The World Economic Forum’s public-private water initiative in South Africa and India showed that “Brokerage Networks”, involving stakeholders across all sectors, proved successful in conceptualising, and implementing water projects aimed at both boosting economic growth and satisfying human needs. e Indian initiative focussed on many small-scale multi-stakeholder water projects endorsed by the government and brought satisfying results. Less successfully, multi-municipality water projects were planned, but not implemented, in South Africa. Many lessons can be learned from these experiences.

The World Economic Forum has, since 2005, been working with the Swiss Agency for Development and Cooperation (SDC) and Alcan Inc. on a pilot public-private initiative on water in developing countries – the Water Initiative. Extensive stakeholder consultations were initially conducted to determine where efforts could be best directed. One conclusion was that water partnership projects designed to provide water for both economic growth (“water for industry”) and human needs (“water for health”) are relatively easy to conceptualise and present a straightforward argument for public and private co-financing. However, they are very often difficult to broker, design and implement since both public and private sector entities generally face too high transaction costs. is “bottleneck” in the project planning stage must be over – come to see more investments in the water sector.

The Water Initiative aims to develop “Brokerage Networks” involving stakeholders across all sectors – governments, businesses, civil society, development agencies and international organisations – and facilitate more effective collaboration to develop and accelerate a series of win-win partnership projects. ese projects would in turn help improve access to water for communities in line with the UN Millennium Development Goals, while securing reliable water resources for industries to foster economic growth. e fundamental objective of the approach is thus to bring together, via shareholding, all the various main parties that might benefit from the project, and coordinate their actions.

Outcomes of the Water Initiative

The Water Initiative decided to initiate two pilot Brokerage Networks in India and South Africa. Indeed, the World Economic Forum enjoys a solid relationship with both these countries and both are experiencing rapid economic growth yet face water security challenges.

All the various cross-sector parties involved in the project collaborated in these “Brokerage Networks” the purpose of which was to:

  • Lower transaction costs (especially entry costs) for all stakeholders to engage in the project;
  • Reach consensus among all stakeholders from the outset, thereby reducing the risk of future project disruptions;
  • Provide the neutral space for stakeholders to challenge and constructively resolve project issues;
  • Ensure that projects were “bancable” and aligned with existing economic growth and social development strategies, thereby stimulating additional finance for these projects backed by political and private sector heavyweights.

The Water Initiative demonstrated that it is possible to leverage 3 USD from the public sector and  6  USD  from  the  private  sector  in  project  finance  for  every  1  USD  invested  in  the  Brokerage Network by the development agency.

The Indian and South African initiatives

The  Indian  Business  Alliance  on  Water  (IBAW)  is a national level public-private partnership involving  the  Confederation  of  Indian  Industries  (CII), USAID, the SDC and the UNDP, that was catalysed at the Forum’s 2005 India Economic Forum (www.ibaw-india.com).  e  IBAW  catalysed  25  project proposals throughout India, 14 of which are based in  Rajasthan.  is  partnership  at  state-level  with the  State  Government  of  Rajasthan  is  called  the Rajasthan   Business   Alliance   on   Water.   Project proposal  topics  include  desalination  plants,  rural water  supply  and  sanitation  systems,  rainwater harvesting, groundwater recharge systems, waste-water  treatment  and  sewage  treatment  facilities. e IBAW used an initial 200,000 USD grant from USAID  to  appoint  a  full-time  Project  Officer  and to organise project development meetings, which in turn stimulated an additional 20,000,000 USD of public and private finance for the projects. e IBAW has been approached by other Indian states to replicate this partnership and is now examining this matter with government officials of other potential states.

In South Africa, the NEPAD Business Foundation (NBF),  with  the  support  of  the  World  Economic  Forum  Water  Initiative,  has  helped  facilitate  a multi-stakeholder  water  network  that  includes government  departments  (such  as  the  Department  of  Water  Affairs  and  Forestry,  the  National Treasury PPP unit and the South African Local Government Association), development and commercial  finance  institutions  (such  as  the  Development  Bank  of  Southern  Africa,  Trans  Caledon
Tunnel  Authority  and  Standard  Bank),  civil  society   groups,   national   and   multinational   companies,  especially  from  the  mining  sector,  and  finally,   multilateral   institutions   (such   as   the  European  Investment  Bank,  IFC  and  the  African Development Bank).

This network aimed at developing two major “win-win”  water  project  propositions  in  South  Africa  – large  and  complex  projects  that  involved  the  collaboration of multiple municipalities, agencies and industry  sectors.  Combined,  these  two  projects were designed to provide clean water for 750,000 people  in  some  of  the  poorest  areas  of  northern South Africa, as well as to secure reliable water supplies to industry to stimulate economic growth.Due to capacity constraints within the NBF at the time, the projects, after conceptual agreement was reached,  were  handed  over  to  project  champions for  implementation.  It  has  regrettably  not  taken place  failing  the  appointment  of  an  “external  coordinator”.

