infrastructure deteriorated: handpumps in rural areas broken down, and urban systems provided water without disinfection on an intermittent basis. the few who had access to continuous water supply received it for free and wasted it, with consumption levels of 200 liter per capita per day, higher than in most european cities. there were 35 sewer systems in the country, but only nine had functioning wastewater treatment plants. establishment of commercial utilities and a regulator (1988-2000) the foundation for reforms was initially laid at the local level when the city of lusaka created the country's first commercial utility (cu) in 1989. the utility charged water tariffs and was a legally and financially autonomous public entity to be operated based on commercial principles. a year earlier, a first study laying out options for the future institutional structure of the sector had been undertaken. but the reform process only gathered steam in 1991 when the first democratic multi-party elections were held. the government of frederick chiluba (1991–2002) initiated liberal economic reforms. at this time the current sector structure, consisting of regional commercial utilities and a national regulatory agency, gradually evolved. a process of "tariff rationalization" began and significant tariff increases were implemented between 1992 and 1994, albeit starting from an extremely low level. in 1992 the second commercial utility was established in chipata. in 1994 the new national water policy (see above) was approved by cabinet and in 1997 the water supply and sanitation act was passed. it created the regulatory agency (nwasco) and a devolution trust fund (dtf) as a financing vehicle for low-income, peri-urban areas. in 2000 nwasco became operational. tariffs were once again increased substantially, and six new commercial utilities were created. unlike the first two utilities, the new utilities were regional utilities grouping together the physical assets and personnel of several local authorities, usually in a single province. at that time a few local authorities had begun to make money from selling water, while neglecting the maintenance of the infrastructure. they were initially reluctant to lose this source of income, because in a commercial utility all revenues were to be used to maintain the assets, to improve service quality and extend access. also, the tariff level within a commercial utility would be the same, which meant that in some localities tariffs would have to increase. introduction of water kiosks (2004 onwards) water kiosks in chipata. when levy mwanawasa was elected president in 2002, the sector policies shaped under his predecessor basically remained in place. in 2004 the dtf became operational and two pilot projects in peri-urban areas were initiated in the itimpi area in kitwe and the maiteneke area in chingola with a total of 11 kiosks supplying 16,000 people. both areas already had a piped water infrastructure. but it was so deteriorated that it provided no more water at all or so infrequently, so that the residents had reverted to the use of water from other sources including contaminated rivers. some of those who received piped water got it through illegal connections. those who had a legal the connection and got water did not pay for it. water was resold from unmetered connections to neighbors. the commercial utilities paid to operate the system, but did not get any revenues. they were ready to give up the piped water systems in the peri-urban areas, and the residents had given up the hope that the authorities would provide proper piped services. there were also a few standpipes in the areas that provided water for free, but not on a regular basis. at the water kiosks the utility sold water in bulk to private operators who resold the water in buckets at a small profit. under that system all bills to the utility were paid, while before 75% of bills were not paid. illegal connections disappeared and leakage was reduced, because the length of the pipes was reduced. the pilots were considered successful by the utilities and the residents, and the system was thus scaled up to other areas and cities nationwide. privatization and its aftermath in the copper belt (2001-2008) during indicents of water contamination, people sometimes revert to the use of shallow wells such as this one. in 2001, after the privatization of the state-owned mining company zccm, the responsibility for water supply and sanitation in the mining towns was entrusted to the private french water company saur under a management contract supported by the world bank. however, this remained the only case of private sector participation in the zambian water sector. a world bank-supported study by severn trent conducted in 2002 recommended that a lease contract should be signed for lusaka, but the government did not accept the recommendation. in 2005 the management contract in the copper mining area was terminated on the grounds that the privatized management did not perform better than publicly owned utilities. after a transition period of three years, service provision was entrusted to the three commercial utilities in the area. however, contamination of drinking water in the copper areas makes headlines. a similar contamination incident occurs in chingola in 2006. during a second incident in january 2008, at least 13 people in mufulira in northern zambia were admitted to hospital after drinking water alleged to have been contaminated by the nearby mopani copper mines. residents were afraid to drink tap water and collected water from shallow wells or nearby streams. recent developments (2010 onwards) in 2010 the national water policy was revised, but it maintained the same basic thrust concerning water supply and sanitation. in 2011 parliament passed a new water resources management law. in september 2011 michel stata became president, who continued to pursue the established policies in the water sector. financial aspects and efficiency tariffs and cost recovery tariff structure. urban tariffs for unmetered domestic users are set according to the category of housing (low, medium and high costs) for purposes of cross-subsidization. for metered users an increasing-block tariff is applied. the regulator nwasco is financed through a 1-2% surcharge on water tariffs. tariff increases and approval procedures. tariffs were increased substantially between 1992 and 2006, between twofold and eightfold in real terms. the highest increase (+881% in