irc summer debate 1 - sustainability clause

IRC Summer Debate #1

IRC debate – sustainability clause – Aug 20122

A sustainability clause in contracts for the WASH sector?

Chair – Patrick Moriarty

Rational and Pro position – Catarina Fonseca

Against position – Jean de la Harpe



Rational and Pro position – Catarina Fonseca

In the sector, sustainability is a nice to have...

• Very limited concrete changes in the sector to address

the issue

• Consistent evidence in the sector for lack of

sustainability

• Evidence of lack of monitoring data

• Evidence of lack of cost data

• Evidence of lack of aid effectiveness, fragmentation, etc.


5

National/local governments are responsible for providing WASH services but…

• Services can be delegated: urban utilities, cooperatives,

user associations, decentralised authorities, etc

• Service agreements take shape between government,

provider and implementer

• The implementer is still liable for infrastructure and for

putting in place mechanisms for service delivery

• This is the standard in most financial transactions - there

are liabilities, guarantees…


What if….

…. we have a 10 year “sustainability clause” in contracts between donors and implementers?

Programme/project duration under contract

with donor

WASH services delivered

10 year contractual sustainability clause

Y1 Y10


The “clause” should include three things:

• Enforce 10 years sustainable services – the stick

• Invest in sector ‘capacity’ to deliver sustainable services

– the plan

• Learn about the weak parts of the delivery chain and

correct them – the monitoring.


Anticipated impact of introducing a ‘sustainability clause’ into contracts

Current contracting arrangements with inadequate sustainability requirements

Introduction of ‘sustainability clause’

• Monitoring focuses on outputs (e.g. number of systems constructed and persons served) and processes (community participation, availability of spare parts)

• Monitoring carried out for limited time after ‘post-implementation’

• Limited anticipation of life-cycle costs

• Institutional mandates for ensuring services not fully considered

• Limited or no external incentive for implementing agency for coordination to ensure sustained impacts

• Monitoring focuses on long-term outcomes (e.g. quality and reliability of services)

• Monitoring post-implementation is supported for minimum of 10 years

• Long-term monitoring efforts integrated/ aligned with national systems

• Contracts for service delivery are custom-made to reflect who is responsible for which activities and life-cycle costs

• Promotion of closer coordination with other implementing agencies and government

Medium-long term with improved sustainability

• Reduced non-functionality• Better services to

consumers• More water and sanitation

‘person years’ per each Euro invested (increase value for money)

• Better cooperation with partners and national government

• Increased economies of scale with increase geographical focus

• Better spread of investments across the full life-cycle

• Greater clarity for institutional mandates across the service life cycle


9

Contractual accountability is not the same as ownership…

• Mutual accountability is compatible with ownership

• A donor agency has the right to demand from its fund

recipients that its investments result in sustainable

outcomes

• The challenge for WASH is how to make sure that

accountability is where it should be (service provider)

and making sure there are sufficient “incentives” in

contracts for ensuring implementers will provide

sustained service delivery.




Against position – Jean de la Harpe

Sustainable services provision

• A common goal … for donors, for country governments, for service

authorities, service providers, implementing agents, development

partners – and citizens

• Great to put sustainability on top of the agenda

• Sustainability is complex– anything in a complex environment

carries risk – where the consequences are often unforeseen

• If sustainability was not a complex issue then this debate would not

be happening – and perhaps DGIS would be entering into direct

contracts with governments


The clause is not simply about post construction accountability – it is about guaranteeing a service

A service is about capacity and resources - staff, skills, systems, revenue, hydrological conditions

It is governed by national and local policies and political priorities

There is only one grantee – e.g. UNICEF (will be used as an example throughout the presentation)

But that grantee has no authority when it comes to service provision – and the sustainability of that service –

this is the prerogative of local government (within a decentralised framework)

National government is not a grantee in the chain of contracts …. it is not receiving anything – it is local

government that is receiving a ‘project’ or infrastructure.

A sustainability clause is likely (MAY) to create a knock-on effect or ‘chain’ of sustainability clauses in all sub-grantees, sub-implementers and partnership contracts making it in everyone’s interest, to address post-construction accountability.


