Publication:
Easing the Transition to Commercial Finance for Sustainable Water and Sanitation

Loading...
Thumbnail Image
Files in English
English PDF revd (1.47 MB)
5,450 downloads
English Text (358.33 KB)
135 downloads
Other Files
Spanish PDF (1.54 MB)
311 downloads
Published
2017-08
ISSN
Date
2017-08-24
Editor(s)
Abstract
Providing sustainable water supply and sanitation (WSS) services in developing countries remains an immense, and increasingly urgent, challenge. Chapter two sets out how the sector is currently funded and why business as usual is insufficient for meeting WSS-related goals, covering the size of the investment gap, and the challenges presented by the status quo. Chapter three proposes a financing framework toward more effective use of existing funds to enable the mobilization of new sources of finance, and explains the benefits and costs of commercial finance. Chapters four to six detail the three components of the financing framework, providing practical advice and global experiences that demonstrate how countries can begin to make progress. Chapter seven summarizes how stakeholders can bring the three components together to mobilize commercial finance, and provides the main conclusions and recommendations of the report.
Link to Data Set
Citation
Goksu, Amanda; Trémolet, Sophie; Kolker, Joel; Kingdom, Bill. 2017. Easing the Transition to Commercial Finance for Sustainable Water and Sanitation. © World Bank. http://hdl.handle.net/10986/27948 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Reform and Finance for the Urban Water Supply and Sanitation Sector
    (World Bank, Washington, DC, 2019-08) Goksu, Amanda; Bakalian, Alex; Kingdom, Bill; Saltiel, Gustavo; Mumssen, Yogita; Soppe, Gerard; Kolker, Joel; Delmon, Vicky
    Since 2016 the World Bank has explored a wide range of country experiences in delivering better water supply and sanitation services. The analyses led to publication of three new global frameworks for designing water reforms: Policy, Institutional, and Regulatory Incentives, which looks at the broader sector enabling environment; Water Utility Turnaround Framework, which looks at utility-level reforms; and Maximizing Finance for Development, which looks at shifting the financing paradigm to reach the Sustainable Development Goals. The three frameworks—individually and as a compendium—set forth the key principles of a more holistic approach to reform that diverges from the traditional focus on infrastructure economics to a deeper understanding of the behavior of and between sector institutions and of the people within those institutions. Each country-specific reform path will gradually bring the sector to higher degrees of maturity with a strong focus on improving financial sustainability. This summary note integrates the three lines of work—utility reform, sector reform, and sector finance—for readers to understand the critical links between the three spheres. New contributions of this note are a Maturity Matrix for assessing where a country is in its reform process and where it wants to go and a Maturity Ladder that identifies typical actions to move from one stage of maturity to the next. Tools and references are also provided to help governments start on their reform path.
  • Publication
    Financing Options for the 2030 Water Agenda
    (World Bank, Washington, DC, 2016-11) Kolker, Joel Evan; Kingdom, Bill; Trémolet, Sophie; Winpenny, James; Cardone, Rachel
    The sector is in the process of repositioning itself toward the Sustainable Development Goals (SDGs). Under the Millennium Development Goals (MDGs) the international focus of the water sector was predominantly on increasing access to water supply and sanitation (WSS). With the advent of the SDGs the agenda is much broader covering all aspects of water, water resource management, and irrigation and theirsustainability. The water sector is not well equipped to face these new financing challenges. The sector has historically relied on public financing to meet its investment needs—through domestic and development partner concessional funds and/or lending. Institutionally many parts of the sector are government departments where mobilizing private finance is almost non-existent. Even when they are established as corporate entities, such as some WSS providers, it is rare for them to borrow from commercial lenders due to weak incentives and/or poor creditworthiness. Mobilizing additional concessional funds will help— but will not be sufficient. New sources of concessional finance might be tapped (e.g., climate finance) but the gap cannot be filled simply by increasing the volume of concessional funds and lending from governments or development partners. A new sector financing paradigm is required based on four broad themes. The sector has to realign itself around actions that (a) improve sector governance and efficiency (i.e., improving creditworthiness), (b) crowd in or blend private finance (i.e., leveraging capital ), (c) allocate sector resources more effectively to deliver the maximum benefit for every dollar invested (i.e., targeting capital), and (d) improve sector capital planning to reduce unit capital costs (i.e., minimizing capital requirements). Achieving the new financing paradigm requires a more collaborative approach with all stakeholders playing an active role.
  • Publication
    Aid Flows to the Water Sector
    (World Bank, Washington, DC, 2016-11) Winpenny, James; Trémolet, Sophie; Cardone, Rachel; Kolker, Joel; Kingdom, Bill; Mountsford, Lyndsay
    This report provides data and insights on the role of grant funding and concessional financing in meeting the Sustainable Development Goal for water (SDG 6, known as the water SDG). These sources of funding are collectively referred to in this report as aid flows to the water sector. This report was prepared as an input into the High-Level Panel on Water. Data analysis was conducted using two main databases on aid to the water sector. The Organisation for Economic Cooperation and Development Assistance Committee (OECD/ DAC) database is the most comprehensive, while the WASHfunders.org database provides complementary data on aid from philanthropic organizations. These databases were complemented by an inventory of the main institutions providing aid to the water sector, as well as interviews with selected providers of aid to the water sector, including leading multilateral development banks (MDBs), bilateral donor agencies, and international nongovernmental organizations (NGOs). This analysis provides the basis for recommendations on how to improve the aid architecture to the water sector and mobilize financing to achieve the water SDG.
  • Publication
    Better Use of Capital to Deliver Sustainable Water Supply and Sanitation Services
    (World Bank, Washington, DC, 2018-11) Kingdom, Bill; Lloyd-Owen, David; Tremolet, Sophie; Kayaga, Sam; Ikeda, John
    The costs of meeting the SDG WASH targets will be several times higher than investment levels during the MDG era (2000–15). The immense scale of the financing gap calls for innovative solutions. In addition to mobilizing more funding another approach is to deliver the needed infrastructure more efficiently and effectively and thus reduce the financing gap. Capital expenditure efficiency (CEE)—the efficient and effective use of capital—is less documented compared to operational efficiency. Although improving operating efficiency is frequently highlighted and readily evaluated, the scope for capital cost efficiencies is poorly understood, frequently overlooked, and difficult to evaluate, even though the scale of savings can be significant—in fact, capital and operating costs are equally important when considering full cost recovery. This study compiles case studies that show the "art of the possible" in CEE. The report is not encyclopedic—many more examples could surface from a comprehensive study. It also doesn’t quantify the savings possible through increasing CEE. However, almost all the examples show capital savings of 25 percent or more compared to traditional solutions. This alone this should give policy makers, donors, and utility managers pause for thought and encourage them to develop CEE in their sectors, projects, or utilities. A 25 percent improvement in CEE would allow existing investments to deliver a 33 percent increase in benefits.
  • Publication
    Financing On-Site Sanitation for the Poor : A Six-Country Comparative Review and Analysis
    (World Bank, Washington, DC, 2010-01) Trémolet, Sophie; Kolsky, Pete; Perez, Eddy
    The present study offers evidence on alternative financing approaches for on-site household sanitation from case studies in six countries: Bangladesh, Ecuador, India, Mozambique, Senegal, and Vietnam. This evidence can help identify the best-performing approaches and the relevant factors and issues to consider in designing a sanitation financing strategy. The study systematically compares alternative financing approaches based on a set of common indicators, including in terms of the effectiveness in the use of public funds and targeting. The team chose to focus on those projects recognized as successes to obtain a reasonable representation of the better practices in sanitation programs. The study identified a number of useful examples and tentative lessons about finance which should help to advance the design of sanitation finance at the outset of a project. Replicating such experiences will require a better understanding of what drives household investment and what the key constraints limiting such investment are, in both financial and non-financial terms. The sanitation challenge continues to grow with population, as does the cost of failing to meet it. This study is a worthwhile contribution to addressing the challenge of how to pay for sanitation.

