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Published on: 15/09/2022

Why is a WASH finance strategy necessary?

When the United Nations Sustainable Development Goals were adopted in 2015, the international community recognized that closing the finance gap to achieve  WASH targets was a major ask. At the time, the US$ 114 billion needed to cover the capital costs of universal access would have required a three-fold increase in spending. This number also did  not take into account the funding required to operate and maintain WASH systems, replace ageing infrastructure, and ensure smooth running of the sector as a whole.

Since 2016, there has been no observable increase in WASH sector financing globally, even if more is being spent in some countries, according to UN GLAAS data which willbe released later this year. In 2019, twenty countries and territories reported a finance gap of 61% between identified needs and available finance to reach national WASH targets.

Cost recovery from user charges has not significantly increased in the past decade, and in more than half of countries, tariffs are still insufficient to cover at least 80% of operation and maintenance costs. While official development assistance (ODA) grants for WASH have been at a standstill in real terms since the year 2000 , ODA loans have been steadily rising. Today there is also evidence of more climate, innovative and private sector sources being tapped, giving  hope for the future financing of WASH targets.

Based on this realistic outlook, it is vital to adopt a strategic approach to closing the WASH finance gap. This means understanding financial flows and needs, viewing the performance of existing fund flows through the lens of equity, effectiveness and efficiency, finding ways to use the funds more efficiently andestablishing measures to attract additional financial resources.

How can we successfully close the financing gap?

This week, UNICEF, with the support of AFD, IRC and SWA, is launching a comprehensive guide to developing a WASH finance strategy.

A WASH finance strategy  assesses the sector finance gap over a long planning period, identifies options to mobilize more financial resources and reduce the costs of achieving sector targets and  provides policy recommendations to close the finance gap.

The guide will support governments and development partners to promote and facilitate the development of WASH finance strategies. This process requires policy dialogues and consensus-building by asking difficult questions about the best ways to acheive WASH goals. Above all, a WASH finance strategy should not operate in a vacuum. Instead, it should be opportunity-driven and linked to existing processes

Windows of opportunity to launch the development of a WASH finance strategy

What’s in the Guide?

The guide,  showcases the benefits of investing time and resources to properly understand WASH finance and explores the pre-conditions needed for the strategy to be useful.

Elements of a Finance Strategy

Benefits of a Finance Strategy

Because many previous WASH finance plans or strategies have not had the needed impact, the guide also explains which resources are required in order for strategies to be successful. Additionally the guide offers advice on engagingthe right stakeholders and producing relevant analyses to support policy dialogue.

Phases of the WASH strategy development process

The final section of the guide covers the main contents of a WASH finance strategy, including the 3Ts framework (taxes, tariffs and transfers), the data requirements and methods of analysis to estimate the financing gap and ways to assess implications of different sources of finance.

The guide also provides case studies from countries which have successfully used finance-related strategies and instruments in the recent past – including Albania, Armenia, Cambodia, Ethiopia, Kenya, Mali, Morocco, Myanmar, Rwanda and Senegal. Importantly, these examples emphasize government leadership and the supportive collaboration of sector agencies.

The development of the guide has been supported by many sector stakeholders under UNICEF’s leadership, such as co-publishers including the UN-hosted Sanitation and Water for All (SWA) global partnership, Agence Française de Développement (AFD) and the IRC Water and Sanitation Centre in The Netherlands. The guide is available in English, French and Spanish.

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