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Improving Urban Services in Nairobi

A recent OED impact evaluation 1/ finds that five World Bank-supported urban services projects in Nairobi increased the supply of potable water and affordable housing to the poor, improved sanitation and environmental conditions in project sites, and increased access to social services.

The improved and expanded infrastructure brought critical water and sewerage services to rapidly growing business areas and poor neighborhoods in the eastern section of Nairobi, helping in the economic growth of the city. But the cost of water for the poor remained high because of the irregular pricing practices of kiosk operators. And homeownership among transient groups did not materialize as hoped, partly because the project had taken a top-down approach to project design, leading to an inaccurate assessment of the target groups' housing need. Finally, loan recovery for the housing projects was poor, showing once again that public agencies are less adept at collecting loans than private mortgage companies or nongovernmental organizations.

Among the lessons, the OED evaluation points to the importance of interspersing technical assistance projects between investment interventions to ensure that project activities are continually improved based on experience. Proper sequencing proved one of the strengths of the water supply projects, and the lack of technical assistance in the less successful housing projects an important weakness of those operations.

Project goals

Water supply projects

Until the 1970s, Nairobi's principal source of water supply was the Kabete Scheme, which for many years had managed to keep pace with demand. But the city's rapidly growing population and high water losses severely strained the aging system's capacity. Throughout the 1970s and early 1980s water shortages were common.

The First and Second Nairobi Water Supply projects (WS I and WS II), approved in 1970 and 1978 respectively, sought to expand the supply of water (by developing the new Chania Scheme), improve and expand the distribution of treated water, and improve the availability and affordability of water for the poor. An important consideration of WS II was cost recovery through setting progressive tariffs to ensure the financial viability of the Nairobi City Council's Water and Sewerage Department (WSD).

The Nairobi Third Water Supply Engineering Project, approved in 1985, provided strong technical assistance and training, primarily to develop WSD's capacity to prepare the third phase of the water supply investment project and to strengthen the department's operational efficiency and financial management.

The sequencing of the three water operations proved highly beneficial. First, the two investment projects were planned far enough apart to allow the lessons of the first to influence the design of the successor projects. Second, the technical assistance project that followed the two investment operations helped WSD make critical operational improvements. Even more important, the project helped WSD overcome key constraints on its ability to plan and implement the follow-on project.

Urban development projects

The Urban I and II projects (approved in 1975 and 1978 respectively) took an integrated approach to improving living conditions in three eastern sites in Nairobi. The projects sought to increase the supply of affordable housing to the poor, expand the sewerage system to project sites, and improve social services. A major objective was the promotion of homeownership among transient groups to reduce the proliferation of informal settlements, which the government continually destroyed.

The projects followed an incremental self-help model to promote homeownership. The projects sought first to provide enough serviced small lots to meet rapid growth in demand, thus tempering land-price increases. The projects would then make loans available for housing construction and renovation. Finally, with beneficiaries paying utility tariffs and municipal fees and making loan repayments, the city government would have the funds needed to operate and maintain infrastructure.

Urban I was to be the precursor to other sites and services projects in Kenya, serving as a model for government programs to provide urban shelter and infrastructure to low-income groups. The projects were complex, both in scope and design, requiring the involvement of different municipal departments with strong management and planning capacities. But unlike the water operations, the urban projects provided little if any technical assistance to strengthen the relevant city departments, even though the projects included technical assistance components. Institutional weakness thus continued, adversely affecting the proper implementation of project components. Moreover, the two projects closely overlapped, leaving little time for implementation experience to pass from one to the other.

All five projects achieved their physical objectives, albeit with long delays. But only for the water supply projects was outcome rated satisfactory at completion.

In 1994, OED evaluated the medium and long-term impacts of the projects. The five projects were evaluated together because they all focused on improving urban services to the poor, provided technical assistance to weak municipal departments, and were interconnected: water services were essential to the development of the housing schemes. The evaluation drew on a field survey of households, on-site observations of infrastructure facilities, key informant interviews, and a review of relevant documents and records to assess the impacts of the projects at the household, neighborhood, and city levels.

