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Turnaround Approaches Using Private Sector Mentality: What Can Others Learn from NWSC-Uganda

This workshop outlines the successful turnaround approaches implemented by NWSC-Uganda, a leading water utility in the world. It covers the driving forces for reforms, reform interventions, achievements, key success factors, and the case of the KW-Stretch Program. Participants will learn how to replicate these approaches outside NWSC.

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Turnaround Approaches Using Private Sector Mentality: What Can Others Learn from NWSC-Uganda

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  1. Turnaround Approaches Using Private Sector Mentality: What Can Others Learn from NWSC-Uganda By: Dr. Eng. Silver Mugisha Chief Manager (ID&ES), NWSC WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  2. Outline • NWSC in General • Driving forces for Reforms • Reform Interventions • Achievements • Key Success Factors • Case of KW-Stretch Program (Most Recent PIP) • Replicating Approaches outside NWSC • Conclusions WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  3. Introduction: What is NWSC? • Parastatal set up in 1972 • Currently responsible for WSS services in 22 towns of Uganda (pop. 2.1million, 160,000 customers, 70% pipe water coverage + 25% safe water coverage from bore holes and protected springs in peri-urban areas) Vision Statement To be One of the Leading Water Utilities in the World Mission Statement The Mission of the Corporation to provide efficient and effective water and sewerage services, applying innovative managerial solutions to the satisfaction of our customers and other stakeholders in an environmentally friendly manner WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  4. Triggers for Performance Turn-around in NWSC: 1998 • High number of unviable towns ( only 3 out of 12) • High arrears level of 14 months old • Very expensive labour force (1800No => 36 staff/1000c) • Low operational efficiency with high NRW of 50-60% • Irrational and costly welfare scheme • Poor organizational public sector behavior e.g. late coming, corruption etc • Lack of performance incentives for Area Managers and Staff • Rampant water leakages and sewage spillages • Low collection efficiency of 60% • Intermittent service in several towns ranging from 15-21 hrs  • A running monthly deficit of about Ushs 348M (~US$ 300,000) despite a high average tariff of Ush 1100/m3 (US$ 1.00/m3) • The high debt burden ($100 million) WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  5. Development Partners VIEW! Quote World Bank as at 1998: Over the last 10 years, the GOU in partnership with the World Bank and Other Donors have made significant investments (over US $ 100 million) in the Urban Water and Sewerage sector. These investments have contributed immensely in rehabilitating the existing infrastructure under the NWSC management. Unfortunately, these investments have not been matched with the necessary efficient commercial and financial management capacity that can ensure the delivery of sustainable services in the medium to long-term”. WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  6. Pondering PSP Approaches to Public Sector Management: What was done? The organisational culture and performance situation had to change! At a Strategic Level • New Board and Management installed in 1998 • Medium-term strategies adopted • Target financial sustainability of all NWSC Towns • Introduction of incentives as performance drivers • Adapted private sector-like management principles of commercialisation • Increased managerial autonomy to Areas WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  7. What was done? Cont’d NWSC carried out a series of PSP-oriented performance improvement programmes: • 100 Days (02/99 to 05/99) • SEREP I and II (08/99 to 08/00) • GoU Contract (2000-2003) • Area Performance Contracts & Support Services Contracts, after 1st • GoU Contract (2000-2003) • Stretch Out Program (2002/03) • One Minute Management (2003/04) • Internally Delegated Area Management Contracts, after 2nd GoU Contract • PSP in Kampala (KRIP-98/01 and ONDEO Services-02/04) • M&E through the checkers systems WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  8. Other Key Elements of Internal Reforms • Tariff Review • Reduced connection/reconnection fees • Regular Tariff Indexation against Inflation • Strengthened Management Information System • ISO-certification in 7No. Operating Areas • New water and sewerage connection policy • Reducing ‘vendor effect’ and also making sewerage services more accessible WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  9. Applying PSP Approaches can Lead into Efficiency Gains: NWSC Achievements WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  10. Key Success Factors: What Can Others Learn? • Empowerment of staff • Devolution of power from the centre (headquarters) to regional operations • Increased Customer Focus • Incorporation of “private management style” efficiency (less bureaucracy, performance-based pay, “customer-pays-for-a good service” principle etc). • Good planning and continuously challenging management teams with new performance targets • Outsourcing non-core activities • Clear oversight and monitoring through checkers system • Information sharing through benchmarking WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  11. A Case Study of Kampala Water – Stretch Out Program Held Between 20th-22nd July 2007 WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  12. Introduction NWSC - Vision To be One of the Leading Water Utilities in the World NWSC –Mission to provide efficient and effective water and sewerage services, applying innovative managerial solutions to the satisfaction of our customers and other stakeholders in an environmentally friendly manner KW - Vision To be a Symbol of Excellence among Water Utilities in the World KW–Mission To Provide Excellent Water and Sewerage Services to our Customers at a Fair and Reasonable Cost WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  13. STEP Targets ** 2007/2008 Budget = Ushs.5.432 bn WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop 13

