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Published on: 06/11/2014

Every aspect of WASH service provision in developed countries, like the Netherlands, France, the UK or even the USA directly or indirectly involves public money.

However, discussing the role of public finance for WASH in developing countries remains unfashionable when compared with its sexier cousins: market solutions, repayable finance, supporting bottom of pyramid entrepreneurs and micro-credit.

The proposed Sustainable Development Goal on water goes beyond providing universal access. It links the water and sanitation sector with the broader integrated water resources management and recognises that sanitation services go beyond the construction of latrines and needs to address the safe final disposal of waste. The new goal is a step up in the sector's ambition and translates into water and sanitation services for everyone forever which IRC has been advocating for with partners in countries and internationally.

Embracing the goal of providing water and sanitation for everyone forever will require a profound change in the way the sector works and is funded. It will take strong and responsive governments, civil society and private sector. Two of the main implications that the new goal has for the sector are that we need to shift from piecemeal projects to system-wide change and that this must go hand in hand with public finance.

But public finance has a tarnished reputation in part reflecting poor historic outcomes of for example badly designed latrine subsidy programmes which "crowded out" household/market finance and created subsidy dependence. Indeed, some people immediately understand "public finance" to mean service provision by a government agency, though this is incorrect. Public finance is defined as financing which originates from the tax base, whether on a national or sub-national level. Public finance does not necessarily mean public service delivery: it is absolutely possible for money disbursed by a public institution to pay for a service delivered by a private company.

Even the most committed proponents of market solutions accept that public finance for WASH remains necessary 1) to bridge the "pioneer gap" between proof-of-concept and marketing at scale of innovations, 2) to cover aspects of services or segments of the population which the market can probably never entirely reach (e.g. parts of the faecal sludge management chain, or service delivery in remote rural areas), and 3) to create frameworks that allow markets to work: in other words, to enable and catalyse new markets.

A key question is: How can public finance be used effectively together with philanthropy/aid as well as private finance with the aim to support sustainable services at scale? 

The answer to this question will hopefully be given at the next IRC event. It will discuss how public and private finance should not be seen as opposing solutions, but rather as two complementary pieces of the same puzzle in the water and sanitation sector. Speakers interventions will support our understanding of how public finance for basic services like water and sanitation requires us to take account of national processes (e.g. budget allocations to WASH) as well as of local processes (e.g. municipal tax systems) and the processes of fiscal decentralisation which are essential for effective involvement of local government in basic services delivery, now and in the future.

When: 12th November, 16:30 - 19:30 PM, preceded by coffee, tea and followed by drinks. The debate itself takes place from 17:00 to 18:30 sharp.
Where: At the venue 7AM (Buitenhof 47, 2513 AH Den Haag)

Register at communications@ircwash.org for your presence at the event and to be kept informed about future events.

Read these supportive and informative pieces on public finance by IRC as a prologue to the discussion:

 

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