UN-WATER GLAAS“TRACKFIN INITIATIVE”

IRC 2013 SYMPOSIUM, ADDIS ABABA

Marie-Alix Prat and Sophie Trémolet April 2013

Presentation Overview

Overview of UN-Water GLAAS TrackFin initiative Why track WASH financing? What is TrackFin?

Overview of the proposed methodology What is the approach to building WASH-Accounts? What are the main methodological issues raised?

What can we expect from implementing WASH-Accounts? What can countries learn from WASH-A? What can we learn from the implementation of Health

Accounts? Next steps for TrackFin

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Why track WASH financing?

Benchmark countries and track implementation of commitments e.g. eThekwini declaration: countries committed to spend at least 0.5% GDP

on sanitation but there is no existing method to track this type of commitment

Support policy development and implementation Is current and projected public funding sufficient to achieve objectives? Does funding need to be increased and, if so, by how much? What is the financial burden on households? Are current public policies

effective at leveraging private investment?

Encourage better utilization of existing funds, e.g.: Is financing going to the segments of WASH sector and regions that need it

most? Is sufficient financing allocated to operations and maintenance as opposed

to investment? Is funding to the WASH sector effectively channelled? (especially for donor’s

contribution) How can local governments be supported?

Attract additional financing to the sector vs. other sectors which are better able to track financing (e.g. National Health Accounts in more than 100 countries)

There is also a consensus that this is a difficult and challenging task, especially considering the poor state of current financial

data in the sector

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How is WASH financing tracked now? There is no consolidated methodology to track financing to

WASH Existing studies (WSP work in 2004/2005, AICD, CSOs, WASHCost, PERs

of the World Bank) provide useful data and methodologies, but: • One-off snapshots, no clear prospect of being repeated • Tend to be externally-driven with substantial consultant input • No consistent methodology across countries or institutions

UN Department of Statistics has launched SEEA-W with broad (and ambitious) objectives of tracking all hydrological and financial flows

Contributions of previous GLAAS reports in this area :

GLAAS 2010 report focused on reporting ODA flows• Hardly any mention of tariffs: the “paradox” of WASH financing

GLAAS 2012 report identified a lack of reliable sector financial data• Sought to improve the methodology: focus on the 3Ts • Limited number of countries provided data + data reliability is low • Proposed a methodology to improve financial tracking (Annex B)

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Why should GLAAS pick up the baton?

Policy needs expressed at High-Level Meeting (Washington, April 2012)

Highlighted “substantial financial gap to meet targets” Countries committed to increase funding and, overall to: • Put in place realistic sector financing plans and track their

achievement using standard methodology and formats• Create specific trackable national budget lines for water,

sanitation and hygiene 5 countries have committed to track financing at the meeting

Identifying GLAAS’s mandate and potential role re. financing

GLAAS is a key input into the High-Level Meeting (alongside JMP)

GLAAS review: agreement that GLAAS should maintain a strong focus on investment flows and be embedded in national systems

GLAAS report: an excellent opportunity to develop methodologies to track financing at national level in a comparable and consistent manner through the application of a globally accepted methodology

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Objectives Define and test a globally accepted methodology to track WASH

financing at national level Develop a methodology to build WASH Accounts (on the model

of National Health Accounts), building upon governments’ statistical systems and mainstreams data collection

Encourage countries to adopt this common framework to track their financial data of WASH sector

TrackFin proposes to address four “simple” questions: 1. What is the total expenditure in the sector? 2. How are the funds distributed to the different WASH services and

expenditure types? 3. Who pays for WASH services and much do they pay? 4. Which entities are the main channels of funding in the WASH

sector?

What is the “TrackFin Initiative” ?

Overview of the proposed methodology to track financing to WASH at national level7

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Defining the “boundaries” of the WASH sector The guidance document proposes common classifications to

ensure that the information produced for the GLAAS exercise (and beyond) is consistent, comprehensive and comparable.

Code

Category Proposed definition

S1 Water supply services

This category includes all activities necessary for water distribution : Collection of rain water and water from various sources, from rivers, lakes, wells Purification of water for water supply purposes, desalting of sea or ground water Distribution of water through mains, by trucks or other means.

