1. Task Force on Alignment to the New Constitution, Ministry of Water and Irrigation Maji House, Ngong Road P. O. Box 49720-00100 Nairobi, Kenya Future Outlook of the water Sector Aligning the Water Sector Policy, Legal and Institutional Framework to the 2010 Constitution: Presented at the WASPA Conference 8 th September 2011 Republic of Kenya Ministry of Water and Irrigation

2. 2 Background The current Outlook 2

3. 3 Objective and Tasks Objective: To make proposals on the changes necessary to align the policy, legal and institutional framework of the water sector to the 2010 Constitution Tasks: 1.Review gains/successes of the reform so far 2.Note existing and emerging challenges 3.Examine the provisions of the 2010 Constitution on water and sanitation 4.Propose appropriate policy, legal and institutional changes

4. 4 Methodology The Task Force has adopted the following methodology: 1.Carry out a desk study to identify achievements of the reform since the Water Act 2002 and the outstanding and/or emerging challenges 2.Examine the relevant provisions of the 2010 Constitution 3.Conduct studies on a selected topics considered key: right to water; provision of water in rural areas; institutional arrangements; and financing mechanisms 4.Formulate proposals which were subjected to stakeholder consultations 5.Carry out revisions to the Water Act, 2002 and related water sector legislation.

5. 5 Reform achievements i.In line with the Water Act 2002, water resources management separated from water services provision. ii.Provision of water services has been ring fenced and is undertaken through autonomous and commercial entities. iii.Functions have been decentralized and devolved to regions and catchment areas iv.Independent water sector regulators have been established. v.Stakeholder participation has been enhanced through WRUAS. vi.A dedicated pro-poor financing mechanism has been established vii.Arising from these reforms the sector has been able to attract more resources.

6. 6 Challenges i.Transfer of functions to newly established institutions yet to be completed. ii.Viability of many water service providers remains questionable. iii.Perception of an overload of institutions which appear to duplicate each other’s mandates (e.g. WSBs and WSPs; WRMA and NEMA over catchment management etc) iv.Lack of clarity in the policy institutional arrangements for and inter-relations with sector arrangements for water storage, irrigation and land rehabilitation. v.Lack of an overall financing mechanism for the water sector and for water resources management specifically. vi.Poor governance practices generally in WSPs. vii.Limited appreciation of the role of independent regulation in the sector.

7. 7 The 2010 Constitution: Key provisions 1.Devolved government: Constitution creates two levels of government - a national government and county governments - and assigns them functions (Sch. 4) 2.Cooperation: Article 189(2) states that Governments at each level, and different governments at the county level, shall co-operate in the performance of functions and exercise of powers and, for that purpose, may set up joint committees and joint authorities. 4. Water resources: Water is defined as part of land. In Art. 260 “Land” is defined to include “any body of water.” In Art 62 “Public land” is defined to include all rivers, lakes and other water bodies 5.Water resources management: Art. 67 establishes the National Land Commission established to manage, inter alia public land. 6.Regulation of land (defined to including water resources) is dealt with in Article 66(1): “the State may regulate the use of any land, or any interest in or right over any land ….” 7.The use of water resources is also made a national function (Sch. 4)

8. 8 The 2010 Constitution: Key provisions 7. Water services: Access to water is made a right: Under Art. 43(1) Every person has the right …(b) to accessible and adequate housing, and to reasonable standards of sanitation; & (d) to clean and safe water in adequate quantities..” 8. Regulation of water services: This is not explicitly provided for but can be seen as a necessary part of consumer protection, a national government function (Sch. 4) 9. Revenue allocation: National Government 85%, counties -15% (minimum) (Art. 203). An Equalization Fund equivalent to 0.5% of national revenue is also established to provide basic services including water (Art. 204). 10. Infrastructure development – a shared function: National government may undertake “public investment” and “hydraulic engineering” while counties may undertake ‘county public works.” (Sch. 4) 11. Dedicated funds: National government may by law set up dedicated funds outside of the Consolidated fund – e.g. a water sector fund(s) (Art. 206)

9. 9 Proposed institutional changes LevelCurrent status WA 2002Proposed New MandatesPotential Benefits and RisksRef. NC Policy MWI in charge of policy formulation, resource mobilization and sector coordination Policy formulation, resource mobilization and sector coordination either as standalone ministry or department in case of merger with other ministry Establish County Water Advisory Office (CWAO) to advice on policy and coordination of water affairs at county level BENEFITS: Lead agency on water affairs retained promotes uniformity (policy, M&E, annual reporting etc). CWAO limited to advisory role in line with the Constitution RISKS: Dominance of lead agency Cabinet, Art. 152 Support for county govts, Art. 190; The 6 th Schedule, Article 262, section 15 The 4 th Schedule Part 1, 32 Water Resour- ces Core functions: water allocation; planning and enhancement of water availability; regulation and protection of water resources; and information on water resources Separate regulation from water resources management but continue catchment based approach to regulation and management of water resources. Transform national WRMA into a Water Resources Regulator (WRR) but retain catchment based approach to regulation. Assign water resources management (e.g. catchment management) to National Land Commission and counties. BENEFITS: Separates regulation (WRR) from implementation (management); Enhanced role for CAAC through input by County Govts and other stakeholders; Staff issues addressed; NLC neglects water resources mandate & counties lack capacity Art. 186 (functions and powers of NG & CGs); Art. 189 cooperation NG & CGs); Art. 191 (Conflict of laws); The 4 th Schedule Part 1 – 2, 22, 24

