March 2021

Willingness-to-pay for Water Management in the Kabarole District, Uganda

Introduction

Most rural water systems in Uganda lack sufficient resources to fund operations and maintenance (O&M). For example, in Kabarole district, regular water user payments occur at fewer than 10% of water points, though user contributions following a breakdown are more common. However, collecting fees post-breakdown is inefficient and contributes to long periods of downtime. Field studies in Uganda indicate that rural water supplies are non-functioning 30 to 40% of the time on average, with worse performance in some areas. 

Identifying strategies for improving revenue collection at rural water systems is critical to sustained water service delivery. In fact, the Ministry of Water and Environment’s (MWE) new O&M framework for rural water supply promotes water user payments as the primary funding mechanism to support rural water services. There are two main approaches for structuring water user payments: Pay-as-you-fetch (PAYF) and flat fees. 

PAY-AS-YOU-FETCH (PAYF) 

In PAYF, users make direct cash payments to a caretaker at the water point each time they collect water. If the water source is equipped with a prepaid meter, users purchase credit from a local vendor, which is loaded on a token that is then debited as they collect water. 

PAYF is widely used in piped systems (typically at standpipes and kiosks) and is increasingly being applied to non-piped water systems with varying degrees of success. To date, PAYF has had limited success in rural Uganda. IRC piloted PAYF in Kabarole district, but after two years, only 30% of water sources maintained the payment system. Even at those sources, recent survey data indicate that only 36% of water users actually pay the tariff required by the PAYF system in place. 

FLAT FEES 

With flat fees, water users pay a set amount for a given period (e.g., month or year). The collected money is then used to pay for maintenance when needed. Village Savings and Loans Associations (VLSAs) are promising structures to administer flat-fee payments. VLSAs are informal groups whose primary objective is to allow members to save money and access loans with interest. VSLAs, therefore, typically have robust accountability mechanisms that establish trust among users. VSLAs may thus be more trustworthy to handle water fees than the Water User Committees traditionally responsible for managing water points, as these usually do not have the same accountability mechanisms. In Uganda, several non-governmental organizations, including Water Trust and Water for People, are working with VSLAs to create dedicated savings funds for handpump maintenance. In this approach, a small percentage of members’ payments is ear-marked in a so-called “water fund,” which can only be used for handpump maintenance. 

Water Trust reports encouraging results: in a 2017 pilot in Western Uganda, 20 water points with VSLA-based “water funds” had collected an annual average of approximately 164 USD for O&M. In the same period, 42 water points where fees were managed by Water User Committees had only collected 48 USD on average, i.e., 75% less. As of 2020, Water Trust had trained 192 VSLAs with an average water fund balance of 173 USD. 

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