAPEX OPEX 0.4 0.2 0 1985 1990 1995 2000 2005 2010 2015 2020 0 100 200 300 US$ million/year SIP estimate SIP target Public CAPEX (planned) JMP, improved JMP, piped Source: SIM and CSO2 costing. Source: SIM and JMP 2010 report. 22 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Figure 16 Urban water supply scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use 2 2.5 2 3 1.5 0.5 1 1.5 1.5 Source: CSO2 scorecard. and important initiatives for the enabling environment require US$56 million per year, which appears affordable include a SWAp, annual joint sector review and the SIP given US$256 million per year in anticipated public 2030, though all of these still need to be fully embedded investments (Figure 15). OPEX requirements are estimated and operationalized in the subsector. As Figure 17 shows, at US$59 million per year—again, ineffective cost recovery Kenya’s scores are fractionally below the peer group from user fees, compensated for by operating subsidies to average, even among enabling environment building utilities, mean this is a drain on available public finance. blocks. Furthermore, the depicted capital costs are for treatment and distribution only—an estimated additional US$150 As in rural water supply, there is some way to go to million per year is urgently needed for storage and transfer improve downstream building blocks including the equity capacity. of services, the quality and monitoring of output, and structures for funding and supporting maintenance. An The upstream building blocks of the urban water supply equity indicator for urban water supply is the presence of service delivery pathway (policy, planning, budget, specific pro-poor plans for utilities: the MoWI’s Pro-Poor and expenditure) score well (Figure 16). Reforms have Implementation Plan mandates WS providers to create dramatically changed the architecture of the subsector, poverty-targeted expansion plans, to bring improved access to areas of greatest need.39 However, actual progress is limited to a few WS providers (for example, Nairobi, Kisumu) and there is no clear monitoring of Figure 17 impacts. Indicators for the output building block include Average UWS scorecard scores for enabling, the quantity of facilities built, but information on the rate sustaining, and developing stages of the service of expansion of household connections and standpipes by delivery pathway, and peer-group comparison the MoWI is limited. Water quality standards are in place but are not regularly monitored (limited evidence suggests Enabling 83 percent of water quality samples were compliant with residual chlorine standards). High levels of nonrevenue water reduce the score for maintenance: WASREB’s latest benchmarking report found this to be as high as 47 percent. A further maintenance indicator is cost recovery: for most of the larger service providers this is sufficient to cover operations and maintenance, but not for around 60 Developing percent of providers (mainly small-scale).40 The ongoing Sustaining ‘clustering’ of smaller WS providers may help to improve financial viability, but requires careful negotiation with Kenya average scores current owners and existing, viable utilities. Autonomy— Averages, LICs, GNI p.p. >US$500 financial, legal, and managerial—of the WSBs and WS Source: CSO2 scorecard. 23 An AMCOW Country Status Overview providers would also be strengthened by coming to final expansion is whether utilities have adequate strategies for agreement on the placement of water services assets securing additional raw water resources. Water crises in and enforcing the 2008, WASREB-developed corporate 2009, 2006, and 2000 have not yet catalyzed government governance guidelines. The alignment of the Water Act and service providers to act together to address long- 2002 with the Constitution of Kenya 2010 will affect how term challenges, and with uneven distribution of water the ‘clustering’ of WS providers, and the autonomy of resources and a high level of aridity (80 percent of Kenya’s both WSBs and WS providers, will be structured. A final land area is arid or semi-arid) the problem of raw water issue is raw water availability—one of the indicators for availability is likely to increase. 