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Rural Water Supply Network
RWSN Webinars – mini series 2017
November 2017
Webinar 2:
“Grown up” finance for rural water?
Supporting water sanitation
and hygiene services for life
.
“Grown up” finance for
rural water?
Catarina Fonseca
RWSN webinar
November 2017
Outline
.
1. The scale of the challenge
2. Financing options
3. Summing up. So what?
.
1. The scale of the challenge
We know its going to cost a lot, and its not
where you think
Fonseca et al.,
Capital expenditure
Minor maintenance
Major maintenance
Everything else:
- Regulation
- Policy
- Monitoring
- Institutions and
people
- Costs of borrowing
Woreda (district): South Ari
Rural and peri-urban population: 263,262
Number of water schemes: 241
Non-functionality: 31%
Omo Guderso - Rural Water Eng, part of 12 people team.
Salaries covered, 1 motorcycle for monitoring… no
maintenance fund, no allowances to leave the office…
We know these costs have accounting names and
we tend to ignore the most important
Fonseca et al.,
CapEx
OpEx
Capital Maintenance
CapManEx
Direct support
Indirect support
Costs of capital
We know the scale of the challenge (but less
details for sanitation)
• Reaching SDG 6 requires an estimate 114 billion US$/year for
capital investments – three times what is currently spent
• ODA (grants and loans) reached 18 billion US$/year and even lower
for middle income countries (2014)
• Capital maintenance of existing services is about 1.5 times the
amount needed for construction of infrastructure
• Amount needed for strengthening the people and institutions
delivering WASH services => at an absolute minimum of 1 US$ per
person per year for rural WASH
We know that costs for the enabling environment
become increasingly important as coverage
increases
With no change in expenditure: danger zone of
stagnation at 60% to 80% coverage (water)
Danger zone?
Coverage: % of rural population with access water 1990-
2015 (with expenditure in rural water increasing)
https://data.worldbank.org/indicator/SH.STA.ACSN.UR?end=2015&locations=KE-TZ-RW-ZM-UG&start=1990&view=chart
.
2. Financing options
Possible sources of finance for WASH
Transfers (ODA)
Taxes
Tariffs
Financing gap
Transfers (ODA)
Taxes
Tariffs
Financing gap
Tariffs + public finance = not fast enough, not
the amounts required… bring in private finance
https://openknowledge.worldbank.org/handle/10986/27948
BB/BBB AAA
Low risk
Utilities
C
Medium risk
Utilities
Decentralised providers
1.000.000.000
100.000.000
10.000.000
1.000.000
100.000
10.000
1.000
100
10
1
Pro
ject siz
e, U
SD
, lo
g s
ca
le
No credit rating
High risk
Decentralised providers
No formal providers
Micro loans
Project finance
Development Cooperation Funds
(incl. concessional loans)
Bond financing
Public
Finance or
Finance
Gap?
Commercial bank financing
What we don’t know: what financing options are really
available to address the rural water finance gap?
1. How much funds
do we have?
Transfers (ODA)
Taxes
Tariffs
Financing gap
Transfers (ODA)
Taxes
Tariffs
Financing gap
3. What
mechanisms
?
2. How much do
we need?
From 75 respondents WHO GLAAS report…
We still don’t have sector development plans
http://www.who.int/water_sanitation_health/publications/glaas-report-2017/en/
What Finance Ministers really think about the
WASH sector
Clarissa Brocklehurst, UNC Conference, October 2017
Summing up. So what?
Prioritise how to increase domestic resource
mobilization for WASH => some ideas
National level
• Understand budgeting processes and organisations involved,
their interests and constrains => where do they need YOU?
• Ensuring prioritization of WASH in national and local
expenditure plans => develop a detailed advocacy strategy =>
who to influence and how?
• Support development of multi-annual sector plans (which need
to go beyond construction) => Why are they not happening?
• “Experiment” with a combination of different finance
mechanisms (public and private) => Start discussing with private
finance what is possible and what is not
Prioritise how to increase domestic resource
mobilization for WASH => some ideas
National level
• Understand budgeting processes and organisations involved, their interests and constrains => where do they need YOU?
• Ensuring prioritization of WASH in national and local expenditure plans => develop a detailed advocacy strategy => who to influence and how?
• Support development of multi-annual sector plans (which need to go beyond construction) => Why are they not happening?
• “Experiment” with a combination of different finance mechanisms (public and private) => Start discussing with private finance what is possible and what is not
• Support CSOs to hold gov accountable to SDG6 and its financing => There are CSOs specialised in budget tracking and budget accountability, support them so they are aware of the budget issues in the water sector
Prioritise how to increase domestic resource
mobilization for WASH => some ideas
District level
• Support development and implementation of district wide
asset management of rural water services
• Support development of plan and budget for next 5 years
• Support understanding and increasing the tax base at
district level
• “Experiment” with a combination of different finance
mechanisms (public and private) => Start discussing with
private finance what is possible and what is not
Prioritise how to increase domestic resource
mobilization for WASH => some ideas
Service providers
• Support development of incentives for improving service
delivery and efficiency (reduce NRW, tariff collection)
• Support tariff regulation => at least to cover OpEx and
CapManEx
• Support development of shadow credit rating or at least
some sort of benchmarking for rural utilities/service
providers
Key Resources (all hyperlinked)
• WHO/UNICEF Joint Monitoring
Programme, 2017
• UN-Water Global Analysis and Assessment of Sanitation and Drinking-Water (GLAAS), 2017
• The Costs of Meeting the 2030 Sustainable Development Goal Targets on Drinking Water, Sanitation, and Hygiene, World Bank, 2016
• Financing WASH: how to increase funds for the sector while reducing inequities, 2017
• Easing the transition to commercial finance for sustainable water and sanitation, 2017
• Universal water and sanitation: how did the rich countries do it?, 2015
• Roadmap to universal WASH district level, 2017
Visiting address
Bezuidenhoutseweg 2
2594 AV The Hague
The Netherlands Postal address
P.O. Box 82327
2508 EH The Hague
The Netherlands T +31 70 3044000
www.ircwash.org
Supporting water sanitation
and hygiene services for life
Thank you! Any questions please reach me at: [email protected]
Rural Water Supply Network
RWSN Webinars – mini series 2017
November 2017