29 August 2019

Laws, policies and regulations

laws, policies and regulation
Author/Compiled by
Andrea van der Kerk (IRC)
Reviewed by
Edema Ojomo (UNC)
Jeske Verhoeven (IRC)
Raphael Graser (Antenna Foundation)
Fanny Boulloud (Antenna Foundation)

Executive Summary

Laws & Policies

The regulatory framework of a country influences private sector activities through laws, regulations, standards and tax regimes among others- also for safe water.

This handout describes what aspects of a regulatory framework especially concern safe water businesses and how these aspects can be adapted to be more in favour of market-based safe water approaches. One specific tool described is the “red tape assessment” that helps identifying bottlenecks and administrative burdens for the private sector.

Different case studies in boxes provide insights on how aspects have been tackled in practice.

What aspects of a regulatory framework do influence the development of safe water enterprises and what is the role of the government?

Factsheet Block Body

Different regulatory aspects affect the enabling environment of safe water enterprises and HWTS users. Among them are:

  1. Laws and policies
  2. Standards for quality and performance
  3. Certification
  4. Subsidies and tax advantages
  5. Import regulations and tariffs

These sub-topics of a regulatory framework will subsequently be explained and their impact on safe water enterprises elaborated.

1. Laws and policies

In many countries, no specific legal frameworks for social (safe water) enterprises exist (ARBTER, WELLSTEIN & ATASOY, 2015). In these countries, social enterprises often adopt the legal status of a (non-profit) association or a co-operative. The existence of a specific legal framework is not a sufficient condition for social enterprise development. Whether a social enterprise can operate effectively is for instance highly dependent on the extent to which the legal framework enables the enterprise to attract capital. Also the (lack of) implementation of the laws and regulations influence the businesses environment. (ILO, 2016).

Governments can also implement policies that facilitate sustainability and scale-up of safe water businesses. The presence of policies specifically tailored to household water treatment solutions (HWTS) for instance can help maximise the impact of efforts to promote and implement different HWTS practices. (OJOMO ET AL., 2015). The government can also implement policy measures to support social entrepreneurs or foster a more general culture of social entrepreneurship. (ILO, 2016).

2. Standards for quality and performance

With numerous HWTS products and technologies available, it is important that consistent standards for quality and performance are established. Government standards and regulations, when implemented and enforced, help to market and scale up effective and sustainable HWTS products. Some of the potential benefits include increased trust of consumers and consistent quality of the product. Filter manufacturers in Ghana and Tanzania indicated that standards help ensure that quality products are being produced consistently. (OJOMO ET AL., 2015). On the other hand standards can also increase costs for manufacturers due to increased costs for monitoring and testing (ITC, 2010).

If government standards have not been developed yet, voluntary standards set by manufacturers and implementing organisations can be a useful intermediary solution. At the international level, the WHO has set widely recognised standards for drinking water quality (WHO 2011). These standards are in place to support national water authorities in setting up guidelines, regulations and structures to deliver quality drinking water to its population (WHO, 2011). Since 2014, WHO has been testing HWTS products against WHO health-based performance criteria through the “WHO International ‘Scheme’ to Evaluate Household Water Treatment Technologies” participating in this scheme can gain consumer confidence (see box 1).

For more information about quality control mechanisms and quality management aspects within a company see factsheet on quality control.

Box 1: WHO International Scheme to Evaluate Household Water Treatment Technologies

WHO’s ‘international scheme to evaluate household water treatment technologies’ (the Scheme) offers independent and consistent testing possibilities to evaluate the performance of specific HWTS products. The efficiency of the removal of microbial pathogens is tested by applying the concept of acceptable risk (WHO, 2011) to estimate the disease burden associated with the exposure to pathogens in drinking water (WHO, 2016). Organisations and businesses can get their technology tested by applying to the Scheme. So far two calls were open for application, a third call is foreseen for 2018. Participation costs approximately USD 5,000 plus the costs of the tested product(s).