24 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 9. Subsector: Rural Sanitation and Hygiene Priority actions for rural sanitation and hygiene • Complete the sanitation strategy (in development) ensuring it: o Takes a clear stand on level of subsidy to households; o Makes full use of the 6,000–7,000 environmental health workers for promotion activities; o Puts in place a mechanism for monitoring the uptake of sanitation; o Addresses vulnerable groups; and o Incorporates a costing for the intended results. The government’s estimate of rural sanitation coverage percent.41 If this is the case, anticipated public investment and baseline for the SIM is 32 percent (2006). As can be plus leveraged household finance leaves a deficit of US$26 seen in Figure 18, this is roughly in line with the JMP trend million per year. However, as discussed below, policy on line, which puts coverage at 32 percent in 2008 (a slight subsidies vs. promotion requires clarification. The SIM increase from 27 percent in 1990). Unlike in the water estimates a small OPEX requirement of US$4 million. This supply subsectors, the JMP and government use similar figure is calculated in relation to sewerage only. definitions of improved coverage. Both figures indicate there is a considerable shortfall relative to the government The service delivery pathway for rural sanitation is less target of 75 percent (government). The JMP estimates a developed than either water supply subsectors (Figure 20), further 18 percent use shared latrines (with 18 percent in particular for developing services, where the average resorting to open defecation). score drops below the peer group average (Figure 21). For building blocks relating to enabling and sustaining The SIM estimates that a total of US$272 million per services, Kenya’s performance is above average. The high year is required for sanitation hardware alone (that is, enabling scores nonetheless conceal a major shortcoming not including promotion and marketing costs) of which for rural sanitation: unclear policy on the relative role of households are expected to contribute around 80 subsidies for hardware, and ‘software’ activities such as Figure 18 Figure 19 Rural sanitation coverage Rural sanitation investment requirements 100% 80% Coverage 60% Required CAPEX Required 40% OPEX 20% 0% 1985 1990 1995 2000 2005 2010 2015 2020 0 100 200 300 US$ million/year JMP improved JMP, improved + shared SIP estimate SIP target Public CAPEX (planned) CAPEX deficit Household CAPEX (assumed) Source: SIM and JMP 2010 report. Source: SIM and CSO2 costing. 25 An AMCOW Country Status Overview Figure 20 Rural sanitation and hygiene scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Markets Up-take Use 2 2.5 2 2 1 0.5 2 0.5 1.5 Source: CSO2 scorecard. Figure 21 of their efforts to sanitation and hygiene promotion, but Average RSH scorecard scores for enabling, there is no budget line within the MoPHS to fund such sustaining, and developing stages of the service activities, and other health issues tend to take priority. The delivery pathway, and peer-group comparison MoPHS is developing ‘schemes of service’ to set out its Enabling responsibilities and performance targets for hygiene and sanitation promotion. Meanwhile, the SIM estimates that additional costs for hygiene promotion are around US$24 million per year, but it is not clear whether this includes staffing costs, promotional materials, or both. This lack of clarity has implications downstream in the service delivery pathway. Low scores for output arise because Sustaining Developing with unclear policy, there has been limited development of promotion tools, and little attempt to establish what types Kenya average scores of output (for example, hardware subsidies, promotion, or Averages, LICs, GNI p.p. >US$500 marketing) are most effective in encouraging uptake. Low- Source: CSO2 scorecard. cost methods such as Community-Led Total Sanitation (CLTS) have undergone trials, but challenges such as promotion and marketing. Although Kenya has a National opposition from strong traditional beliefs, expectation Environmental Sanitation and Hygiene Policy (picked up of subsidies, and a lack of quality facilitators persist.42 as one indicator for the policy building block), it is not The uptake building block scores poorly on indicators clear on how households are to be encouraged to invest relating to the number and type of facilities being built by in sanitation, and how this will be financed—an especially households, and handwashing practice (uptake of hygiene urgent issue given the SIM’s assumption that households promotion activities): studies suggest that between 20 will meet 80 percent of the costs. Although in Figure 19 and 60 percent of primary caregivers wash hands with the US$44 million per year in anticipated public investment soap at critical times. In schools, widespread hygiene is contrasted with hardware (capital) investment education does not appear to have followed through into requirements, this sum is currently mainly intended for practice, with only 1 percent handwashing with soap.43 software, in the form of the salaries of more than 6,000 Markets for sanitation hardware, however, appear robust public health workers employed at the local level by the in rural areas—with high scores for indicators relating to MoPHS’s Environmental Health and Sanitation Unit. These the supply chain and private sector capacity—largely as a workers are expected to contribute around 60 percent result of entrepreneurship. 