Building Capacity in 4000+ Urban Local Governments In India: Franchising as a Model for Professionalization of Water Utilities

LPSI News: Posted April 6, 2012

With increasing decentralization of service delivery to local governments a key issue is whether the the 4000+ urban local governments in India have the capacity to take on these new responsibilities? This is not only an issue in India but is a universal issue with decentralized service delivery by local governments with low capacity. How do we build capacity of so many agencies within a reasonable time frame to provide sustainable services? They would need to attract better quality staff, train them, provide them with the tools to do their job, and a governance environment in which they can operate effectively. With limited resources, and many pressing priorities, this may be one challenge too many. Given the potentially large number of urban LGs and the fact that the basic toolkit to build a good service provider is similar, a new model of professionalization is put forth. This model could be adopted to several sectors like transport (bus, metro systems), hospitals, or schools.

The premise is that providers need similar systems and equipment to deliver service. These include an asset database, a commercial billing and collection system, standard operating procedures, standard tools and equipment. The amount and quantity of each will depend on the size of the provider. All could benefit from a standard package of systems, procedures and equipment to deliver service. At the same time all providers need initial training to populate the systems, to implement the procedures, and to use the equipment properly. They also need on-going support to reinforce the initial training and to provide back up to the ULB provider as they institutionalize the learning. In order to operate without undue interference, they need to be set up as institutions that are autonomous and accountable. The presenters suggest a package of professionalization/capacity building to include:

1. Support to establish the appropriate institutional structures
2. Provision of a standard set of systems, procedures and equipment appropriate to the the LG size and characteristics of its WSS
3. Initial training to populate systems, implement standard procedures and utilize equipment
4. On-going support for a period of say 5 years to institutionalize all the above

This bundled package would be provided to groups of urban LGs by a professionalization firm. The groupings would be large enough to achieve economies of scale in the purchase of systems and equipment, and in the provision of the training and on-going support for 5 years. The firm would be selected through a competitive process. The above model would attract local firms - whether from private sector joint ventures or from publicly owned corporations that have the requisite skills. The key advantage of this model is the leveraging approach to building capacity/professionalization. It is simply not possible to professionalize the sector one LG at a time. With this model contracts can be awarded to one firm to build the capacity of a number of LGs at a time using cross learning and competition between the participants to help institutionalize new ways of delivering service. The study to help develop this innovative concept was funded by the AusAID-WB Policy Facility for Decentralization, Local Governance and Service Delivery.

Chair: Ming Zhang, Sector Manager, Urban, South Asia Region, World Bank
Discussants: Luiz Tavares, Lead W&S Specialist, AFTUW
David Michaud, Senior W&S Specialist, LCSUW
Wednesday, April 11, 12:30 - 2:00 PM, MC 10-850.

The presentation is at the Main Complex of the World Bank, 1818 H Street N.W. For a visitor's pass or more information, please contact Tara Sharafudeen at