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WSS sector finance in sub-Saharan Africa A regional comparison framework

WSS sector finance in sub-Saharan Africa A regional comparison framework. Thomas Fugelsnes, Economist, WSP - AF Kampala, Uganda, February 2004. What is resource flows assessments?. Sector Institutional Mapping

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WSS sector finance in sub-Saharan Africa A regional comparison framework

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  1. WSS sector finance in sub-Saharan Africa A regional comparison framework Thomas Fugelsnes, Economist, WSP - AF Kampala, Uganda, February 2004

  2. What is resource flows assessments? • Sector Institutional Mapping • The study uses the concept of WSS service providers: national level government departments, national level utility, local government WSS departments, local level utilities, PSSPs and CBOs • Sector Financial Mapping • Channels of funds, sources of funds and use/utilization of finance • Analysis of Public funds • Decision-making for allocations of public resources, review of rules, procedures and regulatory framework; and analysis of monitoring and accountability systems

  3. Why Resource flows assessments? • Finance is a constraint in countrywide scaling up of sector reforms and to achieve the MDGs • Inadequate understanding of WSS sector finance - a reason for lack of WSS incorporation into PRSPs in SSA • Financing in WSS tends to be diverse with equal importance of public and private/community resources

  4. The resource flows assessment process • Countrywide assessments of resource flows • Develop regional comparisons to feed back into country assessments • Phase 1: Country studies in Kenya, Ethiopia and South Africa • Phase 2: Zambia, Uganda (sanitation), Yemen, West Africa (one or two countries if possible) and regional comparisons

  5. Why regional resource flows comparisons? • At country level • Countries to see how they continuously allocate resources as well as that of other countries, providing a basis for improved future resource allocations • Civil society advocates and parliamentarians to make governments accountable for resource allocations • Donors to see in tandem prioritization and actual resource allocations, adjust their development priorities and assistance • All stakeholders to gain access to good practices and innovative ideas, and adapt these to local challenges to improve performance

  6. Why regional resource flows comparisons? • At regional level • Feed into NEPAD and AMCOW • Regional donor groups, African Water Facility • Multinational donors

  7. Three statements heard in the WSS sector today • “We need more funding, ready for donor projects” • “There’s a ceiling to how much that can be financed on public sector budgets” • “Decentralization and sector coordination”… Countries decentralizing but no capacity at local level…

  8. Regional WSS finance comparisons can help addressing those issues • Adequate funding • How much public funding? • User financing • Internal generation and efficiency • Donor support • Integrating NGOs in sector coordination policies

  9. Leveraging point 1:How much should be allocated to the sector through public budgets? • There’s no right or wrong answer to the question - But WSS resource flow studies show limited public sector resources for WSS • The WSS sector receive low allocations in both Ethiopia and Kenya • Illustrations of indicators that can hint at answers can come out of a regional comparison…

  10. Adequate funding 1:WSS expenditure as share of public expenditure

  11. Adequate funding 2:WSS expenditure as share of GDP

  12. Adequate funding 2:Total WSS expenditure as share of GDP compared to health

  13. Adequate funding 3: Comparative annual WSS expenditure per capita (USD)

  14. Adequate funding of WSS in public budgets • There’s a need to assess resource requirements and compare with resource availability in the sector • The Ethiopia Public Expenditure Review of water – an example of projections of expenditure requirements in investment plans: • Ambitious projection scenario • Moderate projection scenario • Low scenario • Regional resource allocation and performance comparisons may help in advocacy for adequate funding

  15. Leveraging point 2: User Financing • Internal generation • The WSS is hitting the ceiling for how much it can be allocated under the PEAP in Uganda, still resource required • Two ways this can be addressed… • More user charges • More community contributions to capital costs (esp.ly for RWSS)… And supporting / coordinating greater NGO and community resources • The assumption is that user financing is not part of the ceiling if it is off-budget • User charges important (39% Kenya)

  16. Leveraging Additional Resources • Comparing sector 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

  17. Leveraging point 2: User Financing Contd • URWS • Efficiency in collecting user charges • Generating operational surplus • Both are linked to institutional reforms • RWSS • Community contributions • Uganda and Benin 5% • Ethiopia 10% • Kenya often 20-60% • China as high as 75% • And often non contributed at all • Linked to cost-sharing policy, design of financing mechanisms and institutional reforms

  18. Leveraging point 3:How to balance sector coordination with NGO involvement? • Kenya/Ethiopia – high share of off-budget or donor resources • 20% of total sector expenditure and • 70 % of donor resources • South Africa story… • Decentralization story…

  19. Share of served population by type of WSP Urban Rural

  20. Expenditure estimates for different levels and service providers

  21. Way forward: Benchmarking WSS sector finance • For country processes and regional process to feed into each other • Such comparisons may help in advocacy for adequate funding of WSS • Ten indicators

  22. Way forward: Benchmarking WSS sector finance • Adequate public funding: • Percentage of total national expenditure allocated to WSS (dev. and recurrent) • WSS budget allocations as share of GDP (national) • Percentage of budget allocations to the WSS sector relative to other other social sectors (dev. and recurrent) • Budgetary ceiling for WSS within MTEF as compared to other relevant sectors • Ratio of total donor/NGO contributions to national budget for WSS expenditures

  23. Way forward: Benchmarking WSS sector finance • User financing: • User charges as a share of total sector finance • Ratio of user charges to recurrent expenditures by service providers • Prevalence and share of user charges among different service providers

  24. Way forward: Benchmarking WSS sector finance • Donor funding/NGO: • Percentage of total expenditures by CBO/PSIP (dev. and recurrent) • Percentage of donor funds integrated into national budget

  25. Way forward: Benchmarking WSS sector finance • Efficiency – not really addressed here: • Utilization – actual as share of planned in national budgets • Value-for-money • Operating performance of service providers

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