1. African Economic Outlook 2007
Drinking Water and Sanitation:
can Africa fill the gap?
Lucia Wegner
OECD Development Centre
28 June 2007 Second OECD Forum on Statistics Knowledge and Policy
Istanbul

2. African Economic Outlook
Measuring the Pulse of Africa
Joint publication of the AfDB and the OECD Development Centre, supported by the EC – 6th edition.
Mobilising a network of in-country African experts & collaboration with WB, IMF, bilateral donors, …
A resource for policy makers, aid practitioners, investors, researchers, students, …
A tool for policy dialogue among African policy makers (nationally, APRM, …) and with their partners (EC, G8, OECD)
The AEO is a process, not only a product

3. African Economic Outlook
An innovative product, an evolving process
Comprehensive, comparative and independent analysis of 31 countries and short-term macroeconomic forecasts.
Annual focus
2003: Privatization
2004: Access to energy
2005: SME development
2006: Transport infrastructure
2007: Access to drinking water and sanitation
Statistical annex, including innovative indicators
A strong focus on issue pertaining to the development of the private sector in Africa.

4. AEO Special Topic 2007 Access to water and sanitation
Water is on the top of the agenda of the international community
Africa is in a particularly difficult situation
A delicate and highly technical topic
AEO 2007 offers an assessment of major trends, challenges and also encouraging country experiences
Why did we choose this topic?
Access to water and sanitation has gained high prominence within the international community because of the dramatic situation in many countries, which is likely to worsen due to climate change
The situation in Africa is particularly worrisome: Sub-Saharan Africa has the lowest drinking water and sanitation coverage in the world. One in two people has no easy access to drinking water and two out of three to proper sanitation facilities
Therefore we have decided to devote this year AEO to such an important issue.
This is a very challenging task, for at least two reasons: 1) access to water is a basic human need, but water is also a scarce resource with many competing uses. Consideration of efficiency must then be balanced with equity. 2. the discussion can be very technical
the AEO contributes to the policy debate by providing an assessment of major trends in the continent, highlighting the challenges but also pointing to encouraging country experiences. These are summarised in the overview and then discussed at length in each one of the 31 country notes.

5. Access to water and sanitation: the facts
10 million people / year have gained access to improved drinking water over in sub-Saharan Africa
With population growth, the number of unserved has increased by about 60 million and SSA is unlikely to reach the MDGs by 2015.
The situation is worse for sanitation: 35 million more people annually need access to improved sanitation (current trend: 7 million)
If the MDGs were reached by 2015, 234 million people would still lack access to safe drinking water and 317 million to improved sanitation
Number of connections need to triple: an additional 20 million per year in order to meet the MDG goal for drinking water.
Number of those without access to drinking water is expected to increase by an additional 45 million by
Two out of three households lack access to improved sanitation, and the number is expected to increase by an additional 91 million by 2015.

6. Access: some outstanding experiences
Universal access to water in Mauritius and South Africa.
North Africa
91% have access to drinking water (highest level in developing world with Latin America).
Sanitation coverage up by 12% between 1990 and 2004 (at 75%), on track to reach the 83% target by 2015.
Uganda: coverage for drinking water tripled between 1990 and (from 21% to 61%).
Tanzania: 90% of population have access to some form of sanitation.
BUT:
Quality of data and information regarding access remain problematic: data collection and treatment is poor
Progress has, however, been excellent in Northern Africa, in Mauritius and in South Africa.
Uganda has tripled the number of people with access to drinking water between 1990 and 2006, and
Tanzania has ensured that 90 per cent of the population have access to some form of sanitation.

7. A resource issue? Partly … Renewable water per capita (m3/inhab/yr)
10000
20000
30000
40000
50000
60000
Africa
Central Africa
West Africa
Southern Africa
East Africa
North Africa
Is this simply a problem of available resources? Partly.
Human needs are between 20 and 50 liters per person per day; or 18 cubic meters per person per year for household needs.
European households consume 4 times as much – 73 cubic meters per year.
For Africa as a whole, and most African countries taken individually, resource availability alone is usually not the constraint.
Source: FAO, Aquastat.