Impact

Water supply and sanitation

Water supply improved, as did the efficiency of the water supply system. The water supply projects have markedly improved the availability of water over the last 10-15 years, enabling supply to keep pace with population growth. From 1976-95, Nairobi's population increased almost threefold. During the same period, gross water availability increased from 165 liters per capita (lpc), to more than 200 lpc, and is expected to hover around 200 lpc to the year 2005 after which another expansion phase will be needed (see figure).

As the availability of water improved, the projects were able to expand the reticulation system into previously unserved and poorly served areas. Extensions under the two projects, including the construction of critical new mains, improved water service to the city center and for the first time expanded the water supply network into the eastern section of the city.

With assistance from the Engineering Project, WSD greatly improved the operation and maintenance of the water supply facilities of Nairobi. The project helped WSD install a metered zoning system to monitor water supply and pressure at delivery points. The system enabled WSD to control leaks and significantly reduce water losses, helping the department to avert critical water shortages during the late 1980s to mid-1990s. WSD also implemented a sound program for increasing metered house connections. Over the 15-year period, the customer-to-connection ratio has improved, indicating that supply expansion has more than kept pace with population growth.

The poor's access to treated water improved, but irregular practices kept costs high. To make water more accessible and affordable to the poor, WSD increased the number of water kiosks in lowincome areas from about 150 in 1978 to nearly 1,500 in 1994 and maintained a low tariff for kiosk operators. The increase in the number of kiosks reduced the distance to water sources, thus the time spent on obtaining water. Women in particular benefited from closer access, since they were the ones largely responsible for fetching water. The beneficiary survey revealed a high level of confidence in the quality of water, and most respondents indicated sufficient supply for basic hygiene, such as cleaning and bathing. But the number of households sharing the services of a single kiosk was still high. A single kiosk sometimes served as many as 50 households.

WSD sought to keep kiosk rates low by providing kiosk operators with water well below cost. And it introduced licensing to regulate operator practices. But licensing proved ineffective as a regulating mechanism; kiosk operators still charged up to six times the lowest rate for house connections. Consequently, WSD has turned to new approaches to lower water prices for the poor. In some neighborhoods residents have formed committees to manage their own kiosks; in others NGOs are becoming involved. WSD is encouraging both trends and is pursuing the possibility of installing house connections for the poor by establishing a funding mechanism for recovering the cost of the connections.

Projects improved sanitation and the environment, but poor maintenance and inadequate garbage collection threaten sustainability of benefits. Urban I completed a major expansion of Nairobi's sewerage system, including expanding coverage into project sites. With the new infrastructure the dumping of liquid waste in open drains has declined considerably, improving both health and environmental conditions in project sites. The water quality of the Nairobi River has also improved since 1987.

The vast majority of survey respondents now use water-borne toilets, a significant improvement in their standard of living from ten years ago when one-third used pit latrines. But access to private toilets has declined, increasing the number of households that must share toilet facilities. Moreover, the dumping of liquid waste in nonproject areas continues, posing serious health hazards that can ripple into the newly improved project areas. Poor maintenance of the sewer system and sanitation facilities poses another serious problem, which, along with woefully inadequate garbage collection, threatens the sustainability of the projects' benefits. The Department of Public Health can only collect about 20 percent of the estimated total amount of waste generated in Nairobi.

Social services

Access to social services improved, but efforts at employment generation failed. The urban projects increased beneficiaries' access to primary schools and health centers, although the impact was not uniform across project areas. All the schools promoted primary education for girls. Moreover, survey respondents indicated a trickle down effect in access to education, with children in nonplanned sites attending schools in a neighboring project site. But the projects' attempts at constructing market stalls to generate employment failed. Project designers had envisaged the construction of the stalls, but not the vendors' need for credit and business counseling. Land and housing markets

The urban projects had some of the demonstration effects sought by their designers. The increased supply of serviced small plots helped temper land-price increases in the project areas, helping to provide greater supply of affordable housing for low-income groups. Although prices initially escalated because of the improved infrastructure, increased supply kept the rate of price changes lower than elsewhere in Nairobi.

