Category: Financing WASH

Financing Maintenance in Last-Mile Contexts: Endowment Funds for Rural Water Sustainability

Featured photo: Ghana, Lucy Parker

Article by Cincotta K. & Nhlema M.

Abstract

Rural water supply systems in low-income settings, particularly in last-mile communities, face chronic sustainability challenges. Financing predictable operation and maintenance (OPEX) remains a persistent gap, with one in four water points in sub-Saharan Africa being non-functional at any given time. While community-based management has been the dominant model for post-construction maintenance, it is increasingly recognized as insufficient, relying on underfunded household tariffs, volunteer committees, and limited technical support. Emerging solutions like results-based financing and professionalized maintenance contracts have shown promise with some securing government financing.  This paper proposes district-level maintenance endowment funds, a mechanism where invested capital generates predictable income, as another option for financing rural water maintenance. These funds would support targeted subsidies, results-based contracting, and accountable, locally governed service delivery aligned with decentralization frameworks. This proposed model is agnostic to the specific management model, whether community-based, professionalized, or hybrid. The focus is on creating a predictable, long-term financing mechanism, particularly for so‑called ‘last-mile’ rural communities: small, dispersed villages, often with fewer than 1,000 people, that are typically excluded from piped water systems due to high per-capita service costs.

Two key arguments frame this proposal: (1) while endowment funds may be initially capitalized by international donors or organizations, over time they reduce dependency on short-term donor cycles by creating a predictable, locally managed revenue stream, and (2) Piloting endowments at the district government level strikes the right balance between being close enough to last-mile communities, accountable to them, and large enough to achieve economies of scale that will ensure financial viability for service provider payments.

THE PROBLEM: Persistent Non-Functionality and Unrealistic Expectations

Across sub-Saharan Africa, one in four rural water systems are non-functional at any given time. These failures are not anomalies, but they reflect a systemic global challenge: the absence of a reliable model for rural water service delivery beyond construction. For decades, community-based management (CBM) has been the dominant approach. It assumes that because communities value water, they will voluntarily manage infrastructure. But the viability of CBM is increasingly being questioned. Tariffs based on affordability rarely cover full maintenance costs, especially in small, dispersed communities, with variable incomes, that are often not prioritized for piped systems. Trained committee members often leave, and access to spare parts or technical support is limited. Volunteer fatigue, lack of retraining, and systemic underinvestment compound the problem.

The expectation that people living in the poorest rural villages must fully fund and manage the long-term maintenance of their own water systems does not align with how water systems are managed anywhere else in the world. In high-income countries, water infrastructure is maintained by trained professionals and supported by stable funding streams, often not limited to water user fees, but supplemented by public financing mechanisms such as property taxes and municipal budgets. The same should hold true, if not more so, in low-resource rural settings. A more realistic, equitable approach is therefore urgently needed.

TRIED AND TESTED SOLUTIONS: Results-Based Financing (RBF) – When Performance Meets Poverty

New RBF models are emerging. Uptime, as an example, is a partnership supporting professionalized rural water service providers that pays providers based on verified uptime. This shifts incentives from reactive repairs to preventive maintenance. Between 2020 and 2022, Uptime supported services for 1.5 million people in seven countries. Governments in countries such as Kenya, Bangladesh, and Zambia are now beginning to adopt performance-based financing approaches like this into their own public financing systems. This has been inspired in part by the evidence generated through philanthropic pilots. Yet, a central limitation remains: these models have demonstrated viability primarily in communities large enough or more “well-off” to generate economies of scale. This makes them financially attractive to service providers, but systematically excludes smaller, remote last-mile communities that are seen as less “bankable”. This is not a critique of performance-based models like Uptime, they are delivering results and proving their value. But it does highlight the need to pilot complementary result-based financing mechanisms that can address the unique realities of last-mile communities. Expecting the world’s poorest to fully finance their own essential services is neither equitable nor realistic. What’s needed is smart, targeted financing, including well-placed subsidies, that reflects the diversity of community capacity and directs public investment where it’s needed most. This is especially critical for last‑mile communities, i.e. remote, low‑density villages where user fees alone can never sustainably cover operating expenses.

This frame of thought, of differential and context-specific financing solutions, borrows from Dorward et al.: “Hanging In, Stepping Up, and Stepping Out.” Most rural households are “Hanging In,” unable to pay without full subsidy. Others can co-finance with support (“Stepping Up”), or engage with market models (“Stepping Out”). This model enables differentiated financing that aligns with real-world capacity. Targeted subsidies are not about dependence; they free up cash for productive use while ensuring reliable services. Importantly, we differentiate between water as a service that must be reliably provided for health and dignity, and water as a productive resource used to generate income. The proposed endowment-backed financing model speaks to the former, guaranteeing essential domestic supply. Other financing tools may be more appropriate for supporting productive uses of water in agriculture or enterprise.

RBF models have proven we know how to make maintenance work. The challenge now is to pilot solutions, such as endowment funds, that can sustainably support these communities where market-based approaches do not reach, thereby ensuring universal access to all.

THE PROPOSAL: District-Level Maintenance Endowment Funds

To close the financing gap, we propose district-managed endowment funds dedicated to rural water maintenance. These funds would invest capital to generate steady income for maintenance costs, insulating service delivery from budget shocks and donor cycles. They would:

  • Provide predictable financing by requiring implementing agencies to allocate a fixed amount, e.g. 10-20% of infrastructure costs, into the fund.
  • Enable targeted subsidies using the Hanging In/Stepping Out framework.
  • Support results-based contracting for professional maintenance providers.
  • Align with decentralization by placing fund management at the district level, while national governments serve as regulators.

