Water supply and sanitation in Senegal

Policy

The Ministère de l'Urbanisme, de l'Habitat, de l'Hydraulique urbaine, de l'Hygiène publique et de l'Assainissement is in charge of policy setting for urban water supply and sanitation.

The Ministère de l'Hydraulique rurale et du Réseau hydrographique national is in charge of rural water supply. These responsibilities were previously under the Ministry of Agriculture.

The Ministère de l'Environnement, de la Protection de la Nature, des Bassins de rétention et des Lacs artificiels is in charge of certain aspects of water resources management.

The government has launched a Water and Sanitation Program for the Millennium (PEPAM) to reach the Millennium Development Goals for water supply and sanitation. The program is not a project, but provides a framework for all stakeholders in the sector. The objectives until 2015 are as follows:

In rural areas:

• Provide sustainable water supply to an additional 2.3 million people, increasing access from 64% in 2004 to 82% in 2015.
• Allow 355,000 rural households to install an individual solution to manage their excreta and domestic greywater, increasing access from 17% in 2004 to 59% in 2015.
• Ensure the sanitation of the most important public buildings through the construction of 3,360 sanitary facilities in schools, health posts, markets and bus stations.

In urban areas:

• Provide house connections to water supply to an additional 1.64 million people, to reach an access rate of 88% in Dakar and 79% in towns in the interior in 2015, compared to 75.7% and 57.1% respectively in 2002.
• Allow 1.73 million additional people access to sanitation, increasing access from 56.7% in 2002 to 78% in 2015.

Service provision

Responsibility for urban water supply is shared between the Senegalese national water company (Société Nationale des Eaux du Senegal (SONES)), a holding company, and Sénégalaise des Eaux (SDE), a private operating company. Initially, the French water company SAUR owned a 51% share in SDE, the remaining 49% being divided between the Senegalese state (5%), private Senegalese individuals (39%) and the employees (5%). As of 2011, SAUR was not listed any more as a shareholder on the website of SDE. Instead its shares are held by the West African infrastructure holding company Finagestion, which in turn is majority-owned by the US-based, Africa-focused private equity fund Emerging Capital Partners.^[19]

The Office National de l'Assainissement du Sénégal (ONAS) is in charge of sanitation.

In rural areas, user associations called Associations d'usagers de forages ruraux (ASUFOR) manage water systems supplied by tubewells. The state obliges them to sign maintenance contracts with private companies, in order to ensure the sustainability of the systems. They can also delegate operation of their systems to private operators.

Affermage for urban water supply

One of the best-known and successful innovative approaches in water supply in Senegal is the lease (affermage) contract signed in 1996. According to the Senegalese government, the number of clients of Sénégalaise des eaux (SDE) increased from 241,671 in 1996 to 638,629 in 2014. Out of almost 400,000 new connections, 206,000 were social connections serving the poorest population, primarily on the outskirts of Dakar.^[20]

According to the World Bank, the government was successful at reaching the poor through the establishment of a national fund to allow the private operator to subsidize Social Connections. It aimed at providing improved services to the poor for a lower price. Social connections were free, while a connection fee was charged for ordinary connections aimed at wealthier households. SDE and Senegalese National Society of Water Usage (SONES) worked through a large NGO to identify the need for social connections. In addition, the private operator set up a decentralized and computerized network of payment booths. This made payments by domestic clients easier, and improved customer services. The operator's remuneration was based on the amount of water produced and sold, creating an incentive to serve as many customers as possible while reducing water losses.^[21]

A 2006 study by the Boston Institute for Developing Economies (BIDE) estimated the total net benefits of the lease contract at a staggering US$457 million, of which the bulk accrued to customers who received better access to higher volumes of water, and to the government, with only small benefits accruing to the public and private owners of the water company (US$6 million). Losers included foreign lenders (US$14 million) and employees (US$10 million) through lower increases in wages and benefits compared to the period prior to the reform and through a small reduction in employment.^[11]

