Investments for Water and Poverty Reduction Strategies Issues and Priorities for Pubic Finance

1
Investments for Water and Poverty Reduction
StrategiesIssues and Priorities for Pubic Finance

• Presentation for the Conference on Fresh Water
• December 4 2001 Bonn, Germany
• Meera Mehta
• Water and Sanitation Program, Africa

2
Presentation Structure

• Water - Sanitation and Poverty Linkages
• Sector Strategies Rural Water Supply and
  Sanitation
• Key Issues and priorities for Public Finance

3
Poverty Linkages - 1

• Type of impacts of water and sanitation on
  poverty reduction
• Health improved child and maternal health
• Education especially for the girl child
• Income improved productivity, reduced costs of
  health
• Gender improved conditions for women
• Social inclusion inclusion of remote and
  excluded communities

4
Poverty Linkages - 2

• To ensure poverty linkages of water and
  sanitation
• Need to reach a large proportion of the
  population over a defined time frame, especially
  the poor in remote areas
• Emphasis on sustainability of water schemes
  through appropriate strategies
• Inclusion of environmental sanitation and hygiene
  benefits to ensure benefits from water

5
Poverty Linkages - 3

• Non-income dimensions of poverty reduction, along
  with education and health
• International development goals
• Population with sustainable access to safe
  water is a key indicator
• Water and sanitation - emerging in country owned
  poverty reduction strategy papers (PRSPs) in
  Sub-Saharan Africa and participatory poverty
  assessments (PPAs)

6
Sector Strategies - 1

• Demand Responsive Approach (DRA)
• A Key sector strategy for RWSS
• Agreement on need for DRA for sustainability
• Global guidelines and detailed implementation
  guidelines and manuals developed in several
  countries
• Level of commitment and extent of coverage varies
  significantly across countries / regions

7
Sector Strategies - 2

• Key Principles of DRA
• Informed choices by communities through
  participatory planning and community involvement
  in implementation to ensure ownership
• Community management responsibility for operation
  and maintenance (OM)
• Cost recovery capital cost sharing (expression
  of demand and ownership) and 100 OM

8
Sector Strategies - 3

• Key Issue - scale up the DRA for RWSS to the
  entire country in a sustainable manner
• DRA accepted in policy in many countries and
  piloted through projects in selected regions
• However, scaling-up in very few cases
• State of Karnataka, India to introduce DRA for
  40 of the state (population gt15 million) and
  strategy to extend statewide
• Uganda Under PRSP and PRSC, gradual extension
  to cover all districts in the country
  population of 18 million. Countrywide and
  Sector-wide approach (SWAP)

9
Issues for Public Finance - 1

• Linking with macro investment frameworks
• Need for feasible and sustainable public finance
  expenditure envelopes / ceilings
• Integrate with Medium Term Expenditure Framework
  (MTEF / MTFP)
• Uganda established link with MTEF
• India (Karnataka) planned link with MTFP
• Linking investments with results and not only
  inputs- Need for a strengthened ME system

10
Issues for Public Finance - 2

• Priority for Water
• Considerable variations across countries
• Uganda recent increases, est. 9 of investments
• Kenya estimated 2 of investments
• Karnataka, India planned increase, est. 6 to 9
  
• Ethiopia estimated 2 of investments
• High / Low Priority is linked to
• Expressed priority by the poor (Uganda)
• Low sector preparedness (Kenya, Ethiopia)

11
Issues for Public Finance - 3

• Financing rules
• Generally agreed at - community contribution to
  be 10 percent of total capital costs
• Need to review and link to
• Notion of a basic service
• Possibility of access to credit through
  sustainable community based / micro-finance
  systems
• Country (region) wide uniform policies to ensure
  fiscal consistency at scale subsidies not
  confined to a lucky few

12
Issues for Public Finance - 4

• FundingInstitutional Change Software
• For informed community choice and sustainable OM
  management, software support is critical
• Tensions with traditional hardware orientation
  of public investments and funding of software
• Example In Uganda, of planned investments
• 14 percent for national program support
• 10 percent for sub-project management support

13
Issues for Public Finance - 5

• Leveraging Resources
• Investment requirements fall short of potential
  public finance resources illustrations
• Uganda estimated 40 shortfall over 3 years for
  a planned increase in coverage from to 50 to
  65
• Ethiopia estimated 45 shortfall over 5 years
  for a planned increase in RWS coverage from 20
  to 25
• Leverage resources through
• Enhanced community shares Notion of basic
  service, micro-finance, valuing community
  participation
• Private sector investments Institutional
  reforms, especially for multi-village schemes,
  partial guarantees?

14
Issues for Public Finance - 6

• Options for Financing Mechanisms
• Links to decentralization block grants versus
  conditional district grants (e.g. Uganda)
• Special independent funds for community projects
• Ethiopia Social Rehabilitation and Development
  Fund 40 of total WS investments in the country
• Mechanisms to leverage resources explore output
  based aid (Paraguay), partial guarantees

15
Emerging Priorities

• Water in participatory poverty assessments
• Sector preparedness for add. investments
• Institutional models and capacity, M E
• Integrate with MTEF / MTFP, decentralization
• Uniform and rational financing rules
• Developing public finance mechanisms to
• Fund institutional change and software
• leverage limited public finance resources