This model borrows from urban utility principles where professional service delivery is underpinned by predictable financing and adapts them to rural realities. It does not assume full cost-recovery from users, nor does it treat water as a commodity for profit. Instead, it creates a stable platform for targeted subsidies and professional maintenance services in communities where user fees alone are structurally insufficient.

Continue reading “Financing Maintenance in Last-Mile Contexts: Endowment Funds for Rural Water Sustainability”

Weaving threads of knowledge and trust across the world – Part 1 (Global Actors)

by Sean Furey, Director – RWSN Secretariat @ Skat Foundation

Rural Water, Sanitation and Hygiene (WASH) is such a local, personal, issue that does global-level exchange make sense?

At first glance, rural areas and communities worldwide seem too diverse for networking and knowledge exchange to be useful or meaningful. What does WASH for isolated hamlets in the Nepalese Himalayas have in common with a fishing village on the Peruvian coast or a small town in northern Nigeria? Quite a lot, it turns out.

Last year, we were privileged to be approached by the Water Section at the Inter-American Development Bank (IDB), to support them with an exciting programme called Sustainable and Innovative Rural Water, Sanitation and Hygiene (SIRWASH), funded by the Water Section of the Swiss Agency for Development & Cooperation (SDC). They asked us to help strengthen the sharing on rural WASH topics within the Latin America and Caribbean (LAC) region and to encourage South-South exchange between LAC, Africa and Asia. Thanks to our strategic partnership with SuSanA we felt well placed to do this, and a great opportunity for both networks to grow our membership in the LAC region and serve our members there better.

Multilateral Development Banks – amazing allies

When it comes to shear financial clout and convening power, Multi-lateral Development Banks (MDBs) are hard to beat, but even they have had mixed success with rural WASH – but there have been successes and they have recognised that they can learn from each other so that they can provide their client governments with the technical assistance and financial options to deliver sustained improvements. So, last year the relevant focal points from the African (AfDB), Asian (ADB) and Inter-American (IDB) met and agreed on a Call to Action with three priorities:

  • Information-based decision-making and rural WASH investments and service monitoring.
  • Institutional strengthening & coordination.
  • Rural sanitation.

From this, we organised a webinar mini-series drawing on their recommendations for case studies on each topic from each region.

Finding the common threads and bringing them together to make them stronger

This year, we took more steps to build an understanding and appreciation of the solutions that have the potential to transcend the variability of local contexts and be adapted. With growing interest, our colleagues at the World Bank also joined the small group and together we organised a special SIRWASH breakfast meeting and an open session on “Coordinating Rural Water Investments to Promote Security and Stability” with REAL-Water :

The SIRWASH breakfast meeting that followed was in the spirit of collaboration among countries in the global south, using knowledge sharing as a catalyst for innovative and sustainable solutions. It was attended by more than 40 representatives from countries (Haiti, Brazil, Peru, Chile, Nigeria and Uganda), multilateral banks, multilateral and bilateral agencies (SDC, AECID, SIDA, WHO, OAS, UNICEF), NGOs and philanthropists (including, One Drop, Water For People, Avina, Aguatuya, mWater, Global Water Center), as well as networks, partnerships and research (RWSN, SuSanA, WASH Agenda for Change, WASH Funders Group, SIWI, Uptime, the Aquaya Institute). 

Reflections on the SIRWASH Breakfast meeting (source: IDB)

Using the “Fishbowl” method, participants exchanged their perspectives in an open and dynamic way on how strategic partnerships can increase impact in the sector. Discussions focused on two key questions: 

1. How can technological innovations in rural WASH information systems be supported to be truly effective in decision making and incentivize scaling up? 

2. What are practical solutions to improve the design and implementation of national rural WASH programs so that their benefits are sustained over the long term? 

One of the central themes was innovation through sector information systems, a crucial tool for planning and managing water and sanitation services in rural areas. Three countries shared their experiences on how they have adapted and improved these systems:

The importance of institutionalizing information at the national level and ensuring that communities participate in the validation and appropriation of data and decisions was emphasized.

In addition to information systems, the event underscored the need to integrate both technological and social innovations to improve rural services. Social innovations and behavioural change are essential for communities to take ownership of the systems and actively participate in their management and maintenance. Participants agreed that long-term sustainability is about finding the sweet spot between community-ownership/responsibility and external support.

The second critical issue addressed was the sustainability of rural water and sanitation services. Participants stressed that the successful implementation of these services cannot depend solely on initial investments in infrastructure. Innovative mechanisms need to be developed to ensure their financing and continued operation. The examples of Brazil and Nigeria were instructive, both countries demonstrating how the combination of effective governance and innovative financial models can ensure the operational sustainability of services:

  • Brazil presented its comprehensive implementation of their National Rural Sanitation Program (PNSR).
  • Nigeria highlighted the ways a results-based SURWASH programme is strengthening institutional capacity.
  • The Uptime Consortium shared their experiences and successes with Results-based Contracting on rural water service delivery across many contexts.

The discussion emphasized the need for functionality and quality indicators for rural services, linking reliable information to financial incentives for operators. This strategy can enhance the long-term sustainability of these systems. The working group concluded that collaboration is essential to ensure countries have reliable information for decision-making, aimed at improving the quality of rural services.r decision-making aimed at enhancing the quality of services in rural areas.

In the final discussion, consensus was reached on the need to create and maintain an enabling ecosystem for the development and sustainability of rural services. The great opportunity for development partners to join efforts and seek synergies, contributing technical and financial resources to this ecosystem in the countries was highlighted.

The event concluded with a clear call to action: all actors – governments, development banks, cooperation agencies, NGOs, networks and the private sector – must remain committed to financing and strengthening rural water and sanitation services. The MDBs will continue to work together on a concrete action plan to exchange and replicate successful and innovative experiences to ensure universal and quality WASH services in the countries.

