Water Policy Vol 9 No 3 pp 271–284 © IWA Publishing 2007 doi:10.2166/wp.2007.010
Using internal incentive contracts to improve water utility performance: the case of Uganda's NWSC
Silver Mugishaa, Sanford V. Bergb and William T. Muhairwea
aInstitutional Development and Performance Management Expert, National Water and Sewerage Corporation, Plot 23, Jinja Road, PO Box 7053, Kampala, Uganda
bCorresponding author. Public Utility Research Center, University of Florida, Warrington College of Business, 318 Matherly Hall, PO Box 117142, Gainesville, FL .32611-7142, USA Tel: 352-392-0132Fax: 352-392-7796sberg@ufl.edu
ABSTRACT
The achievement of Millennium Development Goals (MDGs) by 2015 requires significant managerial innovation and creativity, especially in low-income countries where utility inefficiencies are still most prevalent. This paper describes approaches that have been used in Uganda's National Water and Sewerage Corporation (NWSC). We outline the potential for internal incentive contracts in delivering efficiency gains under public–public water management settings. No simple recipe for promoting efficiency exists. However, this paper highlights useful ingredients, including proper contract framework design, competition for managerial responsibility, effective business planning, performance monitoring and the use of managerial incentives. We conclude that these factors require careful consideration during the planning and implementation of incentive contracts.
Keywords: Contracts; Incentives; Performance; Uganda; Water utility
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