Although not their intended goals, the projects also significantly increased the supply of rental units and improved the efficiency of the rental market. Average rent has declined over the last ten years in Nairobi. But the percentage of owner-occupiers has also declined, contrary to the projects' expectations. Over the last ten years, almost the entire demand for housing has been satisfied through rentals, a trend the projects were unable to reverse for two reasons. First, the municipal department was unable to manage the allotment of property and housing appropriately, leading to unauthorized sales and land speculation, as well as homeownership dominated by absentee landlords instead of owner-occupiers. Second, the projects had incorrectly assumed that the majority of transient groups preferred to own their homes, while in reality most wanted to rent, intending to keep their rural residence as their permanent home.

Half of the original allottees were women, who benefited from the first phase of the program. However, selection criteria and the self-help model did not favor poor women, who had neither the required substantial down payment nor the skills to build on their property. As a result, women who were able to keep their plots tended to belong to higher income groups.

Institutional development

Capacity building. All five projects had technical assistance components to strengthen the capacity of the relevant municipal departments to plan, implement, and manage new investment projects. But only the Engineering Project provided a sufficiently strong technical assistance and training program to turn WSD into such an institution. The project helped the department create a more qualified pool of mid-level staff, reducing staff turnover and significantly improving staff efficiency, as demonstrated by the ratio of 8.5 staff to 1,000 connections. Although the operations and management capacity of WSD has improved over the past 10 to 15 years, gains made are likely to be compromised if the inadequate supply and deteriorating condition of the department's vehicles, equipment, and meter repair workshops are not addressed soon.

In contrast to WSD, none of the departments involved in implementing the urban projects received adequate support to improve institutional capacity. Their operations were badly hampered by staff inefficiency and lack of equipment.

Cost recovery. Cost recovery was an important objective of both the water supply and urban development projects, but only WSD managed to achieve financial viability through its costrecovery scheme. WS II helped the water department introduce a progressive block tariff structure that raised tariffs on average every two years between 1982 and 1993, by about 90 to 135 percent during 1987-93. The tariffs enabled WSD to earn an annual rate of return of 8 percent.

Cost recovery in the municipal housing projects has deteriorated steadily since 1980. By mid 1994 cumulative arrears in loan repayments reached 57 percent of the total amount due that year. The arrears were caused largely by the municipal government's deteriorating financial and administrative structure, which compromised its ability to contain delinquencies, increasing perceptions among homeowners that the enforcement terms were lax. Low-income housing projects managed by private mortgage companies and NGOs had a much better cost-recovery record (see box).

Lessons and recommendations

- Municipal services projects in weak institutional environments need strong and well-targeted technical assistance. Ensuring the sustainability of results requires interspersing technical assistance support with investment operations, as was done in the case of the water supply projects and was missing from the housing projects.

- Investment projects need to integrate various service provisions so that the benefits of an improved service (such as drainage) are not negated by the absence of improvements in another service (waste collection). Such coordinated interventions will reinforce the outcome of investments and the sustainability of benefits.

- Housing programs should include market analysis, which in Kenya would have enabled project designers to better balance the demand for owner-occupied and for rental housing. Programs should consider modifying the policy framework and regulations for housing development. And, they should promote cooperation with local NGOs and private mortgage companies experienced in housing the poor to help in loan recovery, enabling the program to maintain benefits and expand services. Beneficiary participation should be central to shelter projects. Participation requires fostering community cohesion, strengthening the community's capacity to focus on neighborhood management, and promoting employment generation. Trends in the availability of water in Nairobi, 1975-2005 Community participation in a small-scale project In Nairobi, the Undugu Society (an NGO) helped implement an urban shelter and services project comparable to Urban I and Urban II. In 1982, Undugu provided building-material loans of KSh 5,000 per unit and technical assistance to the urban poor for the self-help construction of 500 dwellings in Kitui Village. The remarkable performance of this project--cost recovery exceeded the amounts due--was attributed to the community's involvement and "ownership," the adoption of a business approach to shelter (subletting was a means for generating income), and the provision of technical and financial assistance. The conditions for sustainability were realized: a high level of community commitment and involvement and effective cost recovery.

1/ Impact evaluation: "Kenya: Development of Housing, Water Supply, and Sanitation in Nairobi," by Tauno Skytta and Jean-Francois Landeau. Report No. 15586, April 1996. Precis written by Farah Ebrahimi.



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