African Economic Outlook 2007

1. African Economic Outlook 2007 Water and sanitation: How can Africa fill the gaps? Lucia Wegner Céline Kauffmann

2. OECD’s Knowledge Centre on Development A bridge between … • OECD members and partners Governing Board open to non-OECD: South Africa, Brazil, Chile, India, Romania, Thailand are members • Research and policy Intellectual autonomy, no obligation of consensus • Policy communities All development policies, not just aid • Different actors: private, public, etc. Informal dialogue

3. Part of the OECD’s “Development Cluster” • Bridge OECD members and partners • Research / policy • Intellectual autonomy • Informal dialogue • Club of bilateral donors • Best practice • Peer reviews Development Centre (DEV - 1962) Development Assistance Committee (DAC - 1961) Africa Partnership Forum (APF - 2006) Sahel & West Africa Club (SAH - 1975) Informal discussion Forum OECD / ECOWAS + Mauritania & Cameroon Monitoring commitments G8/OECD – AU/NEPAD

4. 1 What is the African Economic Outlook Project? 2 Africa Performance: A diverging path? 3 Access to Drinking Water and Sanitation: how can Africa fill the gaps?

5. African Economic Outlook • Joint publication of the AfDB and the OECD Development Centre, supported by the EC – 6th edition. • Mobilising a network of in-country African experts + collaboration with WB, IMF, AFD, … • A resource for policy makers, aid practitioners, investors, researchers, students, … • A tool for policy dialogue amongst African policy makers (nationally, APRM, …) and with their partners (EC, G8, OECD) Measuring the Pulse of Africa

6. African Economic Outlook • Comprehensive, comparative and independent analysis of 31 countries and short-term macroeconomic forecasts. • Annual focus • 2003: Privatisation • 2004: Access to energy • 2005: SME development • 2006: transport infrastructure • 2007: access to drinking water and sanitation • Statistical annex, including innovative indicators An innovative product, an evolving process

7. Tunisia Morocco Algeria Libya Egypt Mauritania Niger Mali Senegal Chad Sudan Eritrea Gambia Guinea-Bissau Burkina Faso Djibouti Guinea Togo Nigeria Ethiopia Côte d'Ivoire SierraLeone Central African Republic Liberia Cameroon Ghana Somalia Equatorial Guinea Uganda Congo Gabon Kenya Rwanda Burundi Dem.Rep. Congo Tanzania Angola Malawi Zambia Mozambique Zimbabwe Madagascar Namibia Botswana Swaziland Lesotho South Africa Coverage 2007: 31 African countries AEO 2007 Cape verde Sao Tome et principe 91% of GDP 86% of population Comores Mauritius

8. 1 What is the African Economic Outlook Project? Africa Economic Performance: A diverging Path? 2 3 Access to Drinking Water and Sanitation: how can Africa fill the gaps?

9. Africa continues to grow strongly Africa Total OECD Sources: African Economic Outlook 2007, OECD

10. The recent commodity boom has an important role to play Source: the Worldbank 2007

11. Stable growth in oil producers in 2006 Best performing net oil exporters in 2006 (%) (%) Source: African Economic Outlook 2007

12. And improving growth in oil importers: thanks to good harvest and booming metal prices Best Performing net oil importersin 2001-2006 (%) (%) Sources: African Economic Outlook 2007

13. … fewer bullets, more ballots Presidential elections in 2006 Benin Cape Verde* Chad Congo, Dem Rep.* Gambia Madagascar Sao Tome et Principe* Seychelles Zambia* Uganda *Parliamentary elections as well Sources: African Economic Outlook 2007, Political Indicators

14. Challenges ahead differ: Oil exporters and importers on a diverging path? • Oil and Mineral exporters: • Capitalising on windfall gains • Create spillover to rest of the economy • Avoid Dutch Desease • The rest of Africa (net oil importers): • Containing inflationary pressure • Finance widening trade deficit • Streamline spending to prioritise poverty reduction

15. Despite strong growth rate, progress towards the MDGs remains slow Sources: African Economic Outlook 2007

16. Africa remains vulnerable…Due to its limited integration into international trade • Africa’s share in world trade remains minimal (1.5 per cent) • New actors : China’s trade with Africa has increased five-fold since 2001 • There are opportunities but also a risk of further specialisation and of raising the bar for competing in labour intensive industries Source: COMTRADE Note: X indicates exports

17. …and poorly diversified The higher the index, the more diversified the economy Source: African Diversification Index, African Economic Outlook 2007

18. Better Governance and Business Environment are fostering FDI growth…but • Africa’s share in world FDI inflow remains small at 4 per cent • It is mainly concentrated in natural resources rich countries

19. How can Africa become an active player in Globalisation? Increasing absorptive capacity of Trade and FDI: Continuing to maintain macroeconomic stability, improving business environment, and devise policies to promote diversification Using external resources more effectively: • Capitalising on oil and minerals windfall gains to invest in health education and access to basic services • Using ODA as a catalyst: aid for trade is an instrument for enhancing Africa’s integration in the global economy.