According to the WHO, the participation in the Scheme permits businesses to achieve (WHO, 2016):

  • International reach: Results of the product testing are used to guide national governments and global procuring agencies in the selection of HWTS products. The list is accessible here.
  • Expedited registration: WHO collaborates with national regulatory authorities to minimise the time to register HWTS products that have been evaluated under the Scheme and found to meet WHO performance criteria on national levels.
  • Consumer confidence: WHO works with national regulatory authorities to communicate results of testing, product labelling and certifications for products evaluated under the Scheme. These steps help to ensure consumers understand the protection provided by HWTS products and to make the most suitable choice for the context in which they are living and in accordance with the market supply.
  • The possibility to apply for calls: International organisations and procuring agencies impose the requirements of having a certified product to apply for tenders. Being tested under the WHO Scheme opens an international market due to a wide recognition and the testing certificate from WHO.

3. Certification

Although standards for water treatment technologies contribute to quality of products, certification informs the public which specific products provide safe water and are of good quality. This can help increase confidence in products which maximises the likelihood of adoption and sustained use (ITC, 2010). In many countries national laboratories exist that are testing and certifying water and nutrition products. These national testing institutions help assure quality and demonstrate that the product being sold has been tested and approved by national authorities. Depending on the type of product that the company sells (e.g. filter, purified water, or chlorine solution), it can apply for specific certifications. However, in some cases there is no certification for a specific (range of) product (box 2).

Box 2 – CASE: TARA’s certification efforts

Since its inception as social enterprise in 1982 in New Delhi, India, TARA (Technology & Action for Rural Advancement) has placed an emphasis on acquiring relevant certifications for drinking water quality and safety. In addition to ensuring regulatory compliance, these certifications increase credibility of Aqua+ with consumers, resellers, government authorities, and NGOs in the field of safe water. TARA has successfully acquired the following certifications for Aqua+:

  • National Accreditation Board for Testing and Calibration Laboratories (NABL) – Achieved
  • National Test House certifying that the product meets the requirements of IS 10500:2012 for drinking water.

A critical certification for the Indian market is from the Bureau of Indian Standards (BIS). TARA first applied for this certification in 2014 but has been unsuccessful because the regulatory body does not issue a certification for low concentration sodium hypochlorite solution. Teaming up with other producers of low-concentration sodium hypochlorite and manufacturers of electro chlorination machines, TARA is pushing for the creation of a new certification category. For this, a representative of the TARA technical team has testified before the relevant section committee. The proposal is under consideration and the TARA team is optimistic about acquiring this certification in 2018.

However, not all certifications are relevant for a given market: the Water Quality Association certification was appearing to be irrelevant for India. Nevertheless has TARA convinced the Ministry of Drinking Water to include the Aqua+ solution in a list of recommended technologies on the Ministry's website.

Source: Interviews with TARA in 2017

4. Subsidies and tax advantages

Governments may also influence market supply and demand indirectly. Such market interventions include subsidies and tax advantages. Both can be aimed at influencing market demand or market supply. These indirect market interventions may apply to product markets, labour markets and credit markets social enterprises are operating in (see table below).

Example of government subsidies for safe water businesses
  Market demand Market supply

Product market

Reduced VAT-rates for products and services of social enterprises in the water sector

Vouchers to make use of services of safe water businesses at a reduced price

Reduced VAT-rates for (raw) materials needed by safe water businesses

Producer subsidies per unit for goods or services of social enterprises

Exemption of corporate taxes for safe water businesses
Labour market

Tax exempts and subsidies for target employment

Reduced income taxes

Government provision or support of health insurance programs

Credit market

Make loans tax-deductible for safe water businesses

Investment incentives, such as partial tax subsidies for investments in safe water businesses

Beneficial tax treatment of gifts towards social enterprises in the safe water sector

Subsidies to banks and micro-finance institutions to provide cheap loans for safe water businesses

For instance in Nepal is the Department of Water Supply and Sewerage (DWSS) considering to reduce or even eliminate importation taxes and VAT (value added tax) for HWTS products in order to accelerate access to safe water for its population. For more information see also factsheet on smart subsidies.

5. Import regulations and tariffs

When products or spare parts are imported, import regulations and high tariffs can seriously affect the supply chain. Inhibitory import regulations can, for instance, lead to import delays and high costs. High tariffs increase the price at which products can be sold to retailers which in turn, increases the price at which consumers pay the product. (OJOMO ET AL, 2015). Reducing these import regulations and tariffs can help to make safe water products more affordable for BoP populations.

