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  • Performance-based finance for drinking water security in Africa

    Financing water infrastructure for sustainable growth World Water Week, 30th August 2015

    Rob Hope & colleagues, Oxford University

  • 4.7% (29m)

    51.4% (316m)

    0

    10

    20

    30

    40

    50

    60

    1990 1995 2000 2005 2010 2015

    %

    Access to improved water sources in rural sub-Saharan Africa1

    Piped on Premises Other improved

    The $1bn challenge: Maintaining Africas rural water infrastructure

    1. Data drawn from WHO/UNICEF Joint Monitoring Programme (2015). 2. Estimate from Macarthur (2014). This corresponds with number of users of boreholes & protected wells, as calculated from JMP country files. 3. Based on mid-points of annual O&M cost requirement of US $2-3 per person (WASHCost 2011, adjusted to 2014 values). 4. Calculated from JMP country files. 5. Based on mid-points of annual O&M cost requirement of US $2-12 per person (WASHCost 2011, adjusted to 2014 values).

    184m handpump users2

    O&M costs:3 ~$485m p.a.

    70m standpipe users4

    O&M costs:5 ~$490m p.a.

    29m with piped connections

    O&M costs:5 ~$205m p.a.

  • Community-based financing of O&M widely promoted in policies & assumed in finance plans

    = country with rural water cost recovery policy or financing plan assuming O&M costs covered by household contributions

    Uganda: Various methods can be adopted for collection of funds

    depending on the nature of the community

    Ghana: The method of tariff collection [is] the pay-as-you-fetch method at standpipes or pumps

    Malawi: Collecting maintenance funds from

    each user household

    Sierra Leone: Tariffs may take the form of levies, monthly payments per household or periodic

    harvests

    Tanzania: Communities will establish a mechanism to pay the

    full costs of O&M and for higher service levels

    Zambia: Contributions could be monthly, bi-annually or annually

    1. Based on information presented in Banerjee & Morella (2011) and GLAAS (2014). Banerjee & Morella (2011) listed countries with a rural water cost recovery strategy. GLAAS (2014) listed countries with a financing plan [which] defines if operating and basic maintenance is to be covered by tariffs or household contributions. Quotes taken from the following sources: Malawi Ministry of Irrigation and Water Development (2010), Tanzania Ministry of Water and Livestock Development (2002), Zambia Ministry of Local Government and Housing (2007), Uganda Ministry of Water and Environment (2011), Sierra Leone Ministry of Water Resources (2013), Ghana Community Water & Sanitation Agency (2011),

    Some policies promote cost sharing for major repairs and rehabilitation

  • Mismatch between policy and reality Majority of waterpoints lack revenue collection

    0 10 20 30 40 50 60 70 80 90

    LiberiaZimbabwe

    LesothoMalawiZambia

    MaliSouth AfricaMadagascar

    TanzaniaNigeria

    Weighted averageKenya

    Burkina FasoUganda

    MozambiqueGhana

    BotswanaSenegal

    BeninNamibia

    Cape Verde

    Rural households paying for water (2008-09)1

    1. n=17,515 (Afrobarometer, 2014). Available at: http://afrobarometer.org/data. 2. Piped scheme data obtained from Uganda Ministry of Water and Environment (2014), WASREB (2014), EWURA (2014). Analysis excludes waterpoints located in urban areas. Analysis based on publicly available waterpoint datasets (Virtual Kenya, 2015; National Water Sanitation and Hygiene Promotion Committee, 2014; Sierra Leone, STATWASH Portal; Government of Tanzania, 2014; Government of Uganda, 2012). For additional data see Waterpoint Data Exchange http://www.waterpointdata.org

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100

    Tanzania Kenya Uganda Liberia SierraLeone

    Revenue collection rates2

    Rural utility collection rate (piped schemes)

    Standpipes/kiosks with revenue collection

    Handpumps with revenue collection

  • Inadequate finance has major operational implications Non-functionality rate twice as high when no revenue collected

    8%

    22%

    13%

    24%

    10%

    16%

    34%

    25%

    43%

    26%

    0%5%

    10%15%20%25%30%35%40%45%

    Kenya Liberia Sierra Leone Tanzania Uganda

    Rural waterpoint non-functionality rates (n=183,149)1

    With revenue collection Without revenue collection

    1. Waterpoints analysed include standpipes, kiosks, handpumps and protected springs. Analysis excludes waterpoints located in urban areas. Data drawn from publicly available waterpoint datasets (Virtual Kenya, 2015; National Water Sanitation and Hygiene Promotion Committee, 2014; Sierra Leone, STATWASH Portal 2014; Government of Tanzania, 2014; Government of Uganda, 2012). For additional data see Waterpoint Data Exchange http://www.waterpointdata.org/

