RESOURCE PRODUCED BY CSIR BUILDING AND CONSTRUCTION TECHNOLOGY & CSIR ROADS AND TRANSPORT TECHNOLOGY
RESOURCE PRODUCED BY CSIR BUILDING AND CONSTRUCTION TECHNOLOGY & CSIR ROADS AND TRANSPORT TECHNOLOGY |
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Improving transport accessibility for people with disabilities A cost-benefit approach to the identification of well-located land for low-income housing developmentWater services: is franchising feasible? Improvement of the aggregate interlock equation used in the cncPave software package Building quality index for houses CSIR's fire investigation team in demand SB'04 Africa - Regional Conference on Building and Construction Sustainable building workshops CSIR's Dr Sharon Biermann nominated for prestigious national award E N Q U I R I E S |
In the past decade, local government, assisted by the Department of Water Affairs and Forestry (DWAF) and others, has been remarkably successful in answering the challenge of services delivery. Large numbers of households are now supplied with water services of a wide variety, thanks to massive investment in infrastructure. However, this very success provides the seedbed for future problems. As the number and complexity of water services systems increase, so the operations and maintenance requirements escalate. An increasing challenge is to ensure that local government water services provider organisations can manage all the systems, new and pre-1994, in a sustainable manner. Conventional wisdom, supported by research, indicates that the capacity of many local governments in South Africa to adequately provide even basic levels of water services to all their citizens on a sustainable basis is in question. The challenge is to explore a range of alternative provider options, and to selectively incubate innovations, including innovative public sector-driven partnerships with the private sector, on an experimental basis. One such option is franchising. Both Rand Water and DWAF have for a number of years considered that the potential for franchising in the water services industry ought to be investigated. For various reasons this has never been done. The twin driving forces of the franchising concept are:
Franchising is a way of accelerating the development of a business, based on tried and tested methodology. The franchise system firstly systematises the business, and then facilitates the setting up of the business, the introduction of a franchisor that will thereafter support and discipline the franchisees, and the identification of potential franchisees. The cardinal elements of the franchise process are:
For-profit franchising of commercial goods and services in South Africa is extensive, generally viable, and growing rapidly. Over 400 franchised systems operate through more than 26 000 franchised outlets, and generate retail sales around R200 billion annually. Significant numbers of jobs have been created. There is much evidence that, everything else being equal, franchised businesses have a far lower failure rate than do independent businesses. Findings of the CSIR study The CSIR study reviewed the water services that have been developed in South Africa (that is, the infrastructure investment that must be operated and maintained), and the current delivery mandates and methods. It found that there is a need to investigate new water services delivery institutional models as alternatives to, or to complement, those currently in use. Franchising, the study found, appears to be suited rather more to the ongoing operation and maintenance of water services systems than it would be to investment in new infrastructure. However, there is little experience of the franchising of water services anywhere in the world, and no experience in South Africa -- although some public-public and public-private partnerships have some of the characteristics of the franchise approach. Characteristics of franchising, the process, success and failure factors, and the extent to which franchising can achieve its delivery objectives without seeking a profit, were all explored, as was the very creditable track record of franchising in the creation of net jobs and in small, medium and micro enterprise (SMME) development. A survey of overseas literature, while admitting that the topic of water services franchising is a very new one, and implementation even at a pilot scale is yet to take place, concluded that franchising shows great promise. This is so especially in respect of water services to towns and multi-village schemes. However, franchising would by no means be free of many of the issues that equally affect other alternatives -- in particular the financial self-sustainability (or not) of the system. A review of local economic development in South Africa that concluded there is an immense need for the creation and nurturing of SMMEs, provides strong additional support for the investigation of franchising as a water services provider model. Resources allocated to a programme for the franchising of water services would be well spent in terms of creating sustainable jobs and enterprises -- not to mention the water services delivery that would ensue. The study found that many useful pointers for the water services franchisee development programme that would be needed, if franchising of water services is to take off, could be found not only in business-format franchising franchisee development programmes, but also in engineering infrastructure contractor development programmes that already have a track record in South Africa. Thus the study found a great need for alternative water services provider systems and that, given the need for local economic development, through water services franchising there is potential to simultaneously:
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E M A I L
CSIR Building and Construction Technology (Boutek), supported by additional funding from the Water Research Commission, has made a first-level attempt to investigate franchising in the water services sector in South Africa. This study concluded that franchising has promise, and recommended that a more detailed study phase be undertaken, possibly followed by a pilot implementation phase.