26 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond 10. Subsector: Urban Sanitation and Hygiene Priority actions for urban sanitation and hygiene • Ensure that the sanitation strategy: o Outlines the role of Environmental Health Workers in promoting sanitation; o Addresses the high degree of shared sanitation where most people are tenants and so pressure on landlords is required; and o Improves coordination among ministries dealing with urban sanitation. • Identify low cost sewerage options including small-bore sewerage and decentralized, neighborhood-based treatment plants. Sanitation coverage in urban areas is the lowest of any higher prevalence of sewerage in urban areas, which is subsector: the government’s estimate and SIM baseline is fully subsidized despite the fact it is unlikely to benefit the 29 percent for 2006, while the JMP puts 2008 coverage at poorest. As in the rural subsector, this leaves a slight deficit 27 percent, up just 3 percent from 24 percent in 1990. As relative to anticipated public investments, of US$5 million in the rural subsector, reaching the Government’s target per year (Figure 23). OPEX requirements of US$13 million of 78 percent would require a massive acceleration of per year are estimated for sewerage, which will require past progress. The JMP estimates that in fact a majority public finance if effective cost recovery is not secured from of urban Kenyans (51 percent) use shared latrines, with 2 users. percent resorting to open defecation. The urban sanitation service delivery pathway has the lowest To meet the government target by 2015, the SIM estimates aggregate score of any subsector, though performance that US$115 million per year is needed for sanitation is slightly above average for enabling and sustaining hardware. The expected household contribution is slightly building blocks (Figure 25). The overall pattern is similar lower than in the rural subsector, at around 50 percent to that found for rural sanitation: output and up-take (though subsidy policy is again unclear). This is due to a building blocks again receive scores below 1, constituting Figure 22 Figure 23 Urban sanitation coverage Urban sanitation investment requirements 100% 80% Coverage 60% Required CAPEX Required 40% OPEX 20% 0% 1985 1990 1995 2000 2005 2010 2015 2020 0 50 100 150 US$ million/year JMP, improved JMP, improved + shared Public CAPEX (planned) SIP estimate SIP target Household CAPEX (assumed) CAPEX deficit Source: SIM and JMP 2010 report. Source: SIM and CSO2 costing. 27 An AMCOW Country Status Overview Figure 24 Urban sanitation and hygiene scorecard Enabling Developing Sustaining Policy Planning Budget Expenditure Equity Output Markets Up-take Use 2 2.5 2 2 1 0.5 2 0.5 1 Source: CSO2 scorecard. Figure 25 may differ from what works in the rural context. A variant Average USH scorecard scores for enabling, of CLTS, adapted to urban areas, might be applied to sustaining, and developing stages of the service increase uptake of urban on-site latrines, which are used delivery pathway, and peer-group comparison by 40–50 percent of those with access. Such approaches could also encourage the large number of users of shared facilities to construct their own facilities. However, the Enabling effectiveness of CLTS in an urban context is uncertain across the region, and would require development before large-scale adoption. As in other subsectors, better baseline data is a key step to understanding the nature of the challenge. There is currently no systematic monitoring of the number and quality of facilities built by households, and no surveys have focused on hygiene behavior in urban areas (scorecard indicators for uptake). The development Developing of ‘Maji Data’, designed to map sanitation and water Sustaining supply in low-income areas and harmonize definitions and approaches, may enhance understanding. Kenya average scores Sewerage has, up to now, received the bulk of hardware Averages, LICs, GNI p.p. >US$500 subsidies, despite the fact that it is mainly accessed by Sources: CSO2 scorecard. wealthier Kenyans. The MoWI’s own assessment indicates 20 percent of urban Kenyans have sewerage connections, but that only 3–4 percent of urban wastewater receives a barrier on the entire pathway. As in the rural subsector, treatment, while industrial wastewater treatment is also policy on public support for software