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On Regulating for Integrity in Water and Sanitation (Integrity Talk 1)


What is the role of regulators in securing access to water and sanitation services? How can they promote transparency, accountability and participation, and which challenges do they face in doing this?


The Water Integrity Network (WIN) works in close cooperation with regulators in Latin America and Africa to promote integrity in the water and sanitation sectors. For this Integrity Talk, WIN partner organisations shared their experiences and reflected on their work driving integrity, not only inside their own organisations, but also in relation to governments, water service providers, and consumers.


With special guests:

Pilar Avello (SIWI); Corinne Cathala (Inter-American Development Bank, IDB); Giovanni Espinal (Water and Sanitation Services Regulatory Entity ERSAPS, Honduras); Robert Gakubia (former head of the Water Services Regulatory Board WASREB, Kenya); and Chola Mbilima (Eastern and Southern Africa Water and Sanitation Regulators Association, ESAWAS).



KEY TAKEAWAYS

  • Integrity starts from within: it is important to implement integrity measures also within a regulatory institution and then with water and sanitation providers and consumers.

  • There are no fixed formulas for regulators to drive integrity in the water and sanitation sectors. Each regulator has its own individual mechanisms for approaching integrity according to the context where it is operating. Integrity assessment tools or indicators can help better target and adapt interventions.

  • No real change will take place at the regulatory level without the cooperation of governments and respective ministries, or without the engagement of stakeholders and users.

  • Working with vulnerable or marginalised communities and water supply committees in rural areas is an essential element of the integrity work of regulators.

  • Regulators can play an important role in promoting integrity by making budget allocations clear and by informing consumers about how resources are used to improve coverage and quality of water services.


Regulators and their functions


Regulators are essential in the provision of adequate, affordable and reliable water and sanitation services. They set up rules and standards for utility companies, ensure adequate tariffs, monitor and report on quality of service, ensure effectiveness of investment and sustainability, and secure citizen involvement (WIN, 2021). They are crucial in balancing the interests of governments, consumers and utilities, while also limiting harmful behaviour (Twyman and Simbeye, 2017).


In contexts where corruption and integrity failures compromise the performance of water and sanitation service providers, appropriate regulatory frameworks can promote transparency, accountability and participation and support the realisation of the human rights to water and sanitation. To build integrity in the water and sanitation sectors and boost service delivery, the Water Integrity Global Outlook WIGO (2021) recommends these actions for regulators:

  1. Regulate for equity, providing incentives or standards for pro-poor services.

  2. Regulate for integrity, setting standards and specifically monitoring procurement and corporate governance in utilities.

  3. Regulate with integrity, in a transparent and accountable manner, giving voice to residents.

  4. Regulate non-utility service provision.

Regulators and their role in promoting integrity


What kinds of tools are available to regulators to support their work in promoting integrity in the water and sanitation sectors?


Pilar Avello (SIWI): The Stockholm International Water Institute (SIWI), WIN and cewas have developed tools to support regulators in promoting integrity. The Integrity Management Toolbox for Regulators addresses how regulators can be accountable to policy-makers, service providers and consumers. Following the WASHREG approach, we selected six regulatory areas (what regulators regulate): tariff setting, service quality regulations, competition regulation, consumer protection, environmental regulation and public health regulation, and key activities performed by regulators (how regulators regulate): enforcement, definition of rules and approval of licences as well as monitoring and information.


For these areas and activities, we identified a set of integrity risks that could occur and the tools that could be used to mitigate them. The ultimate goal is for regulators to develop roadmaps to improve integrity within their own organisation. In the long-term, we are planning to implement this toolbox in Paraguay, Honduras and Ecuador between 2021 and 2023.

How can regulators put integrity into pracitce in the water and sanitation sectors?


Robert Gakubia (former head of the Water Services Regulatory Board WASREB, Kenya): We do not perceive regulators as anti-corruption fighters but as key players in identifying violations on integrity in order to ensure that people have access to sustainable water services. The role of regulators is to provide an environment that facilitates efficiency, effectiveness and equity in the provision of water and sanitation services, while addressing the sustainability of the service.


WASREB looks at the whole water service chain from governance all the way to the consumers. We look at governance by addressing different aspects: how service providers organise their services in terms of provision, how they do their financial management and develop their human resources, how commercial aspects are connected to consumer services, how they engage and inform consumers, how they prioritise investments. All these issues are connected to integrity.


Giovanni Espinal (Water and Sanitation Services Regulatory Entity ERSAPS, Honduras): The benefits of integrity are connected to the principle of transparency. Regulators are obliged by law to enforce transparency by providing all information to service providers and consumers in terms of water quality and investment plans to improve coverage rates and achieve universal access. To secure accountability, we organise consumer assemblies, and team up with local supervision and control units (unidades de supervición y control local) to make information available. We also promote “consumer forums” to inform a wider public about their rights and responsibilities and the quality of water they receive.


Our work with integrity was initiated with the implementation of an Integrity Management Toolbox. The Toolbox has been very useful to identify new indicators that have helped us to promote integrity. In particular, it has helped us to guide water providers on how to use their own resources and manage bidding for tenders. These aspects are very important, because in Honduras resources are limited and if they are used in an inefficient or illegal way, water provision will be negatively impacted.


