Financing Water Infrastructure

1
Financing Water Infrastructure

• Conclusions from the session

2
Session on financing

• We heard 9 presentations
• African Water Facility Shehu Yahaya
• Water Resources and Macro-economics David Grey
• Africa the Camdessus Panel Bill Cosgrove
• Water credit for the private sector John
  Wasielewski
• Wastewater Financing Cees van der Gnuchte
• Innovative Financing Mechanisms Meike van
  Ginneken
• Water for the Poorest Stephen Turner
• Strengthening the position of local authorities -
  Bernard Charrier
• Water privatization - Adrian Gauci

3
The costs of not investing in water are very large
Correlation between GDP and Rainfall in Zimbabwe
4
Estimates of required vary, but they all
agree that the required amount is very large

• The financing challenge is enormous for all
  water-related sectors
• Water resources management
• Irrigation drainage
• Water and the environment
• Water supply sanitation
• Hydropower

5
But it is not only about getting more

• Existing resources need to be used more
  effectively
• Capacity building
• Improving efficiency
• And to reach the poor (example of WSS)
• Resolve land tenure issues
• Recognize community assets
• Design for cross-subsidies
• Prioritize equity in monitor planning

6
Donor financing is a small of financing but can
play a pivotal role

• The African Water Facility was welcomed as a good
  thing to support countries to improve their WRM
  AMCOW and AfDB were requested to speed up
  preparation
• Providing incremental funds
• A facility of Africa for Africa
• Flexible design short reaction time
• Aimed to local initiatives (communities,
  municipality, basin agencies)
• Donors must work on leveraging local private
  capital (I.e. USAID guarantee program) and
  develop capital markets
• Donors must support local governments
• Donors must become more responsive to local needs
  try to bridge the gaps between good local
  initiatives and donor financing
• Donors must stop imposing privatization, and
  focus on sector-wide reforms, that can include
  customized private sector participation

7
Empowering local governments includes capacity
building and making available

• Decentralization renders government more closely
  accountable to communities
• Central governments must ensure that devolution
  of responsibilities (to basin organizations and
  local governments) goes hand-in-hand with
  devolution of budgets
• International donors and development banks must
  increase support to local governments to build
  capacity and by direct financing to sub-sovereigns

8
Local private capital has to be mobilized, and
thus local capital markets have to be developed

• Jointly, we must market our sector better to
  local private financiers
• Jointly, we must make water a better business
• Jointly we must develop innovative mechanisms,
  i.e. donor guarantees for loans from local banks

9

• Only if sustainable cashflows exists, investments
  for expanding services can be attracted
• Introducing (sustainable, not necessarily full)
  cost recovery is important, but introducing it is
  a hard long-term process
• Various sub-sectors require different approaches
  and pacing

• Governments must increase cashflows
• Raise the priority of water (I.e. in PRSP)
• Increase billing collection
• Set an example by paying their own water bills
• Introduce smart tariff structures including
  targeted (cross)subsidies to ensure affordability
  to all

10

• The MDGs are a global commitment to international
  solidarity
• In reality donor financing to the water sector is
  going down

Donor countries must keep their promise and make
incremental available and channel them to
local initiatives