The Independent had an Interview with the NWSC Managing Director Dr. William T. Muhairwe

When and how was NWSC formed and what was its objectives, vision and mission?

The NWSC is a government owned parastatal which was established by Decree No. 34 of 1972, following an earlier study on the need for improvement of water and sanitation in the major urban centres of Uganda. 

The Corporation was, initially, responsible for Kampala, Entebbe and Jinja. During the 1970'S and early 1980's the NWSC, like most other institutions in the country at that time, suffered substantial decline. Most of the assets were run down and service delivery reduced considerably. From the mid 1980's, following the takeover of government by the National Resistance Movement (NRM), the water sector was increasingly revitalized.

Through the intervention of the International Development Association (IDA) and other donor agencies, NWSC embarked on major rehabilitation and expansion of its water supply and sewerage systems. The Corporation's legal position was strengthened by NWSC Statute No. 7 of 1995, which later became NWSC Act of 2000. Under the new Act, the powers and structure of NWSC were revised to enable the Corporation operate on a commercial and financially viable basis.

Accordingly, the Corporation is currently mandated to manage water and sewerage services in 23 urban areas: Kampala, Jinja/Njeru, Entebbe, Tororo, Mbale, Masaka, Mbarara, Gulu, Lira, Fort PortaL Kasese, Kabale, Arua, Bushenyi/Ishaka, Soroti, Mukono, Lugazi, Iganga, Malaba, Hoima, Masindi, Mubende, and Kaberamaido. The NWSC towns have a population of 2.96 million people which account for 75% of  the population in the large urban centres.

What is NWSC's mandate?
Under the Water Act, NWSC: Provides water supply services for domestic, stock, horticultural, industrial, commercial, recreational, environmental and other beneficial uses; Provides sewerage services, in any area in which it may be appointed to do so under the Water Act.

Develops water and sewerage systems in urban centres and big national institutions throughout the country. Carries out its functions with a view to providing its services efficiently and economically; Operates on sound commercial practice and ensures that its revenues are sufficient to provide for; all operation and maintenance costs; all depredation and a reasonable contribution to investment.

What progress has NWSC made since its establishment, towards achieving its objectives, vision and mission?

A snapshot or static view of the corporation's performance after a decade of transformation shows the impact of the various initiatives that were undertaken. A summary of the Cumulative achievements based on the supply service chain, right from water production to the point of delivery to the users, is shown below. In summary, to date, contrary to the mis-givings of public enterprises, the NWSC stands out as a model utility in the African region because of its exemplary exploits and achievements.

It is now an efficient water utility producing about 70 million cubic meters of water per an- num, operating at an average Non Revenue Water rate of 34%, a staff productivity ratio of 7 staff per 1,000 connections, a customer base of about 234.718 accounts (December 2009) which have grown from a paltry 50,826 in 1998. Underlying the performance improvements have been the rehabilitation and expansion of some of the water and sanitation infrastructure.

The above mentioned achievements have also contributed to achievement of the over- arching government policies: Poverty Eradication Action Plan (PEAP) and the Millennium Development Goals (MDGs) obligations which are aimed at eradicating poverty through systemic improvement in people's standards of living. The Corporation achieved strong revenue growth with a 10-year compound average growth of 21%. The turnover increased from Ushs 21 billion in 199b to Ushs 100 billion in 2009.

To Colloborate the effectiveness of the performance enhancement programmes, the operating profit after depreciation commensurately improved from a loss of Shs 2.1 billion in 199B to a profit of Shs 15.1 billion in 2009, signifying NWSC's increasing ability to meet some of the capital obligations.

How has NWSC managed to transform from a loss making to a profit making corporation

The NWSC adopted a two-tier process. First a set of long-term strategies was formulated through a Corporate Plan and later, the Performance Contract with Government, establishing a platform for subsequent tailor-made activities at a tactical level Within the overall framework of the Corporate Plan and the Performance Contract with Government, a series of activities were implemented.

Secondly, the NWSC adopted several high impact short-term perfonnance improvement programmes based on home grown solutions/approaches meant to operationalise the long-term plans.

