The report highlights the transition of community-based organizations (CBO) to professional service providers in Indonesia. As significant numbers of Indonesian villages are outside the reach of utility service, the Government of Indonesia has been supporting the construction of village water infrastructure to be managed by users through CBOs since the 1990s. Emphasizing project ownership and democratic involvement, community-based management is thought to allow systems to be better maintained and operated post-project. The report also discusses if CBOs might not transition from the original concept of a post-construction "coping mechanism" into a real engine for accelerating access to water in rural areas through a service-oriented enterprise of the community.
- Each community-based organization (CBO) provides an average of 1,200 people from low-income households with water service; they could be serving up to 800,000 people with piped water, or about 7% of the total population of the five districts in Indonesia. In Blitar and Lamongan, CBOs provide piped water to 3 and 5 times more households than the local water utility.
- Emphasizing local ownership, CBOs allow systems to be better maintained and operated over their lifetime, and where they perform exceptionally, they operate the infrastructure to generate value and expand services: 67% of CBOs had operating ratios lower than 1, and can be as low as 40% in some cases.
- There is significant demand: a 'willingness to-pay investigation' undertaken with 2,100 households showed a 30-300% WTP over the average tariffs currently paid by rural households in these five districts.
- CBOs are by and large "promising but fragile": a few of them have already expanded some components of their systems, but in the absence of a financing facility, they painfully build up funds over time, borrow against the personal credit of one of the leaders, or turn to government or new donor programs.
- Access to financing is not the only constraint; expansion also requires improved commercial practices and most CBOs do not have systems in place to plan and budget on an annual basis.