Finance and Governance: Government, Pay Your Water Bills!

This session shines a spotlight on an issue most development partners, government representatives, and utility managers are aware of but seldom discuss openly. Across the globe, too many public institutions do not pay their water and sewerage bills, thereby starving utilities of much needed resources to be economically viable. This undermines the fulfilment of the human rights of safe water and sanitation.

At 3pm on 25 August 2020, experts, human right advocates and concerned global citizens gathered to discuss issues relating to the provision of water to every household and member of the global community. Exacerbated by Covid, the need for adequate water is more crucial than ever to human health.

Consequently, the Convenor of GIZ, Water Integrity Network (WIN), End Water Poverty, Eastern and Southern Africa Water Regulators Association (ESAWAS), Rwanda Utilities Regulatory Authority (RURA) and Zambia NGO WASH Forum convened to focus on Finance and Governance: Mobilizing and Directing Financing Resources for Water.

This session shines a spotlight on an issue most development partners, government representatives, and utility managers are aware of but seldom discuss openly. Across the globe, too many public institutions do not pay their water and sewerage bills, thereby starving utilities of much needed resources to be economically viable. This undermines the fulfilment of the human rights of safe water and sanitation.

Speakers

The speakers were Fanni Zentai (moderator), Sara Ramos (founding member of Solutions for Water Integrity and Management- SWIM), Teodor Popa (Financial Manager of the Compania Apa Brasov in Romania), Bubala Muyovwe (Zambia NGO WASH Forum coordinator), Mr. Jacques Nzitonda (Director of Water and Sanitation at the Rwanda and Utilities Regulatory Authority- RURA), and our very own Al-hassan Adam (international coordinator at the global civil society coalition End Water Poverty).

Sara Ramos’ Grand Opening

Sara Ramos presented the main research findings and lessons learnt from the Government, Pay Your Water Bills campaign policy brief, a joint product of GIZ – Water Policy - Water Integrity Network (WIN) - End Water Poverty. Besides being a founding member of SWIM, Sara is part of the research team that developed the policy brief.

In a closer look at the problem of non-payment of water bills institutions, Sara addressed  the importance of ensuring government pays their water bills. She stated that the issue of non-payment affects numerous water utility companies in many countries around the world.

Provision of water and water utilities comes at an expensive cost; utility companies must have resources to cover operation costs, maintenance and investments. Many public institutions are big water consumers e.g educational institutions, military institutions, hospitals and so on. The non-payment of water bills reduces collection rate and revenue of water supplies. In Sara’s words:

A high collection rate is indispensable for water utilities to cover these costs… Financial stability of the utilities is threatened by public institutions that don’t pay their water bills and delay

STATUS OF THE PROBLEM: 95% of water utilities in 18 countries investigated have cases of governmental non-payment, mostly in the global south.

In Zambia, government institutions owe $55.6 million to water utilities; 50.3% of annual revenue of utilities. In Botswana, $28 million is owed, amounting to 19% of the utility’s annual revenue.

IN PERSPECTIVE: The global collection rate for private customers is 92.7%, but just 48.8% for public institutions!

WHY? Sara states that there are several reasons government authorities do not pay their water bills. The five main reasons include: the belief that they are public institutions and don’t have to pay; the lack of action to enforce payment; the inconvenience that the bills are based on estimations rather than accurate metre readings; lack of funds; abuse of power either in the water utilities or public institutions.

RECOMMENDATIONS: So, what’s the solution? From the main findings the following general recommendations were made to ensure the payment of government bills; these include: adequate metering and billing from the utilities, control in the budget cycle (read further to see how other countries have implemented this); adequate corporate governance and regulation frameworks encouraging transparency and accountability; donors and development institutions setting political and financial conditions; supporting programs to strengthen both civil society and water utilities; using the media to explain why governments must pay for water services.