Long term Strategies.

The strategies can be summarised as follows: Use of performance improvement programme approach as the key vehicle of efficiency enhancement Re-aligning staff organizational behaviour to operate with a strong commercial and customer care orientation

Keeping close contact and strategic alliance with the public and customers to ensure confidence and legitimacy of NWSC initiatives Adopting a "do it yourself' strategy and out sourcing for supplementation, not substitution Adopting an instrumentalist approach to tariff adjustment through an equitable indexation policy.

Establishing "smart" networks with academic institutions and other regional companies operating similar business. Computerization of most management information systems in order to increase speed of work and efficacy.  Establishing transparent operating frame- work with the business owner (Government of Uganda) through performance contracting.

Short term Performance Enhancement programmes

At the secondary and more tactical leveL NWSC converted the long-term plans into a plethora of short-term plans relating to sections of the long term plans. The short- term plans progressively fulfilled the Corporate Plan. and were meant to operationalise the long-term plans. Below are highlights of the programmes.

a) 100-days programme (Feb-May 1999): It was a high -impact programme aimed at reversing the operational & financial inefficiencies within the NWSC. The programme activities addressed the five key performance areas of water production and sewerage services; water distribution services; customer,are services; revenue generation services and cost reduction initiatives.

b) This was followed by the Service & Revenue Enhancement Programmes - SEREP 1&11 (Aug'99- Aug'00). This was aimed at restoring customer confidence in NWSC operations and hence service delivery. By end of the SEREP programmes, NWSC had registered more achievements, most notable of which was the expansion of the customer base and the in- crease in the number of break-even towns to 6No from 3No in the 100-Days programme.

c) The Area Performance Contracts I (APC I) and Support Services Contracts I (SSC I) (October 2000-0ctober 2001). These were contracts signed between the NWSC Headquarters and Area Managers and Heads of Support Ser- vice departments like the Maintenance, Procurement and Stores departments. The main characteristics of the APCs and SSCs included increased autonomy of Areas and Support Departments, enhanced commercial orientation, creation of result and output oriented management and increased accountability and clear separation of responsibilities.

d) Area Performance Contracts II (APC II) and Support Services Contracts II (SSC II) (from December 2001 -November 2002). They were generally a strengthened form of the APC I and SSC I. Under these programmes, more key: performance areas were introduced such as the
,reduction of suppressed accounts. In addition. the incentives structure was re-designed according to SMART criteria in order to enhance staff motivation to work harder.

e) The S-T-R-E-T-C-H-OUT Programme. This came as a result of continuously evaluating the progress of APC l is in which it was realised that there was need to accelerate the achievement of APC II objectives. The main characteristics of S-T-R-E-T-C-H Out were: Reduction of bureaucracy; increase in speed of work; simplicity and self-confidence; worker involvement; organisational boundary lessness; stretched targets (which are far above SMART targets) and reward of progress towards achievement I of stretched targets.

f) One Minute Management Concept (July C 2003-2004). It was introduced as an augmental measure for Stretch-Out Programmes by (strengthening the Individual accountability
within the group by requiring each staff, right ( from the Managing Director, to have individual visions, missions and One Minute Goals, 1 catching people doing the right thing instead j of the "policing" orientation, regular group and i individual performance appraisals to reward I individual performance as well.

g) The Internally Delegated Management Contracts (since Dec. 2003). They were introduced under the auspices of the Second Performance Contract with Government, and came as a result of NWSC's response to the need to further consolidate operations at the Area (Town) level. The contract differed from the Area Performance Contracts by assigning more autonomy and operating risk to the management teams of the various towns under NWSC. The management teams formed partnerships paid based on the achievement of key performance indicators.

h) The Zonal Performance Contracts in Kampala. They were introduced as a result of the increasing demand for services in Kampala. The NWSC management decentralized and devolved functions from the centre to the Zones. With the introduction of this policy, all the 13 zones in Kampala assumed responsibility for the operational functions, which were formerly centralized under the administrative unit at our 6th Street premises. The decentralized functions have turned the zonal offices into one-stop centres for all services including new connections, main extensions, leak control and billings.