Selection of the private operator The private operator was selected competitively in a two-stage bidding process. Four bidders, all of them French, participated in the first stage: Générale des Eaux (now Vivendi Environnement), Lyonnaise des Eaux (now SUEZ), the Société d'Aménagement Urbain et Rural (SAUR), and CISE (which has since merged with SAUR). The two-stage process entailed inviting pre-qualified bidders to submit a first-stage technical proposal that is evaluated, after which each bidder was invited to a meeting to discuss the shortcomings of their technical proposal. A potentially difficult situation arose when SAUR was invited to bid, as SAUR already had a long-standing relationship with SONEES. SAUR had been working as an advisor to SONEES since 1980. The government considered eliminating them from the bidding, but the World Bank did not agree. Instead, SONEES was instructed to finish up all contracts, end all contact, and provide SAUR with no access to their operation four months before the bidding took place. Finally, all four bidders were invited to submit revised technical proposals, accompanied by financial bids. All four bidders responded. Lyonnaise des Eaux was eliminated as the submission was non-compliant. After further discussions, the bid from Générale des Eaux was also eliminated, as they refused to entirely endorse some of the requirements of the contract. The two remaining bidders, CISE and SAUR, were then invited to present second-stage bids. When these were opened on October 25, 1995, SAUR was announced the winner, based on price. SAUR had bid a water supply rate of 236 FCFA per cubic meter, which at the time was 62 percent of the average tariff.^[9]

Criticism According to critics, such as the Dakar-based regional NGO Aide Transparence, the number of connections has increased from a much lower base of 203,902 in 1996 to only 264,161 in 2002.^[22] This contrasts with SDE figures which state that the number of connections was 338,398 in 2002.^[23] According to the report by Aide Transparence, "consumers often complain about a reduction in water quality" and that "the use of mineral water has never before been so widespread in Senegal", without providing any specific figures. It also says that "in certain areas or at certain points in the year" there is no tap water for a whole day or even for several days.^[22]

Community partnership for standpipes in Dakar

Another innovative approach is the community partnership with SONES, SdE and an international NGO with local roots, Enda Tiers-Monde, to select the location for standpipes, build and to operate them. The program installs metered standposts to serve poor households who previously used polluted well water. The program is demand-responsive rather than relying on supply-side targeting of the poor. Community involvement is strong—they are heavily involved in planning, construction and maintenance, leading to strong ownership and near 100 per cent cost recovery. All standposts are metered—the households pay the standpost operator whilst the operator pays the utility for bulk water. The community itself chooses the operator (or a group of rotating operators) who may work for the community for a salary or occasionally for themselves for a share. There are two types of standpipe schemes—in one SONES fully finances the cost of the infrastructure, in the other ENDA finances the infrastructure. This latter scheme, known as the 'Eau Populaire' program, began in 1995. The SONES scheme has installed roughly 250 standposts, the ENDA scheme roughly 130. In 2001, an estimated 200,000 people had received access to potable water thanks to the 'Eau Populaire' project. The project has led to a significant drop in waterborne illnesses in children. It has also led to the creation of several hundred jobs (standpost operators who receive between 30,000 and 80,000 CFA per month), as well as funding other local projects via standpost receipts.^[24]

Rural water supply

In rural areas, the government supported the introduction of more sustainable management models for piped water systems using boreholes since 1999 through the pilot project REGEFOR in Central Senegal. Among the innovative features of the project are the use of metering and volumetric pricing, mandatory maintenance contracts with private sector companies and support through micro-credit.^[25] The first pilot project covered 80 boreholes. In 2009 a private maintenance company is to be contracted for 621 boreholes in the central area of Senegal, and until January 2010 all the country's 1,400 boreholes are to be under private maintenance contracts.^[4]

First public-private partnership (1960-71)

1960-71: The Compagnie Générale des Eaux du Sénégal, a subsidiary of the Compagnie Générale des Eaux of France is in charge of urban water supply in Senegal under a lease (affermage) contract.^[26]

Public management (1971–mid-1990s)

1971: Under President Léopold Senghor, an advocate of African socialism, the state nationalizes the water company and creates the national public water company Société Nationale d'Exploitation des Eaux du Sénégal (SONEES). At least in rural areas water is provided for free.

1983: Under President Abdou Diouf (1981-2000), SONEES signs a concession contract with the government. In rural areas, water tariffs are being introduced using flat fees per household in the absence of metering.