KEY MESSAGES:

  • Access to water is a fundamental human right. Non-Payment undermines it
  • Someone always pays the bill
  • It is necessary to define clear rules and to play by the rules
  • COVID19 exacerbated the financial instability of water utilities-
  • There are many ways to address the issue ranging from regulation and action in the utility corporation to issue of willingness integrity and long-term thinking

BREAK OUT SESSIONS

After Sara Ramos’ grand opening were four parallel breakout sessions. In the first session, Teodor Popa explains how Romania managed to get the government to pay their water bills. The second session, led by Bubala Muyovwe, highlighted the firsthand impact of the Government, Pay Your Water Bills Campaign (GPYWB) campaign in Zambia. Jacquee Tundai shared experiences in Rwanda and pointed out how regulators can successfully advocate for government institutions to timely pay their water bills in the third session. In session four, Al-hassan Adam stressed the importance of civil society pressuring the government to paying their water bills.

Example from Romania: Romania managed to get both people and governments to pay their water bills. Despite government asking themselves why they should pay, Teodor pointed out solutions adopted in the long-wounded battle. These included:

  1. Establishing and strengthening independent regulators who can enforce the payment of unpaid accounts
  2. The legal right to stop supply without payment (although not advisable for private consumers)
  3. Romania Government reflecting their ethical commitment to water utilities in their budgets
  4. Structural changes in the water utility governance and commercialization of service providers.**

How successful was Romania? Since embarking on the journey to ensure government accountability, Romania has achieved a collection rate of over 99% in the last 10 years

Bubala's take on Zambia: attributed the weakness in corporate governance as a reason for governments failing to pay their water bills in Zambia. She further explains that the government’s lackadaisical approach stems from the notion that water, as a natural resource, requires no funding. In response to a question asked by a member of the audience about how the pandemic exacerbated the utilities’ financial instability, Bubala stated that Covid has impacted the budgets of the utility suppliers.

Due to the government’s failure to prioritise water bills in their financial statements, they fail to pay their water bills. Therefore, utilities are unable to supply water adequately whilst running on a loss. Almost lamenting, Bubala shared that utility companies need their owed revenue now than ever!

Steps being taken: according to Bubala, it wasn’t all chaos in Zambia as the government has decided to tackle the issue by installing prepaid metres and agreed to prioritise payment by ensuring they are paid through the government treasury;

Next step: Unlike Romania, there is more work to be done in Zambia. Bubala suggests the need for an awareness raising campaign through the media and engaging with the Minister of Finance to apply pressure. She also suggests that the next step of the GPYWB campaign should be to ensure accrued payments are appropriately distributed to plug the gap in the water utility sector - as she alludes to potential corruption issues within utility companies.

Annual Budgeting in Rwanda: Jacques mentions different ways regulators can provide incentives for governments to pay their bills by lobbying government institutions and the treasury to allocate line items for water and electricity in a timely fashion. He also urges the government to prioritise utility bills in their annual budget

He suggests regulators produce an annual benchmarking report; they can include an indicator on government debt in that report and work with national government bodies to report outstanding debts to water utilities. In the case of Rwanda, the government has been a model to other customers. The auditor general raises queries when money is owed to utility companies. Consequently, government authorities in Gambia are allowed to take out commercial financial loans to pay outstanding bills.

Catch 22: In Zambia, utilities don’t pay electricity bills; therefore, creating an excuse for government officials to ignore their water bills – he cited a similar scenario in Malawi and the Ministry of Finance’s reluctance to pay their water bills for the aforementioned reasoned.

A General Problem with Specific Considerations: Al-hassan spoke about the need for local partners to take charge of the Government, Pay Your Water Bills campaign. He explained that the issue of non-payment takes different forms in different countries; therefore, the need to move away from a one-size-fits-all approach. He encourages campaign policymakers to put the message of the campaign into context.

**A one-size-fits-all approach might not necessarily be applicable to all countries. For example, the commercialisation of water utilities as seen in Romania can hinder the fulfilment of people's rights to water, in cases of accrued payments. End Water Poverty opposes the disconnection of water supply to households or government buildings. Governments must take responsible. For example, the Ghanaian government has decided to pay utilities for all water consumption in an attempt to ensure survival against Covid.

There’s no need for speed; we need to trust the process for each individual state.

Conclusion: The summary of the conference is straightforward

  1. The problem of nonpayment is very real
  2. Arrears prevent utilities from expanding their networks to connect vulnerable populations
  3. We will not achieve SDG6 until governments pay their water bills. Someone always pays.