A Primer for Practitioners and Students in Developing Countries

EUWI- FWG - February 2011

Target readers for the Primer are practitioners in developing countries – politicians, officials, professionals, private business people, members of civil society organisations and laypersons – involved in different ways in providing the infrastructure and services for water and sanitation. It is also aimed at students needing a compact introduction to this topic. A Glossary of frequently used terms is included as Annex A and list of useful websites and written material is given in Annex B.

Table of Contents

Preliminaries and Overview
1.1 Policy context
1.2 Target readership
1.3 What is included in the term “water”?
1.4 Why are water and sanitation a problem to fi nance?
1.5 Are water and sanitation separate issues?
2. Basics of Governance and Financing
2.1 Water governance
2.2 Financing policy issues
2.3 The difference between “investment” and “fi nancing”
2.4 “Private” and “Public” solutions
2.5 NGOs and civil society partnerships
3. The Planning Framework
3.1 Strategic fi nancial planning
3.2 Estimating fi nancial needs
3.3 The basic water-fi nancing model
3.4 The 3Ts – Tariffs, Taxes and Transfers
3.5 Repayable funding sources
3.6 Levers
4. Tariffs: Affordability, Cost Sharing and Cost Recovery
4.1 Who bears the cost?
4.2 Tariffs
4.3 Affordability
5. Taxes: National Government Funding
5.1 Central government as fi nancial provider
5.2 Sub-sovereign finance
5.3 Specialised national fi nancial intermediaries
6. Transfers: Offi cial Development Assistance (ODA) and Philanthropy
6.1 Offi cial Development Assistance (ODA)
6.2 International funds and facilities
6.3 Philanthropic sources
7. Repayable Funding Sources – Loans, Bonds and Equity
7.1 Bank loans
7.2 IFIs
7.3 Microfinance
7.4 Bonds
7.5 Equity fi nance
8. Leveraging the 3Ts
8.1 Financial guarantees
8.2 The “halo effect”, “umbrellas of comfort” and B-loans
8.3 Output-based aid
8.4 Blending and co-fi nancing
8.5 Bond pooling
8.6 Other methods of reducing risk
Annex A. Glossary of Financial Terms
Annex B. Sources of Advice and Information
Useful websites
Written material