  14. Methodological Approach • A participatory approach was adopted at all stages • Questionnaire was designed to enable staff freely identify HYGIENIC (behavioural) issues hindering performance • Review of past performance and recap on the STRETCH-OUT & OMM Concepts • Formulation of corrective action & way forward on the hygienic issues WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop 14

  15. Methodological Approach – Cont’d • Factors hindering performance & formulation of strategies and corrective actions under key performance areas: (Water Sales, Revenue collections, Suppressed accounts, Cost optimisation, ….) • Preparation of OMGs • Harmonisation session between KW-Top management and the Business Units • MOU WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop 15

  16. Key Issues raised/corrective action • Abuse of transport for O&M and un necessary interruptions • Proper co-ordination and scheduling to avoid interruption of work operations • Poor remuneration • JNC process • The approach of HQ & KW-Top Management Managers • Managers to change the approach WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop 16

  17. M&E Mechanism • Self Evaluation => OMGs and daily/weekly task planners • Task force & DME Dept to carry out independent monthly/ quarterly evaluation – basis for the incentive • Own performance evaluation by the business units WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop 17

  18. Incentive Mechanism • 30% of individual staff monthly gross pay on achievement of the minimum performance standards • Additional 30% of individual staff monthly gross pay on achievement of the SMART Targets • Further additional 60% of individual staff monthly gross pay on achievement of the STEP Targets WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  19. Can NWSC Experiences by Used Elsewhere? External Services Offered: Advisory Services, e.g. Organizational behavior change, Contract design and incentive systems, monitoring and evaluation systems Core Utility Services e.g. Commercial & Customer Care/IT Services, Static Plant Maintenance Who have benefited from our Services? The Water Sector • Nairobi Water and Sewerage Company, Lake Victoria Water services Board - NZOWASCO Ltd: Kenya, • Nkana Water; (Lusaka Water and Sewerage Co Ltd: Zambia • DAWASA/DAWASCO: Dar-es-salaam: Tanzania • Karachi Water and Sewerage Co.: Pakistan • New Delhi Water Board and Several Water Municipality Water Boards in India Outside the Water Sector • Steel Rolling Mills Alam Group of Co., • Sembule Steel Mills, • The Lands Dept in Ministry of Lands and Housing • The Kampala City Council (Revenue Improvement) WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

  20. Conclusions/Lessons The turnaround initiatives in NWSC clearly show that: • A publicly managed utility in the developing world can become efficient, viable and provide good service to its customers. • Public Utilities can plan and implement a successful ISO-process • Efficiencies are possible if the ‘public sector’ adapts strong commercialisation (private sector-like) practices, namely • Systematic use of external and internal contracts to increase performance accountability • Change of bureaucratic mentality • Emphasis is put on customer focus! • IN addition, enhancement programmes can be successful if • Benchmarking of efficient utilities is carried out • Key stakeholders and staff are involved at all levels • They are continuously monitored & evaluated Remember: “Do not be afraid to make mistakes so that they can be corrected” (Sotho: Lesotho) INNOVATION IS KEY! WBI/InWEnt, Kampala, 24-27 July, 2007 - ISO Workshop

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