10. 10 LevelCurrent status WA 2002 Proposed New MandatesPotential Benefits and Risks Ref. NC Water Storage & Irrigation WA2002 gives it responsibility to NWCPC for state schemes and it is currently involved in developing multi- purpose dams, dykes, ground water recharge, boreholes and bulk water supply facilities i.Establish a National Water Storage Authority (NWSA) with mandate to for water storage through large and medium multi purpose dams ii.Subject NWSA to regulation by Water Resources Regulator (WRR) iii.Establish irrigation agency to take over mandate of facilitating irrigation and land reclamation BENEFITS: Clearly spelt out mandate avoiding duplication; Avoids staff lay-offs; Regulation by WRR on dam design, safety standards RISKS: Proposed NWSA takes over staff from NWCPC which may suffer from legacy issues. Implementatio n of rights and fundamental freedoms, Art. 21, sub section 2 The 4 th Schedule Part 1 – 22, 24 etc Water services Currently provided by Water services boards (WSBs) - regional bodies responsible for planning, investments, services provision; Water services provided by local authority WSPs agents of WSBs 1.Transfer water services functions to county owned WSPs. 2. Infrastructure development: (a) where undertaken by by counties then assets owned by county WSPs (b) where undertaken by more than one county, as in cross county pipelines, assets vest in a joint authority set up by the counties concerned; (c) where undertaken by the national government, as a public investment, assets vested in a regional state corporation established by national government. BENEFITS: 1. Flexible arrangement caters for different circumstances. 2. WSB staff moves to successor bodies; 3. Ring fenced & clustered WSPS ensures commercial viability RISKS: Destabilizing effect on recently established institutions; Lack of clarity on where to place reserve capacity for intervention Articles 20 and 21, The 4 th Schedule Part 1 – 33 Proposed institutional changes

11. 11 LevelCurrent status WA 2002Proposed New MandatesPotential Benefits and RisksRef. NC Water and sanitation in rural & other unviable areas Low coverage and non sustainability of services Provision by non- commercialised entities (community run) with limited capacity i.Place mandate of rural (unviable) WSPs water at County Government level with support from Ministry through the County Water Advisory Office (CWAO) ii. Establish County Water and Sanitation Forum (CWSF) as a think tank for negotiation and dialogue on matters of rural (unviable) water and sanitation services BENEFITS: Flexible approach allows adoption of diverse local solutions; Enhance role of County Govts and stakeholders to plan for investments; Professional backstopping introduced; RISKS: Neglect by county govts more concerned about visible projects The 4 th schedule Part 2, 11 Articles 21, 27, 43 etc Regulat- ion WASREB develops and enforces rules designed to regulate the provision of water and sewerage services while WRMA regulates resources Retain water services regulation at national level including monitoring assets development, equitable investments across counties and governance standards for WSPs. Query whether regulation of services should be combined with regulation of resources. BENEFITS: Enhanced regulation (licence/contract,) performance monitoring and audits including public reporting ensures delivery RISK: Limited acceptance about autonomous regulation limits effectiveness Article 191; Article 21(2) Proposed institutional changes

12. 12 Level Current status WA 2002 Proposed New Mandates Potential Benefits and Risks Ref. NC 9. Financing Mechanism MWI finances major investments while the WSTF provides the pro poor funding 1. All proposed institutions to be self sustaining on recurrent expenses. 2. On capital investments : i. National government to finance major investments (e.g. cross county pipelines) as national investments; ii. National government to on-lend to county WSPs for capital investments subject to on-lending agreements iii. Counties to invest and lease to WSPs iv. Continue pro poor financing through a fund such as WSTF linked to the Equalization Fund BENEFITS: 1.Flexible financing arrangements able to mobilise resources from several sources. 2.Viable entities required to back through on- lending arrangements RISKS: No clear window for financing water resources Funding through Exchequer might not be attractive to development partners. Article 20, Article 201, 202, 203, 204 etc The 4 th Schedule Part 1, 33 Proposed changes

