© Yvonne Magawa

Integrity in Designing Appropriate Regulation

Lessons from the Eastern and Southern Africa Water and Sanitation Regulators Association (ESAWAS) Conference

‘Water integrity is the strongest counterforce to poor service delivery and a key element of good governance’

With this statement, the Minister of Water Development, Sanitation and Environmental Protection, Hon. Lloyd Kaziya, opened the ESAWAS Annual Conference held in Livingstone, Zambia from the 1st -2nd of November 2017. The main theme of the conference organized by the ESAWAS Regulators Association was Water Integrity and SDG6- designing appropriate regulation.

 

Bridging the enforcement gap: multi-stakeholder collaborations for effective regulation

In his opening remarks, Hon. Lloyd Kaziya also called upon participants who represented water and sanitation regulators, utilities, civil society and consumer groups, development partners and oversight authorities such as the auditor general ‘to appreciate the roles various stakeholders can play in promoting integrity’.

Hon. Kaziya’s statement pre-empted one of the hot topics of the conference, which was about the relationships and potential for collaboration between regulators, utilities, supreme audit institutions, and civil society. The presentations and discussions highlighted good collaboration practices between these stakeholders, for example in Zambia, Zimbabwe, and Tanzania.

While participants saw a clear added value in the collaboration between these different stakeholders in addressing key challenges (such as corruption in infrastructure development and water cartels particularly in low income urban areas), the candid discussions also brought out the fears and differences between them.

For example, utilities voiced concerns that consumer engagement may result in uninformed interference with the way utilities manage their business. They also doubted whether they can tackle jointly with citizens and regulators issues such as government institutions drilling illegal borehole drilling or not paying their water bills.

At the same time, civil society expressed concerns about responsiveness to citizen participation and the need for regulators and utilities to engage with existing resident or consumer associations instead of establishing new structures that may lack credibility. Another point of debate was the pro-poor vs. pro-company orientation of regulators and utilities.

Discussions around collaboration between regulators and other oversight institutions, such as the auditor general or anti-corruption authorities, unveiled interesting possibilities, ranging from simple referral to information sharing and joint inspections. It seemed clear that participants saw value in regulators collaborating with the auditor general to benefit from the auditor general’s higher profile and direct reporting to parliament. These same qualities also sparked an important discussion however on the independence of regulators. There were questions linked to issues around how and to whom regulators report, how their boards and CEOs are appointed and removed, and how they are financed.

 

Integrity tools for
utilities and regulators

A number of presentations shared good practices and lessons on how utilities and regulatory bodies promote integrity using a notably wide range of tools and approaches. For example, the Dar Es Salam utility, DAWASCO, presented its people-oriented change management process; which introduced a new way of doing business and open feedback mechanisms across hierarchy levels. There were also interesting presentation on GPS logging apps for meter reading at the Lusaka utility and on integrity committees investigating corruption reports at the Zambian regulator NWASCO. Eastern Water and Sewerage Company, also from Zambia, presented its reward scheme for whistle-blowers.

 

Good corporate governance is
key for promoting integrity

A discussion that continued throughout the various sessions was around good corporate governance of regulators and utilities, and the relationship between top management and the governing boards. Discussants deemed that monitoring corporate governance, including the effectiveness and expenditure of utility boards, was an important role of regulators.

Regulators highlighted that exorbitant board expenditures and sitting allowances are a key challenge. This was confirmed by the auditor general, who shared a case of one utility that had 80 board meetings during one year.

Participants underlined that regulators themselves are not immune to these challenges and need to report on this for their own institution. As the chair of the Tanzanian regulator EWURA highlighted: ‘there is no way you can ask someone to clean up if you yourself are dirty’.

 

The way forward: monitoring integrity
and capacity development

Conference participants highlighted two issues that are particularly relevant for follow up.
First they all agreed that monitoring integrity of utilities will be crucial to better capture how integrity is linked to performance. They pointed to the need to develop indicators focused on organizational policies and practices with regards to transparency and disclosure, accountability, participation, and anti-corruption, in addition to the more straightforward check of board expenditure and composition. Along these lines, several ESAWAS members, as well as the regulator from Palestine, have already taken initiative to include governance and integrity aspects into their benchmarking. WIN is also currently developing a framework for monitoring integrity of utilities and will collaborate further with to take this forward.

Second, both regulators and utilities emphasized that stricter regulatory guidelines and monitoring of integrity need to be combined with capacity development to help utilities live up to these requirements. One of the approaches identified for this is the Integrity Management toolbox.

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