IRC Summer debate 1 - Sustainability clause

A sustainability clause in contracts for
the WASH sector?
Chair – Patrick Moriarty
Rational and Pro position – Catarina Fonseca
Against position – Jean de la Harpe

2 IRC debate – sustainability clause – Aug 2012

the WASH sector?
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.


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

IRC debate – sustainability clause – Aug 2012

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 Introduction of Medium-long term
arrangements with inadequate ‘sustainability with improved
sustainability requirements clause’ sustainability

• Monitoring focuses on • Monitoring focuses on long- • Reduced non-functionality
outputs (e.g. number of term outcomes (e.g. quality • Better services to
systems constructed and and reliability of services) consumers
persons served) and • Monitoring post-
processes (community • More water and sanitation
participation, availability of
implementation is supported ‘person years’ per each
spare parts) for minimum of 10 years Euro invested (increase
• Monitoring carried out for • Long-term monitoring efforts value for money)
limited time after ‘post- integrated/ aligned with • Better cooperation with
implementation’ national systems partners and national
• Limited anticipation of life- • Contracts for service delivery government
cycle costs are custom-made to reflect • Increased economies of
• Institutional mandates for who is responsible for which scale with increase
ensuring services not fully activities and life-cycle costs geographical focus
considered • Promotion of closer • Better spread of
• Limited or no external coordination with other investments across the full
incentive for implementing implementing agencies and life-cycle
agency for coordination to government
ensure sustained impacts • Greater clarity for
institutional mandates
across the service life cycle

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.


the WASH sector?
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


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.

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 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


What are the assumptions underlying the „chain of clauses‟ (chain of contracts)?

Guarantee
DGIS UNICEF
$
Guarantee

National
Government

Guarantee

Local
governmen Project
t
Guarantee

Service
provider

Payment

Citizens

• 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?

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
everything
Uganda is US$ 63
one size does not fit all
Ghana RSA Uganda BRAZIL USA
GDP
(current 408,236,752,3 15,094,000,000,0
US$) 39,199,656,051 38 16,809,623,489 2476652189880 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 110,223,923,13 851,968,353,31 4,060,286,000,00
Revenue 6,663,941,529 1 2,185,251,054 9 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

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