Putting a Price on Water for All, Namibia

Access to water and sanitation is indeed a human right; however quality water and sanitation service provision should not be assumed a ‘free service’ as a result. Hence it is crucial to understand the costs involved of monopoly water service provision to enable informed decision-making on tariff determination. Namibia, is not only characterised with extreme conditions of water scarcity and skewed income distribution, with a history of free water services, but it also is prone to information asymmetry and lack of transparency (especially financial) challenges in the price-setting process. Hence, the research aim was to adapt a framework for determining price-setting processes and to investigate the potential role of an economic regulator to inform the process and policy accordingly in Namibia. In this regard, the research explores the price-setting processes of independent economic regulators in England and Wales and Zambia (as a guide to understand the dynamics and intricacies of setting and enforcing prices for utilities based on the need for sustainable cost recovery and efficient service provision) to further investigate possible improvements to the Namibian price-setting process. The research objectives were explored through descriptive and exploratory case study approaches, mainly comprising of semi-structured interviews and focus group discussions. The research found that the most appropriate regulatory framework for Namibia is an intermediate framework- a hybrid regulatory body (consisting of a combination between government and independent expert panels). The research also identifies crucial operating principles, regulatory tools (with emphasis on accounting separation within financial models) and consumer involvement as major components for the Namibian price-setting process. In essence, accountability through transparency (effective information sharing and stakeholder involvement) is identified by the study to address the principal-agent challenges faced within Namibia, especially given the extreme conditions.