1994: The government embarks on a year-long process to design sector reforms, including a series of workshops and advice from the World Bank and an assessment of reforms in other countries.^[21]

Second public-private partnership (since mid-1990s)

1995: The government decides to delegate urban water service provision to the private sector under a lease contract in its first letter of development policy.

1996: SONEES is dissolved and three new companies are created: Société Nationale des Eaux du Sénégal (SONES), the state asset holding company, Sénégalaise des Eaux (SDE), the private operating company, and the Office National de l'Assainissement du Sénégal (ONAS), the public sanitation company. SONES owns the assets, is in charge of investments in infrastructure, and regulation of SDE. SDE is responsible for operation, regular maintenance, some investment for system expansion, as well as billing and collection. According to the World Bank, good relationships were helped by the fact that no major layoffs were necessary during the reforms, as the utility was not very overstaffed to begin with.

1998: SONES and SDE successfully renegotiate several unattainable targets in the contract without resorting to arbitration or litigation.

1998: A Conseil Supérieur de l'Eau, presided by the Prime Minister, is created to set policies for water resources management and water supply.^[27]

1999: The pilot project REGEFOR is initiated in Central Senegal with the support of the French Development Agency AFD with the objective to develop new management principles based on the disengagement of the State in favor of users and the private sector: metering, volumetric pricing, trained managers and technicians and clear relationships between the different actors. This required a "cultural revolution" among villagers and within the administration, whose responsibility to maintain the equipment was transferred to the private sector.^[28]

2000: Change of government after Presidential elections that are won by the opposition leader Abdoulaye Wade.

2001: Second letter of development policy and effectiveness of the World Bank-supported Long-Term Water Sector Project. Water and sanitation policies are pursued without major changes.

2002: Sénégalaise Des Eaux is certified according to the ISO 9001 norm, version 2000, by the French association for quality assurance AFAQ. SdE is the first Senegalese company that has received an ISO certification and the first African company certified according to the ISO 9001 norm based on customer satisfaction management.^[29]

2005: Third letter of development policy. The Water and Sanitation Program for the Millennium (PEPAM) is created.^[30] In rural areas, the pilot project REGEFOR is completed successfully and its approach is now being introduced at a national level.

2006: The lease contract with SDE is extended by five more years. A performance contract is signed with SONES.

2008: The government signs a performance contract with ONAS.

2009: The government commissions a study to assess, among other issues, whether the lease contract should evolve into a concession contract under which the private company finances some or all of the investments.

2010/11: SAUR sells its share in SDE to the West African infrastructure holding company Finagestion, which in turn is majority-owned by the US-based, Africa-focused private equity fund Emerging Capital Partners.

2011: The lease contract with SDE is extended by two more years.^[31]

2012: Macky Sall elected President, defeating Abdoulaye Wade.

September 2013: Dakar's water supply is interrupted for three weeks after a break in a key transmission pipeline at Keur Momar Sarr.^[31]

2014: The lease contract with SDE is extended by five more years.^[31]

Tariffs and cost recovery

Urban water tariffs SDE applies an increasing-block tariff, which includes three blocks:

• a social tariff for low-consumption users with house connections, defined as those using less than 20 cubic meters every 60 days, which was 191 FCFA/m³ in 2008;
• a regular tariff for consumption between 20 and 40 cubic meters (formerly 20-100 cubic meters), which was 630 FCFA/m³ in 2008; and
• a "dissuasive" rate for any consumption over 40 cubic meters (formerly 100 cubic meters), which was 789 FCFA/m³ in 2008.^[32]

In Dakar water is also sold in buckets at standpipes for 30 CFA (US$0.06) per 25 litre bucket, equivalent to US$2.40/m³. Guardians of standpipes are small entrepreneurs who buy water from the utility and sell it to their customers.^[5]

The NGO Public Citizen has criticized the tariff structure in Senegal, because the poorest who tend to rely on standpipes pay the highest tariffs, "which amounts to 350 percent of the social tariff". In addition, families in low-income areas may share one connection and consequently consume at the "dissuasive" rate. According to Public Citizen, this leads to a situation in which the poorest families subsidize the water of rich families who use normal amounts of water and qualify for the "social" tariff.^[33]

