Financing the Sector

FINANCING THE SECTOR

Effective financing is the backbone of water and sanitation programs. Common practice in the sector has been to identify areas with limited funds and argue for more public resources to fill those gaps. While this is necessary, public resources for these services tend to be scarce. WSP takes a different approach. We prefer to build local capacity, leverage private (domestic) resources, and ensure that all resources (public and private) reach their targets and are effectively spent.

WSP places a strong emphasis on improving governance arrangements and processes so that our clients get the most from financial resources to benefit their poor and underserved populations. We work with client governments to develop sector programs which clearly link reforms, financial strategy, and public budgets to ensure that revenue is managed effectively, subsidies are targeted appropriately, and new opportunities are realized. Strong monitoring systems are a critical component of these programs.

In part this work means developing financial strategies that create relevant incentives. In several South Asian countries, an innovative sanitation program promotes hygienic behavior change only after a community has “bought-in”. This successful Total Sanitation Approach has been adopted and expanded by municipal governments and is now being replicated in other regions. In Africa, a subsidy and micro credit scheme is the foundation of a pilot project which will introduce sustainable credit financing to small water projects in Kenya. Similar efforts are also planned in several countries in East Asia for small service providers in urban and rural areas.

Finance is a cross-cutting theme in all regions, and since fiscal year 2002 has emerged as one of the core businesses in WSP engagement with clients. We draw on our pool of global knowledge distilled from work with country governments in four regions to offer our clients first rate guides for managing the finances of water and sanitation programs.