The  success  of  the  South  African  projects  seems less  convincing  compared  to  the  Indian  one.  Yet, activities are to be extended to other SADC countries  with  due  consideration  for  lessons  learnt from the positive pilot experience. In preparation of  Phase  2,  the  NBF  has  established  a  dedicated Project Management Office (PMO) to serve a a cooperation hub for project development. More companies  will  come  on  board  to  tackle  targeted projects aligned with the SADC priority Growth Development Corridors. At the 2009 World Economic Forum on Africa, over 60 public and private sector, civil  society  and  NGO  participants  endorsed  this idea and will re-convene in the autumn of 2009 to develop the implementation action plan.

 

Water recycling project in Rajasthan

Shree Cement Ltd currently operates a cement factory in Beawar, in the Ajmer district in Rajasthan. is district suffers from a lack of sewage treatment and waste disposal facilities, thus resulting in health concerns and polluted groundwater. Shree Cement will build and operate  sewage treatment plant that treats and reuses wastewater in its cement factory. is project will free up 1000 m3 of water per day. e project will be conducted in partnership with the Government of Rajasthan, who will provide land for the treatment plant, as well as the local government who will provide the wastewater supply infrastructure.

 

Hartbeespoort Dam project in South Africa

This project will treat and pipe poor quality, non-potable water from the Hartbeespoort Dam in the Gauteng Province to north and potentially to Botswana to be used as industrial-grade water by various heavy industries, thus providing them with the water they need to maintain and grow their operations in the North West and Limpopo provinces, creating employment and supporting wider provincial economic growth. e volume of potable water currently being used by these industries will be reduced by up to 50 %. Clean water will thus be supplied to approximately 595,000 people in two district municipalities.

 

Lessons learned

Stakeholders  who  have  been  involved  in  the  regional  processes  to  date  have  expressed  their  desire  to  scale  up  these  activities  (for  example  in multiple states across India and across the Southern Africa region). New stakeholders have signaled their interest to replicate the model in other regions (for example in the Middle East, suggesting Jordan as a potential starting point). Before moving forward, it is important to draw from the lessons of the pilot network experience.

Necessity  to  appoint  a  coordinating  project officer: it  is  crucial  to  have  full-time,  dedicated resources  to  coordinate  the  network  and  oversee the work from the design process through to the implementation  phase.  e  India  pilot  network used part of its USAID grant to remunerate a dedicated  project  officer  who  worked  with  the  network stakeholders to broker the project proposals. e South Africa pilot network did not have sufficient funding to appoint a full-time project officer. After  the  project  design  discussions,  the  project concepts  were  left  to  the  specific  project  stakeholders to be carried forward, which slowed down the project implementation progress. However, in Phase 2 of the South Africa network, a dedicated PMO  and  project  officer,  sponsored  by  the  SDC, have been appointed.

Government  endorsement:   the  official  backing  of  government  at  the  highest  level  is  key  for success  (only  a  stable  government  with  credible  water  policies).  is  kind  of  backing  provides the credibility that a network needs to engage the necessary  stakeholders.  In  India,  the  Chief  Minister of Rajasthan initiated the State partnership which most likely convinced private sector companies and civil society of the IBAW’s legitimacy as a  partner.  However,  in  South  Africa,  stakeholder commitment  was  hard  to  obtain  as  the  network was  not  officially  launched  as  a  government-endorsed initiative.

Multi-stakeholder network and engagement: the creation of a network can facilitate more effective collaboration between multiple stakeholders. Due to the political nature of water, it is sometimes unrealistic to work through government or donorled initiatives alone to promote innovations or reforms in the water sector that include the private sector.  A balanced selection of “network partners” and designated representatives that participate as equals is required from all sectors concerned.

Clearly-allocated  roles  and  responsibilities: India’s  pilot  network  took  a  more  formal  partnership  approach  with  the  IBAW,  which  included a  Memorandum  of  Understanding  signed  by  all partners. However, the stakeholders of the South Africa  network  took  a  more  informal  approach.  While  it  is  difficult  to  say  if  one  approach  is  decidedly  better  than  the  other,  it  appears  –  based on the pilot experience – that some structure and agreement as to stakeholders’ roles and responsibilities is beneficial in the project design process.

Types of projects:  the India network focused on a larger number of smaller-scale projects compared to the two large-scale multi-municipality projects in  South  Africa.  is  experience  shows  that  it  is easier (and less politicised) to develop the smaller projects. In addition, projects that focused on demand and efficient use / re-use of water resources seemed less contentious than projects centred on water supply (increasing water capacity).

Managing lead-times:  a lead-time of about one year  is  necessary  for  the  preparation  of  new  networks and to initiate the processes to catalyse and develop project ideas. However, once the network and process are up and running, the time to generate  additional  project  ideas  decreases.  For  new networks  to  be  sustainable  on  their  own,  a  2-  to 3-year process is necessary.

Management of water needs stands out as an urgent, tangible and fully resolvable issue. e experience  of  the  Water  Initiative  in  India  and  South Africa shows that this issue can effectively be tackled thanks to a multi-stakeholder effort supported by government