© Sanne van der Most

Lack of Financial Vision for the Water Sector

An interview with Catarina Fonseca on increasing water sector financing by improving governance

Catarina has 20 years of experience in development cooperation and 17 in the water supply and sanitation sector. She has pioneered sector development on the understanding of life-cycle costs and financing. She is part of the IRC management team, is Head of the International and Innovation Programme of IRC and is the Director of Watershed: empowering citizens. Catarina has a passion for evidence and data in support of good governance (acknowledging it’s a tough call).

We caught up with Catarina to discuss her views on the importance of integrity in water sector financing, particularly in light of reaching the SDGs.

 

In your view, why is integrity in water sector financing important?

“A reason why integrity is important, is that financial resources for water and sanitation are scarce. There is plenty of evidence of corruption in infrastructure construction and of funds which do not go to the areas and people that need services the most.

But there is also something that we rarely talk about which is the moral principle of aiming to do our best and avoid waste. Integrity in the water sector means that money is spent and used accountably and with honesty.

In my experience though, in several countries, there is an issue here. Much failure and waste of funds in the sector come from doing nothing: from not acting, from not having maintenance plans in place, from not holding service providers and governments accountable for their commitments to SDG 6, from seeing the same failure year after year and from not taking responsibility.”

 

What projects has IRC been engaged in that have promoted integrity in water sector financing?

“The best known project IRC has engaged on in this topic is called ‘WASH Cost’. It was a large action-research programme across several countries and with a number of organizations that, among other things, developed a framework for costing service delivery against service levels.

It is very powerful to ask the right questions. This programme was the first step in developing strong frameworks to be able to: 1) track and report funds, and 2) understand what level of services were being delivered. It has also demystified a lot of the language in the sector around finance, making the discussions on budget tracking and value for money accessible to non-financial experts.

What does this means in practice? I remember that in some countries when the first overview of real rural construction and maintenance costs were all put together in maps, it became clear where there had been some serious integrity issues. In other countries the methodology showed the inefficiencies of, for instance, putting all the money available in more pipes and pumps without building the capacities of local governments or of the regulator to ensure funds are used efficiently.”

 

In your opinion, what is the biggest challenge for financing the Sustainable Development Goals, in particular SDG6?

“My opinion, which is based on a lot of data and evidence from the last years, is threefold:

  1. The sector needs to invest in the systems that run the services (the staff, the institutions, the maintenance and more broadly, the watersheds)
  2. We need to talk seriously about blended finance and the critical role of public finance
  3. We need to ensure that services improve for the most marginalized.

None of these three issues are getting the amount of attention they deserve. The sad part is that it will be very difficult to get an increase of finance into the sector without improving the governance of the sector. This includes showing a positive track record of investments, understanding which funds we have, where they are going, and how much we need.

It might sound strange, but the reality is that there are very few countries that signed up for the SDG goal 6 that are using multi-year financial sector plans. This means that there is not a clear financial vision for the sector and how to achieve the targets. Without national, costed SDG 6 plans and budgets, talking about financing for the SDGs and influencing Ministers of Finance or Development Partners or the private sector is meaningless.”

 

What can we do to make water a less risky investment and enhance both public and private investment into the water sector?

“As mentioned above, invest in the system. Improve financial monitoring and reporting.  Improve governance, financial governance! There needs to be confidence in the urban utilities, or in decentralized municipal or district service providers, and in the regulators. By having Key Performance Indicators for service provision in both the public and private sector, we would go a long way.

If good performance can be demonstrated, if service improves and people are willing to pay for it, then investment in the sector will be seen as a less risky. “

 

Thanks!

In 2018, WIN will be paying extra attention to the topic of financing water integrity. At the World Water Forum 2018 in Brasilia, WIN will be co-organizing an event in collaboration with IRC on financing water governance.

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