A third model illustrated in Box 8.11(c) creates a contractual relationship between the private sector and the NGO, quite separately from the municipality. Probably the most straightforward to organise, the NGO acts as one of many sub- contractors (alongside material suppliers or works contractors) for the delivery of an agreed service, mobilising communities or promoting cost recovery to agreed performance targets, for instance.
The private operator pays for and defines the services required from the NGO. The municipality will have included a requirement in the tender for the engagement of an NGO to provide institutional and social development services. Ideally, the NGO has negotiated agreeable terms before agreeing to join the bid, but in practice this is rare, and the NGO often agrees to join without adequate reflection or knowledge of the implications; or the private operator discovers, through the course of its work, that it needs an agent to work with communities to assist them in meeting their obligations, and it approaches an NGO to perform this role.
Evidence suggests that under this model, especially in large-scale water and sanitation arrangements, NGOs often find themselves in an intolerable position. Their core values, mission and mandates to support poor communities are often incompatible with the motives of the actor employing them - the private operator applying pressure for results, the community organisations requiring more capacity building. At its worst, this leaves the community feeling aggrieved over payment and tariff issues and the NGO is seen as the agent of a private firm that is making profits from these payments.
This model does offer the advantage that the NGO is centrally involved in any discussions with the community and it cannot be marginalised or sidelined. This form of contract is typically adopted for an NGO to deliver particular (e.g. institutional and social development) services (see Box 8.12).
In Buenos Aires, IIED-AL has worked with Aguas Argentinas since 1995. As an NGO committed to improving the urban environment for the poor, it sees the need to continue this collaboration in some form for as long as the poor have inadequate water and sanitation services. Yet despite this commitment, IIED-AL experienced a number of conflicts during the main part of its collaboration. Some of these expose the fundamental differences in the nature of the private sector and the NGO sector (see Box 6.13), and some arise through the nature of the arrangement in Buenos Aires and the particular relationship established between IIED and Aguas Argentinas. IIED-AL has been engaged in the water and sanitation arrangement with Aguas Argentinas in two distinct ways. In the first instance, its activities in the field working with poor communities to improve the quality of their lives has led to an informal relationship with Aguas Argentinas in two barrios: San Jorge and Jorge Hardoy. In these contexts, IIED-AL has helped to facilitate the activities of the operator to increase formalised connections and cost recovery. This includes, for instance, the connection of the San Jorge mini-system to the city network. In addition to this, IIED-AL has worked formally with Aguas Argentinas in a series of small service contracts in which it has provided social and institutional development expertise to supplement the skills of the operator. Some of the initiatives were relatively unambitious at the outset and developed as the problem became clearer. In each case, an agreement was established based on agreed terms of reference and an agreed lump sum contract. These included: • Staff training Over a six-month period, IIED was responsible for the training of regional managers on the characteristics, issues and processes involved in service delivery to low-income settlements. On a monthly basis, IIED-AL facilitated learning events such as workshops, site visits and community-leader meetings to familiarise AA staff in issues concerning the poor. • Social and environmental diagnosis of the concession area Given the lack of reliable data and qualitative understanding of the physical, social and organisational aspects of poor communities, AA contracted IIED-AL to undertake comprehensive social and environmental assessments throughout the shanty towns of Buenos Aires. These assessments provided the foundation for the operator to plan an approach to the prioritisation of water and sanitation upgrading in low-income areas (see Box 7.3), taking account of social and environmental indicators. • Environmental impact assessments IIED-AL was contracted to undertake environmental impact assessments for proposed facilities, such as the wastewater treatment plant, for government approval. While the scope of this work generally fits within the competencies and mandate of IIED-AL, the nature of the arrangement whereby it were contracted directly to the private operator created a problematic environment for the effective work of an NGO. While a consultant is willing to prepare a report and leaves it to the client organisation to act on it as they see fit, an NGO working towards poverty reduction objectives has a vested interest in achieving the best outcome for the poor, and is concerned with how the information is ultimately used. In other situations, an NGO with a dissemination objective needs to be able to disclose the information and knowledge collected; but most importantly, it needs to know that information is not going to be used in a way that brings disadvantage to poor groups or marginalises the poorest households from potential benefits. IIED-AL has recognised that the lack of a comprehensive pro-poor framework accentuates these conflicts and makes the NGO effort somewhat random and expendable. Without a PPP framework - agreed at the outset - that establishes a non-negotiable foundation for working with the poor, NGOs will battle with the function they can best perform. The underlying conflict is that governments are trying to attract private investment and create incentives for the private sector, but this conflicts at its core with the difficulties, the time and the risk of working in low-income areas.
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