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IRC debates the pros and cons of a “Sustainability Clause” in donor contracts

By Carmen da Silva Wells, Programme Officer, South Asia & Latin America Team, IRC International Water and Sanitation Centre.

On the 20th of August the IRC International Water and Sanitation Centre organised an in-house debate on the pros and cons of adding a sustainability clause in contracts between donors and implementers in Water Sanitation and Hygiene (WASH) programmes.

The background to this is that IRC had been asked by the Netherlands Directorate-General for International Cooperation (DGIS) to prepare a thought piece on this topic, to help them move forward on the development of a clause for their grants to the WASH sector globally. This thought piece included a ‘straw-man’* sustainability clause, together with an assessment of the likely impacts – positive and negative – of its application.  The idea of a sustainability clause has caused heated debate within IRC and in the broader sector.

During the debate, IRC staff members Catarina Fonseca and Jean de la Harpe took opposing sides of the argument on the utility and ethics of a sustainability clause.

Supporting the idea of a sustainability clause, Catarina argued that despite increasing agreement in the sector that sustainability is important, there is also evidence that we have not been addressing it face on. In fact, we have a growing body of evidence of the limited sustainability of many investments so far, weak monitoring of programme outcomes, and largely absent data on the costs of sustainable service delivery. While governments, donors and civil society agree on the need to improve aid effectiveness and coordination, practical improvements in existing contractual arrangements between donors and implementers remain focused on short duration of contracts.

Catarina pointed out that in most normal financial transactions, funding is given based on agreed service levels and targets. Responsibilities, results, risks, guarantees and warrantees are specified – and expected. So, why is it so strange that donors are demanding evidence of sustained service delivery for the millions of tax money which are transferred to multilaterals and NGOs? If we had a 10-year sustainability clause in WASH contracts between donors and implementers this would make the implementer responsible and accountable to put all the mechanisms in place to ensure that actual service in year 10 meets the initial plans.

In other words, a sustainability clause is a step towards a focus on outcomes and impacts in the long term, it provides an incentive for monitoring, increased aid effectiveness, reduction of non-functionality and better service to customers.

Checking a broken facility in Mozambique. Photo: IRC

Demanding evidence that investments are used for sustainable outcomes is a step towards implementing sustainable service delivery, but, there are many reasons why services break down or fail altogether that are beyond the control of the implementers. Opposing the use of a sustainability clause, Jean de la Harpe pointed out that the clause seems to confuse responsibilities: what authority does the grantee have when it comes to service provision? It does not collect revenue and it is not formally responsible for service provision.

There are many possible unintended consequences of a sustainability clause given the complexity of achieving sustainable service delivery and indeed of the WASH development sector itself.  Sustainability is dependent on many things besides the infrastructure itself: capacities for operations and maintenance, financial and management systems and monitoring all need to be in place. “We know that local governments lack resources. Also governments differ in their ability to continue financing infrastructure post implementation, tax revenues differ widely between countries”.

Sustainability is a complex challenge,  it isn’t something we can guarantee. Even country policies do not talk about “guaranteeing a service”, instead they talk about rolling out levels of service, progressively improving access. It is not up to implementing agencies to put service provision mechanisms in place. Why not focus on plans and resources to support service providers, instead of on a sustainability clause which may undermine governance?

After both Jean and Catarina presented their arguments, the floor was opened for further discussion.

Stef Smits supported one of Jean’s main points: emphasising that we should not undermine country ownership and responsibility for service delivery. The ultimate responsibility for service provision lies with government, where in most cases this is delegated to decentralised governments. These different spheres of mandate and authority need to be recognised. Stef suggested that the sustainability clause could be implemented first in bilateral contracts between donors and national governments.

For sanitation there are additional concerns regarding a sustainability clause. Joep Verhagen pointed out that the demands in a sustainability clause may be above and beyond what has been done so far in the sector. Although we would like to see outcomes like environmental sustainability, it is unrealistic to expect that features such as a toilet pit emptying service (a proposed indicator of the straw man clause) can be achieved everywhere, especially in contexts where governance is weak (post-conflict for example). Also, handwashing by all (another proposed indicator) has yet to become a reality even in developed countries. Ambition is good, but we need flexibility and realism too. There is a risk that organisations will not sign a clause if they feel they cannot commit to it in a given context.

Dick van Ginhoven from DGIS praised IRC for putting this hot topic on the agenda. If sustainability was not a complex issue, then it would also not be so difficult to tackle: “However we look at the situation, the reality is that we need to do better and we need to put sustainability into practice. People’s lives are at stake. Whatever we invest should keep functioning. Development cooperation is under great pressure, we need to take bold steps. And taxpayers are demanding accountability for our investments in development cooperation. In fact, Dutch State Secretary for Foreign Affairs Ben Knapen has agreed to an investment of 100 million euros in West and Central Africa on the condition that there is a sustainability clause”. Dick added in his closing statement: “There is agreement that sustainability is of central concern and that a sustainability clause is a step towards putting our commitment [Dutch Government] into practice”.  Dick underlined that DGIS is fully aware that insisting on sustainability is not a cheap option – however “the argument that this will be more expensive is the wrong argument, we prefer to put more money upfront than to continually invest in rehabilitating failed infrastructure”.

The main challenge is to make sure that accountability is where it should be (service provider) but also that there are enough incentives to ensure implementers will make sure all the mechanisms are in place to provide sustainable service delivery (to create a chain of accountability from funder to service provider). Discussions will surely continue, within IRC and among other sector players. But, complexity in the sector cannot be an excuse for not taking action.

* A “straw-man proposal”, also known as an Aunt Sally, is a brainstormed simple proposal intended to generate discussion of its disadvantages and to provoke the generation of new and better proposals. Often, a straw man document will be prepared by one or two people prior to kicking off a larger project. In this way, the team can jump start their discussions with a document that is likely to contain many, but not all the key aspects to be discussed. (http://en.wikipedia.org/wiki/Straw_man_proposal)

About dietvorst

Information Specialist and Editor of E-Source, IRC International Water and Sanitation Centre, The Hague, The Netherlands

4 comments on “IRC debates the pros and cons of a “Sustainability Clause” in donor contracts

  1. […] colleague Carmen da Silva wrote in her recent blog, even the possibility of a sustainability clause has been stirring things up in the last couple of […]

  2. […] How different is the response of DGIS (the Dutch Directorate-General for International Cooperation) to a policy review of the Dutch contribution to drinking water and sanitation in 5 countries. This report found similar type of data: good progress in infrastructure development, but problems with sustainability of service provision and poor water quality being delivered. Of course, this report was a more comprehensive and analytical report than the one by the Auditor, going into more depth on the underlying causes of poor performance and sustainability. But, DGIS also used it to critically reflect on its approaches. And, in the response (in Dutch) to Dutch parliament, it proposed a healthy mix of incremental and radical changes in its approaches so as to improve sustainability. The boldest one is arguably the sustainability clause, which would commit recipients of Dutch aid to be responsible for 10 year sustainability of service provision, a step that has already sparked lots of debate. […]

  3. […] DGIS seeks to include in its contacts with implementers. The pros and cons of this have been widely debated . A key component of the clauses is to have sustainability checks as a way to verify whether […]

  4. […] to share the results of the sustainability check review, as one of the main instruments of the DGIS sustainability clauses that were heralded a year ago during SWWW 2012 by my friend and colleague – and now the new […]

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