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Drivers of Performance in Water

Utilities in Africa

Caroline van den Berg, Alexander Danilenko and

Aroha Bahuguna

May 15, 2017

Methodology

Assessment of Performance of Water Utilities in Africa

Drivers of Performance

Conclusion

Context

Africa Water at a Glance

2

• Population in urban SSA

increased more than 80 percent • 206 million in 2000 to 373 million in

2015

• Access to improved water

increased 88 percent • 172 million in 2000 to 324 million in

2015

• Piped water on premises

decreased from 40 percent to

33 percent in 2015 • Access to piped water increased from

82 million in 2000 to 124 million in

2015

https://openknowledge.worldbank.org/handle/10986/26186

Methodology

Assessment of Performance of Water Utilities in Africa

Drivers of Performance

Conclusion

Context

Data Sources

4

• Data collected from different sources:

o Fieldwork by World Bank Task Team Leaders

o IBNET (International Benchmarking Network for Water and Sanitation Utilities)

o Secondary sources, including but not limited to publications from regulatory agencies

• The team used the IBNET toolkit to ensure internal consistency of the data collection process

• Data collection started in February 2015 and lasted until April 2015

Data Collection

5

• After the data collection process was completed, the database

included

o 306 utilities from 41 countries

o The data observations cover the period 1995 to 2014; yet the number

of years covered by the various utilities ranges from 1 – 20 years

• The team used a balanced panel for the years 2010 to 2013

o 14 countries in different parts of Africa

o 119 utilities in low- and middle-income countries in Africa

o Excluded upper-middle-income countries

Characteristics of Utility Sample

6

Indicators Subsample 2010–2013

(without UMIC) in 2013

Number of people served with piped water (million) 58

Number of people served with wastewater (million) 5

Number of people in service area of utilities (million) 103

Number of towns served with piped water 1,574

Number of towns served with wastewater 183

Annual utility turnover (USD billion) 1.1

Annual volume of water sold (billion cubic meter) 1.3

Total staff employed in utilities 28,560

Methodology

Assessment of Performance of Water Utilities in Africa

Drivers of Performance

Conclusion

Context

Scope

• Performance of utilities measured using a set of key

indicators that include

o Operational performance – NRW, staff productivity & efficiency

o Financial performance – operating cost coverage ratio, average

revenue and costs

o Customer performance – service level (population/connection),

reliability, and affordability

• Median values reported

Non-revenue Water

NRW (m3) per connection per day showed a

decline 0

12

3

NR

W_C

ON

N_

DA

Y

2010 2011 2012 2013

Staff Productivity and Efficiency

1,21

0,85

0,62 0,53

0,48

0,00

0,20

0,40

0,60

0,80

1,00

1,20

1,40

< 10,000 10 - 50,000 50 -100,000 100 -500,000 500 -1,000,000 > 1,000,000

Staff per 1,000 people by Size of Utility

2.948 3.506

4.345 5.484

9.353

12.240

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

< 10,000 10 - 50,000 50 -100,000 100 -500,000 500 -1,000,000 > 1,000,000

Staff Cost per Employee (US$ per year) by Size of Utility

• Staff per 1,000 connections is low but improving o Decreased from 11 staff per

1000 connections in 2010 to 8.7 in 2013

• Median number of staff per 1000 people served increased from 0.68 in 2010 to 0.72 in 2013

• Median annual costs are increasing o Per employee cost increased

from US$4,246 in 2010 to US$5,865 in 2013

• Staff efficiency dropped from US$ 3.47 in US$3.04 in 2013

Average O&M Costs and revenues

01

23

40

12

34

2010 2011 2012 2013 2010 2011 2012 2013

2010 2011 2012 2013

Small Utilities Medium-sized Utilities

Large Utilities

OM

_C

OS

T_C

UM

_S

OLD

Graphs by SIZE

• Median O&M costs per cubic

meter sold increased o US$0.76 in 2010 to US$0.86

in 2013

• Increase mainly due to

higher labor costs

• The smallest utilities have

the highest O&M cost per

cubic meter sold

• Average revenues per cubic

meter sold increased over

time

Operating Cost Coverage Ratio

• A typical utility in the sample

is just able to cover its O&M

costs – but trend is negative

• Smaller utilities typically

charge higher water rates

than larger utilities, and

water in such utilities tends

to be much less affordable

than in larger utilities

• The average for utilities in

the top quartile is not more

than 140 percent of total

O&M costs

0.5

11

.52

2.5

2010 2011 2012 2013

revenue-based OCCR cash-based OCCR

Customer Performance

• Drop in number of hours supplied – median dropped from 18 h in 2010 to 15 h in 2013

• Very modest progress in improvement in service levels

o the number of people per connection declined slowly to 11 in 2013

• Affordability improved

o Low income countries spent 1.8% of income compared to 0.9% in middle-income countries in 2013

• Low levels of per capita water consumption

o Around 56 liters per capita per day

Methodology

Assessment of Performance of Water Utilities in Africa

Drivers of Performance

Conclusion

Context

Correlation between the performance

indicators

• The correlations between

the financial performance

and operational

performance is statistically

significant

• The correlation between

financial and customer

performance is negative -

better service with lower

levels of financial

performance

Financial Customer Operational

Financial 1.0000

Customer -0.1365** 1.0000

Operational 0.1830*** 0.0573 1.0000

Summarizing

• No linear relationship between indicators

• Performance of the utility increases with size, up to a threshold

• Utilities that provide sewerage services perform better

• Major driver of utility performance are linked to their costs

• Some drivers of performance are beyond the control of utilities

• No link between financial performance and water coverage

Methodology

Assessment of Performance of Water Utilities in Africa

Drivers of Performance

Conclusion

Context

Conclusion

• Utilities in Africa generally underperform.

• Customer performance is relatively weak even among the best-

performing utilities in Africa.

• There is scope for balancing revenue sufficiency and affordability.

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