wss sector finance in sub-saharan africa a regional comparison framework thomas fugelsnes,...
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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
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Ethiopia(2000)
Kenya(2001)
South Africa(2003)
National andLocal Budgets
11
Adequate funding 2:WSS expenditure as share of GDP
-
1.0
2.0
Ethiopia Kenya South Africa
PublicExpenditure
Total SectorExpenditure
12
Adequate funding 2:Total WSS expenditure as share of
GDP compared to health
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Ethiopia Kenya South Africa
WSS 2001
Health 2000
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Adequate funding 3: Comparative annual WSS expenditure per
capita (USD)
1 24 3
5552
-
25
50
Ethiopia Kenya South Africa
CapitalExp. PerUnservedPopulation
RecurrentExp. PerServedPopulation
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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
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)
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Leveraging Additional Leveraging Additional ResourcesResources Comparing sector expenditure as a % of GDP - health Comparing sector expenditure as a % of GDP - health
versus WSS versus WSS
Are we crowding out non-public resources?Are we crowding out non-public resources?
Source: Sub-Saharan Africa: World Development Report, 2003. Other countries: WSP-AF ongoing studies.
0
3
6
9
Health
Public
Total
Sub Saharan Africa
0
3
6
9
WSS Health
Ethiopia
0
3
6
9
WSS Health
Kenya
0
3
6
9
WSS Health
South Africa
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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
0.0
50.0
100.0
Ethiopia Kenya South Africa
0.0
50.0
100.0
Ethiopia Kenya South Africa
National
Local
Non-govt
Urban Rural
20
Expenditure estimates for different levels and service providers
0.0
50.0
100.0
Ethiopia Kenya South Africa
National
Local
Non-govt
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
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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
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