Why is the role of governments important to stimulate safe water businesses?

Factsheet Block Body

Laws, policies and regulations do concern different aspects of safe water businesses and HWTS - on one hand do regulations directly affect businesses (establishment, certification, taxes etc.) and on the other hand can also be limiting regulations in place for HWTS or the sales of water as such.

Business level:

Two of the scaling barriers mentioned by KOH ET AL. (2014) in their study on businesses at the bottom of the economic pyramid are inhibitory laws and regulations. Unnecessary or excessively complicated regulations and administrative processes (the so-called ‘red tape’) can lead to high compliance costs for entrepreneurs (ILO, 2016). To improve the enabling environment for safe water businesses, governments can reduce the administrative and regulatory burdens and also develop policies and regulations that encourage safe water businesses.

HWTS level:

Governments can also take a role in evaluating and regulating HWTS technologies to ensure that citizens use safe HWTS options (WHO, 2011). A WHO study (2012) revealed that only 42% of the responding 46 countries regulate HWTS technologies based on performance or ability to remove chemical and microbial contaminants. Still, 65%, of countries certify or recognise internationally certified HWTS technologies. The majority of the responding countries (72%) have national policies in place that address HWTS. However, only 20 of the responding countries have HWTS targets in place and only two countries (Ghana and Tanzania) have a national HWTS strategy. Even when national policies and targets are in place, implementation is limited, especially in terms of monitoring of use and impact. A large majority (76%) of the responding countries identified limited monitoring of HWTS use and impact as a key challenge (WHO, 2012).

Accordingly it is favourable for consumers and social businesses if governments do (re-)consider their regulations align their regulatory schemes towards a broad access to safe water. Subsequently concrete examples and tools are provided that can help governments enable the safe water business environment through regulatory amendments.

For whom is this tool is useful?

Factsheet Block Body
  • Governments
  • Safe water businesses
  • Investors and partners of safe water businesses

How can the laws, policies and regulations be assessed and improved to stimulate safe water businesses?

Factsheet Block Body

Red Tape assessment tool

One interesting transversal tool to identify regulatory issues and adapt it more in favour of safe water businesses is the red tape assessment tool from ILO:

Red Tape is a concept often used to describe “a collection or sequence of forms and procedures required to gain public/official approval for something, especially when oppressively complex and time-consuming. In other words, Red Tape is a short-hand term for unnecessary or excessively complicated regulations and administrative processes that have financial as well as opportunity costs for enterprises when complying with national and local laws and regulations and administrative processes. It must be stressed that not all regulation is Red Tape. Regulation is necessary and useful when it enables enterprise formation, growth and job creation.” (ILO, 2016).

Assess regulations and identify opportunities for improvements. Regulations are needed to enable growth and job creation in the private sector, but the question is: “When is regulation too much? When is regulation constraining rather than enabling? In other words, “When is regulation becoming Red Tape”? Through the Red Tape analysis, it is possible to identify areas where regulatory compliance costs are most troublesome for firms and to review these in order to identify opportunities for streamlining these processes, make them more efficient and less costly both in terms of real costs and opportunity costs for firms (ILO, 2016).

Application. Red Tape is assessed using a mix of secondary and primary data. The most important information is obtained through an enterprise survey using a standard questionnaire to identify red tape issues. The survey helps to quantify the compliance costs that enterprises incur per year. The assessment has been piloted in South-Africa in 2015, surveying over 400 small and medium size enterprises and their perception and impression of the South-African regulatory frame.

Applicability. Assessing and quantifying Red Tape in a rigorous and methodologically sound way takes time. Up to 12 months should be planned for designing the methodological framework, adapting the questionnaire, identifying a representative sample, training of interviewers and implementing the survey. Data analysis and quantification and drafting the report usually require another 2-3 months. Including the validation process, the whole process may take up to 2 years.