A sustainability clause should motivate implementing agencies and their partners to develop plans (capacities, systems, institutions) for sustainability of services, but it should also include clear incentives and proper methods for enforcement

Isn’t UNICEF already developing plans to support service providers?

This assumes that the capacity, systems, and institutions will result in sustainability

If UNICEF is required to give a guarantee for a service – it effectively is guaranteeing that all the capacities,

systems and institutions will be in place – it can’t just plan it or play the role of capacity builder …

There is only one way to properly guarantee a sustainable service and that is to put the necessary staff and

operational capacity in place – i.e. to itself fulfil the role of service provider (it can’t guarantee the performance of

someone else over a 10 year period)

BUT, of course this is not the intention of the sustainability clause and also

a) flies completely in the face of AE, country ownership and building country capacity

b) Is not the role of international institution such as UNICEF

c) Would be extremely costly – where the risk would be covered in terms of budget (as has been experience

of BOTTs)

HOWEVER

Local governments that lack capacity and resources may be very happy with this option – let UNICEF take

responsibility and ensure the necessary financing IRC debate – sustainability clause – Aug 2012

What are the assumptions underlying the ‘chain of clauses’ (chain of contracts)?

DGIS UNICEFGuarantee

National Government

Guarantee

Guarantee

Local governmen

t

Guarantee

Service provider

$

Project

Citizens

Payment

• The implementer is still liable for infrastructure and for putting in

place mechanisms for service delivery

• This is the standard in most financial transactions - there are

liabilities, guarantees…

• Not the case when taking about provision of a basic service that is a

human right – government is responsible for putting service

provision arrangements in place

• A donor agency has the right to demand from its fund recipients that

its investments result in sustainable outcomes

• This needs to be from government – not international agencies


• International agencies cannot provide services, unless they are properly

contracted by government to do so – for example in the case of Suez


Sustainability is a challenge

• What is the incentive for the parties down the line to sign such a

clause?

• Sustainability is a challenge – we can’t guarantee it

• there are too many factors involved – politics, local contexts and

priorities, institutional arrangements, local economies, etc

• Governments themselves can’t give such guarantees – (court action

from citizens) … policy does not talk about ‘guaranteeing’ a service – it

talks about ensuring access, progressively rolling out services, etc

• What is UNICEF’s role down the chain … and how does it ensure that

it’s guarantee is followed through to the ground level where the service

is provided

• How do we know that the countries can afford the operation and

maintenance of the infrastructure in the first place?IRC debate – sustainability clause – Aug 2012

Not all countries have equal financial capacity to sustain the infrastructure – therefore a guarantee from Ghana will means something different from Uganda …Ghana’s tax revenue is less than US$ 300 per person per annum – to spend on everythingUganda is US$ 63one size does not fit all

Ghana RSA Uganda BRAZIL USA

GDP (current US$)

39,199,656,051

408,236,752,3

38

16,809,623,489 2476652189880

15,094,000,000,0

00

Population, total

24,965,816

50,586,757

34,509,205

196,655,014

311,591,917

GDP/cap

1,570

8,070 487

12,594

48,442

Tax as % of GDP 0.17 0.27 0.13 0.344 0.269

Tax Revenue

6,663,941,529

110,223,923,1

31

2,185,251,054

851,968,353,31

9

4,060,286,000,00

0

Tax Revenue per cap

267

2,179

63 4,332

13,031


To sum up• We all feel strongly about achieving the goal of sustainability – the challenge is HOW

• The problem with the process and content of the sustainability clause is the issue of

unforseen consequences

• there is a significant body of work on this issue in the fields of governance and indeed

complexity theory

• There have been (no doubt) solutions found to complex problems

• the problem with such 'BIG' solutions is that we remember (and talk about) the

successes

• the failures are relegated to the dustbin of history

• Can we as IRC take this risk, in light of the possibility of a multitude of UNINTENDED

CONSEQUENCES?

• remember we are dealing with the Lives of People, Governments of Countries and

Multi-National Organisations here.

• Are we prepared to accept the possibility (risk) of unintended consequences?



Debate: pro or against?

irc summer debate 1 - sustainability clause

Technology

agenda sustainability

asustainability clause

irc summer debate

donor wash services

service provision

contracts forthe wash

service agreements

service providers