Knowledge exchange is not just talk and powerpoint presentations, it is about building connections and trust between individuals and organisations, finding those common interests and encouraging co-creation of new insights and more sustainable solutions.

The symbolic activity organized by One Drop, where participants bonded to represent their intention to work together towards a common goal, was a powerful reminder of the importance of lasting partnerships. This symbolic gesture is just the beginning; it is essential to continue to scale up efforts so that the most vulnerable communities can access quality water and sanitation services in a sustainable and equitable manner.

Top-Down meets Bottom-Up

After this event, our partner Aguatuya convened an online meeting of Latin American WASH networks to encourage bottom-up exchange to complement our high-level approach. But we will follow that thread in the next post…

Many thanks to the large number of people involved, but in particular to Sergio Campos, Manuela Velasquez-Rodriguez and Cristina Mecerreyes at IDB; Diane Arjoon at AfDB, Vivek Raman and Tanya Huizer at ADB, Awa Diagne and Sarah Nedolast at the World Bank, Janine Kuriger at SDC, and to the wonderful RWSN/SuSanA team: Dr Aline Saraiva, Batima Tleulinova, Susanna Germanier, Lourdes Valenzuela, Paresh Chhajed, Chaiwe Sanderse and all the speakers and panellists for the webinars and sessions.

“Financial Innovations for Rural Water Supply in Low-Resource Settings” Innovation 2: Digital financial services

This blog post is part of a series that summarizes the REAL-Water report, “Financial Innovations for Rural Water Supply in Low-Resource Settings,” which was developed by The Aquaya Institute and REAL-Water consortium members with support from the United States Agency for International Development (USAID). The report specifically focuses on identifying innovative financing mechanisms to tackle the significant challenge of providing safe and sustainable water supply in low-resource rural communities. These communities are characterized by smaller populations, dispersed settlements, and economic disadvantages, which create obstacles to cost recovery and hinder the realization of economies of scale.

Financial innovations have emerged as viable solutions to improve access to water supply services in low-resource settings. The REAL-Water report identifies seven financing or funding concepts that have the potential to address water supply challenges in rural communities:

  1. Village Savings for Water
  2. Digital Financial Services
  3.  Water Quality Assurance Funds
  4. Performance-Based Funding
  5. Development Impact Bonds
  6. Standardized Life-Cycle Costing
  7. Blending Public/Private Finance

Understanding Digital financial services

Digital financial services have penetrated many aspects of daily life, including water services. 

One strategy to address the gap in rural water funding is to increase the financial sustainability of water systems through improved water revenue collection and management (Waldron and Sotiriou 2017). In low-income countries, the collection of service fees primarily relies on cash, which can be labor-intensive, difficult to track, prone to miscalculations, and susceptible to theft or loss (Sharma, 2019). However, by implementing automated digital recording of time-stamped water usage and payment data, the planning, projection, and delivery of water services can be significantly improved (Waldron et al., 2019).Good record-keeping aids water service providers in tracking performance changes over time, as well as supporting financial sustainability, water conservation, and climate adaptation.

How does it work?

“Digital financial services” encompasses two concepts: financial services (e.g., payments,

savings, credit, insurance, user suport) and the technologies that deliver them to end users (Waldron et al. 2019). Services such as online savings or credit accounts mainly benefit adults who work outside the home and have bank accounts (Coulibaly 2021). The digital technologies accessible to users who rely on cash may include mobile money (electronic wallets using a mobile phone), water sale kiosks or “ATMs,” and prepaid token technologies (REAL-Water 2022).

Customers can use digital mechanisms to conveniently purchase water, reducing waiting times and operational downtimes when live vendors or caretakers are unavailable (Waldron et al., 2019). With prepaid digital services, the efficiency of water fee collection can reach nearly 100% (with the exception of targeted subsidies or discounts). “Postpaid” digital financial services, which collect fees retrospectively for prior water usage, enable service providers to automatically track outstanding payments and initiate billing. Digitization may enable better payment compliance, as those with seasonal or inconsistent income are able to deposit a sum of money and draw on it over time (Sharma 2019).

Moreover, the implementation of prepaid metering for automated water dispensing devices and postpaid digital water service accounting brings benefits to both water system operators and customers, improving fee collection consistency as well as convenience. They may likewise simplify subsidy delivery to vulnerable customer segments. 

Figure 1. Training a customer in Ruiru, Kenya on how to use his phone for making

water payments (Source: Joyce Kisiangani, The Aquaya Institute)

Examples

Technology provider Grundfos partnered with the nongovernmental organization World Vision and Safaricom, the leading telecommunications provider in Kenya, to install 32 self-service water kiosks (called LifeLink systems) in locations that lacked water infrastructure, serving both

homes and businesses (Waldron et al. 2019). Initial uptake was high and interviews documented user benefits from reduced favoritism in water distribution as well as being able to track and review spending. Collecting mobile payments cost less than collecting cash payments, a savings that could be reinvested to upgrade services or passed onto consumers (Sharma 2019). The World Bank and others have likewise been working to scale affordable water installations in Tanzania using prepaid Grundfos card kiosks combined with solar pumping, which vastly reduces water transportation time and stabilizes high prices offered by private sellers (World Bank 2017). Recognized downsides of this and other digital payment examples have included questions of who requires data access, remote monitoring needs, labor cuts, reduced customer service capabilities, and difficulty paying among the ultra-poor (Waldron et al. 2019).

The nonprofit organization Safe Water Network uses Hangzhou LAISON Technology digital household prepaid meters in their piped connection program in Ghana. Customers receive a device to input a token purchased through mobile money. New users joined quickly following customer workshops to explain the payment system, and the enhanced cost recovery shifted the operation from a net loss to a net surplus (Waldron et al. 2019). Ensuring proper use will likely require sustained engagement. Safe Water Network has continued expanding the household connection metering program to serve several thousand households in small rural towns in Ghana’s Ashanti Region.