    If SDG is to be achieved in rural Sub-Saharan Africa then financial sustainability must be addressed

  • Kitui County (2012-2022)

    Kwale County (2013-2019)

    Evidence from Kenya

  • Rainfall predicts improved water infrastructure demand - Kitui County (2013-15)

  • 0

    25

    50

    75

    100

    125

    150 -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    Average Volume / litres

    Average Rainfall / mm

    3 per. Mov. Avg. (Average Rainfall / mm)

    Smart monitoring systems data to improve institutional design and delivery (Kwale, 2014)

  • 0

    100

    200

    300

    400

    5000.0

    0.5

    1.0

    1.5

    2.0

    2.5

    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

    Rai

    nfa

    ll (m

    m)

    USD

    pe

    r d

    ay

    Revenue and expenditure by month

    Average rainfall 2007-13 PAYF income

    Fixed fee income Maintenance expenditure

    All O&M expenditure

    Pay-as-you-fetch: higher income and lower downtime Cash flows heavily influenced by rainfall (Kwale County)

    13

    35

    36

    Pay-as-you-fetch

    Fixed fees

    Ad hoc

    Downtime by payment approach (days)

  • Foster & Hope, 2016

    Data - 229 years of financial records from 100 handpumps with >50,000 payment records Predictors of payment: Distance to waterpoint Water quality (pH, taste) Productive use Seasonality

    Late payment and non-

    payment are prevalent

    Payment behaviour a socio-ecological response

    PAYF higher income, higher unimproved use

    Multi-decadal analysis of payment records - Kwale County

  • Will rural people pay for a professional maintenance service? - Choice Experiment analysis from Kwale (similar in Kitui)

    Foster, Hope & Thomson, 2015

  • FundiFix Ltd. (Kwale) a local enterprise to promote sustainability

    Phase 1 Maintenance system (14/15) One year free trial control/treat. 369 repairs for 213 treated pumps

    over 12 months. Ave. 1.7 repairs per pump per year. Mean days to repair 30

    days Hourly data on pump usage Phase 2 Institutional design (16/17) Community monthly fees to register

    with FundiFix Design of Water Services

    Maintenance Fund blending user fees, county government and donors

  • Promising but sustainable? Communities pre-pay by MPESA with a guaranteed service or money back

  • Water Services Maintenance Trust Fund - Results-based finance (RBF) from users, government and investors - Coordination at scale to reduce risks for communities, schools, clinics and local enterprise

    Local bank Account #1 Company cashflow Account #2 Trust contributions

    FundiFix Ltd.

    Handpumps

    Boreholes with kiosks

    Piped systems

    Regulator (WASREB)

    Government (national, local)

    Water Services Maintenance Trust Fund

    User Payments $$

    RBF $$

    RBF $$ Performance

    Metrics

  • Sustainable finance critical to achieve universal drinking water security - Annual maintenance expenditure exceeds $1bn/pa

    Mismatch between policy and reality Community-based financing but systematic revenue deficits

    Evidence from Kenya Users pre-paying for professional service delivery (FundiFix Ltd.)

    Smart monitoring and data informs better design and delivery

    Legacy of past investment decisions limits future options

    Tension between universal delivery and financial sustainability

    Performance-based models: Water Services Maintenance Trust Fund

    Summary

  • Papers, videos, blogs and more at: http://www.smithschool.ox.ac.uk/research-programmes/water-programme/ http://www.reachwater.org.uk/ http://www.oxwater.uk/ https://upgro.org/consortium/gro-for-good/ Join us at RWSN7 in Abidjan on Tuesday 29th November: https://rwsn7.net/

    http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://www.smithschool.ox.ac.uk/research-programmes/water-programme/http://reachwater.org.uk/http://www.oxwater.uk/http://www.oxwater.uk/https://upgro.org/consortium/gro-for-good/https://upgro.org/consortium/gro-for-good/https://upgro.org/consortium/gro-for-good/https://upgro.org/consortium/gro-for-good/https://upgro.org/consortium/gro-for-good/https://upgro.org/consortium/gro-for-good/https://rwsn7.net/https://rwsn7.net/
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Performance-based finance for drinking water security in Africa Financing water infrastructure for sustainable growth World Water Week, 30 th August 2015 Rob Hope & colleagues, Oxford University
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