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Library References

Sustainability and Scale-up of Household Water Treatment and safe Storage Practices: Enablers and Barriers to effective Implementation

This paper provides insights from the ground on scaling up sales of household water treatment products (HWTS). The data collected is based on interviews carried out in over 25 countries. 47 enabling factors as well as barriers were identified to sustaining and scaling up HWTS. The findings were clustered as: user guidance on HWTS products; resource availability; standards, certification and regulations; integration and collaboration; user preferences; and market strategies.

OJOMO, E. et al. (2015): Sustainability and Scale-up of Household Water Treatment and safe Storage Practices: Enablers and Barriers to effective Implementation. In: International Journal of Hygiene and Environmental Health: Volume 218 , 704–713. URL [Accessed: 23.07.2018] PDF

Status of National Household Water Treatment and Safe Storage Policies in Selected Countries

This report assesses the status of national Household Water Treatment and Safe Storage (HWTS) policies and regulations and progress towards the global policy targets. The report details responses from a survey – amongst others in many Sub-Saharan Africa countries - and categorises countries into three tiers of readiness to scale-up HWTS.

WHO (EDITOR) (2012): Status of National Household Water Treatment and Safe Storage Policies in Selected Countries. Results of global survey and policy readiness for scaling up. Geneva: World Health Organisation (WHO) URL [Accessed: 20.04.2018]

Evaluating Household Water Treatment Options

Household water treatment (HWT) interventions may play an important role in protecting public health where existing water sources, including those delivered via a piped network or other improved sources, are untreated, are not treated properly or become contaminated during distribution or storage. Properly formulated and locally relevant performance specifications are needed to protect users and inform decision-making regarding selection of technologies or approaches. This document provides a basis by which to evaluate the microbiological performance of HWT options.

WHO (2011): Evaluating Household Water Treatment Options. Health-based Targets and Microbiological Performance Specifications. Geneva: World Health Organization (WHO) URL [Accessed: 20.04.2018]

Guidelines for Drinking-water Quality, Fourth Edition

This volume of the Guidelines for Drinking-water Quality explains requirements to ensure drinking-water safety, including minimum procedures and specific guideline values, and how those requirements are intended to be used. The volume also describes the approaches used in deriving the guidelines, including guideline values. It includes fact sheets on significant microbial and chemical hazards.

WHO (EDITOR) (2011): Guidelines for Drinking-water Quality, Fourth Edition. Geneva: World Health Organization (WHO) URL [Accessed: 11.07.2018]

International Scheme to Evaluate Household Water Treatment Technologies

WHO established the international scheme to evaluate HWTS. The Scheme aims to consistently and independently evaluate the performance of HWTS against WHO performance recommendations. The report provides the result of these assessments from a range of HWT technologies including solar, chemical, filtration and ultraviolet (UV). It highlights that of the ten HWT products evaluated, eight were found to meet WHO performance recommendations. The report also recommends specific actions at the national level needed to ensure that health gains from HWT are realized, including strengthening regulation and evaluation of HWTS.

WHO (EDITOR) (2016): International Scheme to Evaluate Household Water Treatment Technologies. Geneva: World Health Organisation URL [Accessed: 20.04.2018]
Further Readings

From Blueprint to Scale: The case for philanthropy in impact investing

This report discusses the newest developments of entrepreneurial pioneers implementing market-based innovations to serve the global poor. These ambitious entrepreneurs are taking great risks for little potential financial reward, but for tremendous potential social value. Such ideas have elicited a rush to the new field of ‘impact investing’. But the field is young and many investors report that they are struggling to find good opportunities in which to invest for impact.

KOH, H. KARAMCHANDANI, A. KATZ, R. (2012): From Blueprint to Scale: The case for philanthropy in impact investing. Arlington, VA: Monitor Group URL [Accessed: 07.03.2018] PDF

Women, Business and the Law 2012: Removing Barriers to Economic Inclusion

For women and men throughout the developing world, the chance to start and run a business or get a good job is the surest hope for a way out of poverty. This publication discusses gender-based discrimination and efforts for economic inclusion for all and its implications for the law.

INTERNATIONAL FINANCE CORPORATION (EDITOR) (2012): Women, Business and the Law 2012: Removing Barriers to Economic Inclusion. Washington: World Bank URL [Accessed: 20.04.2018] PDF

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