8. ..but mainly a management issue
Weak extraction capacities - except in North and South Africa.
Inefficient use: agricultural (68%), domestic (24%), industrial (8%).
Industrial pollution, poor sanitation and sewage practices. In Congo, only 68% of water samples comply with quality standard.
Wastage: unaccounted for water reaches 50% in most cities: Botswana 46%, Mauritius 47%, Egypt 50% (good practice: 15-20%).
The problem is largely one of management.
Weak extraction capacity in most of the continent;
Inefficient use in all sectors;
Pollution;
And wastage.
As water becomes relatively scarce, its use as an input in agriculture and industry needs to be progressively re-directed toward activities with high value-added, and demand management for household use becomes more important as well.
Tunisia manages to provide nearly universal access to drinking water and sanitation for its citizens despite having a resource endowment of less than 500 m3 of water per person per year.

9. Introducing water demand management the municipality of Windhoek
Programme components:
Increasing public awareness
Implementation of block tariff system
Quality Monitoring programs to ensure appropriate standards
Improved maintenance and technical measures to reduce leaks
Re-use of water: one of the first cities to introduce recycling of effluent for drinking purposes
In 2006: unaccounted-for water fell to 10.3% (good practice: 15-20%)

10. The challenges
Implement integrated water resource management (IWRM) -Monitoring mechanisms are crucial
Strengthen local management
Move sanitation and wastewater treatment to the top of the development agenda
Integrated Water Resource Management is a process that promotes the co-ordinated development and management of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems. This approach promotes more co-ordinated development and management of land and water, surface water and groundwater, the river basin and its adjacent coastal and marine environment, and upstream and downstream interests.
IWRM is also about reforming human systems to enable people to obtain sustainable and equitable benefits from those resources. For policy making and planning, taking an IWRM approach requires that:
• Water development and management takes into account the various uses of water and the range of people’s water needs;
• Stakeholders are given a voice in water planning and management, with particular attention to securing the involvement of women and the poor;
• Policies and priorities consider water resources implications, including the two-way relationship between macroeconomic policies and water development, management, and use;
• Water-related decisions made at local and basin levels are along the lines of, or at least do not conflict with, the achievement of broader national objectives; and
• Water planning and strategies are incorporated into broader social, economic, and environmental goals.
An IWRM approach focuses on three basic pillars that aim at avoiding a fragmented approach of water resources management:
• An enabling environment of suitable policies, strategies and legislation for sustainable water resources development and management
• Putting in place the institutional framework through which to put into practice the policies, strategies and legislation
• And setting up the management instruments required by these institutions to do their job.

11. Status of National IWRM
Level 1
Level 2
Level 3
North Africa
Egypt
Morocco
Tunisia
Mauritania
Sudan
Algeria
Libya
Central Africa
Cameroon
Burundi
Central African Rep.
Chad
Congo
DRC
Rwanda
Eastern Africa
Uganda
Eritrea
Ethiopia
Kenya
Mauritius
Tanzania
Western Africa
Burkina
Benin
Ghana
Mali
Nigeria
Senegal
Southern Africa
Namibia
South Africa
Zimbabwe
Botswana
Malawi
Mozambique
Swaziland
Zambia
i) 5 countries have plans incorporating the IWRM principles in place or a process well underway – level 1; ii) 21 countries are in the process of preparing national strategies which require further work – level 2; and iii) 12 countries are at a very early stage and have not yet inserted IWRM principles in their national policy and legal frameworks – level 3.
Source: Global Water Partnership, 2006

