Busembatia sits on a highland in eastern Uganda. Its surrounding areas are swampy, which is perfect for growing its staple cash crop: rice. But open defecation, pit latrines, and other pollutants captured in runoff contaminate the town’s swamps, ponds, boreholes, and hand-pumped wells.
Women and children used to spend massive amounts of time collecting water for drinking, cooking, and washing from these sources. They often had to walk miles with their empty jerry cans and buckets, and return with them full and weighing more than 40 pounds. This daily burden meant losing out on educational and work opportunities, which affected the economic well-being of generations of families. But the harmful bacteria, viruses, and other pollutants swirling inside their containers were an equally heavy burden.
“This affects the working population in the rural area. The mothers, when they’re sick, cannot be productive. Children don’t go to school when they’re not well,” said Michael Opagi, principal investment officer in IFC's Public-Private Partnerships (PPP) department in Sub-Saharan Africa.
But it was Opagi’s team at IFC that turned things around with a PPP solution, helping to transform the lives of thousands in Busembatia. Today, the community has clean, piped water. Women now have more opportunity to work, children go to school, and local businesses have a reliable utility.
In Busembatia, Uganda, a successful public-private partnership helped local banks finance a small-scale water project that provided thousands of people with a sustainable water supply system for the first time.
A Global Crisis
Nearly 90 percent of Uganda’s 35 million people live in small towns and rural areas, and roughly two thirds of them lack access to safe water. Poor sanitation worsens the problem. Waterborne diseases and infant mortality are widespread.
When the government of Uganda decided early last decade to decentralize rural water supplies and distribute grants to local governments to organize service, it awarded management contracts to private operators in dozens of towns. But most contracts were weak and the utilities have underperformed.
According to Stemma Kategeke of Busembatia’s town council, before IFC turned its attention to the town’s problem in 2007, the locally run situation was a “mess.” Service was virtually non-existent and there were zero prospects of improving things.
Opagi said that the contracts for the program in place in Busembatia were not well-structured and performance was underwhelming, with only a couple of hundred people being served. There was no ability to drill for new water and scale up the operation to manage bigger contracts, extending benefits to more people.
The challenges included the need to transform poor contracts already in place, increase the capacity of the local operators to scale-up their services, and overcome a critical lack of local finance. To tackle them, IFC harnessed existing World Bank Group support in Uganda from the Joint Water and Sanitation Sector Program and Global Program for Output-Based Aid (GPOBA). We also brought in the Public-Private Infrastructure Advisory Facility (PPIAF) to help find local solutions to Busembatia’s water problems.
A Local Solution
Among other priorities in Busembatia, getting local banks to believe in the viability of small-scale water PPPs was crucial. To address this, IFC and PPIAF brought together local financial institutions and small-scale water providers to learn from each other and come up with a viable business model for financing small town water operations for the first time, improving access to finance for small infrastructure projects.
The result? In 2010, three local companies were invited to submit a bid for a five-year management contract in Busembatia following a prequalification process. The contract was awarded to Trandint Limited. Trandint offered the lowest price at $270,000 and received a $100,000 loan from a local commercial bank, the first of its kind there. IFC also worked with GPOBA, which guaranteed a subsidy to pay for the project.
“IFC was directly involved in the evaluation, so we felt there was a level of transparency and this was a project worth going for,” said Phiona Rotaro, owner and operator of Trandint.
Trident has more than doubled the number of water stations, adding over 400 new connections. Today, some 700 stations distributing clean piped water have been installed in Busembatia, serving more than 15,000 people in and around the town.
With clean water flowing, new transparency and bankability facilitated by IFC has washed away the old problems plaguing the town’s water utility, opening a new chapter in Busembatia.
The project was supported by DevCo, a multi-donor facility affiliated with the Private Infrastructure Development Group. DevCo provides critical financial support for important infrastructure transactions in the poorest countries, helping boost economic growth and combat poverty.
“We’ve been given trust in the supply system,” said Rotaro. “So to me, I think IFC made us more mature in business and let banks gain confidence in us. This whole town is covered 24/7. Water is flowing.”
Published in March 2016