It also includes the construction activities to build water distribution and water resources management infrastructures and the associated assets: Construction of dams, aqueducts and other water supply conduits, except pipelines Water well drilling services

S2Sanitation services

This category includes : Installation of septic systems Collection of sewage by sewer systems or sewage treatment facilities (Septic tank emptying

and cleaning services) Treatment and disposal of sewage by sewer systems or sewage treatment facilities

S3

Unallocated construction activities (for both water and sanitation services)

This category includes the construction activities for both water and sanitation infrastructures and the associated assets: Construction services of pipelines and long distance transport of water and sewage Construction services of local pipelines Construction services of sewage and water treatment plants

S4Support services

This category includes the public administrative services related to water and sanitation services : Administration of potable water programmes Administration of waste collection and disposal operations Regulation of these sector of activities

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Establishing a common classification of WASH actors and financing flows

WASH-Account financing sources

Proposed definition

Correspondence with OECD Typology of financing sources

Correspondence with SEEA-Water categories of financing sectors

FS1Tariffs for services provided

Payments made by users to service providers for getting access to and for using the service.

TARIFFS

Part of funding via “Corporations”

FS2

Households’ out-of-pocket expenditure for self-supply

Funding provided by households to invest in or provide the service themselves. This can be in form of cash, material or time (sometimes referred to as “sweat equity”).

Households

FS3Domestic public transfers

Public transfers from government agencies (central or local government) to WASH actors. These are often subsidies that come from taxes or other sources of revenues of the government.

TAXES Governments

FS4International public transfers

Funds from public donors and multilateral agencies that come from other countries. These funds can be contributed either in the form of grants, concessionary loans (i.e. through the grant element included in a concessionary loan) or guarantees.

TRANSFERS

Rest of the world

FS5Voluntary transfers

Funds from international and national non-governmental donors including from charitable foundations, Non-Governmental Organizations (NGOs) and civil society organizations. These funds can be contributed either in the form of grants, concessionary loans (i.e. through the grant element included in a concessionary loan, in the form of a subsidised interest rate or a grace period) or guarantees.

Non-for-profit institutions serving

households

FS6Private repayable financing

Refers to sources of finance that come from private sources and ultimately need to be repaid, such as loans, equity investments or other financial instruments such as bonds.

REPAYABLE FINANCE

Part of funding via “Corporations”

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Mapping financial flows for WASH service provision

Source: adapted from Trémolet & Rama (2012)

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Defining methodologies to capture information on national expenditure to WASH

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Defining a common set of tables to present the information

WASH- Accounts tables

Table WA 1 (SxR)- WASH expenditure by main WASH service and regional subdivision

Table WA 2 (SxU)- WASH expenditure by type of WASH service and user

Table WA 3 (SxP)- WASH expenditure by type of WASH service and provider

Table WA 4 (PxFS)- WASH expenditure by type of WASH provider and financing sourceTable WA 5 (SxFS)- WASH expenditure by type of WASH service and financing source

Table WA 6 (SxFA)- WASH expenditure by WASH service and financing agent

Table WA 7 (PxFA)- WASH expenditure by WASH provider and financing agent

Table WA 8 (CxP)- WASH expenditure by type of cost and WASH provider

Table WA 9 (CxS)- WASH expenditure by type of cost and main WASH service

Table WA 10 (ASxP)- Asset stocks by type of WASH provider

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Indicator (I)Total expenditure on the WASH sector at the national levelTotal expenditure on WASH in the country as share of GDPTotal expenditure on WASH per capitaTotal expenditure on WASH as a % of total public spendingTotal expenditure on urban and on rural drinking-water as a % of total WASH expenditureTotal expenditure on urban and on rural sanitation as a % of total WASH expenditureTotal expenditure on urban and on rural hygiene as a % of total WASH expenditureTotal expenditure per type of service user as a % of total WASH expenditureTotal expenditure per type of WASH service as a % of total WASH expenditureTotal expenditure per type of WASH provider as a % of total WASH expenditureTotal expenditure per type of financing source as a % of total WASH expenditureTotal government domestic transfers expenditure and as a % of WASH expenditureTotal international transfers expenditure and as a % of WASH expenditureTotal household expenditure as a % of WASH expenditureTotal expenditure channelled through regional and local authorities as a % of WASH public expenditureRecurrent and capital expenditures as a % of total WASH expenditure Total CAPEX expenditure on water supply as a % of total water expenditureTotal OPEX expenditure on water supply as a % of total water expenditureTotal CAPEX expenditure on sanitation as a % of total sanitation expenditureTotal OPEX expenditure on sanitation as a % of total sanitation expenditureTotal WASH asset stock per capita

