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Financing strategies to leave no one behind

Guy Hutton, Senior Adviser, UNICEF, New York
27 Mar 2019

Since its inception, the Sanitation and Water for All partnership has recognized the primacy of financing in catalyzing sector progress. It has held four high-level meetings with finance ministers alongside the World Bank’s Spring Meetings; and it has used these as an opportunity to develop the evidence-base and advocacy around why WASH is deserving of more public funds. In the past 10 years there have been many examples of expanding budget lines for WASH, especially for sanitation which had a very low baseline, but it has proven frustratingly difficult to achieve significant or sustained increases across the board in public fund allocations for WASH.

Hence SWA partners’ understanding of the financing challenges has evolved and a more nuanced approach to the financing conundrum has developed. While do need to keep making the argument for public fund increases, this cannot be our only strategy. We therefore need a smarter approach to financing that works on several levers, building blocks and levels simultaneously.

For this, a financing strategy is needed, one that contains solid underlying evidence on costs and current financing and a thorough analysis of the potential for sector efficiency gains as well as alternative financing sources and service delivery models. Underlying a good financing strategy is an up-to-date national WASH policy and strategy that explicitly recognizes the universality of WASH and leaving no one behind.

Tailored financing

Critically, a one-size-fits-all financing approach should not be proposed: different service delivery models, tariff policies and subsidy approaches will be needed within the same country, given different starting service levels, regulatory environments, feasible technological solutions, social norms or user expectations, and ability to pay (potential for tariffs to recover costs). Private sector can be incentivized to deliver services when mechanisms to achieve universality are written into their service contract.

Indeed, a question absorbing the sector at present concerns “what is a fair or affordable payment for services by the user?” This question needs to be answered in each and every service delivery area, to ensure revenues are received from those who can pay while ensuring mechanisms exist to include the poorer and more vulnerable segments of society. If the tariff revenues and subsidies are not sufficient to operate, maintain and sustain the desired service level, lower service levels have to be considered.

There is now a widespread recognition among governments and partners of the need for service providers to be more financially independent, and less reliant on subsidies and donor support, which are less easy to predict and are expected to decline over time. The Sector Ministers’ Meeting (SMM) provides an opportunity for Ministers and country delegates to exchange on the good examples of how service providers have been strengthened and become more financially viable, and even creditworthy and able to borrow commercially, while leaving no one behind.

Role of the SMM

As countries make final preparations for the SMM in San Jose, Costa Rica, I believe we are at a turning point for the global sector. Now that most countries have localized the SDG targets, there is a motivation to assess how fit-for-purpose their WASH sectors are in delivering on their goals, using the SWA Framework by conducting in-depth examination of the Building Blocks and Collaborative Behaviours, which leads to a suite of proposed strategic solutions.

The journey to the achievement of safely managed WASH within 11 years is a challenging one, not only because it raises the bar on the MDG service standards, but also many countries are dealing with conflicts, climate change, urbanization and continued population growth, among others. This understanding has led many countries with unfinished MDG agendas to set more realistic targets for open defecation free communities and for basic or improved water and sanitation services, rightfully recognizing that immediately going for a ‘safely managed’ standard risks leaving even more people behind.

Despite these many challenges, it is comforting that we are united by a common vision under the Sanitation and Water for All partnership, and through the Mutual Accountability Mechanisms there is promise of a greater sense of shared purpose and shared solution-building. Government partners as sector leads can feel supported – not threatened – by in-country partners who pledge to align their efforts, and help in applying the necessary frameworks, tools and programmes which lead to sustainable solutions - see the SWA Tools Portal for a list of these.

About Guy Hutton

Guy Hutton is Senior Adviser for WASH at UNICEF, New York. He has been engaged with the SWA partnership since 2010 when he developed the WASH economics briefings for countries attending the high level meetings, and since has been active in SWA’s working groups and participated in the steering committee. He currently provides leadership for UNICEF on several global programmes on WASH covering the enabling environment, bottleneck analysis, knowledge management, investment cases, affordability and financing and he chairs the global initiative “WASH for Work”. Previously Guy worked for the World Bank, leading country and regional studies on the economics of sanitation (2006-2016) and the global WASH costing study in 2016. For WHO he published on the global costs and cost-benefits of WASH in 2004, 2008 and 2012. Previously he held positions at London University, UK, and Basel University, Switzerland.