Most water and sewerage utilities are faced with the challenges of improving efficiency and will pass on gains to their customers. The challenges are more in low-income countries especially those in Africa. There has been a lot of on-going debate and studies about approaches and options to water utility efficiency improvement in these countries to meet the Millennium Development Goals (MGDs). About ten years ago the emphasis was on private sector participation (PSP). Consequently, most development partners propagated this approach and even went to the extent of conditioning PSP implementation to funding. The option delivered varied degrees of successes contingent on the operating contexts in those countries. Attempts to mitigate the wrong contexts and conditions to suit the PSP have proved to be more expensive than potential benefits from the option itself. As a result, many low-income countries have been compelled to be more innovative and widen the scope of solution search. The debate currently is, therefore, about performance improvement other than PSP options. This paper presents a phased approach to efficiency improvement taken by National Water and Sewerage Corporation (NWSC) of Uganda in the last seven years. We discuss mechanisms that NWSC has used to achieve significant efficiency gains. Managerial incentives and autonomy are at the centre of the successes registered. We also draw conclusions on how private management principles can be introduced into the public sector to improve efficiency.

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