and recent developments the first piped water systems were completed during the colonial period in the 1930s. water-borne sewerage was introduced after 1937. the construction of new facilities increased from 1950 to 1965 under the framework of large national development programs. later, the existing systems were only partly maintained and no new facilities were constructed until 1990. according to a un-water document, by 1990 the urban water infrastructure served less than 10 percent of the population in large towns.: page 78 around the end of the 1980s, international donors began to invest substantial financial resources to rehabilitate and renew the water network in kampala. for example, the world bank contributed us$60 million under the water supply project, which was active from 1990 to 1998 (see below). although the financial support helped to rehabilitate the infrastructure, the commercial performance of nwsc was still unsatisfactory. description of the reform process the nwsc was created as a government-owned parastatal organization in 1972 under the national administration of idi amin dada, serving only entebbe, jinja, and the capital city kampala.: p. 3 its service area then grew gradually to incorporate large and mid-sized towns all over uganda, reaching a total of 23 cities and towns in 2008, and 40 cities and towns in another extension of its service area in february 2014. in 1995 and 2000, nwsc was reorganized under the nwsc statute and nwsc act, giving it substantial operational autonomy and the mandate to operate and provide water and sewerage in areas entrusted to it, on a sound, commercial, and viable basis. internal reforms at nwsc started in 1998, beginning with a "strengths, weaknesses, opportunities, threats" (swot) analysis initiated by a new management team. at that time, the utility benefited from a recently rehabilitated water and sewerage infrastructure, including abundant water production capacity and a high level of metering, a competent senior management team, and a good and enabling water legislative framework providing nwsc with relative autonomy. on the other hand, nwsc was in bad condition with regard to operational and financial aspects. for example, non-revenue water (nrw), water which is produced but not billed for several reasons such as leakage and illegal connections, stood at 60 percent. the utility was heavily overstaffed, and staff costs accounted for 64 percent of the total operating costs.: p. 5 in late 1998, the national government appointed william tsimwa muhairwe as the managing director of nwsc. he had been managing public companies in uganda and elsewhere. under a new board, more emphasis was placed on commercial viability. at the same time, political interference within the utility was reduced. the new management soon drew up several programs to implement the principles, the first of which was the 100-days program, aiming to adjust operational and financial inefficiencies.: pages 3–4 programs to improve financial and operational efficiency of nwsc: page 4 program objective(s) measures time of implementation 100-days program reverse of operational and financial inefficiencies improved revenue collection and cost-cutting measures february 1999 – may 1999 service and revenue enhancement program restoring customer confidence introduction of service centers and help desks, customer surveys august 1999 – august 2000 area and service performance contracts commercial sustainability managers were given more autonomy and liability through performance contracts 2000–2003 stretch-out program improving team work more staff involvement, flatter hierarchical structure 2002–2003 one-minute management program individual performance accountability incentives for achievements of individual goals 2003 internally delegated area management contracts (idamcs) increasing autonomy and liability of area managers internal contracts including explicit targets and incentives since 2003 since 2000, nwsc has worked under performance contracts with the national government, each of which covered three years. the contracts contain specific performance indicators, which the nwsc is expected to achieve. for example, the 2003–2006 contract required nwsc to reduce nrw from 39 percent in 2003 to 36 percent in 2006. simultaneously, inactive connections were required to be reduced from 21 to 13 percent. to encourage management to achieve the targets, an incentive element of 25 percent of the annual basic salary depended on the fulfillment of the contract. each year the nwsc board decides the appropriate bonus rate that the nwsc management receives. results and analysis the improvement of nwsc concerning access and operational performance is indisputable. some of the achievements are: performance indicators for nwsc (1998–2012) 1997-98 1999–2000 2003-04 2006-07 2007-8 2010-11 2011-12 2012-13 operating profit before depreciation (ebdit) (ush billion) 1.5 3.0 11.0 18.0 16.0 30.4 36.1 39.8 non-revenue water 51% 43% 38% 33% 33% 33% 33% 34% collection efficiency 60% 76% 98% 92% 92% 96% 98% 96% connections 51,000 59,000 100,000 181,000 202,000 272,400 296,200 317,300 employees 1784 1454 949 1388 1691 1773 1858 labor productivity(employees/1,000 connections) 35 25 9 8 7 6 6 nwsc has been turned around without a tariff increase, except for inflation adjustments and a 10 percent increase to compensate the utility for a reduction in connection fees. instead of increasing tariffs, the reforms focused on increasing the number of connections, an effective computerized billing system, improving customer relations and communications, and better incentives and training for staff. one factor that partially explains the drastically improved collection rates is a government policy instituted in 1999 of paying the unpaid water bills of public entities. the significant increase in new connections is partially explained by a drastic reduction of connection charges, also in 1999, from ush 400,000/= to 25,000/=. flexibility in technical requirements (such as waiving land title requirements, easing construction standards, and post-processing of new connection forms) was also key to increasing water service coverage in the urban poor communities. klaas schwartz has noted that the success of nwsc since 1998 was facilitated by a high level of support from international donors, international lending agencies, and uganda's national ministries;: page 93 effective leadership from top management; a highly professional staff; and, strong institutional cultures. nwsc received iso 9001:2000 certification for fourteen of its service areas, including kampala, by june 2008. according to its 2006-07 annual report, nwsc provided training to utilities in tanzania, zambi and soon in nigeria. building on its success, nwsc's vision was "to be one of the