Financing water security

The African Development Bank (AfDB) has an active water sector portfolio of 94 operations worth US$4.3 billion. WASA asks Osward Chanda (OB), director: Water & Sanitation at the AfDB, questions about the financier’s recently approved water strategy – 2021-2025: Towards a Water-Secure Africa – and its role in providing water security for member states.

What role does water security play in inclusive growth and development in Africa? OB The UN’s Water and Sanitation Linkages across the 2030 Agenda for Sustainable Development report highlights the links and interdependencies between Sustainable Development Goal (SDG) 6 on water and sanitation and other SDGs. It emphasises how water and sanitation support the social, economic and environmental dimensions of the 2030 Agenda for Sustainable Development. Society, the economy and the environment require water in sufficient quantities at a suitable quality.

Improvements in access to safe drinking water supply, sanitation and hygiene (WASH) services in homes, healthcare facilities, schools and workplaces, and improving ambient water quality are essential for reducing multidimensional poverty, improving nutrition, improving health and education, achieving gender equality, improving work opportunities, and overcoming inequalities. Furthermore, water is essential in building resilience to climate change.

How does the AfDB plan to boost water security on the continent? The AfDB’s five-year strategy aims to increase water security in Africa, and to foster its sustainable, green and inclusive socio-economic growth and development. We are focusing on: • integrated sustainable water resource management • strengthening the delivery of WASH services • increasing the availability of sustainable water resources for food production and improved nutrition • sustainable development of water for energy in terms of hydropower potential.

Osward Chanda, director: Water & Sanitation at the AfDB

The bank uses both financial and non-financial instruments to assist in achieving water security in Africa and this is achieved through various partnerships.

What non-financial instruments does the AfDB use? We scale up and disseminate knowledge and analysis on water and sanitation.

This puts policymakers and water managers in a better position to facilitate increased water efficiency and implement more effective interventions. Knowledge aids in better water governance and sound policies.

Specialised, skilled people from the AfDB engage with policymakers, water managers and the private sector across the continent. This assists with the design and implementation of the projects and programmes that we finance, and ensures that all issues are addressed.

The AfDB partners and engages with institutions, associations, universities and other centres of excellence for knowledge. We assist with information capture and undertake countrywide water and sanitation assessments where we report on infrastructure, governance, policies, legislation and institutions that are managing and regulating water.

Furthermore, the bank supports regional knowledge initiatives and programmes.

With our experience in mobilising resources and promoting coordination between countries and donors, we avoid duplication and ensure that we are aligned to a country’s priorities and can efficiently address needs on the ground. We then also highlight areas where there is little support.

What more can be done to ensure that water projects reach bankability status? While finance is available, few water projects on the continent reach bankability status. Typically, a project will not be ready to be financed if there is a lack of data to inform the design of a project, little to no long-term financial planning, and if there are weak government structures and institutions.

The AfDB also promotes partnerships with the private sector. Countries need to understand the value that the private sector can bring in providing water and sanitation services. A publicprivate partnership (PPP) provides less risk than a project that needs to be 100% funded by a development bank. We believe that PPPs hold promise in attracting finance.

Through the Africa Water Facility, which is hosted and managed by the AfDB, we provide grants for project preparation and expert technical assistance to implement innovative water projects and raise investment for these projects throughout Africa.

What are the problems the water industry is facing? The rapid increase in population, particularly in the urban areas, compounded by the immediate needs of industries and developments puts pressure on water. The water sector is simply not growing at the same pace as the population and the economy.

Very few countries are planning for population growth. In most cases, the water sector is operating at a backlog where they have insufficient resources to provide services.

Climate change is another serious challenge experienced by the water industry, where there are prolonged droughts and storms that destroy infrastructure and livelihoods. Building resilience in the water sector is crucial. We need to plan and implement solutions that mitigate and reduce the impact of climate change and variability.

An additional issue is the politicisation of water. This prevents the effective management of water where technically sound decisions are often overruled. Many politicians (even councillors and mayors) have unchecked powers, where they suspend water tariffs close to elections. If water utilities are poorly governed, there will never be improved quality of service. It is critical to have autonomous regulation agencies as well as a mix of PPPs. Poor water governance impedes social and economic development, as water is crucial to the growth of a country.

As stated previously, the financing of water and sanitation projects is also a challenge. But before a country even considers financial assistance for new water infrastructure, it is important to efficiently manage its existing funds. Public funds need to be used efficiently and effectively by government; if they are wasted, it is difficult to attract additional finance.

Another issue is that there is often a lack of partnerships and collaboration within a country and/or region. Approximately 90% of Africa’s rivers are transboundary. It is vital to mobilise resources and promote coordination

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between regions and countries to avoid duplication of projects and programmes.

What is the future of water in Africa? The circular approach to water resource management is gaining traction. Water is used, treated and recycled. Wastewater and sewage will be viewed as a resource. A large portion of investments will be directed towards water reuse. There is also an increased emphasis on using technology to better manage water.

I also think that the payment methods for water will change. Presently, we are used to paying our bills at the end of the month. However, purchasing water on a ‘pay as you go’ basis – where people can purchase water on a weekly or daily basis – is becoming a more sustainable option.

These types of innovations come from the private sector, as it will always do all it can to drive down inefficiencies and increase revenue collection. The role the private sector plays within the water and sanitation industry will expand.

Decentralised water and wastewater plants will increase in popularity. Many of our water and wastewater distribution systems are kilometres long. It makes more sense to treat water and wastewater closer to the location where it is needed.

The water industry needs a pragmatic approach that veers away from traditional methods. Africa is unfortunately off-track in its progress towards achieving SDG 6 and every effort must be made to scale up the delivery of basic water and sanitation services to ensure the targets are met by 2030.

SOME WATER AND SANITATION PROJECTS FUNDED OR CO-FUNDED BY THE AFDB:

• The Sumbe Water Supply, Sanitation and Institutional

Support Project (Angola) • Lesotho Highlands Water Project (Lesotho) • Water Sector Reforms and Institutional Capacity

Development Programme (Sudan) • Zanzibar Urban Water Supply and Sanitation Project (Tanzania) • Gabal El-Asfar Wastewater Project (Egypt) • Transforming Rural Livelihoods in Western Zambia

Project (Zambia) • Urban Water and Sanitation Improvement Project in

Oyo and Tara (Nigeria) • Rural Water Supply and Sanitation Project (Sierra Leone) • Mzinba Integrated Urban Water and Sanitation

Project (Malawi) • Projet D’assainissement de Younde Phase II (Cameroon) • Premier Sous-Projet D’assainissement des quartiers peripheri (Burkina Faso)