Irc ucgla presentation 2010


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IRC Southern Africa Regional Programme presentation in the inaugural working session of the UCLGA Water and Sanitation Focal Point Network, August 2010, which was attended by 14. associations from African countries. Contains: Africa - some points, water and sanitation in context, investing in the sector, WASH governance support and IRC programmes.

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  • Electric power is equivalent to economic dev As seen on the map the economy is mainly in euroope and USA Noticible gaps int eh south
  • 3 parts to africa – macr Sout africa and sub saharan africa Income per person per annum
  • NB to remember that 50% of the worlds population are in chine and india and africa – goldman sacks estimate that 70% of the worlds economic growth in the next 40 years will come from so called emerging economies
  • The need Water covers 70% of the earth’s surface so why are one in eight people worldwide unable to access safe drinking water? Only a very small proportion of the water on Earth is drinkable. If a bucket of water represented all the world’s water, only one teaspoon of this would be drinkable. So water is a limited resource – and one that is not shared out evenly or fairly around the world. I n the developing world the average person will use 10 litres of water for all their drinking, washing and cooking needs each day while in the UK we each use an average of 50 litres a day for flushing the loo alone! Overall the average European uses about 200 litres of water a day.
  • - Financing gap is often larger than 50% of needs (eg Egypt, Georgia, Moldova) - Most of this is for O&M and the renewal of existing infrastructure - In developing countries, about 70% of resources needed for existing systems, ie USD 54bn out of 72bn - Hence there is a need to look beyond investment costs for expansion of WSS coverage, only
  • Let’s not forget that increased tariffs will both reduce demand, increase the incentives to reduce leakages and increase financing. Efforts to close the financing gap, may require increasing tariffs and other sources of revenue, but before looking into this, much is possible to do to reduce the costs of water systems should have been done: Many if not most water utilities are in need of improvements of their operational efficiency. Leakage rates of 50% or more are often to be seen and energy efficiency is similarly poor. Hence, significant cost reductions can be achieved by tackling these inefficiencies. There are also opportunities to reduce costs through better planning and low-cost technologies: A different phasing of investment can help to reduce overall costs, eg by investing into efficiency improvements first (leakage control, energy efficiency) to bring down O&M costs (which in turn frees up resources for rehabilitation and expansion). The use of low-cost technologies may often require changes in existing technology and construction standards, which are often hampering the use of cheaper options. In the last instance, governments need to reconsider their objectives set for coverage and service-level targets. Providing water through standpipes rather than in-house connections, treating wastewater with primary rather than tertiary can make a huge difference to investment and O&M costs.
  • If following cost reductions a financing gap still persists, there are only three ultimate sources of revenue that can help to close this gap, the 3Ts: Tariffs and other user charges Tax-based subsidies, from central, regional or local governments Transfers from other countries, such as ODA or private forms of charity The slide shows that OECD and developing countries are choosing very different ways of financing their water sectors, going from almost fully tariff financing (eg France) to almost entirely tax-based financing (eg Egypt or Ireland (not on figure)). ODA can play a major role in some of the poorest countries, eg Mozambique (see figure). At the end of the day, what matters is that there is a predictable and sustainable flow of revenue. However, each of the 3Ts provides a different type of incentive to users, operators and financiers, and this should be taken into account when deciding about the mix of the Ts. If revenue from the 3Ts is sufficient to ensure financial sustainability, this will then allow to access loans and bonds, which are indispensable to cope with the large up-front investment costs that are typical of the water sector. Loans and bonds need to be repaid, however, and therefore mainly serve to bridge the gap, rather than helping to close it.