leading water utilities in the world". towards the end of 2008, nwsc management introduced another management initiative, codenamed the "raving water fans", aimed at improving customer service and, in the long run, willingness to pay and revenues. the initiative is based on the raving fans concept developed by management experts ken blanchard and sheldon bowles that emphasizes "the 3ds": deciding what you want, discovering what the customer wants, and delivering plus one percent of what the customer expects. legal framework the current institutional sector framework is based on several policy reforms in the water sector since the mid-1990s. water supply and sanitation are recognized as key issues under the national peap, prepared first in 1997 and revised in 2001 and 2004. the peap is the key government document for fighting poverty through rapid economic development and social transformation. the 1995 constitution of the republic of uganda instructs the ugandan state to take all practical measures to promote a good water management system at all levels and defines clean and safe water as one of its 29 objectives. the current legislative water sector framework was introduced with the 1995 water statute, which has the following objectives: promotion of rational water use and management promotion of the provision of a clean, safe, and sufficient domestic water supply to all people promotion of the orderly development of water and its use for other purposes, such as irrigation and industrial use, among others, in ways that minimize harmful effects to the environment pollution control and promotion of safe storage, treatment, discharge, and disposal of waste that may cause water pollution or other threats to the environment and human health. in accordance with the national constitution, chapter eleven, the local government act of 1997 provides for the decentralization of services, including the operation and maintenance of water facilities for local governments in liaison with the ministries responsible for the sector. finally, the national water policy (nwp), adopted in 1999, promotes the principles of integrated water resources management, a comprehensive approach to water supply. in addition, the nwp recognizes the economic value of water, promotes the participation of all stakeholders, including women and the poor, in all stages of water supply and sanitation, and confirms the right of all ugandans to safe water. responsibility for water supply and sanitation policy and regulation the lead agency for formulating national water and sanitation policies, coordinating and regulating the sector is the ministry of water and environment (mwe). the directorate of water development (dwd) under the mwe acts as the executive arm and provides support to local governments and other service providers. economic and performance regulation there is no independent economic regulatory body for water supply. tariffs are proposed by nwsc and need to be approved by mwe. nwsc is regulated by contract according to a performance contract with the national government. the performance review committee (prc) under the mwe reviews the performance of nwsc according to the contract. the prc, however, is partly financed by the nwsc, which may hinder the full independence of the committee.: page 22 nwsc regulates its local branch offices through internal contracts that are monitored by its internal monitoring and regulation department. environmental regulation environmental regulation is carried out by the dwd and the national environment management authority. drinking water quality regulation according to klaas schwartz, dwd is expected to monitor the quality of drinking water provided by nwsc. in practice, however, nwsc monitors its drinking water quality internally without any complementary external monitoring. nwsc's internal quality control department examines whether the supplied water complies with the national standards for drinking water, which in turn follow the world health organization guidelines. there are a central laboratory in kampala and satellite laboratories in the other nwsc operation areas. at several sampling points, water is controlled for ph, color, turbidity, residue chlorine, and e. coli. the results are available at the official nwsc website and mostly comply with the national standards. where nwsc does not provide the service, districts are responsible for water quality monitoring. according to the mwe, this is done insufficiently, and data are scarce. a ugandan girl at a well cities and towns in 22 cities and large towns water supply and sewerage - where it exists - is provided by nwsc, a public utility working on a commercial basis. in 2007, it provided services to 1.8 million people out of 2.5 million in kampala, jinja/lugazi, entebbe, tororo, mbale, lira, gulu, masaka, mbarara, kabale, kasese and fort portal, bushenyi/ishaka, soroti arua, masindi, malaba, iganga, hoima, and mubende. the smallest town served, hoima, had a population of only 9,000. the nwsc operates under the mwe. besides its performance contracts with the national government and its internal contracts beginning in 2000, nwsc also had two consecutive service contracts for billing and collection (called "management contracts") with foreign companies in kampala. the first management contract between nwsc and the german company h.p. gauff ingenieure started in july 1998 and ended in june 2001. the second contract with the french company osul (ondeo services uganda limited) ran from february 2002 to february 2004. under both contracts, nwsc's financial and operational indicators continued to improve. the boston institute for developing economies, however, has claimed that the improvements were not due to private sector participation, but to overall reforms of nwsc initiated before the service contracts were signed and continued while they were being implemented. small towns in small towns with a population between 5,000 and 30,000, facilities are owned and managed by local governments, supported by the mwe. many have created water authorities, which contract out water services under 3-year contracts to local private operators since about 2000. at the beginning, private participation in small towns faces major challenges such as inexperienced local governments and private operators, limited public spending, and poor user participation. by 2010, 80 small towns with 35,000 connections were served by private operators. service quality and user satisfaction have improved after the private operators took over the systems.: page 92 but according to the association of private water operators, the contracts are too short to compensate the small, local private operators for their initial efforts in setting up their operations. due to low tariffs and lack of funding for