Water Supply and Sanitation

Key facts on water supply

  • The population covered by improved water supply has not expanded in recent years.  Indeed, it has declined in urban areas.
  • Because it would cost US$15 billion a year to meet the Millennium Development Goal for water, and because only half that much is plausibly available, some countries may need to take a closer look at lower-cost technologies.
  • Underpricing of water costs US$1.8 billion a year in subsidies that do not seem to be reaching the poor, yet cost-recovery prices appear affordable for most existing customers.
  • The operational inefficiencies of water utilities cost the region US$0.9 billion a year, holding back service expansion and maintenance.
  • In rural areas, the central challenge is to reduce reliance on surface water through a network of sustainable water access points.  Here, recent institutional reforms seem to be working.

Water supply financing needs

Sub-Saharan Africa as a whole is unlikely to meet the Millennium Development Goal (MDG) for water supply.  Coverage in urban areas has been declining as utilities have struggled to keep pace with population growth.  In rural areas, more than 40 percent of the population continues to rely on surface water.  Overall, wells and boreholes are the fastest growing sources of supply.

The price tag for reaching the MDG for access to an improved water source is estimated at US$16.5 billion a year (roughly 2.6% of Africa’s GDP). For many countries, these costs look prohibitive.  By emphasizing lower-cost technologies, such as standposts and boreholes, those countries could reduce the cost of meeting the MDG.

Spending on the water sector today is US$3.6 billion, one-fourth of what is required.  However, some US$2.7 billion available to the sector is currently being wasted due to inefficiency.

An important example of inefficiency is under-pricing of services.  Average water tariffs are about US$0.67 per cubic meter, below the cost-recovery threshold of just over US$1.00 per cubic meter.  By under-pricing water, the sector forgoes at least US$1.8 billion a year in revenues.  Full capital cost recovery should be affordable for half of the population but would not be affordable to the remainder.

Operational inefficiencies of water utilities cost the region a further US$0.9 billion a year and impede service expansion.  Even if all these inefficiencies could be eliminated, the overall financing gap for the water sector would still be US$7.8 billion a year (1.2% of GDP).

Key facts on sanitation

  • Today, a third of Africans still practice open defecation and half rely on traditional latrines, the health effects of which are largely unknown.
  • The sanitation challenge takes a variety of forms in different countries, as well as across urban and rural settings. These differences call for different policy responses.
  • Where open defecation remains prevalent, the policy focus needs to be on education to encourage people to build and use a latrine.
  • Where traditional latrines are already prevalent, the central policy challenge is how to encourage people to upgrade to improved models.
  • Where improved sanitation is already prevalent, the policy issue is how to extend it to the lower-income population and move toward network sewerage in high-density areas.
  • Household budgets will likely remain the main source of funding for sanitation investments in the foreseeable future.

Sanitation financing needs

The overall price tag for reaching the sanitation MDG is estimated to be US$6 billion a year, or roughly 0.9% of Africa’s GDP.  Capital investment needs can be conservatively estimated at US$4.5 billion a year (0.7% of the region’s GDP) while maintenance requirements are US$1.5 billion a year (0.2% of the region’s GDP).

No reliable data exist on sanitation expenditure because individual households undertake so much of the expense.  Estimates suggest that, on average, African countries are investing about 0.5% of GDP in new sanitation facilities, quite close to the recommended investment level.  Half of the countries appear to invest less than 0.7% of GDP, which is the level needed to meet the sanitation access MDG.

How much of the estimated total spending on sanitation comes from the public purse is hard to pin down.  Evidence suggests negligible public investment on sanitation of 0.02% of GDP, on average. Households appear to be footing the bulk of the investment bill.  Operation and maintenance (e.g. of sewer networks) is estimated to require an additional 0.2% of GDP in future.

Although the costs of meeting the MDG sanitation target are high, so is the associated health dividend.  For example, it is estimated that reaching the MDG for both water and sanitation in Africa would prevent 172 million diarrhoea cases a year, saving US$1.8 billion in treatment costs.

(Source: AICD)

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