As a regulator, I suggest looking at what integrity means, how it manifests itself. It is important to understand that we do not operate in isolation. Integrity can help us to make sustainable use of our resources in order to solve the problem of lack of water and sanitation.


“One of the main challenges for regulators is to promote integrity within their own organisation before engaging with water providers and consumers. We are constantly facing complex questions such as: what is integrity for us, how do we manage our own resources, and how do we take decisions.”

- Giovanni Espinal, ERSAPS


How do you establish commonality about integrity issues across the region you work in?


Chola Mbilima (Eastern and Southern Africa Water and Sanitation Regulators Association, ESAWAS): Currently our organisation has 10 members. We approach regulation from different perspectives. First, we provide a framework for the discussion of regulatory issues and by doing so, we promote good governance as a way to achieve integrity. It is very important to define clear responsibilities in order to promote accountability and transparency. Second, we develop instruments and tools that guide regulators in performing their functions. In particular, we have designed guidelines for regulators with implications for integrity.


I will give an example: we have developed a guideline for tariff setting for the entire region to assist regulators. This relates to a lot of issues of corruption, exclusion, and accountability. The guideline articulates how consumers can participate in tariff setting and raise their voice. We try to make information clear so consumers are aware about how tariffs are set up and what people can do to get a new connection. We try to help each other in the region.


As regulators, I have noticed that, in the region, corruption primarily emerges from lack of information and unclear rules. We try to establish clear regulations and share information as much as possible. We have also done regional benchmarking to share information. We agree to set standards as a region and we make information available to a wider public. By doing this, we try to promote transparency, however, member countries also have their own individual ways of approaching integrity.


“For regulators, information and data management are key aspects to fight corruption and promote integrity. Most of the time we are hit with lack of data and this becomes a problem because it is a recipe for corruption. If people do not have information they won’t be able to know what road to take and that can bring issues of corruption.”

- Chola Mbilima, ESAWAS


From a financier’s perspective, what is your motivation to invest in promoting integrity within regulators and what do you see as the direct benefit to your financed projects?


Corinne Cathala (Inter-American Development Bank, IDB): The IDB has worked in close cooperation with WIN, cewas and SIWI to assist regulators in the management of their information management systems. This has brought transparency to the way they handle information and accountability to the consumers. We are currently working with 22 regulators in 14 countries. We also aim at strengthening frameworks among regulators as well as supporting partnership and creating a collaborative environment with governments and all water sector stakeholders.


The IADB also backs the AquaRating initiative, a performance rating system for water and sanitation utilities. In collaboration with WIN, we have developed a focus analysis targeting integrity and transparency and it has been applied in several water and sanitation utilities. Although this tool was originally designed for utilities, several regulators from Ecuador, Bolivia and Colombia have approached to us to also use these indicators.

How do you provide opportunities to marginalised communities in Honduras to hold regulators and utility companies accountable?


Giovanni Espinal (ERSAPS): The majority of water providers in Honduras supply rural areas and they work on a voluntary basis. Integrity is part of their heritage as they operate through participatory schemes. They do not receive any economic benefit from tariffs and they represent a true example of what constitutes integrity in the provision of water services. However, they are rural communities and we have to make an effort to make their work visible and to support them to make wise use of the few resources they obtain, especially to reinvest in the improvement of the water service and resources. As regulators, we should avoid any distortion of the system of integrity and volunteer commitment, and recognise their contribution to collective forms of water service provision.


integrity management workshop at ERSAPS
Prioritising integrity management measures at ERSAPS (November 2021, photo by ERSAPS)

While promoting integrity within the work of regulators, how does the IDB articulate the human right to water compared to issues of economic efficiency?


Corinne Cathala (IDB): This is tricky question. The UN resolution on the human rights to water and sanitation is oriented to incorporate elements such as effective availability of water, minimum levels of consumption, quality and access to water. These are very important aspects that we are working on with regulators. But we also look at economic efficiency to foster rational use of water resources without undue political interference.


However, these aspects should be part of a long-term view that incorporates mechanisms of subsidies to help the most vulnerable population. Many countries, for example, have adopted a scheme of gradual adjustment of tariffs in order to subsidise families that have payment capacity problems. There is lots of work not only at the regulatory level but also at the public policy level with ministries.

How do you encourage a regulator to start to work with the concept of integrity?


Chola Mbilima (ESAWAS): A key strategy to motivate regulators is to invite them to visit places where things are working. We support regulators that supposedly are not doing so well to visit regulators that do things better. They have the opportunity to ask questions and they appreciate how the system works. We also encourage them to visit regulators, policy-makers and service providers to get ideas about how to make their own internal changes. In ESAWAS, we do not force people, but we expose them to institutions that work well. It’s a strategy to push regulators to implement integrity.

References

Twyman, B. And Simbeye, I. 2017. Regulating Lusaka’s Urban Sanitation Sector. The Importance of Promoting Integrity and Reducing Corruption. Berlin: Water Integrity Network (WIN) and Aguaconsult.

Water Integrity Network (WIN). 2021. Water Integrity Global Outlook 2021. Water Integrity in Urban Water and Sanitation. Berlin: Water Integrity Network.

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