  • Message for Ministers of Finance: Given constraints in household affordability, many poor countries will need to provide significant support for water and sanitation through public budgets In some cases full cost recovery from tariffs can only be a long term objective (see example of Moldova, mentioned earlier). Example: Countries such as Armenia, Moldova and Georgia need to spend 2-5% of public budget expenditure on WSS to achieve financial sustainability and the MDGs Message for Ministers of Water: However, in order to get more funds from public budgets, the water and sanitation sector needs to be more efficient, reduce corruption, plan better, and establish better linkages to budget processes
  • Irc ucgla presentation 2010

    1. 1. IRC presentation UCLGA Focal Point Network Working Session 15 th – 19 th August 2010 <ul><li>Jean de la Harpe </li></ul>
    2. 2. This presentation <ul><li>Africa – some points </li></ul><ul><li>Water and sanitation in context </li></ul><ul><li>Investing in the sector </li></ul><ul><li>WASH governance support </li></ul><ul><li>IRC programmes </li></ul>
    3. 3. Electric power is equivalent to economic activity The economy is mainly active in Europe and North America Look at the gaps in the South
    4. 4. Africa in an unequal world <ul><li>A peculiarity of the recent economic downturn is that it affected the developed world more than the developing world </li></ul><ul><li>In the 2000s Africa’s economic growth has been maintained (whereas in many mature or developed markets it has declined or even been negative, for example Europe, Japan, US) </li></ul><ul><li>Real GDP in Africa rose by 4.9 percent a year from 2000 through 2008 – more than twice its pace in the 80s and 90s – </li></ul><ul><li>Construction is booming, private investment inflows are surging </li></ul><ul><li>Telecommunications, banking and retail are improving </li></ul>We live in a highly unequal world, where economic activity varies across the regions
    5. 5. <ul><li>Poverty </li></ul><ul><li>Disease </li></ul><ul><li>Infant mortality </li></ul><ul><li>Wars </li></ul><ul><li>Natural disasters </li></ul><ul><li>Poor government policies </li></ul><ul><li>These challenges can stop or even reverse the gains made in any individual country </li></ul><ul><li>BUT in the long term internal and external trends indicate that Africa’s prospects are growing. </li></ul>At the same time 50 plus individual economies are facing very serious challenges:
    6. 6. Africa – income per person per annum Pop/income 150m $2500 50m $3500 600m $600
    7. 7. 50% of the worlds population are in China, India and Africa Goldman Sacks estimate that 70% of the worlds economic growth in the next 40 years will come from so called emerging economies
    8. 8. Size shows proportion of all people living on over US$ 200 ppp a day Few very high earners live in Southern Asia, Northern Africa, Eastern Europe and Central Africa
    9. 9. One in eight people without safe water Water and sanitation – its a global issue Water Cited as the highest priority of the poor Poor Sanitation One of the biggest killers of children <ul><li>Sub-Saharan Africa is most off-track based on current MDG progress: </li></ul><ul><li>Water not until 2035 </li></ul><ul><li>Sanitation not until 2108 </li></ul><ul><li>In Sub-Saharan Africa, only the maternal mortality MDG is more off-track than sanitation </li></ul>
    10. 10. Water and sanitation - context <ul><li>Sanitation and drinking water underpin all aspects of human and economic development, yet some 2.5 billion people lack access to basic sanitation with 1.1 billion practicing open defecation and 884 million lack access to clean water. </li></ul><ul><li>Each day, nearly 6,000 people (mostly children under five) die from preventable diarrheal diseases. </li></ul><ul><li>Investments are especially low in countries where access is the lowest. </li></ul><ul><li>Sanitation is one of the most off-track of all the MDG targets and is particularly badly off-track in Africa </li></ul>
    11. 11. Use of improved sanitation
    12. 12. Use of improved drinking water
    13. 13. The argument for investing in sanitation and drinking water <ul><li>Investing in sustainable sanitation and drinking water improves health, reduces health care costs, boosts productivity and increases the return on investments in education. </li></ul><ul><li>The economic benefits of achieving universal access to sanitation and drinking water are estimated at US $171 billion per year globally </li></ul><ul><li>Meeting the MDGs on water and sanitation in Africa alone would save nearly $15 billion annually (nearly 2 percent of the region’s Gross Domestic Product). </li></ul><ul><li>(OECD 2010) </li></ul>
    14. 14. The total aid for water fell from 8% to 5% of total ODA between 1997 and 2008. During the same period, ODA for health increased from 7% to 12% of total ODA, while education remained at around 7%. (OECD 2010) Percentage aid for water and sanitation is declining
    15. 15. Commitments per capita to sanitation and water
    16. 16. Financing Sanitation and Water Services <ul><li>Demand for financing in the sector is considerable </li></ul><ul><li>Aid and budget allocations in the sector are not well targeted - Only 42% of sector aid goes to low income countries - only 16% is invested in “basic” systems that primarily serve the poor </li></ul><ul><li>US$ 72 billion is needed per year for developing countries to achieve the MDG targets (excluding the BRIC countries – Brazil, Russia, India, China) </li></ul><ul><li>Current spending is short of this level – there is a large financing gap </li></ul><ul><li>(WHO 2010) </li></ul>
    17. 17. EU disbursements per country and access to improved sanitation 2006-2008
    18. 18. EU disbursements per country and access to improved water supply 2006-2008
    19. 19. Consequences of financing gap <ul><li>Insufficient maintenance </li></ul><ul><li>Deteriorating services </li></ul><ul><li>Weak institutions </li></ul><ul><li>Services not being extended to those without access </li></ul><ul><li>Impacts on local government’s ability to deliver sustainable services </li></ul>
    20. 20. Barriers to universal and sustainable sanitation and drinking water for everyone Focus on infrastructure rather than delivering a service Lack of effective plans and strategies Mounting maintenance backlogs Poor decentralisation with insufficient resources Local government advocacy to target these barriers
