Transcript WSS sector finance in sub-Saharan Africa

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
 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
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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
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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
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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
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Why regional resource flows
comparisons?
 At regional level
 Feed into NEPAD and AMCOW
 Regional donor groups, African Water Facility
 Multinational donors
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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…
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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
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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…
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Adequate funding 1:
WSS expenditure as share of public
expenditure
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
National and
Local Budgets
Ethiopia
(2000)
Kenya
(2001)
South Africa
(2003)
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Adequate funding 2:
WSS expenditure as share of GDP
Public
Expenditure
2.0
Total Sector
Expenditure
1.0
Ethiopia
Kenya
South Africa
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Adequate funding 2:
Total WSS expenditure as share of
GDP compared to health
9.0
8.0
7.0
6.0
WSS 2001
5.0
4.0
Health 2000
3.0
2.0
1.0
Ethiopia
Kenya
South Africa
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Adequate funding 3: Comparative
annual WSS expenditure per
capita (USD)
55
52
50
Capital
Exp. Per
Unserved
Population
25
Recurrent
Exp. Per
Served
Population
1
2
4
3
Ethiopia
Kenya
South Africa
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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
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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)
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Leveraging Additional Resources
 Comparing sector expenditure as a % of GDP - health versus WSS
Are we crowding out non-public resources?
9
9
Ethiopia
6
6
3
3
0
WSS
9
Health
South Africa
Kenya
0
WSS
9
Health
Sub Saharan Africa
6
6
Public
3
3
Total
0
0
WSS
Health
Health
Source: Sub-Saharan Africa: World Development Report, 2003. Other countries: WSP-AF ongoing studies.
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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
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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…
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Share of served population by
type of WSP
Urban
Rural
100.0
100.0
National
Local
50.0
50.0
Non-govt
0.0
0.0
Ethiopia
Kenya
South Africa
Ethiopia
Kenya
South Africa
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Expenditure estimates for different
levels and service providers
100.0
National
Local
Non-govt
50.0
0.0
Ethiopia
Kenya
South Africa
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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
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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
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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
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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
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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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