Empowering utilities to accelerate universal access: Introducing the Utility of the Future Center of Excellence in the Western Balkans

Note: This article was taken from the World Bank Blogs page, The Water Blog.

Despite international momentum and political will displayed during the recent United Nations (UN) Water Conference, achieving Sustainable Development Goal (SDG) 6 – universal access to safely managed water and sanitation services¹ – remains elusive. In 2020, there were still 3.6 billion people without access to safely managed sanitation and 2.0 billion people without access to safely managed drinking water.² Global forces such as climate change, water scarcity, population growth, the energy crisis and rapid urbanization are exacerbating the challenges faced by water and sanitation service providers. Utilities have a key role to play in increasing access and delivering safely managed water and sanitation services to all citizens, in line with SDG 6.  All too often though, the weak capacity of utilities is one of the hurdles that hinders the establishment of proper, sustainable water and sanitation services planning, financing, and delivery.

In the Western Balkans, while large shares of the urban population across the region are connected to sewer networks, functional wastewater treatment plants are often lacking , and the coverage of safely managed sanitation services in 2020 ranged from 12.1% to 47.7%.³  This means that untreated wastewater is often simply discharged into the environment, leading to environmental pollution, health concerns, and negative impacts on economic development. In addition, 2020 estimates suggest that between 11.1% and 29.4% of the population in the region did not have access to safely managed water supply services.⁴ High levels of non-revenue water (>50%) are widely reported, reflecting inefficient operations at least partially due to inadequate asset and financial management, poor HR practices, and poor overall strategies.  These issues are compounded with low tariffs, which are crippling public utilities and leading to services being neither operationally nor financially sustainable, thereby hindering progress towards universal access.

Countries in the Western Balkan are all at various stages of implementing policy and regulatory frameworks to improve water sector performance. ^5,6,7 Investing in utility strengthening should be a priority to ensure reforms are efficiently operationalized and infrastructure investments do not only temporarily relieve pressures faced by utilities, but also contribute to sustainable progress towards SDG 6.

Since 2019, the World Bank and its partners have been working with utilities throughout the world via the Utility of the Future (UoF) Program, developed with support from the Global Water Security and Sanitation Partnership (GWSP). UoF is a novel approach that integrates learnings from decades of analytical work and technical assistance to water utilities, including the Water Utility Turnaround Framework. Other studies, including a review of successful urban water utility reforms, support the robustness of this approach. The UoF approach aims to provide tailored assistance to utilities and trigger sustainable performance improvements. It uses participatory methods whereby utility teams are engaged and empowered to transform their utility , optimize essential processes, and develop future-thinking capabilities in order to improve service delivery. Key elements of the UoF process include an in-depth analysis of the utility, the development of a 100-day action plan identifying short-term, “quick-win” measures, and the preparation of a five-year strategic plan to improve performance.

The UoF Program is growing, and a total of 85 utilities in 33 countries have already received UoF support to date, with promising results around the world. For example, as part of actions taken during the first 100 days of the UoF process, a partial digitalization of the billing system allowed one utility to shorten the invoice generation time by six days. Another utility developed a sexual harassment prevention policy and conducted training on this matter for all their staff. The UoF Program also supported long-term strategic developments such as the separation of water and sanitation services from a municipality or the merger of several utilities into a new, regional entity.

To further build on this program, the World Bank, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), will be establishing the Utility of the Future Center of Excellence (UoF-CoE) in Tirana, Albania.  The UoF-CoE  will expand upon the current UoF program and is intended to complement existing capacity development efforts in the region, such as the Regional Capacity Development Network (RCDN) and the Danube Learning Partnership (DLeaP). The UoF-CoE will be based on the following four pillars: (1.) an operations center to manage and implement the UoF Global Program and support water utilities and the UoF advisory team in order to provide demand-driven provision of “soft” corporate development and change management support to utilities across the world; (2.) a knowledge and innovation hub pushing the knowledge frontier on utility performance and service innovations, and connecting utilities and water stakeholders at local, regional, and global levels; (3.) a financing facility giving access to performance-based grants for “‘quick-win”’ measures to improve performance and boost sustainability of water and sanitation utilities (in the Western Balkans); and (4.) a project incubator to identify needs and opportunities for further support and to help utilities (in the Western Balkans) in the preparation of strategic infrastructure investments.

While the UoF-CoE’s role as an operations center and knowledge and innovation hub will benefit utilities worldwide, funds will be available to support up to 50 water utilities from the Western Balkan region with implementation of the UoF approach. The program will provide support for the utility in-depth analysis and development of 100-day action plans and five-year strategic plans, using the UoF approach, including the promotion of best practices in terms of green management, energy efficiency, and gender balance and diversity as per the UoF “zoom-in lenses.”. The program will then use a competitive mechanism to grant funding to up to 10 utilities for the implementation of short-term measures and/or project preparation. The selection will be based on the level of commitment demonstrated by the water utilities (such as % completion of 100-day action plan) rather than typical financial performance indicators, as well as considerations of equity, strategic importance, and coherence with other known initiatives.

Strong utilities are the essential drivers of whether sustainable progress towards SDG 6 takes place. As the actor that is at the forefront of water and sanitation services delivery, utilities should take an active role in the conversation around universal access and actively influence other stakeholders, such as policy makers.  As utilities are ultimately responsible for infrastructure operation and maintenance, they have the power to break the build-neglect-rehabilitate cycle and to ensure that new investments are used in the most efficient way possible to connect additional people to safely managed water and sanitation services. The UoF-CoE is expected to provide significant support for utilities to advance the universal access agenda in the Western Balkans and globally.

1 “Safely managed” water supply is accessible on premises, available when needed, and free from contamination. “Safely managed” sanitation is the use of improved facilities that are not shared with other households and where excreta are safely disposed of or removed and treated offsite.
2 Progress on household drinking water, sanitation and hygiene 2000-2020: five years into the SDGs. Geneva: World Health Organization (WHO) and the United Nations Children’s Fund (UNICEF), 2021. Licence: CC BY-NC-SA 3.0 IGO.
3 Data available for Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, and Serbia.
4 Water Security Outlook for Kosovo, June 2018. World Bank.
5 Water Management Strategy of the Republic of Serbia.
6 Macedonia, Draft SDG#6 Strategy, 32nd AGUASAN workshop, 2016.