Defining a common set of indicators to present the information

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What can we expect from implementing WASH-Accounts?

WASH-A will help address policy questions so as to provide the basis for better planning, budgeting, monitoring and coordination of financing to the sector

The expected uses of WASH-A are based on the experience of Health Accounts (HA) in the health sector : HA have generated useful evidence for country-level

policymaking as well as for cross-country comparisons HA have been increasingly institutionalised in developing

countries and used by policymakers to reform health systems and allocate financing more efficiently.

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1. What is the total expenditure on WASH ?

Related policy questions : Is current funding sufficient? What is the trend in funding? Is it increasing or decreasing? How does the level of funding compare to neighbouring

countries? How does the level of funding compare with other social

sectors (health, education)? Input in policy development :

Monitor WASH expenditure trends over time Benchmark funding to the WASH sector, against other

countries or other sectors (health, education) Raise awareness on the need to attract more financing to the

WASH sector so as to meet agreed physical targets and objectives

Compare financial to outputs and outcomes in the WASH sector to estimate the efficiency of financing

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2. How is funding distributed?

Related policy questions : Is funding going to regions/areas that need it most? (rural vs

urban) Is spending allocated to WASH subsectors and services that need it

most? (water vs sanitation) Is sufficient spending allocated to operations and maintenance as

opposed to investment?

Input in policy development : Identify inequities in the distribution of spending across regions

and population groups Allocate funds to sub-sectors, services, providers and programmes Plan national WASH policies and strategies Monitor policies’ outcomes and effectiveness.

Evidence from Health Accounts: In Mexico, HA enable to compare per capita health expenditure

between state. They are used to identify funding needs and allocate budget to the neediest states allocation.

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3. Who pays for WASH services?

Related policy questions : By whom is each type of service financed? What is the share of public

vs. private expenditure? What is the financial burden on households? Are policies and utilisation

of public funds effective at leveraging private investment, including from households?

What is the share of donor’s contribution? How much is donor spending out of the total government’s budget?

Are government and donors’ commitments on WASH financing respected?

Input in policy development : Define financing strategies; Monitor trends and outcomes of financing strategies over time; Coordinate donor aid and international transfers; Track commitments and targets expressed in financial terms.

Evidence from Health Accounts: In Rwanda, sub-accounts for HIV /AIDS revealed that households were

carrying 93.5% of the expenditures for prevention and treatment of this disease. These findings were used by the Ministry of Health to design targeted interventions to improve HIV/AIDS prevention financing

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4. How is funding channelled?

Related policy questions : E.g. What % of WASH public expenditure is channelled via local

governments?

Input in policy development : Define and monitor financing strategies Evaluate the performance of decentralized financing policies Identify ways to support local governments that channel such

budgets

Evidence from Health Accounts: In the Philippines, HA have been used to evaluate the impact of

the government’s decentralization reform in 1993. They showed that spending on public health care (that benefit to the community at large) actually increased between 1991 and 1997, largely thanks to increased funding from local governments, which allocated more than half of their health resources to public health care .

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Next steps

Test the TrackFin draft Guidance Document in 3-4 countries : Morocco, Brazil, Ghana and Vietnam have expressed

interest Inviting interest from other countries to join the initiative

Results of these exercises will be presented in an annex of GLAAS 2014 on the TrackFin process and findings in test countries

Learn from this testing for development of a revised methodology for GLAAS 2016 and development of WASH Accounts in other countries

20Thank you for your attention!

Sophie@tremolet.com Marie-alix@tremolet.com

gordonb@who.int allelyd@who.int