A World Bank study acknowledges that standpipe users pay more for water, noting that the government sees them as a temporary solution and intends to reach all the poor with private connections. However, still according to the same World Bank study, this policy suffers from a "major flaw": the very criteria that make a household eligible for the subsidy more or less guarantee that it is not poor. Social connection programs are intended for stable neighborhoods where the residents have established themselves. In order to obtain a social connection, an applicant must have title to the land, and an existing house must be located on it. A household that can afford this, and can afford to build a permanent house, is not among the poorest of the poor.^[9]

Price increases have been limited to no more than 3 percent per annum in nominal terms under the performance targets, the same as the rate of inflation, thus keeping tariffs constant in real terms.^[5] The average water tariff increased from 350 FCFA/m³ in 1995 (US$0.72/m³ at the exchange rate of 489 CFA/US$) to 496 FCFA/m³ (US$1.09/m³ at the exchange rate of 456 CFA/m³) in 2007.

Cost recovery for urban water All the financial costs for water supply are entirely recovered, which is highly unusual for a water utility in Sub-Saharan Africa. Interest-free long-term loans provided by international financial institutions to the Senegalese government are on-lent to the asset holding company and are recovered from users through the bills issued and collected by SDE.

Tariffs and cost recovery for sewerage A sanitation surcharge of US$0.05/m³ is levied by SDE on behalf of ONAS on water customers in all cities with a sewer network. The surcharge represents six percent of the water bill for households using 50 m³ per month of water. Revenues generated by this surcharge are insufficient to finance ONAS operations and maintain sewerage and drainage networks. Achieving financial sustainability of ONAS and finding means to devote resources for on-site sanitation promotion and development remains a major challenge for the sub-sector.

While municipalities are not responsible for sanitary or stormwater drainage, they are nevertheless supposed to transfer a portion of the property tax (amounting to US$0.5 million) to ONAS, through the equipment fund for municipalities, to finance operation and maintenance of drainage facilities. However, at least until 2001, these resources were not made available to ONAS.

Collection efficiency in urban areas Tariff collection by SDE reached a rate of 98 percent, up from less than 80 percent before the project according to one World Bank source.^[8] According to SDE and another World Bank source the tariff collection rate indeed averaged 98% in 2001-2006, but it was only slightly lower at 96% in 1996.^[9][34] According to again another source the collection ratio in 1996 was 91%.^[20] The lease contract was signed in April 1996.

Tariffs and financing policy in rural areas In rural areas beneficiary communities contribute 20% to initial investments and 80% is financed by the government. Operation, maintenance and replacement costs are to be recovered through tariff revenues.

Investments and financing

Investment According to the Senegalese government, financing equivalent to 260 billion FCFA (about US$500 million using the 2008 exchange rate) has been mobilized between 1996 and 2006 through the Projet Sectoriel Eau (PSE) and the Projet Eau à Long Terme (PELT).^[3] According to other reports, US$300 million were invested in Senegal's water partnership.^[5] According to the World Bank, total project cost for Senegal Water Project (including sanitation) was US$290 million for which IDA provided US$100 million. IDA provided another US$125 million equivalent under the follow-up Long Term Water Sector Project.^[8]

The budget of the PEPAM for the period 2005-2015 is 515 billion FCFA (about US$1 billion), including 274 billion FCFA for rural areas and 241 billion FCFA for urban areas.

Financing Most of the investments in the sector are being financed by donors through zero-interest loans from the World Bank's International Development Association and the African Development Bank or grants from other donors, complemented by government counterpart funds. Investments of US$20 million were financed by the private operator over the first ten years of the lease. In 1996, Citibank and the Compagnie Bancaire de l'Afrique Occidentale (CBAO) provided a maximum line of credit of 21.4 million US dollars (11 billion F CFA) over six years to assist the asset-holding company SONES with its cash flow.^[9]

Efficiency

Water losses, mostly from leakages, dropped to less than 20 percent in 2006, from 32 percent in 1996. The decline translates to a savings equal to the water needs of 930,000 people.^[8] Labor productivity stood at 2.3. employees per 1,000 connections in 2014, up from 6.1 in 1996.^[20]