Environmental Services Program Spurs Water Innovation for the Urban Poor

Water for the poor
WATER FOR THE POOR: Communal meter in Yong Panah Hijau area, Medan, North Sumatera serving poor communities, giving them access to piped water 24/7 like never before.

More than 100 million people in Indonesia lack access to clean water. In fact, in urban areas, only 40% of citizens receive water from a household tap; the rest collect it from contaminated rivers and lakes, use of which often causes disease, or they buy it from water vendors at inflated prices. These residents are overwhelmingly poor, often living in areas of high unemployment and social unrest. Furthermore, urban women and children expend enormous time and energy gathering clean water from distant sources. But recent innovations in water-for-the-poor programs have water flowing to grateful citizens in crowded urban neighborhoods.

To meet the water needs of the urban poor in Indonesia, USAID's Environmental Services Program (ESP) delivered an innovative approach to increase household water connections. Through the Master Meter program, ESP added water connections to poor households and helped finance the effort through the Micro Credit program.

The town of Belawan in North Sumatra became one of the first successful beneficiaries of the program. Typical of many Indonesian slums, Belawan is home to over 18,000 households on the banks of the polluted and muddy Deli River, and three quarters of its citizens live in poverty. Many of its inhabitants live in non-tenured shacks perched on stilts above the flood-prone, garbage-filled, muddy Deli River. In 2006, ESP piloted a Master Meter program in Belawan to link low-income households to water utilities through a community based organization (CBO) water system. In such arrangements, a local utitlity enters into an agreement with the CBO and pipes water to a single, metered access point. From there, the CBO distributes water to individual households whose members pay a fee for using it. In its role, the CBO, often in partnership with a non-governmental organization, organizes local households, maintains the system, and collects fees.

To the surprise of utility officials, the CBO and its households proved to be responsible and reliable customers. "Late payments hardly ever happen," explained Pak Julian Syah, a regional community manager from the ESP North Sumatra team. "The community would not dare to jeopardize clean piped water access." With the new connections, utilities are expected to increase customers and revenues, while avoiding the risks of non-payment often associated with urban slums. 
Since the first pilot project, CBOs have grown to include 30 organizations that operate 100-200 house connections each. By 2009, the Master Meter program expanded to serve over 7,000 households in Belawan and the surrounding villages near the city of Medan. In addition to providing clean water, the role of CBOs expanded as empowered citizens used them to address other issues such as hygiene, sanitation, and solid waste management.

Observers attribute Master Meter success to the effective collaboration among CBOs, volunteer organizations, and the Environmental Services Program. These organizations worked in complementary roles to operate, finance, and maintain a community-managed water system. In Belawan, the program provided capacity building and training; the volunteer organization took responsibility to maintain the water system; and the CBO spearheaded community participation and design of the network.

To complement Master Meter, ESP's Micro Credit program introduced an innovative approach to finance low income water connections. Since many poor people cannot pay for the household connection fee in one payment, ESP worked with local banks and water utilities s to offer micro loans to customers seeking to set up a household connection. In this arrangement, a utility and the bank sign a Memorandum of Understanding so that the utility guarantees the customer loan that allows the bank to loan customers up to five million rupiah (about $500), for up to two years, to pay water connection fees. By adding new customers and increasing revenues, the program's Micro Credit has grown to include 12 water companies and several local banks.

In reflecting on the factors behind the program's success in delivering water to the poor, Trigeany Linggoatmodjo, a senior environmental program manager for USAID/Indonesia pointed to the participation of government, utilities, and banks. "These organizations provided institutional and financial support and they helped to roll out and expand these innovative models," she said. As for lessons learned, Ms. Linggoatmodjo emphasized the value of the participatory process and stressed the importance of carefully aligning program objectives with those of strategic government plans. "Fortunately, we were able to establish collaborative relationships that created win-win benefits for all partners," she concluded.

USAID contractor DAI implemented the Environmental Services Program from 2004 to 2010. Although the USAID ESP program is now closed, their legacy for innovation and success lives on in a partnership with the Government of Indonesia that continues for the next five years through project Indonesia Urban Water, Sanitation, and Hygiene. In addition, USAID/Indonesia is preparing to give a grant directly to the government via an existing agreement between the Australian Agency for International Development and the Government of Indonesia. This agreement will extend water services to poor urban households by providing incentives to local governments to use their own funds for water sector investment in pursuit of the overall goal of improved water supply governance. With these new programs, USAID/Indonesia continues to assist the Indonesian government in making significant progress toward achieving Indonesia's safe water and sanitation goals.

S. Nelson

Last updated: September 27, 2013

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