these 14 years) was for the highest tranche for metered consumption in lusaka, while the lowest increase (+61%) was for unmetered mid-cost housing in the southern province. the average collection efficiency in 2010 was 84%, indicating that 16% of users did not pay their bills. tariff increases have to be approved by nwasco based on tariff adjustment guidelines published, in their second and improved version, in 2005. proposals for tariff increases can be submitted in advance for a period of up to six years. the approval process includes ten steps, including a public hearing with consumer representatives and an analysis of service quality and costs. the regulator can exclude costs from the proposal if it considers them unjustified, but otherwise the regulator mostly has to follow specific calculations that are specified in the guidelines. on the one hand, if the utility has not met previously agreed targets for the share of metered customers, water quality and service continuity the approved tariff will be lower than if the targets are met. on the other hand, if special efforts have been made to improve access, performance or efficiency, higher tariffs will be approved. sanitation tariffs are usually 30 percent of water tariffs. in contrast to the detailed procedures for the approval of water tariffs, sanitation tariffs are set as a share of water tariffs without taking into account the performance of the sanitation services. cost recovery. financial viability in the urban areas has improved with six of the nine licensed commercial utilities operating in zambia reaching operational cost coverage by the end of 2006. in 2010 the average operational cost recovery was 105%, varying from 46% to 130% in mulonga. according to one study, higher levels of cost recovery are impeded by a high level of non-revenue water (44% in 2010) and low collection efficiency due to a large extent to the non-payment of water bills by public institutions. cost recovery is almost nonexistent in rural areas where most communities do not pay anything. affordability. the share of household expenditures for water among the poor varied from 2.5% to 9.9% in 2002–03. more than 60% of poor households paid more than 3% of their expenditures on water. investments and financing actual investment. in 2002 total investments in water and sanitation were estimated at us$33.5 million, including us$33 million by donors and ngos (98%) and us$0.5 million (2%) by the government using its own resources. government capital expenditures had been budgeted at us$6.1 million for 2002, but only 9% of that amount was actually invested. investment needs. the water supply and sanitation development group prepared a medium-term development strategy to implement during 1994–2003. their estimations suggested that the government had to invest between us$407 million (under a low-cost investment strategy) and us$1,553 million (under medium-cost investment strategy) every year during this period in order to rehabilitate the existing system and expand the network to avoid any reduction in access rates, i.e. without increasing access rates. actual investments were only a small fraction (8% of the low-cost scenario) of investment needs. the investments required for rural areas were estimated at us$260 million in the national rural water supply and sanitation programme (2006–2015). financing. as pointed out above, 98% of investments in the sector are financed by donors and ngos. the government has established a devolution trust fund (dtf) to provide financing to increase access in poor urban areas through the use of low-cost technologies. the dtf financed water kiosks that provided access to clean water to 120,000 people at a cost of 643,455 euro until 2006. the dtf assigns its funds based on proposals received from water utilities. efficiency the average level of non-revenue water in the commercial utilities operating in urban areas was estimated at 44% in 2010, varying among utilities between 34% for the northwest and 67% in luapula. staff per 1,000 connections varies between 7 and 17, thus indicating significant overstaffing, since national targets are less than 5 or 9 staff per 1,000 connections depending on the size of the utility. utility performance has constantly increased since nwasco began its benchmarking exercise. external cooperation a large array of external public donors support the water and sanitation sector in zambia. donors coordinate their activities on the basis of a joint assistance strategy covering all sectors and a sector advisory group for the water sector. one donor has the function of speaker of the sector advisory group on a yearly rotating basis. there are also coordination groups for the three sub-sectors urban water supply and sanitation, rural water supply and sanitation as well as water resources management. donors increasingly use basket funding, based on a basket for rural water supply and sanitation and a second basket for urban water supply and sanitation. many ngos, such as care and wateraid, also support the sector. the activities of the main public donors are listed below in alphabetical order. african development bank in the central province the african development bank has been supporting the seven local authorities in institutional reforms and infrastructure rehabilitation under a project approved in 2003. in nkana it supports water supply and sanitation under a project approved in 2008. furthermore, a national rural water supply and sanitation program has been approved in 2006. denmark since 2004 danida supports the mulonga, kafubu and western water and sewerage companies. in 2006 it approved a eur 32.8 million five–year (2006–2010) water sector support program, which includes water supply and sanitation in rural and peri-urban areas, as well as integrated water resources management. denmark will end its support for the zambian water sector in 2013. european union both the european commission, which provides grants, and the european investment bank, which provides loans, are active in the sector. in 2012, a us$75 million loan from the eib to the three commercial utilities in the copperbelt was under appraisal. germany germany supports the water and sanitation sector in zambia through financial cooperation carried out by kfw development bank and german technical cooperation carried out by giz. german aid has been particularly involved in expanding services to the urban poor through water kiosks, supported via the devolution trust fund (dtf).