Transitioning to digital payments comes with certain challenges, such as additional transaction fees, costly startup infrastructure, poor telecommunications technology, skepticism towards technology, and the belief that water services should be cheaper or free, as well as income loss for traditional vendors who primarily handle cash transactions. Local training support and outreach efforts for social inclusion can be beneficial for expanding digital services. However, digital financial services do not represent a fix-all solution. Their successful implementation requires substantial training and effective governance to transition service providers and communities to new processes that increase collection efficiency, while minimizing the impact on customers’ water usage (Heymans, Eales, and Franceys, 2014).

Digital financial service innovations have made inroads globally in urban areas and are rapidly expanding to serve rural residents in Africa, Asia, and Latin America. As use expands, social inclusion efforts may be needed to ensure the services benefit vulnerable populations (Coulibaly 2021).

To access further information on financial innovations for rural water supply in low-resource settings, you can download the complete report HERE.

The information provided on this website is not official U.S. government information and does not represent the views or positions of the U.S. Agency for International Development or the U.S. Government.

References:

Coulibaly, Sionfou Seydou. 2021. “A Study of the Factors Affecting Mobile Money Penetration Rates in the West African Economic and Monetary Union (Waemu) Compared with East Africa.” Financial Innovation 7 (1): 25. https://doi.org/10.1186/s40854-021-00238-0.

Heymans, Chris, Kathy Eales, and Richard Franceys. 2014. “The Limits and Possibilities of Prepaid Water in Urban Africa: Lessons from the Field.” Case Study. WSP.

REAL-Water. (2022). Technological Innovations for Rural Water Supply in Low-Resource Settings. United States Agency for International Development (USAID) Rural Evidence and Learning for Water Project

Sharma, Akanksha. 2019. “Digital Payments in Water: Findings from Two New Research Projects.” Mobile for Development (blog). March 18, 2019. https://www.gsma.com/mobilefordevelopment/blog/digital-payments-in-water-findings-from-two-new-research-projects/.

Waldron, Daniel, and Alexander Sotiriou. 2017. “Digital Finance and Sustainable Water Service for All.” Brief. CGAP. https://www.cgap.org/research/publication/digital-finance-and-sustainable-water-service-for-all

Waldron, Daniel, Caroline Frank, Akanksha Sharma, and Alexander Sotiriou. 2019. “Testing the Waters: Digital Payments for Water and Sanitation.” Working Paper. Washington, D.C.: CGAP.

Strengthening accountability for water

This blog is based on the Accountability for Water action and research programme funded by the William and Flora Hewlett Foundation and managed by the Partnership For African Social and Governance Research (PASGR), supported by Water Witness International, KEWASNET and Shahidi Wa Maji. The full webinar summary is available here.

On 15th December 2022, a global webinar was held to discuss the critical importance of accountability for water. During the webinar, a partnership of organizations led by PASGR and Water Witness presented the findings of their Accountability for Water research program, which aimed to identify specific actions to strengthen accountability in different contexts. The programme partners involved in the research include KEWASNET, Shahidi Wa Maji, WaterAid, Water Integrity Network, End Water Poverty, IRC, and World Bank. Dr Pauline Ngimwa and Dr Muthio Nzau of PASGR introduced the webinar.

Dr Tim Brewer of Water Witness gave an overview of the research programme which started with the global review of evidence carried out in 2019-2020.  According to this review, 80% of the research papers on accountability found that interventions contributed to improved water, sanitation and hygiene (WASH) services and water resource management (WRM). Common lessons emerged with clear recommendations for action by governments, civil society, donors and others. While a key lesson is that accountability is context specific, an analytical framework based on the “5 Rs of accountability” can be used to identify specific challenges and opportunities within this framework – the ability to review, explain, and report performance against rules, responsibilities, and obligations, and to react constructively to improve performance through sanctions, incentives, or corrective measures.

The review identified a series of knowledge gaps and questions, including gender, donors, government responsiveness, measurement, and civic space. Based on this analysis, 14 Professional Research Fellows (PRF) working in the water sector in Ethiopia, Kenya, Tanzania, Zambia, Liberia, and Zimbabwe from a range of government, civil society and academic institutions investigated accountability issues in their own contexts. The full list of research topics and researchers is at the bottom of this blog.

The following key takeaways for governments, civil society organizations (CSOs), and donors were drawn from a compilation of recommendations from the research projects .Presenters included Dr Firehiwot Sintayehu (Addis Ababa University);  Eunice Kivuva (CESPAD); Chitimbwa Chifunda (WaterAid Zambia), The full list of research topics and researchers at the end of this blog demonstrates the depth and breadth of evidence underlying these recommendations .

Three key takeaways for governments      

  1. Laws, policies and accountability mechanisms are essential to support accountability. However, lack of clarity and consistency between sectors and levels, a lack of knowledge and capacity about the laws and mechanisms, and weak enforcement often undermine these. Therefore, the key recommendations are to: 
    • Harmonise, strengthen, and execute laws and policies for water resources and WASH at national and subnational levels,
    • Strengthen accountability systems and relationships:  mechanisms, standards, regulation, monitoring, stakeholder engagement and enforcement including for the private sector,
    • Build capacity on accountability, develop an accountable outlook and de-politicise accountability systems.
  2. Clear roles and responsibilities and better coordination: Accountability mechanisms are often let down by poor coordination, unclear or conflicting roles and responsibilities and widespread lack of enforcement. Key actions required are to:
    • Clarify institutional roles and responsibilities between actors for WASH and WRM – eliminate conflicts in functions,
    • Separate implementation and regulatory institutions,
    • Strengthen horizontal and vertical institutional and sector coordination across water users through enforceable accountability systems and mechanisms.
  3. Informed engagement with citizens and users: All the researchers found that effective engagement with citizens, citizen groups and water users is essential for accountability but wanting. To address this governments need to:
    • Introduce or strengthen accountability mechanisms such as public hearings and citizen oversight panels,
    • Provide Information, education, and mobilisation for communities ensure access for marginalised groups,
    • Support civil society to vertically integrate social accountability initiatives into decision making at different levels,
    • Support coordination amongst actors to increase the capacity of rural women and marginalised communities to participate in problem analyses and decision-making processes.

