What has informed SWA engagement with finance ministries? Clarissa Brocklehurst , Senior Advisor, SWA Secretariat

What is this? A room full of Finance Ministers ready to discuss WASH – a dream come true for many of us

Engagement with finance ministries is what sets SWA apart…. Since 2010, always finance ministers in attendance Prep process is key: often the first time water ministers sit with their finance counterparts How to make this work better? Need photo here 2017: 14 ministerial-level representatives of finance and planning ministries

We have done research Held on March 5, 2013 Hosted by the Global Research Institute and the Water Institute of the University of North Carolina Participants from Uganda, Nigeria, Sierra Leone, Liberia, Gambia and South Sudan Observers from SWA Secretariat “Chatham House Rules” observed Supported financially by UNC, DGIS (via UNICEF), Bill and Melinda Gates Foundation

Role of Finance Ministers in shaping WASH investments Finance Ministers consider themselves stewards of scarce resources They want value for money They are driven to grow the economy – so want to know how WASH will contribute They need to know not only that WASH is a good investment, but which kinds of WASH investments constitute value for money They are interested in links to other sectors Are interested in links to other sectors – other parts of water sector, health, education – willing to act as conveners between Ministries Complex process Frustration with “flat” briefings from technocrats Staff need modular briefing materials that can be tailored to Minister’s interests and concerns On-going, supportive relationship will mean staff know where to get relevant information rapidly

Perceptions of the WASH Sector Some perceived weaknesses: Fragmentation – multiple ministries involved Lack of data Weak absorptive capacity Poor record of sustainability Finance Ministries want to see multiple ministries engaged to ensure cohesion Finance Ministers are frustrated by WASH Sector inability to demonstrate and track progress

Lessons for High Level Meetings? HLM linked to World Bank Spring Meetings works well Finance Ministers want the HLM to be a learning opportunity Make HLMs informative and educational for Finance Ministers (themes, keynote speakers, etc.) Frame WASH in the context of its contribution to economic growth and a sound, value-for-money investment Address sustainability Start early and maintain an on-going, multi-Ministry, multi-stakeholder dialogue Be ready to provide modular briefing materials, data and other information on short notice to respond to windows of opportunity Make a strong case for WASH as a contributor to economic growth and a sound, value-for-money investment

We have focused on making the economic case investment in water supply and sanitation makes good economic sense failure to invest has massive costs water supply and sanitation also offer non-monetized benefits improvements to water supply and sanitation yield massive returns on investment significant investment is needed government investment is an important part of the financing of water supply and sanitation

We’ve explained the benefits of improving WASH Improves quality of life WASH-related jobs created Environment improves Boosts tourism Reduces water treatment costs WASH services improve Economic opportunities Efficient water use Frees up water for production (agriculture, industry) Sustainable growth Improved WASH leads to direct benefits for households Reduced mortality and morbidity Lower prevalence of stunting, which affects cognitive development and long term prospects Improved productivity Reduced downtime due to illness Time spent collecting water or finding a safe place to defecate is freed up: more time for productive, educational activities and rest Dignity, reduced risk of sexual violence for women and girls Improved quality of life in a clean environment And for society at large… Employment opportunities: in the construction and operations of WASH facilities, overall sector management, monitoring, etc. Economic opportunities: improved availability of water for other productive uses (agriculture, industry) ; cleaner environment boosts tourism revenues and competitiveness Environmental impacts on both land and water bodies Diseases reduce Mortality & morbidity drops Stunting reduced Better education outcomes Productivity increases Time freed up

Sustainable water sector We’ve educated Finance Ministers on the need to improve operating efficiency Consumers use water More efficiently Investments in new access expand revenue base More satisfied customers = more willing to pay Staff and managers rewarded for improved performance Subsidies for new access provided in transparent and targeted manner Staff motivation improves Tariffs increased to cover greater portion of efficient costs Reduced losses: reduced costs Service quality improves Technical efficiency improves Service providers fully cover operating costs System assets adequately maintained Sustainable water sector Private finance mobilized to increase investment capacity Reduce costs and free-up wasted resources Invest in more capital-efficient solutions Implement asset-management systems Reduce non-revenue water Improve collection rates Reduce energy costs Maximize reuse and resource recovery Professionalize staff Enhance governance arrangements

An efficient water sector frees up scarce public funds which can be reallocated to: connecting the poor and the hardest to reach; the sub-sectors with limited revenue sources (e.g. sanitation versus water supply) be used in a catalytic manner to leverage private finance (“blending”) We have spoken to Finance ministers about ways to make sure the poor are served – sustainably

We’ve discussed the sources of finance available to the sector Water service provider’s finances Costs Funding REPAYABLE FINANCING Capital maintenance Financing gap Concessional finance Traditionally, bulk of repayable finance for water came from concessional finance, i.e. from development finance institutions with a grant element To meet the SDGs, commercial finance needs to be leveraged with a particular focus on domestic commercial finance Financial costs Commercial finance Operation and maintenance Transfers Traditionally, bulk of repayable finance for water came from concessional finance, i.e. from development finance institutions with a grant element To meet SDGs, commercial finance needs to be leveraged with a particular focus on domestic commercial finance Investment costs Taxes Tariffs Funding PUBLIC PRIVATE

We’ve encouraged Finance Ministers to have a WASH financing strategy avoid squeezing out private finance target efficiency improvements build pipelines of bankable projects put greater emphasis on blending A financing strategy that includes commercial finance A sector wide financing strategy would address these issues.

The goal: Finance Ministers work with sector ministers to support…. Efficient, affordable universal services for everyone, financed by a mix of sources including tariffs/user charges, taxes and repayable private finance, predominately from domestic sources. Comprehensive planning for the sector includes sustainable financing strategies …and comprehensive planning for the sector includes sustainable financing strategies

Thank you