Performance Improvement Toolkit for Small Water Utilities

In 2005, the Water and Sanitation Program (WSP) completed a pilot project for improvingand benchmarking the performance of small water utilities in the Philippines. These smallutilities, ranging from 1,000-5,000 connections, serve about a third of the total number ofFilipinos who are connected to piped systems. While performance has generally been satisfactory, small utilities typically have modest returns on investment. The slow rate of increase in water supply coverage is a result of the inability of utilities to expand fast enough to meet the growing demand. Financing has been a key factor constraining the performance of small utilities. Access by small water enterprises to financing has both demand- and supply-side dimensions. On the demand side, small utility capacity to approach financial institutions (Fis) with 'bankable' projects is limited - either because of inexperience in developing 'bankable' investment plans or because general management, financial, operational and legal capacity weaknesses negatively affect their credit worthiness. On the supply side, Fis consider the risk-return profile of small water utility business as unattractive and their products are mismatched with the needs of small utilities. The current Small Water Utilities Improvement and Financing (SWIF) Project sets out to support better services through the improved ability of small utilities to access increasingly market-based financing in line with the Government of the Philippines (GoP) Water Sector Financing Strategy. The project provided technical assistance to small utilities in assessing their performance and developing improvement plans based on available business opportunities (through acustomer survey and pricing review) and research and development support to partner Fisto understand the financing needs of small water enterprises towards developing newassessment policies or financing products.