A range of stakeholders have an interest in the increasing involvement of the private sector in service delivery. It is important to ensure the involvement of such stakeholders and the ongoing flow of information to them. Stakeholder participation is vital in enhancing ownership and sustainability. This would enhance the overall legitimacy of the project, and also help to ensure that the service providers act accountably and with sensitivity to the needs of consumers.
Participatory decision-making ensures a better fit between public investment decisions and community realities and preferences. Even where elected local governments exist, their representative capacity and reach into society is often too limited to enable them to speak on behalf of those directly affected by change, whose cooperation is required for successful development projects. In particular, poor communities and individuals are often not able to make their voices heard, and special effort is necessary to ensure that low-income households and marginalised groups (such as women and young people) make effective inputs. For these reasons, as we have discussed in Chapters 6 and 7, successful private sector participation requires systematic efforts to involve key interest groups in the policy, planning, implementation and monitoring process for a partnership. A central tenet of stakeholder participation is to engage with stakeholders from an early stage when the partnership is being conceptualised, and to ensure ongoing meaningful participation throughout. Many PPPs have merely tried to co-opt stakeholders once the deal is done.
Municipalities sometimes appoint full-time community liaison officers or units to ensure such inputs, or they may create special forums to facilitate debate and exchange about the private sector participation projects. It remains important, however, that the inputs received are treated seriously by the leadership within a local government, and that the links between the community officers and line management be consciously strengthened. Unless this is done, the participatory process can easily become nominal, with little real effect on planning and decision-making in the council as a whole and in project management. Any initiative will flounder if stakeholder involvement is superficially consultative, with the stakeholders feeling that they have no real impact on outcomes. All stakeholders should be consulted with due sensitivity to their particular interests. Important groups are:
• consumers, who will have to pay for the services, and who have an interest in the standards and costs involved;
• residents directly affected by the construction of a new facility, such as people living next to a new reservoir or landfill site;
• poor households and communities, who often lack the means to participate effectively in public policy and project processes. Their involvement is critical to partnership design, implementation and monitoring because it helps to incorporate the perspectives of people who experience delivery problems first hand;
• municipal employees, who often fear the implications of private sector participation for their employment conditions, if not for their jobs. It is critical to engage with them from the outset, to ensure that they understand the need for transformation, and that they are able to make an impact on the decisions that are eventually made about partnerships; and
• existing informal service providers, who stand to lose their source of income if their interests are ignored.
While it is advisable to always keep all interested parties informed, the levels of engagement may vary according to the specific issues at stake. For example, while trade unions are very important stakeholders when labour and employment issues are being discussed, they may not be a primary actor when the original principle decision to engage in a partnership is decided, or when levels of services are being determined. Sometimes, interest groups might be opposed in principle to partnerships, and the municipality will then have to carefully assess the costs and benefits of being in opposition to those policy stances. It is rarely possible to satisfy all interests, but all effort should be made to ensure that all inputs are heard, mediated and taken seriously through the processes of participation.
Perhaps the primary problem of the affermage contract is that the responsibilities for operation and maintenance, on the one hand, and for investments, on the other, are conferred upon different parties, yet are often difficult to distinguish. For an affermage contract to succeed it is commonly agreed that it must clearly define which items constitute operation and maintenance (and are therefore the responsibility of the operator), and which items are long term and strategic (and are therefore the responsibility of the authority). In Stutterheim, however, a number of problems have arisen due to the lack of agreement over the definitions and scope of maintenance versus capital improvement. A primary question in such a contract is who will distinguish between routine maintenance and capital expenditure, and this is not resolved in Stutterheim or in South Africa because of the lack of a regulating body (see Box 8.6). The lack of clarity and the ambiguity in the contract has been at the core of many disagreements and much discontent. It is informative to consider what types of problems are embodied in this lack of clarity over operation and maintenance a versus capital works. The specifics of four disputes are described below: 1. During severe floods in Southern Africa, a length of trunk-main on a steep hill was badly damaged by the heavy rainfall and flooding in the vicinity. The pipework had been designed and constructed by the council as a part of a capital improvements programme. The council is now in a dispute with the private operator over the responsibility for the cost of rectification of this pipework. WSSA has argued that the pipework foundation was not properly compacted and failed due to poor preparation and workmanship during construction. It sent the council a letter to this effect some months before the damage occurred, and argues that rectification costs are not therefore a matter of maintenance. The council, however, interprets the operator's obligation under the contract to ensure joint supervision and assistance to optimise operations differently. It argues that WSSA should bear some responsibility for the failure of the design under unusual flooding conditions. While WSSA have reduced the cost to the council to some extent, this difference of opinion has not been resolved. 2. A failure at the boreholes meant that WSSA undertook large-scale replacement and rectification works. It argues that the boreholes constructed by the council before the contract were not properly lined, and that the specification of the pump size was too great for the mechanism. As a result, unexpected vibration led to the collapse of the lining. The council argues that the boreholes have been functioning adequately since 1990 and that the problem is one of operation and maintenance. 3. A disagreement also arose when a pit latrine vacuum tanker, specially designed to enter narrow streets, broke down and needed replacing. Under the contract such capital equipment must be provided by the municipality. The process of approving the expenditure on a new vehicle was slow. To cover the period of four months, WSSA brought in another vehicle from a nearby town which could operate but required maintenance and upgrades to carry out the task. WSSA has since billed the council for the maintenance carried out on the tanker and disagreement has ensued over responsibility for the costs of upgrading a tanker not owned by and no longer benefiting the council. 4. When the wastewater treatment works was extended in 1994-95, WSSA noted that ungraded river sand was being provided as the media for the sludge drying beds. At this time WSSA expressed concern to the council that this cheap, ungraded river sand was specified by the consulting engineer, instead of graded sand in accordance with standard engineering practice. The council did not accept WSSA's concerns but chose to go ahead with the sand specified by the local consulting engineer. Following an exchange of correspondence, an independent investigation was carried out, and the final report stated that ungraded river sand has reduced filtration capacity, restricted the drying tempo of the sludge and resulted in a higher rate of sand loss. This is of particular concern during extended wet periods when sludge drying capacity becomes critical. WSSA has therefore stated that it cannot be held responsible for the early replacement of the sand due to inadequate specifications on capital works. Apart from the lack of clarity in the contract and the lack of a regulator to resolve differences, the lack of effective communication between the partners has added to their disagreements. While it is clear that STLC prefers not to negotiate at a strategic or practical level, WSSA has not communicated as well as it could have. The affermage contract requires trust between the client and the operator and particularly some mutual understanding over investment. At its worst, the contract falters if a client does not invest in the infrastructure necessary for the operator to provide an acceptable level of service. While this is certainly not the case in Stutterheim (where the council has invested appropriately), there is nevertheless a lack of mutual agreement on the manner and spirit in which capital works are carried out. On the one hand, the council believes that WSSA does not provide the joint supervision described in the contract, and does not always show the interest it should. On the other hand, WSSA argues that its voice is not heard, that the council does not accept that the technical resources of an international water operator exceed the generalist skills of a local engineering consultant, and that the council has acted naively towards investment at times. Capital works in an affermage contract become a three-way partnership including the client, operator and engineering consultant. This relationship has not been an easy one in Stutterheim.
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