vs. hardware needs a concern. In the long term, sewerage remains the likely to be clarified, and a clearer link established between preferable option in terms of public health, but exploration different government outputs, and uptake by households. of low-cost technologies is required if it is to benefit Public consultation suggests sanitation is currently a low poorer Kenyans. In the short term, with many existing priority for urban communities,44 indicating that additional treatment plants operating well below design capacity promotion and marketing is necessary: the SIM estimates (15–20 percent on average) it appears that networks could additional hygiene promotion costs in the urban context of be extended in some areas without the need to invest in US$6 million per year. However, the appropriate approach expensive additional treatment.45 28 Water Supply and Sanitation in Kenya: Turning Finance into Services for 2015 and Beyond Notes and References 1 Global Economic Monitor, The World Bank. 2010 11 The CSO2 scorecard methodology and conceptual average. framework are discussed in detail in the synthesis report. 2 The first round of CSOs was carried out in 2006 covering 16 12 MoWI. 2007. National Water Services Strategy 2007– countries and is summarized in the report, ‘Getting Africa 2015; and 2009. Sector Investment Plan for the Water and on Track to Meet the MDGs on Water and Sanitation’. Sanitation Sector in Kenya. 3 In the absence of baseline estimates derived using an 13 Ministry of Health. 2007. National Environmental identical methodology, it is not possible to formally Sanitation and Hygiene Policy. estimate whether past coverage trends are sufficient to meet these targets. 14 Indicators relating to the Institutional framework section are as follows: All subsectors: targets in national 4 MoWI (Ministry of Water and Irrigation). 2009. Sector development plans/PRSP; subsector policy agreed and Investment Plan for the Water and Sanitation Sector in approved (gazetted as part of national policy or as Kenya. standalone policy); RWS/UWS: institutional roles defined; RSH/USH: institutional lead appointed. SIP coverage estimates are adjusted from those of the Kenya 5 Integrated Household; targets are based on subsector 15 Institutional roles and relationships in the water and targets in the National Water Services Strategy (MoWI, sanitation sector will be reviewed and aligned with the 2007) and the national development plan, Vision 2030 Constitution of Kenya 2010. (Ministry of State for Planning, National Development, and Vision 2030, 2008). 16 WASREB (Water Services Regulatory Board). 2007. Impact: A Performance Report of Kenya’s Water Services Subsector, 6 JMP estimates are based on a linear regression of nationally Issue No. 1; and 2009. Issue No. 2. representative household surveys. Notwithstanding the different definition of improved water supply access, the 17 The main financial relationship between WS providers JMP estimates for Kenya are reasonably robust, since and WSBs takes the form of a lease fee, based on a the trend line is calculated using linear regression of a fixed percentage of revenues billed. This is unrelated to reasonable number of household survey results, with few the WSB’s actual costs such as asset development and outliers. administrative costs. Furthermore, WSBs pass on a part of the lease fee to local authorities, regardless of whether 7 The annual investment requirements for the SIM are they have serviced loans related to the assets, that is, have calculated from the ‘base year’ of 2006 (the year in which actually paid for them. the Kenya Integrated Budget Survey was completed). For the CSO2 scenario investment requirements are calculated 18 Castalia. 2009. Review of Implementation of Kenya Water from 2008 (latest year included in the JMP 2010 update). Services Transfer Plan. Final report to MoWI and WSP In both cases the assumption is that the annual investment 2009. requirement was actually met in past years (2006–09 for 19 Indicators relating to section on Financing and its the SIM, 2008–09 for the CSO2 costing model). If the Implementation are as follows: All subsectors: programmatic required investment was not in fact met in those years, Sector-Wide Approach; investment program based on the annual investment requirements for future years must MDG needs assessment; sufficient finance to meet MDG be revised upwards. Given allocations and expenditure (and subsidy policy in the case of sanitation); percent of rates in previous years, it is more likely that investment official donor commitments utilized; percent of domestic requirements are underestimated, than overestimated. commitments utilized. 