Users also downloaded

Showing related downloaded files

  • Publication
    Design Thinking for Social Innovation
    (2010-07) Brown, Tim; Wyatt, Jocelyn
    Designers have traditionally focused on enchancing the look and functionality of products.
  • Publication
    Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008
    (2009-06-01) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.
  • Publication
    Governance Matters IV : Governance Indicators for 1996-2004
    (World Bank, Washington, DC, 2005-06) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.
  • Publication
    Government Matters III : Governance Indicators for 1996-2002
    (World Bank, Washington, DC, 2003-08) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.
  • Publication
    Breaking the Conflict Trap : Civil War and Development Policy
    (Washington, DC: World Bank and Oxford University Press, 2003) Collier, Paul; Elliott, V. L.; Hegre, Håvard; Hoeffler, Anke; Reynal-Querol, Marta; Sambanis, Nicholas
    Most wars are now civil wars. Even though international wars attract enormous global attention, they have become infrequent and brief. Civil wars usually attract less attention, but they have become increasingly common and typically go on for years. This report argues that civil war is now an important issue for development. War retards development, but conversely, development retards war. This double causation gives rise to virtuous and vicious circles. Where development succeeds, countries become progressively safer from violent conflict, making subsequent development easier. Where development fails, countries are at high risk of becoming caught in a conflict trap in which war wrecks the economy and increases the risk of further war. The global incidence of civil war is high because the international community has done little to avert it. Inertia is rooted in two beliefs: that we can safely 'let them fight it out among themselves' and that 'nothing can be done' because civil war is driven by ancestral ethnic and religious hatreds. The purpose of this report is to challenge these beliefs.