20. ODA as a catalyst

21. Aid for trade is on the rise … and Africa is the 2nd largest recipient

22. 1 What is the African Economic Outlook Project? 2 Africa Performance: A diverging path? 3 Access to Drinking Water and Sanitation: how can Africa fill the gaps?

23. Access to water and sanitation: the facts • 10 million people / year have gained access to improved drinking water over 1990-2004 in sub-Saharan Africa • With population growth, the number of unserved has increased by about 60 million and SSA is unlikely to reach the MDGs by 2015. • The situation is worse for sanitation:35 million more people annually need access to improved sanitation (current trend: 7 million) • If the MDGs were reached by 2015,234 million people would still lack access to safe drinking water and 317 million to improved sanitation

24. People w/o access to drinking water (ml) The world is progressing. Africa’s share of unserved is growing. Source: WHO/UNICEF Joint Monitoring Programme

25. People w/o access to sanitation (ml) Idem for sanitation but proportions are 3 times bigger. Source: WHO/UNICEF Joint Monitoring Programme

26. Access: the outstanding experiences • North Africa: • 91% have access to drinking water (highest level in developing world with Latin America). • Sanitation coverage up by 12% points between 1990 and 2004 (at 75%), on track to reach the 83% target by 2015. • Universal access to water in Mauritius and South Africa. • Uganda: coverage for drinking water × 3 between 1990 and 2006 (from 21 to 61 per cent). • Tanzania: 90% of population have access to some form of sanitation.

27. A resource issue?Renewable water per capita (m3/inhab/yr) Source: FAO, Aquastat.

28. Mainly a management issue • Weak extraction capacities - except in North and South Africa • Inefficient use: agricultural (68%), domestic (24%), industrial (8%). • Industrial pollution, poor sanitation and sewage practices. In Congo, only 68% of SNE water samples comply with quality standard. • Wastage: unaccounted for water reaches 50% in most cities. Botswana: 46%, Mauritius: 47%, Cairo & Alexandria: 50%

29. Introducing water demand management the municipality of Windhoek Programme components: • Increasing public awareness • Implementation of block tariff system • Legislation to address water conservation • Improved maintenance and technical measures to reduce leaks • Re-use of water: one of the first cities to introduce recycling of effluent for drinking purposes In 2006: unaccounted-for water fell to 10.3% (good practice: 15-20%)

30. The remaining Challenges • Implementing integrated water resource management (IWRM) • Strengthening local management • Advancing sanitation and wastewater treatment to the top of the agenda

31. Status of National IWRM Source: Global Water Partnership, 2006

32. Key management issues • Strong national water policiesand legislation. • Sound and autonomous regulation: monitor progress, set guidelines, design incentives to extend service provision and protect consumers (NWASCO in Zambia). • Strengthening capacity on the ground (partnership in South Africa between TCTA and Umgeni Water). • Harmonisation of different stakeholders’ interventions (SWAP in Uganda). • Participation of all stakeholders: improve efficiency, maintenance, avoid conflict(Ghana community approach). • Regional cooperation

33. Reducing the sanitation gap • Increasing access to drinking water can only be safely achieved if sanitation is tackled simultaneously. Awareness rising: Senegal • Investments are small compared to the health and environmental costs of inaction and returns (WHO: economic benefits of meeting MDGs in Africa = $23 bl/yr). • Overcome the segmentation of the sector: between administrations, among providers (Durban). • Develop technologies adapted to communities’ needs. • Invest in prevention campaigns (Community health clubs in Zimbabwe).

34. Financing A key issue for all stakeholders • Investment needs: $20bl/yr until 2025, 1/3 for sanitation, ¼ for drinking water supply (Africa Water Vision 2025). • Insufficient public money (national budgets and ODA). • National water providers have failed to achieve financial viability. • Least attractive sector to private investors – but active in some countries.

35. Financing gaps in water and sanitation (rural/urban) Uganda In million $ per year Madagascar Mozambique Senegal Benin Burkina Kenya DRC Mauritania Source: AMCOW, AfDB, EUWI, WSP & UNDP, 2006.

36. Strengthening utilities • Financial independence: • cost-recovery: affordability and cross-subsidisation • sustainable & predictable public funding • Capacity building through benchmarking and partnerships (ex: UNSGAB Water Operators Partnership). • The role of small-scale local providers • Flexible, better knowledge of remote areas • But they need to be better regulated and their action facilitated by institutional framework (Uganda Association of Private Water Operators)

37. 1.2 0.9 Bilateral ODA 0.6 0.3 Multilateral ODA 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 What role for the donor community? Total Water ODA to Africa, $ billion, 2004 prices Source: OECD/DAC

38. What role for the donor community? • Using ODA to leverage further financing (Zambian Devolution Trust Fund). • Using subsidies targeted on performance, such as Output-Based Aid (GPOBA in Mozambique). • Develop innovative financial tools: sub-sovereign financing facility in local currency, risk mitigation through resource pooling. • The role of the African development Bank: African Water Facility and the Rural Water and Sanitation Initiative.

39. Thank you