8 Due to rounding, component figures may not sum to 20 Water Services Trust Fund. 2008. Strategic Plan 2008– totals. 2012; MoWI. 2007. Pro-Poor Implementation Plan. 9 In the absence of an official 1990 government baseline for 21 Ministry of Finance/EC. 2008. PEFA Public Financial 1990, the latest JMP coverage estimates are shown. Management Performance Assessment Report for Kenya, 10 GTZ/MoWI. 2009. Improving Urban Sanitations Systems: p 6. Wastewater Treatment Plants. A Rapid Response to Improve Environmental Sanitation. 29 An AMCOW Country Status Overview 22 The eThekwini declaration, agreed at the AfricaSan+5 32 WASREB. 2007. Impact: A Performance Report of Kenya’s conference, called for African countries to commit at least Water Services Subsector, Issue No. 1; and 2009. Issue No. 0.5 percent of GDP to sanitation and hygiene. It should be 2. pointed out that the MoPHS’s ESH budget line is the only 33 For example: MoWI. 2007. National Water Services Strategy discernible budget line which goes largely to sanitation. 2007–2015 vs. MoWI. 2009. Water Sector Strategic Plan Other sanitation expenditure may be being routed 2009–2013 (draft). elsewhere through the MoPHS and MoWI, but cannot be traced. 34 MoWI. 2007. Value for Money Study. 23 Ministry of Finance. 2009. Quarterly Economic and 35 MoWI. 2007. Pro-Poor Implementation Plan. Budgetary Review. Third Quarter 2008/09, p 14. 36 MoWI. 2009. Sample Survey on Water Quality and 24 IEA. 2008. Water and Sanitation sector. Budget Functionality of Water Systems. Performance 2003–2008 and Emerging Policy Issues. 37 Growth figures for the period vary considerably from 3.8 25 Water Services Trust Fund. 2008. Strategic Plan 2008– percent (UN) to 5.8 percent (KNBS). The latter figure is an 2012. overestimate due to a change in the definition used by the Housing and Population Census between 1989 and 1999. 26 MoWI and Development Partners. 2008. Water Sector in UN. 2009. World Population Prospects: The 2008 Revision Kenya: A Sector-Wide Approach to Planning, Partnership Population Database, and KNBS Housing and Population Principles. Census 1979, 1989, 1999, and 2009. 27 According to a recent review the SWAp arrangements 38 WASREB. 2010. Impact: A Performance Report of Kenya’s have “worked well in terms of discussing sector issues. Water Services Subsector. Actual results in terms of harmonized and aligned practices (are) still at an embryonic stage: GoK-donor cooperation 39 MoWI. 2007. Pro-Poor Implementation Plan. restricts itself to bilateral agreements and some pooled 40 WASREB. 2009. Impact: A Performance Report of Kenya’s funding�; Train4Dev. 2009. Report on the SWAp Joint Water Services Subsector, Issue No. 2. Learning Event in support of the water sector in Kenya, Annex 6, 29. 41 The CSO2 investment requirement estimates do not include the cost of hygiene promotion and other software 28 Water Sector Technical Group. 2005 and 2008. activities, relative to the targets, due to the difficulty of Development Partner Matrix. estimating such costs on a per capita basis. 29 A microfinance credit window using the Output Based Aid 42 Institute for Development Studies. 2009. ‘Beyond approach. Subsidies: Triggering a Revolution in Rural Sanitation’; 30 Central Bank of Kenya. 2009. Invitation to Bid for Treasury CSO2 interviews. Infrastructure Bond, IFB 1/2009/12. 43 UNICEF, Government of Kenya, and WSP. 2007. Are 31 Indicators relating to the M&E section are as follows: Your Hands Clean Enough? Study of Handwashing with All subsectors: annual review setting new undertakings; Soap Behavior in Kenya; MoWI. 2008. Sample Survey on subsector spend identifiable in budget (UWS: inc. recurrent Sanitation 2008. subsidies); budget comprehensively covers domestic/donor 44 Orgut. 2009. Feasibility Study: The Provision of Water and finance; RWS, RSH, and USH: domestic/donor expenditure Sanitation Services through the Health Sector. Final draft. reported; UWS: audited accounts and balance sheets from utilities; RWS, RSH, and USH: periodic analysis of 45 GTZ/MoWI. 2009. Improving Urban Sanitations Systems: equity criteria by CSOs and government; UWS: pro-poor Wastewater Treatment Plants. A Rapid Response to plans developed and implemented by utilities; RWS/UWS: Improve Environmental Sanitation. nationally consolidated reporting of output; RSH/USH: monitoring of quantity and quality of uptake relative to promotion and subsidy efforts; all subsectors: questions and choice options in household surveys consistent with MDG definitions. 30 Notes Notes For enquiries, contact: Water and Sanitation Program–Africa Region The World Bank, Upper Hill Road P.O. Box 30577, 00100, Nairobi, Kenya Tel: +(254) 20 322 6300 E-mail: wspaf@worldbank.org Web site: www.wsp.org