The Checkers System. It was introduced in 2004 in line with the implementation and consolidation of Internally Delegated Area Management Contracts (IDAMCs) as a means of monitoring operations of the Areas by the Head Office.

Private Sector Participation (PSP) Initiatives

Complimentary to the internal programmes, the NWSC also tested the waters with the
private sector based on a need to explore their acclaimed benefits. The NWSC outsourced the non-core activities including building maintenance, vehicle repairs, guard services and premises maintenance and upkeep.

Secondly, management engaged the private sector in management of the water and sewer- age facilities in Kampala Area, the largest area within the NWSC accounting for about 70% of the Corporation's activities. The first contract code-named "Kampala Revenue Improvement Project" (KRIP), ran from December 1997 to June 2001 under Gauff Ingenieure, a German firm. The second Management Contract was signed in February 2002 with ONDEO Services limited (OSUL), one of the best water management utility companies in the world.

Commercialisation Activities

Other commercialisation activities carried out by the NWSC included; Tariff Reviews, which included the reduction of the connection/reconnection fees, and introduction of a new Water and Sewerage Connection Policy aimed at giving subsidised access for pipe lengths up to some and 6om for water and sewerage respectively (with a normal fee of about US$ 30). Furthermore, in order to protect the tariff from externalities such as infution, and thus take into account changes in production costs, the NWSC tariff was indexed with effect from March 2002 with Cabinet approval.

Implementation of a Modem MIS, which is a key ingredient to a robust commercialization process. In this respect, the following were achieved; A Wide Area Network (WAN) and Local Area Networks (LAN s) in all Area offices; establishment of a modem computing server room at head office; efficient inter-office and external corporate email communication system using Lotus Notes; substantial increase in computer workstations and accessories for headquarters and Area office staff; establishment of autonomous billing centres; online cash receipting in all Area offices; improvements in the financial and billing systems including SCALA and CUSTIMA; computerisation of the central procurement process and; implementation of modem integrated telephone exchange facilities.

Improvement in Customer care, in which the NWSC management ensured that the customers' concerns and queries were adequately addressed through the establishment of Customer Call Centres; introduction of account-balance checking system with local telephone companies and; introduction of the Direct Debit System with some commercial banks in order to simplify the payment of bills by customers through the banking system. All these have eased the payment and verification of account balances of customers.

As an additional commercial programme, during the 2009 financial year, NWSC launched the Raving Fans Concept. Under this programme, the Corporation sought to meet and exceed expectations of customers and deliver 1% extra effectiveness in water service delivery.

What's NWSC management structure and how has this helped its performance?

The NWSC structure comprises a Board, Managing Director, supported by seven divisions:
Management Services/Corporation Secretary, Internal Audit, Institutional Development and External Services, Engineering Services, Planning and Capital Development, Commercial and Finance and Accounts. All these divisions have distinctive roles and the interplay between the divisions provides a frame work that ably addresses the entire mandate of NWSC, and effectively supports the Board and Managing Director.

Furthermore, the Corporation's operational framework includes a Performance Contract between the government represented by Ministry of Water and Environment and the Ministry of Finance. The contract stipulates the obligations of both parties, and gives operational freedom to NWSC. At a lower level, the NWSC has operating contracts with its areas of operation through the framework of Internally Delegated Area Management Contracts.

What are the problem areas that need improvement?

General challenges faced by the Corporation include; Increased Non-Revenue Water (NRW), attributed to increased bursts and leaks resulting from the old network system, faulty meters and illegal connections especially in Kampala. The NRW currently stands at about 34% for the Corporation as a whole.

Increased accumulation of Arrears. Arrears have grown overtime from Shs 30.5 billion in 2006 to Shs 41 billion in 2009. As at June 2DOg, total arrears amounted to Shs 41 billion of which government arrears constituted 45%, commercial 18% and domestic 31%. Arrears increase is mainly due to government’s under- budgeting, insufficient water supply in some areas and poor payment culture of some customers.