Three key takeaways for civil society,

  1. Activate and institutionalise effective citizen oversight mechanisms.  As well as the government actions to strengthen engagement with citizens and water users Civil society organisations need to support this, they should:
    • Advocate for more legally institutionalised avenues of citizen oversight,
    • Ensure that citizens’ monitoring and advocacy initiatives are vertically and strategically integrated in decision making at all levels,
    • Carry out budget tracking throughout the whole cycle from planning to expenditure.
  2. Build capacity, empowerment and organise communities. A very common cause of weak accountability is the low levels of knowledge and capacity of water users about their rights, the laws and responsibilities around water provision and resource management, and how they can use accountability mechanisms. Civil society organisations need to:
    • Build capacity on accountability mechanisms and support their use,
    • Strengthen grassroots user groups and associations to participate in decision making,
    • Support civil society and water users, especially women, to move up the Participation ladder from token participation to active participation,  decision making, and control.
  3. Build on what works, like budget tracking, evidence-based advocacy, litigation. There is growing knowledge about successful strategies for strengthening accountability. This research has helped to strengthen a community of practice on accountability and identify examples that others can learn from. Key lessons for civil society are to:
    • Strike a balance between constructive and critical approaches to advocacy,
    • Bring strong evidence for advocacy,
    • Raise awareness of WASH and WRM issues amongst all stakeholders including citizens, government and development partners.

Four key takeaways for donors and private sector

  1. Support governments and CSOs to strengthen accountability frameworks, monitoring and enforcement. Donors can provide financial and political support for the actions for governments and civil society mentioned above. They need to:
    • Support governments on WASH and WRM accountability actions as above,
    • Support CSO actions as above,
    • Support good governance and democratic space for citizens’ voice. Citizens’ engagement is critical to enhancing accountability,
    • Invest in women’s participation and reaching marginalised people,
    • Strengthen political will for accountability.  Donors can influence government priorities,
    • Invest seriously in sustainability.
  2. Water investments need to go beyond projects. They need to: 
    • Go beyond procedural & financial accountability. For example strengthen basins planning to ensure responsible industrial water use,
    • Support budget tracking through the cycle – budget tracking is an effective tool to improve budget performance,
    • Invest in appropriate technology to support accountable and responsive services, For example digital monitoring of services and water treatment technology to prevent pollution of water resources.
  3. Enhance due diligence. Researchers found examples of very weak accountability in economic uses of water by industrial and agricultural actors. Donors and private investors can help strengthen accountability by requiring:
    • Stronger due diligence of companies in relation to water use,
    • mandatory reporting on water,
    • promoting and enforcing the Polluter pays principle
  4. Be accountable!  Donors are major investors in the water sector but often do not fulfil their commitments. For example in Zambia the WASH sector is 80% funded by Donors but only 29% of that was tracked through the budget.
    • Accountability Mechanisms are needed to enable Governments and CSO to hold Donors accountable for their commitments. 

Discussion and next steps

During the webinar, Sareen Malik from KEWASNET, emphasised the importance of legislation to strengthen accountability mechanisms. NGOs can play an important role to advocate for this and bring stakeholders together in Joint Sector reviews as a critical mechanism for accountability, monitoring and reporting. 

Martin Atela of PASGR reflected on the role of politics in undermining accountability and suggested that political interference can be mitigated by greater clarity on roles and boundaries of ministerial responsibilities. He also emphasized the need to find ways to work with political elites so they see the value in change

Next steps involve joining the community of practice on accountability for water, to continue learning from experience and to advocate for commitments to strengthen accountability.

Research partners are organising an event at the UN Conference on Water 2023: “Where is the accountability”  on Tuesday 21st March, driving a greater emphasis on governance and accountability. This needs to be front and centre of all discussion.

The Research programme is managed by the Partnership for African Social and Governance Research (PASGR) and Water Witness International with financial support from the Hewlett Foundation.

More information about the research is on the website including findings from the global review of evidence, recorded presentations from webinars at World Water Week 2022 in Stockholm, presentations from country specific webinars, and summary briefings of all the research topics. www.accountabilityforwater.org

List of Research topics, Professional Research Fellows and host institutions

Ethiopia

  • Government Dynamics of Accountability in Ethiopia, Mulugeta Gashaw, Water Witness Ethiopia
  • Political Economy Analysis of water governance, Asnake Kefale
  • Risks and opportunities for growth in Ethiopia’s textile and apparel industries,  Esayas Samuel
  • Wastewater management in upstream catchment of ARB, Yosef Abebe, Addis Ababa University and Ministry of Water and Energy
  • Accountability of the One WASH National Programme of Ethiopia, Michael Negash, PSI
  • Towards a sustainable management of faecal sludge: the case of Addis Ababa, Tamene Hailu
  • Alwero Dam governance, Firehiwot Sentayu, Addis Ababa University

