10-05-2014, 11:58 AM
Financing sustainable sanitation projects
Financing sustainable .ppt (Size: 885 KB / Downloads: 16)
Main sanitation financing challenges
Overall, insufficient financing for the sector: under-prioritised, taboo element
Fragmented financing channels
Difficult to charge for an “immaterial” service, with low or unexpressed demand
Lack of clarity on what funds should be used for
Evidence of “wasted” hardware subsidies
Mis-allocation of funds across the value chain: “too much” for wastewater treatment rather than basic sanitation
On-site sanitation:
Households are supposed to be main investors in sanitation but get limited support
Insufficient focus on environmental impacts of poor sanitation and associated economic losses
KfW seminar: take-home messages
October 2009 seminar on Financing Sanitation
Stated objective: formulate recommendations for development banks (KfW, EIB, AFD, JICA were there)
What the banks took away
Consider lower cost technologies
Invest more in regional and nation-wide promotion campaigns
Focus on changing behaviours
Consider the entire sanitation value chain - from a financing point of view, there is a need to unbundle along the value chain
Who benefits
Who should pay
Where are revenue streams and how to finance
Use a broad mix of financing instruments and blend devt bank financing with other types (including grant financing)
Examine in more detail the case for micro-finance
Loans to entrepreneurs (90% SSIPs)
Rely on local commercial banks, increase use of guarantees
Lower cost technology
Using lower cost technologies could be a key way to reduce the funding gap:
Recent AICD estimates: would reduce costs of meeting MDGs in SSA by 30%, halving the funding gap in poorer countries, eliminating it in richer ones (high coverage)
Wide differences in costs depending on standards / local factors (see WSP report on financing hh sanitation): implications for effectiveness of public spending (leverage)
Multiple barriers to reducing costs: rigidities in choice of technologies based on existing standards, type of training received, prestige, political reasons, etc.
Limited use of OBA for sanitation
Using performance-based subsidy schemes (OBA) in sanitation
A number of sanitation programs are performance-based without being “labelled” OBA
TSC campaign in India: subsidies to BPL HH after village becomes ODF
PLM in Mozambique: payments to workshops per slab sold / latrine built
PRODES in Brazil: linking payment to volume of wastewater treated
GPOBA has had limited success with sanitation projects
OBA project in Senegal built on existing subsidy scheme, slow to start
OBA in Morocco: some success – GPOBA involved
Key questions (recent study for GPOBA/WSP)
How could OBA-type subsidies be used for sanitation?
At which step of the value chain can OBA financing be provided and should it be packaged with other services? (e.g. water, solid waste)
What other components (e.g. support services to SSIPs, micro-finance, etc) may be required to improve chances of success of OBA schemes?