The takeover of New Towns coupled with expansion beyond the Municipal Boundaries. It has in ticted a financial burden on the Corporation, albeit within limited resource envelope. On top of the 23 towns under NWSC, the Corporation operates 30 other small towns in the periphery.

Limited availability of finance to fund the increasing demand for water and sewerage services, since with the current tariff, the Corporation is only able to finance minor investments. The unfavourable financial market conditions. This forestalled the issue of the bond due to liquidity and interest rate concerns.

Low sewerage network coverage, which impairs the ability of the Corporation to provide sewerage services. This is as a result of lack of funding to carry out comprehensive extension of the sewerage network which is highly capital intensive and requires high sums of funds for investment.

Increased Suppressed Accounts. The level of suppressed accounts has increased by 7,828, from 19,894 in 2006 to 27,722 in 2009 as a result of non- payment of water bills, incidence of dry zones in some areas and the management objective of reducing arrears. VAT policy, which as an indirect tax increases the cost of water hence limiting accessibility especially by the poor consumers. Its payment being based on billings as opposed to actual collections, impairs the cash flow of the Corporation especially where there are high levels of arrears.

What are the strategic plans for the future?

In formulating the Fifth Corporate Plan, the Board and Management of the Corporation adopted the theme: "Maximizing the Cash Operating Margin". By adopting this theme, it is envisaged that the corporation will generate sufficient resources for purposes of ploughing the funds back into the continued expansion of the water supply and sewerage systems. This will culminate into reliable water supply and sewerage services delivery in an efficient and cost effective manner.

In coming up with the futuristic aspirations of the Corporation, it was agreed to maintain the vision for the period 2006-2009 which was deemed still relevant since the NWSC still strives to be among the leading water utilities in the world. Therefore, the Vision for the period 2009 -2012 is; To be one of the leading water utilities in the world. To achieve this vision, the Mission Statement adopted for NWSC Corporate Plan 2009-2012 is; To provide efficient and cost effective water and sewerage services, applying innovative managerial solutions to the delight of our customers.

What are the challenges and the way forward?

As a way forward, the Corporation will continue bracing itself for more challenges in light of the increasing rate of urbanization and conurbation of the different towns we manage. With the continued expansion of our service areas beyond the original municipal boundaries, our task will be to ensure that our services expand in tandem with the growth in demand. We shall need to restructure the network to allow for bulk transfer of water to the new growth areas.

However, key to the achievement of this objective will be to mobilize funding for the major infrastructural investments envisaged. In line with our strategic business plan (2009 -2012) theme of Maximizing the Operating Margin, we shall continue mobilizing our internal resources for financing some of the minor interventions and, replacement of assets critical to the sustainability of our service delivery.

This notwithstanding, there will be need augment our internal resources with funding from the government, and our development partners, so as to bridge the financing gap for infrastructure gap for infrastructure investment. As a backstop to the mobilization of financial resources, NWSC will Endeavour to tackle the key challenges being faced, such as is sue of water losses, especially in Kampala the heart of our business operations.

The main activities in this regard will include demarcating the Kampala Service Area into. Hydraulic Zones, replacement of bulk meters for large customers and some for small customers, and the enhanced sensitization on leakages and bursts. The longer term interventions will include the replacement of the old network, a highly capital intensive venture.

In regard to the Sanitation activities within I the Corporation, 20og/2010 will mark a critical stage in defining and commencing the activities of the Kampala Sanitation Master Plan Project, for which we have received funding from the African Development Bank and the German Government through KfW.

The March 15-18 water congress Key among our Open Door Policy and South to South Cooperation activities, Uganda will be hosting the African Water Association (AFW A) congress in 2010. The congress will bring together different stakeholders from various parts of the world to discuss the African Water and Sanitation challenges under the theme: "Water and Sanitation: what are the perspectives facing the energy challenges and climate change".

The AfW A congress will bring together policy makers and practitioners to discuss the ever increasing effects of climatic change and energy on water and sanitation service delivery and how policies can be translated into action.