Kenya

  • Government Dynamics of Accountability in Kenya, Dr Tiberius Barasa
  • Enhancing coordination for accountability and sustainability in water resources management; a case of Kerio sub-catchment in Baringo rift valley basin. Eunice Kivuva (CESPAD)
  • Kakamega County Water and Sanitation Company, Kenya.  Mary Simiyu, Kakamega Water Service Provider
  • Rural Women and water decisions in Kwale and Kilifi Counties, Felix Brian, KWAHO
  • Strengthening accountability in solid waste management through incentives and penalties in Naivasha, Kenya, Naomi Korir, Sanivation

Tanzania

  • Government Dynamics of Accountability in Tanzania, Dr Opportuna Kweka
  • Assessment of Gender Power Relations and Accountability in Community Based Water Supply Operators in Selected Water Basins of Tanzania, Pitio Ndyeshumba, Institute of Lands
  • Regulatory and Legal Accountability for Water Pollution in Tanzania: The Case of Msimbazi River Basin in Dar es Salaam City, Mwajuma Salum, University of Dar Es Salaam
  • Opportunities and challenges of accountability claiming in Tanzania’s water sector, Dr Parestico Pastory, University of Dodoma

Zambia

  • What makes budget advocacy an effective accountability tool, Bubala Muyove, NGO WASH Forum and Chitimbwa Chifunda, WaterAid Zambia

Zimbabwe

  • Assessing the effectiveness and impact of statutory accountability mechanisms to improve water service provision and catchment management, Mable Murambiwa, Combined Harare Residents Association, Zimbabwe

Liberia

  • Accountability Challenges in The Liberia Water-Supply Sector: LWSC in Robertsport and Kakata, Timothy Kpeh, United Youth for Peace,  Liberia

About the author:  This blog is authored by Louisa Gosling, freelance specialist in accountability, rights and inclusion in WASH, previously working with WaterAid and as chair of RWSN.

Rural Community Water Supply: Sustainable Services for All

Covid-19 gave me the chance to commit to paper (or electronic form, if you prefer) some of my understanding and experience gained over several decades. The outcome is a book, published earlier this year, entitled Rural Community Water Supply: Sustainable Services for All.

by Professor Richard C. Carter

Richard encountering some resistance in Kaabong, Uganda (photo. RC Carter)

Many hundreds of millions of rural people – the exact number is not known, and it is immaterial, except that it probably lies between one and two billion – experience inadequacies in the supply of the water which they use for drinking and other domestic uses.

These inadequacies are partly reflected in the ‘normative criteria’ as defined by the human right to water which apply to water services globally. These criteria ask whether and to what extent water services are available, accessible, affordable and acceptable, and whether their quality meets national or international standards. They also highlight the importance of cross-cutting criteria (non-discrimination, participation, accountability, impact, and sustainability).

Continue reading “Rural Community Water Supply: Sustainable Services for All”

Crowding-in Commercial Financing to Water Supply and Sanitation Utilities

This is a guest blog by RWSN Members Lance Morrell and Michael Ashford.

Achieving SDG6, clean water, and sanitation for all by 2030 requires estimated investments of US$114 billion per year. The present value of the total investment needed is US$1.7 trillion, and these estimates do not include costs of operation and maintenance. At three times current levels, this far exceeds the financing capacity of the entire public sector and donor community, combined.  

We in the development community need new tools and approaches to address this gap. Using donor and public funds to “crowd-in” private investment can help. USAID’s recently announced Private-Sector Engagement (PSE) Policy, for example, recognizes the urgency of using development funding to attract private sector capital into development of infrastructure and services around the world. Similarly, USAID’s Water, Sanitation and Hygiene Finance (WASH-FIN) program is developing and piloting specific interventions to increase private and public investment in WASH. The World Bank’s Public-Private Infrastructure Advisory Facility (PPIAF) is another important source of information and successes on how to leverage the public and donor sectors’ financial power to increase private investment in public infrastructure and services. In all cases, the policies and prescriptions call for the use of market-based approaches as the only sustainable path to sustainably support communities in achieving development and humanitarian outcomes.

While “billions and trillions” of capital for WASH feels overwhelming, outside of 20th century Soviet-style economies, public infrastructure was never meant to be financed, funded, and operated with public resources alone. Commensurate with the growing financing gaps, there is today a glut of private sector capital looking for reliable investments that meet their investment criteria. Globally, pension funds, insurance companies, sovereign wealth funds and commercial banks hold approximately US$100 trillion in assets. In this light, the global financial system is out of balance, and the challenge is to attract private capital and other types of private sector participation into the water and sanitation sector. Development professionals, working with their government counterparts, must now “put skin in the game” without sacrificing the broader objective of shared, public benefits and economic growth.

Changing Project Funding to Crowd-In Private Investments

If the private sector has the capital needed to expand and improve the performance of the WASH sector, why haven’t governments been able to access it? How do we crowd-in the private sector?

The first step is to stop crowding-out private investment with donor funds. Governments and donors crowd-out private investors by providing grants or ill-designed concessional financing against which the private sector cannot compete. Financing and funding are products that banks and donors, respectively, want recipients to “buy;” the price is the interest rate. Free or cheap money from donors is not something private capital can beat.

There are numerous real-world examples of crowding-out in development, which follow the same basic scenario: Donor X works with a government to develop a project that will use public and donor funds to attract commercial financing to the project. In order to attract – or crowd-in – the commercial financing, government will work with financiers to understand their concerns and design appropriate risk mitigating measures. To crowd-in the private sector, the project designers require time to develop both the demand and the supply side. As this project preparation is proceeding and nearing agreement, Donor Y approaches the government and offers grant financing for 100 percent of the cost of the project, and crowds-out the private sector.

In contrast, as USAID’s PSE policy emphasizes, governments must engage and collaborate with the private sector, and the private sector must be allowed to manage its level of risk and to earn a reasonable profit. Adhering to an enterprise-driven development model, USAID and other donors are aiming to play a catalytic role in achieving results, rather than fully funding and managing the majority of its projects. The PSE model recognizes that the private sector represents nearly 90 percent of the direct foreign investment to developing countries, and the model represents a strategic approach through which USAID would consult and collaborate with the private sector for greater scale, sustainability and effectiveness. Under this approach, USAID will attract, or crowd-in, the private investors.