13. 13 Future Outlook National level Regional level Local level WAB Dispute Resolution WASREB WSPCs Consumers, Users Water Resources User Associations WRUAs 6 CAACs WRR NWSA WSPs (Urban) Planning & development Regulation Policy, sector coordination & Financing Service Provision; Investment Planning Consumers; Users WSTF Financing NIB Irrigation services KEWI Training & Research WRR = Water Resources Regulator; sub sector regulator to licence and regulate NWSA NWSA = proposed National Water Storage Authority responsible for planning, supervision of construction, O&M of dams, flood control and ground water recharge infrastructure CAACs = CAACS responsible to advisory input in a catchment basin; WSDB = proposed Water Services Development Board to be the asset holder for cross county schemes COWSOs = Community owned water supply organizations WSPS: asset owners and service providers at county level MWI = Regulation/Licence CAACs COWSOs (Rural)

14. 14 Sept ’10 – Jan ‘11 Work plan CONSULTATIONS Internal Stakeholders WSIs, WSPs etc May – July ‘11July – October 2011 CONSULTATIONS External stakeholders Institutions; Public; Development Partners etc LEGAL DRAFTING, QUALITY ASSURANCE BILL TASK FORCE MEETINGS & STUDIES 1.Concept paper 2.Right to WSS 3.Rural WSS 4.Institutional framework 5.Financing Mechanism 6.Quality Assurance (ongoing) 7.Amendment proposals NATIONAL CONSULTATIVE FORUM INITIAL IDEAS ON PROPOSED AMENDMENTS REPORT OF PROPOSALS TO ALIGN THE WA ’02 TO CoK 2010 BILL, 1 st DRAFT Harmonization with other laws. Input of Kenya Law Reform, AG’s Office, CIC, other sectors BILL SUBMITTED TO CIC Input from stakeholders: DPs, Civil Society, etc

15. 15 The End

16. 16 Back-up: Extract from Interim Report on Devolved Government by the Task Force on Devolved Government (TFDG), April 2011 Page 55: Effective local economic development requires planning and management of a number of development activities across sectors and counties. The importance of this factor came out during public hearing with many Counties beginning to close up on their resources, or contending that fees have to be charged for use of resources originating from their Counties. One example of such a resource is water serving major cities with sources outside respective cities, and by extension Counties. Page 56: Effective cross county planning and service delivery requires cooperation and consultation mechanism as provided for in Article 6(2) of the Constitution. This requires a national legislation and policy that will ensure that effective participation and management of cross cutting resources such as water, roads and electricity are planned in an integrated manner. Section 189 (2) provides the legal framework for the cooperation across Counties noting that `different governments at the County level, shall co-operate in the performance of functions and exercise of powers and, for that purpose, may set up joint committees and authorities’. Legal basis for cross county planning services are implied in a number of Constitutional provisions. Article 66 (1) & (2), 69 (a) & (b) etc Page 57 & 58: Water is a good example of a service which is often provided under the cross county concept. Currently, the Water Act provides a framework for the management and provision of the water services. Under the Act the Water Boards manage the water services through policies and regulation, while actual delivery to consumers is done by the water companies owned by LAs as provided by the law. The same framework can be used where two counties or more come together to provide a service through a common board or company. In such cases a cross county company can provide a common service. Alternatively, a national legislation can provide a framework for a board to provide policy framework and regulation. The membership of such boards should include representative of the counties and national government. Apart from water other cross county sector and services include: transport, tourism, electricity, markets, housing, and energy. As highlighted in the case of water, planning for transport, housing, and energy is better done by specialized boards for and on behalf of the affected counties. This situation becomes more necessary when specific service is being consumed across counties or cities. Section 189 (1) notes that cross county cooperation ensures and enhances articulation and implementation of national government policy. The second provision (2) provides for cooperation for effective service delivery. The provision states that governments at county level are supposed to cooperate and create joint authorities and committees with the aim of performance of certain functions. The joint performance of functions has cost benefit effects, including economies of scale. One of the principle considerations for intergovernmental relations is economies of scale that accrue when providing trunk/bulk infrastructural services. This affects provision of water, roads, bridges, power among others. This implies that the production, provision and transmission of some services would transcend county boundaries and have to be negotiated appropriately with the objective of enhancing capacity and providing services efficiently and cost effectively. Citizens across counties require services as a basic right as contained in the Bill of Rights. However, some of such services may not be available within their counties. To provide such services, it is necessary that resource mobilization is done collectively in order to efficiently produce and deliver the services. In line with the discussion in this section, there is need for policy direction on how services which cut across Counties will be provided and managed. While this option could be left to the discretion of the County governments, it will be useful for national government to provide guiding principles to assist counties in making decisions. This should also include providing an appropriate framework for preparation of and implementation of integrated national, regional and local area land use plans that meets needs of stakeholders across counties. Further, there is need for facilitation of appropriate institutional and technical capacity building initiatives for accelerating plan implementation at all levels.