12. Key management issues Strong national water policies and legislation.
Sound and autonomous regulation: monitor progress, set guidelines, design incentives to extend service provision and protect consumers (NWASCO in Zambia).
Capacity on the ground (partnership between TCTA and Umgeni Water in South Africa).
Harmonisation of different stakeholders’ interventions (SWAP in Uganda).
Participation of all stakeholders: improve efficiency, maintenance, avoid conflict (Ghana community approach).
Regional cooperation
NWASCO has developed regulatory tools and guidelines on service provision, tariff negotiations and yearly reporting. It has been instrumental in strengthening the monitoring of access to water and sanitation services through a close follow-up of the commercial utilities activities. It carries out detailed inspections of the service providers and provides capacity building to ensure compliance with performance and corporate governance. It also approves tariff adjustments. In 2005, NWASCO put in place water quality guidelines describing the types and frequency of water sampling for routine water testing. The regulator also established Water Watch Groups to resolve disputes between consumers and providers. It includes a customers’ complaint handling procedure that encourages direct resolution with the utilities. This mechanism also helps to monitor service quality.
SWAP Sector-wide Approach to Planning.

13. Reducing the sanitation gap
Access can only be increased if water and sanitation are tackled simultaneously.
Investments are small compared to the health and environmental costs of inaction and returns to action
Overcome the segmentation of the sector: between administrations, among providers (e.g. Durban).
Develop technologies adapted to communities’ needs.
Invest in prevention campaigns (e.g. community health clubs in Zimbabwe).
FOR INFO ONLY
Partnerships can help overcome the fragmented nature of sanitation by providing a platform for discussion among the different actors.
Partnerships can also consist in creating intermediaries (typically CBOs) between households and (private) service providers. Such intermediaries can catalyse demand and thereby help the local service providers to develop a more stable flow of orders.
The public sector can also take the lead in co-ordinating demand.
For example, the South African municipality of Durban has chosen to overcome the sporadic nature of demand by ensuring that pits are emptied every five years according to a specific schedule (regardless of volume), at no cost for the households. In parallel, the city is supporting the professionalisation of manual pit emptying operators, regulating their activity to ensure safety and security (allowing work only in daylight, requiring the use of appropriate material and securing the chain of custody from emptying the pits to the safe disposal of waste for treatment).

14. Financing – a key issue for all stakeholders
Investment needs: $20b/yr until 2025, 1/3 for sanitation, ¼ for drinking water supply (Africa Water Vision 2025).
Public money (national budgets and ODA) remains insufficient
National water providers have failed to achieve financial viability.
Least attractive sector to private investors – but active in some countries.
Investment needs are some $20 billion annually until 2025, one-third for sanitation, one-fourth for drinking water supply (Africa Water Vision 2025).
Public money (national budgets and ODA) remains insufficient.
National water providers have failed to achieve financial viability.
Moreover, the sector is unattractive to private investors – although increasingly, the private sector is active in some countries.

15. Strengthening utilities
Financial independence
cost-recovery: affordability and cross-subsidisation
sustainable & predictable public funding
Capacity building through benchmarking and partnerships (ex: UNSGAB Water Operators Partnership).
Small-scale local providers
Flexible, better knowledge of remote areas
But they need better regulation and more conducive institutional framework (Uganda Association of Private Water Operators)
Clearly, utilities must be strengthened.
For this, they must be financially independent.
Can costs be recovered by utilities? While there is a potential for full cost recovery of providing water services in most urban settings, extension of networks in peri-urban areas and service delivery in many rural areas require subsidisation of capital expansion.
The usual rule of the thumb to appraise affordability is that households should not pay more than 3 to 5 per cent of their incomes for water services. However, for a variety of cultural and historic reasons, paying for water and sanitation services is not well established in Africa.
Furthermore, sewerage and wastewater treatment are not necessarily affordable by the majority of people, even in urban areas. Because of these vast differences in affordability across users, cross-subsidisation between the wealthier and the poorer users is necessary, together with subsidisation across water and sanitation. Industries must be treated differently -- particularly the polluting ones that should bear the costs of pollution abatement.