Increasing Government Commitment

Government is the key stakeholder in attracting private sector financing to the WASH sector. To effectively express these commitments, government officials need to understand the benefits and costs of the WASH sectorfrom the perspective of commercial finance. Some of the potential policies and actions include the following, with the commitment type identified in parentheses:

  • Sharing capital costs or providing limited guarantee of recovery of capital costs (lump sum);
  • Guaranteeing continuous payments during project performance to recover capital costs overtime or sharing in expected revenue from tariffs to cover financing costs (revenue flows);
  • Indirect market development by requiring improved operational performance of the utility, whether publicly or privately owned, to reduce expenses and increase revenue, so the utility can enter into direct lending arrangements (regulatory enforcement);
  • Contractually transferring asset management of utilities, if owned by government, through performance-based contracting with private sector service providers (give up control of asset).

Developing a business relationship between governments, utilities and commercial lenders takes time and patience, and the path forward should be gradual to allow all parties to develop trust and confidence. For example, commercial lenders could start with financing smaller projects that enhance revenue for the utility, such as new or upgraded water meters or increasing customer connections. If the utility then dedicates the additional revenue attributable to the project to the private investor, the private investor’s and utility’s interests align around ensuring performance during operation. After the loan is paid off, the additional revenue accrues back to the utility. Once the utility passes this kind of test with private investors, it can expand follow-on borrowing to finance further extensions of the water supply system –again using new cash flow that is “ring-fenced” to repay next the loan.  Meanwhile, scarce public funds are protected and can be used for projects which have high economic value but low financial viability, such as a new sewage treatment system. Overall, the goal is to create more incentives for private capital to partner with donors and government toward shared development goals.

About the authors

  • Lance Morrell is a financial specialist with more than 35 years of professional experience, and is the Founder and Managing Director of FEI Consulting;
  • Michael Ashford is senior clean energy and infrastructure professional with more than 20 years of experience, and is the Global Practice Lead for the Water, Energy, and Sustainable Cities practice at Chemonics International.

This blog post represent the views of the authors and does not necessarily represent the views of Chemonics. Photo credit: Gerardo Pesantez / World Bank.

Rural water supply is changing. Be part of it.

The Rural Water Supply International Directory that is available to download from today aims to track the organizations and businesses fostering this change.

by Philip T. Deal, University of Oklahoma, USA

The Sustainable Development Goals are pushing the water and sanitation community to reach higher than ever before. After decades of fighting for the human right to water, universal coverage is the next, challenging summit to climb. “Access to an improved source” has been upgraded to “safely managed drinking water” – a standard that requires continuous service, good water quality, increasing coverage, and affordability. Considering that rural infrastructure often lags behind when compared with urban environments, accomplishing this standard can sometimes feel more like a cliff than a mountain. For these reasons, rural water supply requires new ideas – experimentation – innovation.

The 2019 RWSN directory of rural water supply services

The The 2019 RWSN directory of rural water supply services, tariffs, management models and lifecycle costs that is available to download (and in French) from today aims to track the organizations and businesses fostering this change. These entities are the catalysts to novel service delivery and management models. Some offer minor changes to technology or accountability mechanisms that increase functionality. Some create new financing opportunities that were not previously accessible. Some create a complex management system to maintain water systems over large geographical areas. Some could potentially fail. All are valuable.

The cases described in the Directory are meant to foster growth, learning, and inspiration. The successes, challenges, and failures depicted by one organization could spark a solution for another across the continent. Financing and life cycle cost discussions could become more transparent, uniform, and clear across borders. Networking opportunities and connections become easier – there may even be a neighboring WASH partner nearby that fits your needs!

This new Directory is intended to be an annual compilation. Current cases can be updated with new developments and research. Other innovations and businesses can be added. If a future reader thinks some other information should be included, there’s potential for expansion. We are open to your input.

Questions to Consider

When reviewing the cases within this directory, I would encourage any reader to think on the following questions:

  • What are some common management traits that you observe? What is similar or different when compared to traditional water and sanitation models?
  • What are the most striking innovations that can be observed?
  • What role does each case hold in their water and sanitation ecosystem? What are their responsibilities, and for what are they dependent upon others?
  • Which cases seem more conducive to scaling up?
  • What life cycle costs do various organizations consider their responsibility? What costs should realistically be expected to be covered by tariffs?
  • How would an organization react if international or support funding were reduced or lost? What would be the ramifications to the customers or beneficiaries?
  • What monitoring schemes seem to be effective in maintaining quality water services?
  • What information or data would you be interested in evaluating for these programs?

Bio – Philip T. Deal

At the end of 2015, I began my doctoral research on service delivery models at the University of Oklahoma. My first significant reference was, “Supporting Rural Water Supply”, by Lockwood and Smits (2011), which has often guided my thought process. Understanding how various management models can improve, disrupt, or maintain the status quo for water service has become a focus of my efforts. I want to know if each case is really sustainable, if there is measurable impact, and if equity is truly equal when applying these models.

Since I began, I have had the opportunity to investigate these types of questions in partnership with Water4 and Access Development in Ghana. You may notice this case was not yet included in the directory. This is because I have wanted to give excellent, data supported answers before I do. The team involved has been working diligently to measure and evaluate the level of service provided, the associated life cycle costs, and the effectiveness or their company. Keep an eye out in the next year for these results in multiple studies.