    21. 21. How do we close the gap? Addressing costs <ul><li>Increase tariffs and other sources of revenue </li></ul><ul><li>Improve efficiency of water and sanitation systems (ie leakage, energy efficiency) </li></ul><ul><li>Reduce costs (where possible) through better planning and low-cost technologies </li></ul><ul><li>In the last instance reconsider objectives for coverage and service levels if they are unrealistic </li></ul>
    22. 22. Closing the Gap - The ultimate sources of revenue <ul><li>There are only three ultimate sources of revenue that can help to close the financing gap, the 3Ts: </li></ul><ul><ul><li>Tariffs </li></ul></ul><ul><ul><li>Taxes, and </li></ul></ul><ul><ul><li>Transfers, ie ODA </li></ul></ul><ul><li>Loans and bonds will need to be paid back and mainly serve to “bridge the gap”, by helping to cope with large up-front investment costs </li></ul>Shares of tariffs, taxes and transfers (ODA) in WSS finance in various countries Source: OECD
    23. 23. Local government and water and sanitation services <ul><li>How can local government advocate to increase investment in the sector ? </li></ul><ul><li>What support does local government need to: </li></ul><ul><ul><li>Scale up services provision </li></ul></ul><ul><ul><li>Improve WASH governance </li></ul></ul><ul><ul><li>Deliver sustainable water and sanitation services </li></ul></ul>
    24. 24. What should we be saying to our Ministers? <ul><li>Ministers of Finance : “Increase investment in the sector” </li></ul><ul><li>Given constraints in household affordability and public goods aspects of water and sanitation services, significant support needs to be provided for water and sanitation through public budgets </li></ul><ul><li>Countries such as Armenia, Moldova and Georgia need to spend 2-5% of public budget expenditure on WSS to achieve financial sustainability and the MDGs </li></ul><ul><ul><li>Investing in water and sanitation makes economic sense ... </li></ul></ul>
    25. 25. Messages to Water Ministers <ul><li>Advocate for increased funds from public budgets </li></ul><ul><li>Support this by making the economic case for water and sanitation to Ministers of Finance </li></ul><ul><li>Build and strengthen the water and sanitation sector – improve planning, provide access to capacity support, develop strong programmes linked to budget processes, strengthen sector collaboration </li></ul><ul><li>Provide institutional support to local government </li></ul><ul><li>Promote and support good governance in the sector </li></ul>
    26. 26. What is good governance? <ul><li>Good governance involves constructive co-operation between the different sectors where the result is: </li></ul><ul><ul><li>efficient use of resources </li></ul></ul><ul><ul><li>responsible use of power, and </li></ul></ul><ul><ul><li>effective and sustainable service provision </li></ul></ul><ul><li>Good governance emerges when stakeholders engage and participate with each other in an inclusive, transparent and accountable manner to accomplish better services free of corruption and abuse, and within the rule of law </li></ul>
    27. 27. Presentation Title Makhaza Toilets: An Affront To Human Dignity and a Threat to Safety & Security Good governance?
    28. 28. More effective water governance <ul><li>Needs to address: </li></ul>Policy and legislative frameworks that protect water resources and ensure water for social and economic development Institutions for water management that facilitate participation of all stakeholders in a transparent, accountable, gender sensitive and equitable manner Decisions making mechanisms and regulation that achieve responsible use of political power, optimal use of resources, sustainable development and ecological sustainability
    29. 29. Getting governance right According to the Water Budget Speech all sorts of arrangements have been made to improve water governance which will allow “communities to participate in their own development”
    30. 30. Good governance from policy to sustainable services It needs to address the entire service delivery ‘life cycle’ Planning Implementation (infrastructure development) Policy Service Provision (sustainable services) The development of good policies require: participation, advocacy, communication, gender equity, transparency, monitoring and feedback, support, accountability, sector knowledge sharing, and so on. The same applies to planning services, deciding tariffs and subsidies, implementing capital projects and ultimately providing the service Financing Good governance
    31. 31. Delivering WASH services Finance Infrastructure Institutional arrangements for service provision Regulation Planning Policies and bylaws (enabling environment) IRC WASH governance support
    32. 32. WASH governance Finance Infrastructure Institutional arrangements for service provision Regulation Planning Policies and bylaws (enabling environment) Capacity development Advocacy and communication Sector knowledge sharing and learning Accountability and transparency Monitoring and evaluation Support to community institutions Gender and equity Cost recovery and innovative finance Participatory and strategic approach to local governance Multiple use services
    33. 33. IRC global programme (back out into the world) Innovation & knowledge development (based on experiences in the regions and through global programmes) Regional and country programmes with partners
    34. 34. How does the water and sanitation sector best serve local government across Africa? <ul><li>The water and sanitation sector tends to be dispersed </li></ul><ul><li>It has been difficult to get networks going </li></ul><ul><li>A major challenge is how to ensure that local government can access and share good lessons learnt, information and knowledge about water and sanitation services </li></ul>
    35. 35. Targeting local government <ul><li>WASH governance needs to be targeted to local government needs, priorities and context </li></ul><ul><li>Challenge is to ensure that water and sanitation knowledge and information is accessible to local government </li></ul>Lessons and best practices from Africa need to be promoted and shared How do we ensure that local government receives the WASH governance support it needs?
    36. 36. What is WASHCost?
    37. 37. Four countries, five years, many partners India (Andhra Pradesh) Centre for Economic and Social Studies / LRMNI Ghana Kwame Nkrumah University of Science and Technology (KNUST) Burkina Faso Centre Régional pour l'Eau Potable et l'Assainissement à faible coût (CREPA) Mozambique National Water Directorate / Rural Water / CoWater
    38. 38. Thank you <ul><li>Jean de la Harpe </li></ul><ul><li>[email_address] </li></ul>