PRESS RELEASE - WASAC Background

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WASAC Background

Water and Sanitation Corporation is a new company created by the law Nº 87/03 of 16/08/2014. The Water and Sanitation Corporation (WASAC) is the entity setup to manage the water and sanitation services in Rwanda as a result of the Government of Rwanda (GoR) decision to unbundle the national utility former EWSA.

The reform is intended to deliver a water and sanitation utility sufficiently focused to deliver new infrastructure; efficient and effective service delivery; build a strong people capability; and meet key national milestones. It is expected to reverse the status quo that includes inadequate planning and investments; inefficient and wasteful operations; inadequate institutional management focus; improve viability and autonomy; and establish a sustainable and customer-centric utility to deliver an important mandate that touches people of all walks of life.

The reform is further intended to create a company with the structure that ensures quick and focused execution of government policy to achieve government target defined in the EDPRS II, 7 years government Program and Vision 2020. For the new company to deliver the target, the WASAC Board of Directors have approved a governance structure and internal systems that enable quick but transparent decisions making in execution of projects and flexibility in staff recruitment, capacity development and remuneration mechanisms that attract the required skills and talent to achieve the national targets

The new utility is designed to respond to the following challenges:

(a) Urbanization and Regional Competitiveness: Rwanda is expected to urbanize quickly in the coming years. Rwanda’s transformation agenda envisages growth in urbanization from the current 16% to about 38% by the end of the EDPRS-2 period. Such a rapid growth in urbanization is not feasible without corresponding rapid growth in water and sanitation services.

A robust water and sanitation infrastructure is critical for a more urbanized and empowered population. Given that ‘cities are magnets for business and industry’, regular and adequate supply of safe water and sanitation facilities will improve Rwanda’s capacity to attract foreign direct investment - providing the necessary focus to drive related EDPRS-2 metrics.

(b) Financial Sustainability: The water sector has in the past depended on government subsidies for development and supply of water services. Investments in a comprehensive sanitation service have been very minimal. While GoR may be expected to continue making investments in the sector as elaborated in the EDPRS-2, the sector must increasingly become self-reliant, at least in the key areas such as operations and maintenance. The emphasis will be on ‘smart’ subsidies to drive key national metrics for water and sanitation – away from the current practice under EWSA, where subsidies were of a general nature. Financial sustainability will to a greater extent assume a ‘cost reflective’ tariff structure. This should equally be informed by the desire to price water and sanitation services to drive efficiency, effective service delivery and sustainability. Sustainability is further premised on improved operations – where there is less ‘Unaccounted For Water – UFW’ and improvements in revenue collections; a better working ratio; increasing number of connections; a better staff to collection ratio; improved account receivables in arrears (months); a wider water and sanitation coverage; improved productivity; and an expanding revenue base.

Aligning these metrics improves the prospects for the new utility.

(c) Balanced Development: The reform is an opportunity to focus in equal measure on both the ‘demand and supply’ aspects. On the supply side, investments in the development of new sources is as important as stemming the current losses caused by an old distribution network and inefficient operations. On the demand side, extending the customer base through new connections is as important as public education to shift consumer behavior towards a more aware customer – able to appreciate and conserve a scarce resource. This kind of thinking received less management attention under the combined utility model and should be established in the new utility as a new ‘mind-set’. An appropriate institutional structure assumes a more

robust capability to appropriately ring-fence and manage these important trade-offs.

(d) Weak Institutional Capacity: Results matter and are delivered through capable institutions and people. The ability to attract, retain and empower talent is assumed for this reform under a new mandate. Equally, an investment into the entire value system – ‘people, structure, systems and procedures’ is a critical success factor for the new utility. The status quo has lacked a sustainable approach to establishing an appropriate institutional capability and suffered for it. A weak institutional capability has impaired decision-making (decisions ought to be made at the lowest level possible) and affected results under the current status quo.

(e) New Public Management (NPM) Criteria: The reform is an opportunity to anchor the new utility within the framework of NPM that emphasizes a market orientation (outsourcing, benchmarking and performance contracts); a customer focus; decentralized responsibilities (finance, operations, human resources, customer management); and accountability for results.

(agency relationships, management oversight mechanisms). These will be important elements of

the corporatization drive.

(f) Appropriate Institutional Autonomy: The reform assumes a commitment to an autonomous water and sanitation utility appropriately accountable for results. It is a key pillar in the intention to ‘corporatize’ the water and sanitation service. Underpinning this are the following characteristics:

(i) Sound corporate governance;

(ii) A separate legal entity;

(iii) modern management practices benchmarked to best practice;

(iv) A customer orientation; and

(v) An effective and transparent use of data to assess and monitor performance.

The degree of autonomy will be affected by the extent to which the following factors dominate: the legal status of the new utility; conditions in the labour market and how they evolve to support operations – some of the critical skills may be lacking and ought to attract short-term gap-filling skills; access to financial resources to drive investments; clarity in the policy framework; regulations – especially on standards and a cost-reflective tariff; availability of the natural resource (water supply) – affected by the quality of decisions to increase supply and eliminate waste; and political commitment and support. The success of the new water and sanitation utility is largely premised on the extent of inter play of these factors.

WASAC VISION

“To be the most sustainable Water and Sanitation Utility in Africa, exceeding stakeholders’ expectations’

WASAC MISSION

“Providing quality, reliable and affordable water and sewerage services through continuous innovations and detailed care to our customers’ needs"

WASAC – SLOGAN

“Dignifying Life”

Done at Kigali November 4th, 2014

The Management