I would encourage all who would like to be a part of the directory in the future to do similar investigations. Challenge your assumptions and dig into the details. Determine what is working and what should be changed. Put resources into evaluating your organization. Then, be honest about it. It is not an easy or glorious task, but it keeps us accountable.

If you do not know where to start – RWSN is a great place to begin. Connect with experts, practitioners, and researchers that can provide excellent guidance. Sean Furey reached out for help on the Directory project in the fall of 2018 through a Dgroup discussion. Since agreeing to participate, I have had the opportunity to grow my knowledge base and network.  We hope this directory will offer the same opportunity to innovative and budding organizations across the world.

Cost effective ways to leave no-one behind in rural water and sanitation – Summary on the RWSN E-discussion

The e-discussion on the topic of “Cost effective ways to leave no-one behind in rural water and sanitation” has come to an end and we are very grateful for the 40+ participants who actively took part. A summary of the e-discussion can be found here. Additionaly, we as moderators want to share our own summary of the discussion in this short blog.

Authors: Julia Boulenouar, Louisa Gosling, Guy Hutton, Sandra Fürst, Meleesa Naughton.

As duty bearers for the realisation of human rights to safe drinking water, States have the responsibility to ensure that no-one is left behind. And the SDG framework clearly sets out the need for all stakeholders to work together on the challenge. This e-discussion was an opportunity for diverse members of the Rural Water Supply Network to share lessons and views on how this can be done.

Reminding ourselves of the challenge at stake: since the SDG WASH targets 6.1 and 6.2 were adopted in 2015, the sector has been thinking hard about how to finance the ambitious goal of providing access to safely managed WASH services for everyone, everywhere and forever. This ambition is even more challenging in rural areas, where coverage levels are lower and the unserved include remote communities which are harder to reach and often poorer.

In order to develop a credible financial strategy to achieve this ambition and leverage resources, governments and sector stakeholders need to determine the real costs involved (not only to provide first time access for a few, but sustainable services for all) and the sources of funding that are available and can be mobilised. It needs credible data on those aspects as well as on the population served and unserved, including the most vulnerable groups.

What we already know about the cost of providing WASH services: the costs of providing services rely on many factors and the WASH Cost initiative led by IRC has helped to identify 6 categories beyond capital expenditure to include among others, operation and maintenance, capital maintenance expenditure and direct support. We know that some of these cost categories are largely unknown and as a result, not planned, not budgeted and not financed. This is the case for capital maintenance expenditure and for direct support costs (generally referring to costs for local government to support service providers).

In terms of actual costs, a World Bank study of 2016 showed that $114 billion per year would be needed globally to cover capital costs and roughly the same for operation and maintenance.

What we know less about is the real cost of providing services to all, especially for those left behind (including those marginalised and those discriminated against) and this is because limited data are available. We also recognise that beyond the 6 generic cost categories, many costs are unknown and neglected and these include:

  • the non-financial time costs of WASH access,
  • the cost of taking time to properly understand demand, recognising gender differences and diverse perspectives,
  • the cost of strengthening skills and stakeholder capacity to fulfil their mandate, particularly service authorities and service providers,
  • the cost of corruption,
  • the time and cost of including people with disabilities and others who are socially excluded in services.

These can be seen as cost drivers rather than additional categories, but should be thought through, every time services are planned for.

Who is currently financing this goal and who should do more? Leaving no one behind is the responsibility of national governments. They need to mobilise funding through a combination of sources, including government (taxes), development partners (transfers) and users (tariffs). This is usually known as the “3Ts”. In some contexts, the private sector may have a role to play in investing in water services. However, results from countries that conducted to identify and track WASH financing with the UN-Water tool TrackFin, show that the main contributors for the sector are by far the users who are paying for their own services through capital investment (Self-supply) and through water tariffs (operation and maintenance). In that context, should we consider revising the “3Ts” to “3Ts and S” to acknowledge the importance of Self-supply in the mix of services? And should we also add a 4th T for time to recognise the extent of unpaid labour, especially that of women, on which rural water supply depends? And should we recognise the time used to travel to a place of open defecation or also the waiting time for shared sanitation?

In any case, given the magnitude of the challenge, governments should mobilise additional funding for the WASH sector and coordinate efforts at all levels to ensure cost-effectiveness and efficiency, particularly in resource-constrained environments. Developing WASH plans at sub-national level could be a good way to strengthening governance and coordination, and maximise cost-effectiveness.

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What about serving those that cannot afford to pay? Those currently left behind include communities located in rural and remote areas who are often the poorest and currently rely on Self-supply. For those who cannot afford to pay and to address the issue of leaving no-one behind, various areas can be investigated:

  • Defining and measuring users’ affordability
  • Considering low-cost technology options such as Self-supply but only if accompanied by long-term support from local and national government (including through regulation)
  • Making sure the solutions are acceptable and accessible for all – taking into account gender, disability, and cultural preferences

This e-discussion has been useful at clarifying knowns and unknowns related to costing and financing services. Even though the issue of affordability has been touched on, many questions remain unanswered.

We think this discussion should continue and here are a few questions, which we still have in mind, but you might have many more:

  • Who are populations left behind in different contexts (including the marginalised and discriminated against) and how can we define and identify them?
  • What are the ongoing costs of reaching everyone (including the aspects listed above)?
  • If users are those paying the majority of WASH supply costs, how do we deal with those who cannot afford to pay?
  • What mechanisms can be introduced to set tariffs appropriately, whilst also covering the costs of long-term service provision?
  • What are the examples of supported Self-supply that have been successful?
  • What are the specific roles of local government in ensuring no-one is left behind?

Continue the discussion with us and post your answers below or sent your contribution to the RWSN e-discussion group.

Photo credits (top to bottom): Dominic Chavez/World Bank; Alan Piazza / World Bank; Arne Hoel / World Bank; Gerardo Pesantez / World Bank