WSP Africa Regional Thematic Work on WSS in PRSPs and Sector Finance in sub-Saharan Africa

1. WSP Africa Regional Thematic Work on WSS in PRSPs and Sector Finance in sub-Saharan Africa Meera Mehta Kampala, Uganda, February 2004

2. Water and Sanitation Program – Africa“An international partnership for improving sector policies, practices and capacities to serve poor people” • Nine focus countries: • Ethiopia, Kenya, Mozambique and Uganda (East and Southern Africa) • Benin, Burkina Faso, Mauritania and Senegal (West Africa) • Yemen • Five regional thematic support groups: • FINANCE and PRSPs, Reform and communications, Rural, Sanitation and Urban poor

3. Regional Theme – PRSP and Sector Finance • Addressing the issues of WSS in poverty reduction strategies and sector financing for improved water and sanitation services • Two main activities: • Incorporating Water Supply and Sanitation into PRSPs in Africa • Assessing Sector Finance – Water Supply and Sanitation Resource Flows

4. Steps in the Africa WSS/PRSP Analysis… • Desk review of the emerging experience in 10 countries (Jan 2002) • WSP-ODI-WaterAid learning partnership – ongoing • Stakeholder workshop, 100 participants (June 2002) • Benchmarking review of 12 countries (Oct 2003 – presented today!) • Benchmarking review with participatory stakeholder engagement - planned 

5. Benchmarking Review Results in 12 African countries Countries: Benin, Burkina, Ethiopia, Kenya, Malawi, Mauritania, Mozambique, Rwanda, Senegal, Tanzania, Uganda, Zambia Five Criteria for Incorporation of WSS into PRSPs: • Was WSS adequately considered in poverty diagnosis? • Are WSS sector reforms recognized in PRSP? • Does PRSP take account of sector financing strategies? • Monitoring and evaluation process in place for WSS? • Consultation process undertaken (not included in study because of lack of information in documentation)?

9. Water and Sanitation in PRSPsKey Findings • What is the degree of WSS coverage in SSA? • Low incorporation • Considerable variation • Improvement from interim PRSP to full PRSP • Two countries – Uganda and Mauritania – are emerging as leaders • How can WSS coverage and incorporation into PRSPs be improved? • Improved information and M&E systems • Sector program and financing • Advocacy and incentive

10. Three critical areas for action to improve WSS/PRSP incorporation Poverty Diagnostics Sector Information M&E Systems Stage 2: Sustaining/ Improving WSS in PRSPs Stage 1: Initial WSS Incorporation in PRSPs Sector Program and Financing Advocacy and Incentives

11. Water and Sanitation in PRSPs – Further work • Advocacy plan – regional, country • Making the case for Water and Sanitation in poverty reduction strategies • Next round of benchmarking of WSS in PRSPs, through a more participatory approach

12. Water and Sanitation Sector Finance Key Activities • Developing a framework for assessing resource flows in the WSS sector and applications in countries • Regional comparative analysis of sector finance • Other regional studies: WSS in Social funds, and WSS Small providers and Microfinance

13. Why Resource Flows Assessments? • Inadequate understanding of WSS sector finance - one of the key reasons identified for lack of WSS incorporation into PRSPs in SSA • Diverse sources and channels with equal importance of public and private/community resources, and by national and local governments • Exploring the potential to use financing to provide incentives for reforms and improved performance • Finance is perceived as a constraint– need to assess ‘gaps’ and explore leveraging

14. Resource Flows Studies • Phase 1: • Exploratory studies in Kenya, South Africa and Ethiopia • Countrywide assessments using institutional and financial mapping • Phase 2: Country level… • Further studies in Uganda, Zambia, Yemen • Uganda – application of approach to sanitation financing • Kenya – contribution of findings and approach to assist Government of Kenya for WSS sector financial and investment planning

15. Approach- Financial Mapping

16. Indicative sources of funding for sanitation activities NGOs Development Partners Project aid Micro Finance PHCCG MoH Programme aid SFG MoWLE DWD WSCG MoFPED 13 Munic. Councils MoES NWSC 55 Districts Sub Counties Comm- unities LGDP LC3 MoLG 60 Town Councils MoGLSD LC5 User charges Sub Districts Community Contributions KCC On-budget Equalisation Grant Private Sector Financial Instns. Off-budget

17. National Budget Framework for Sanitation Note: This is for illustration purposes only – it is simplified and figures are fictitious

18. Emerging DirectionsUganda Sanitation • Development of an overall budget framework linked to sanitation objectives and targets – inquiries at national and district levels • Better management of budgets and resource use at local government levels • Exploring innovative ways of increasing ‘off-budget’ finance (NGOs, households, community, small private, etc.)

19. Selected Findings • Sector Governance • Governance issues critical, often necessitate sector institutional reforms – and influence financing opportunities • All three countries have adopted reforms and are at varying stages of implementation • Design of ‘Transition Process’ is critical… and need to assess its financial implications in all the three countries… • Transfer of existing public schemes after rehabilitation • Transfer of staff, fiscal decentralization and local capacity building • Setting up new institutions – governance structures • Setting up new financing mechanisms – e.g. water services trust fund in Kenya

20. Selected Findings • WSS Finance • Inadequacy of funding – generally highlighted by countries Based on studies… • Some comparisons possible of what is being spent… But…. • Little rigorous analysis of what is really required? • Need to develop tools for strategic financial and investment planning • In relation to - allocation across sub-sectors and cost sharing rules, financing rules, technology choices

21. WSS expenditure as share of public expenditure WSS public spending appears low… But inadequate assessment of the ‘required level of spending’ WSS expenditure as share of GDP

22. Comparing expenditure as a % of GDP - health versus WSS Are we crowding out non-public resources? Source: Sub-Saharan Africa: World Development Report, 2003. Other countries: WSP-AF ongoing studies. Ethiopia Kenya South Africa Sub Saharan Africa

23. Use of Non-public Resources Kenya and Ethiopia… • Significant prevalence of non-budgetary and non-public resources • User charges (39%) • Donors through NGOs (20% ) • Need to explore NGO coordination • Efficiency and effectiveness are difficult to measure at national level without special studies as routine monitoring information is weak / non-existent

24. Why regional resource flows comparisons? • At country level • to enable comparison with other countries, and with regional benchmarks • Civil society advocates and parliamentarians to make governments accountable for resource allocations and utilization • Donors to adjust their priorities and assistance • All stakeholders to gain access to good practices and innovative ideas • At regional level – to explore • Feed into NEPAD and AMCOW process • Regional donor groups, African Water Facility • Donors

25. Sector Finance – Further Work • Expand the scope of benchmarking (PRSP) to incorporate country level WSS financial performance • Develop indicators, benchmarks and performance assessment in a participatory manner with stakeholder engagement • Refine institutional and financial mapping to expand into strategic models for country level financial and investment planning (Kenya, Uganda – sanitation)