EXECUTIVE SUMMARY
disposal. However, such in-house waste management costs can represent a high percentage of local budgets (up to 80-90% in low-income countries).70 Despite progress, many public utilities and municipal service providers still lack the institutional strength, human resources, technical expertise and equipment, or the financial or managerial capacity to effectively provide universal quality basic services. In most of the 70 countries surveyed in the 2012 GLASS Report, infrastructure in the water sector was in a poor state of repair and maintenance.71 The Latin American, African, Asian and Middle East chapters report problems of inefficiency (leakage, weak maintenance, weak capacity to collect fees, overstaffing, etc.), but these problems are not unique to publicly managed services.72 Such issues can be improved by the use of decentralized cooperation between public bodies, known as public-public partnerships (PUPs).73 Over the last 20 years, 130 PUPs have been used across 70 countries in all regions of the world. Since 2006, the United Nations has actively supported such partnerships through the Global Water Operators’ Partnership Alliance (GWOPA) coordinated by UN-Habitat.
See also OECD (2009).
Local authorities should remain attentive to their capacity to oversee public utilities and SPAs and ensure their accountability to users and citizens. They should combine efficiency in service provision with access to quality services for all inhabitants, and contribute to the sustainable development of cities. Reducing inefficiencies and promoting cooperation between municipalities will increase the resources that can be mobilized to extend access and the quality of basic services.
Hall et al (2009) and Hall et al (2011).
Partnerships with the private sector
Hoornweg and Bhada-Tata (2012). 70
WHO-UN WATER (2012); See also, OECD (2009). 71
72 73
For water, see: Marin (2009). 74
OECD (2009); Marin (2009); Hall et al (2011). 75
For most of the 20th century, it was assumed that public authorities were the
most suitable providers of basic services. However, limited progress in many countries and urban areas led to the promotion of reforms that sought to contract provision with public utilities or delegate to private operators. The last two decades have seen an increasing participation of the private sector in basic service provision, particularly in middle-income countries.74 However, as Figure 5 shows, the bulk of private investment has followed the global financial cycle and currently is declining. It has been concentrated in emerging countries in a few regions (Latin America, East Asia and Eastern Europe, particularly in emerging economies) and sectors (telecoms, energy, transport and, to a lesser extent, in water). The hopes in the 1990s that private sector participation and concession schemes would bring new investment and extend access, particularly in low-income countries, have not always been fulfilled. Some early uses of concessions underestimated the cost of renovating and extending infrastructure and over-estimated the potential for cost-recovery through user charges. The failure of some PPS schemes in Latin America in the early 2000s was attributed to poor risk management and capacity problems, as well as the investment environment. There was a shift from the private concession model to other forms of PPPs, combining private operation with public investment, including leases (affermages), mixed-ownership companies, and management contracts (sometimes called 2nd generation PPPs).75 The performance of PPPs over the last 20 years has been mixed. Their biggest contributions have been to efďŹ ciency and service quality. Leases focused on service quality (e.g. reducing water rationing) and operational efficiency (e.g. bill collection, productivity, and reduced water losses) performed