16. Total water ODA to Africa, $ billion, 2004 prices
What role for aid?
Total water ODA to Africa, $ billion, 2004 prices
0.3
0.6
0.9
1.2
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Bilateral ODA
Multilateral ODA
The most recent data from the Development Assistance Committee of the OECD show a sharp increase in the allocation of Official Development Assistance (ODA) to water supply and sanitation in 2004, followed by a slight decline in 2005 to levels that remain above the average of the period (see figure).
Most of the increase in aid was due to new commitments by multilaterals (IDA and EC) whose allocation to the water and sanitation sector in Africa rebounded from about 30 per cent in the middle of the 1990s to 50 per cent in Nevertheless the share of aid devoted to water and sanitation in Africa by the World Bank remains low: only $146 million allocated to water over , representing some 6 per cent of the World Bank portfolio of $23 billion.
What should be done?
Use ODA to leverage further financing (as in the case of the Zambian Devolution Trust Fund).
Target subsidies based on on performance, as in the case of Output-Based Aid (for which there are promising experiences in Mozambique).
Develop innovative financial tools: such as a sub-sovereign financing facility in local currency, or risk mitigation through resource pooling.
Source: OECD/DAC

17. What role for the donor community?
Using ODA to leverage further financing (Zambian Devolution Trust Fund).
Using subsidies targeted on performance, such as Output-Based Aid (GPOBA in Mozambique).
Develop innovative financial tools: sub-sovereign financing facility in local currency, risk mitigation through resource pooling, guarantees (Jo’burg 2004 municipal bonds: 1rst non-sov guaranteed loan in SSA).
The role of the African development Bank: African Water Facility and the Rural Water and Sanitation Initiative.
The amount so far committed for the AWF is around €60 million, from Canada, France, Denmark, Norway, Sweden, Austria and EU. The main objective is to create an enabling environment to attract more resources into the water sector: focusing on policies, strategies, information system, monitoring and evaluation, knowledge sharing, and project preparation.
After one year of operations, a total of 14 projects were approved in 2006, at a total budgeted cost of €9 million. Out of the 14 approved projects, three are related to the implementation of national IWRM policies; five projects focus on the implementation of trans-boundary water resources management initiatives and programmes; three projects concern preparation of programmes/projects in water supply and sanitation, which will lead to immediate sector investments. The remaining three projects are small capital investments designed to attract additional resources or to introduce innovative technologies.
The objective of RWSSI is to accelerate access to water supply and sanitation services in rural Africa to attain 80 per cent by 2015 and extend water supply and sanitation services to 277 million and 295 million people respectively at a cost of $14.2 billion over 3 phases. The first phase ( ) is estimated to cost $4.6 billion; the second phase ( ) $4.2 billion; and the third phase ( ) $5.4 billion.
The Bank has so far approved financing for 14 RWSS programmes for which it has provided financing of $536 million, and expects to approve five more by end 2007 and increase its funding to $803 million.

18. Key messages
Most countries are off-track with respect to the water and sanitation MDGs
Availability of resources vary across countries, but the biggest problem is management and financing of infrastructure
Sanitation should receive more attention: health risks can jeopardise progress in access to water
Moving to integrated resource management needed but complex
Balancing equity and efficiency: sustainability requires cost recovery, but subsidies will remain necessary (make them work well)
Financing requirement are high and rates of return low …the role of guarantees and aid donors.
Before turning to the detailed presentation, let me convey you th key messages emerging from our analysis:
Access to water and sanitation has gained high prominence within the international community because of the dramatic situation in many countries, which is likely to worsen due to climate change
The situation in Africa is particularly worrisome: Sub-Saharan Africa has the lowest drinking water and sanitation coverage in the world. One in two people has no easy access to drinking water and two out of three to proper sanitation facilities
Therefore we have decided to devote this year AEO to such an important issue.
This is a very challenging task, for at least two reasons: 1) access to water is a basic human need, but water is also a scarce resource with many competing uses. Consideration of efficiency must then be balanced with equity. 2. the discussion can be very technical
the AEO contributes to the policy debate by providing an assessment of major trends in the continent, highlighting the challenges but also pointing to encouraging country experiences. These are summarised in the overview and then discussed at length in each one of the 31 country notes.

19. Thank you!
Tesekkur Ederim!
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