Government spending, not aid, is achieving MDG for water

David Hall, Director of the Public Services International Research Unit at Greenwich, London, says that development aid plays a subsidiary role to government spending on water and sanitation, even in sub-Saharan Africa, while the private sector is almost completely irrelevant.

He told the IRC Symposium, Pumps, Pipes and Promises that Millennium Development Goal (MDG) targets were affordable from national resources for all except a few low income countries, and this could be done without Government borrowing, let alone aid.

1.2 billion connected to household water

The latest data from the Joint Monitoring Programme[i] showed that “not only will the Millennium Development Goals [for drinking water] be achieved, they will be over-achieved. The percentage of the population without improved water sources will be reduced to 9%, lower than the target level of 12%.”

He said that two-thirds of this increase is through household connections which have the biggest positive impact on health.  “In the last 20 years in developing countries, 1.2 billion people have been connected to household drinking water supplies, equivalent to the entire populations of north America and Europe and Japan and a bit more. For sure, it took us a hell of a lot longer than 20 years to connect that number of people.”

Finance gap “dangerously misleading”

Public perception was that overseas aid was critical in expanding water and sanitation services, and that little had been achieved. But this view that an immense spending gap had to be filled was dangerously misleading. “What we have got here is a picture of quite extraordinary infrastructure achievement in the water sector in developing countries.”

Private sector fails to provide investment

David Hall’s contribution was based on a paper (Hall and Lobina 2010) which said that the model of private sector investment in water services was broken. “It is now generally agreed that this experiment has failed to generate significant amounts of provide investment, and that there has been almost universal public resistance to private companies.”

In Africa, two thirds of the US$ 45 billion a year being spent on infrastructure (for all sectors) is paid for by Africans, while in India more than 90% of the water and sanitation plan for 2007-2012 is being financed by central and statement and national financial institutions with only 8% coming from aid and only 1.5% from the private sector.

Mismatch in urban / rural perceptions

David Hall acknowledged that Governments tend to focus on urban populations while donors tend to focus on rural populations and this may explain some of the mismatch in perceptions. “One obvious question that arises is whether this [JMP figures] is representing the true position of unofficial peri-urban populations.”

Stronger role for the State

Hall called for a reassessment of the role of the state in developing countries, which for the past 25 years has been seen “as a source of problematic inefficiency, corruption, obstruction of private enterprise etc. and the focus has been on almost anything but the state.”

The time had come to change that perception, he said. “We need to acknowledge that the state through the public finance mechanism in particular has a core central role to play here and more of our discussion should focus on that.

“We now have most of South America and India with elected social democratic governments that have been in office for some time that are pursuing policies with a much stronger role for the state and much stronger role for public finance including in infrastructure and including in these areas.”

Call to build taxation base

In his paper, David Hall warned against focusing on the private sector and cost recovery. “Donors should stop encouraging countries to try and finance development of sewerage systems through cost recovery from users, and stop encouraging countries to believe that the private sector will make any significant contribution to investment in sanitation. They should instead help countries to build the taxation capacity needed to finance this investment and focus aid on the countries in greatest need of assistance, in particular low income African counties, led by Nigeria and the Democratic Republic of Congo.”

Peter McIntyre

[i] The Joint Monitoring Programme of UNICEF and the World Health Organization is responsible for monitoring the water and sanitation targets in the Millennium Development Goals.

Reference: David Hall, D. & Lobina, E. 2010.  The past, present and future of finance for investment in water systems. Paper presented at IRC Conference 2010.