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Sustainable Pro-poor Financing Modalities for WASH

Innovative Water Financing WorkshopMombasa, 9th November 2011

WSUP MembersWSUP Members

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Urban poor to low income consumer

WSUP empowers utilities, municipalities and SMEs to serve the urban poor as viable consumers

LOW INCOMECONSUMERS

Increasing demandHigher revenues

More capacityBetter services

URBANPOOR

Declining demandLower revenues

Lower capacityPoorer services

Stronger service providers, better services for all

Public Private Vendor/NGO ProvisionSSIPs & NGOs & CBOs

ServicesProvision

ServiceCoverage&ServiceQuality

The Poor

ModeratelyPoor

Low Income

MiddleIncome

HighIncome

Service ProviderPP

Public PrivatePublic Agency employing

Private ConstructionContractors

Filling The Void ThroughEmpoweringNGOs?

Public Private Community Partnership Provision SSIPs & NGOs & CBOs

Services Provision Service Coverage & Service Quality

The Poor Moderately Poor Low Income Middle Income High Income

Service Provider

PP

Public Private Public Agency employing

Private Construction Contractors

PPP

Public Private Partnerships

Reform through use of Private Operators

PPCPP

Public Private Community NGO Partnerships for

the Poor

Reformed Public Private SectorWith Pro-poor Mandate,

Using NGOs ?

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Why Invest in LICs?

• Perception that supplying water to the urban poor is not financially sustainable

• Convince utilities of their obligation to serve the urban poor

• Convince water utilities that serving the urban poor makes business sense

€ NRW Reduction€ Expanded customer base€ Tap into existing private assets€ Multiplier effect through DMMS

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Urban poor to low income consumer

WSUP empowers utilities, municipalities and SMEs to serve the urban poor as viable consumers

LOW INCOMECONSUMERS

URBANPOOR

Stronger service providers, better services for all

Urban poorLow income consumers

Project Cycle

Feasibility study

Project Identification

Scoping study

Full Implementation

Piloting

Scale-Up

WSUP Project Cycle

Project Cycle

WSUP Project Cycle

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PLF – rewarding success

• IFIs enter into pre-agreements with LSPs to provide loan finance to scale up financially sustainable pro-poor models

• Innovative Water Finance goes hand in hand with innovative Water Management Options/Partnerships

• WSUP - accessing technical expertise from private and NGO sectors, specifically focused on assisting LSPs to reach LIC on a financially viable basis.

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PLF – rewarding success

Designs financially viable service improvements at

representative scale

Implements financially viable representative

scale project

Further enhance capacity to expand pro-poor services city wide

Service ProviderService provider scales up pro-poor services city wide; loan finance repaid over time by service provider with expanded customer base and improved financial status

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Management tools

Management ContractsConcession Contracts

AffermagePrivatisation

Municipal Funding

• Recognise poor as market segment• Tenders include professional partners for LIC• Budgets & finance mechanisms for LIC• Delegated management models

• Recognise poor as market segment• Tenders include professional partners for LIC• Budgets & finance mechanisms for LIC• Delegated management models

INCLUSIVITY

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(Sector) Budget support

Project aid

Cash-on-delivery

Output-based aid

Progress-linked finance

Explicit focus on commercially viable pro-poor services

Demonstration required to trigger finance

Directly accessible by service providers

Does not require pre-financing by service provider

PLF characteristics vs other financing modalities

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Unique advantages of PLF

• Increasing access and quality of service to low-income urban settlements in a financially sustainable manner

• Linking finance to demonstrated results and capacity improvements to incentivise reform

• Directly engaging with and supporting the entities mandated to provide services in urban areas, i.e. utilities and municipalities (and, through them, smaller-scale or informal service providers)

• Providing an accessible finance option for such service providers regardless of their initial capacity and financial sustainability

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WSUP empowers utilities, municipalities and SMEs to serve the urban poor as viable consumers

LOW INCOMECONSUMERS

URBANPOOR

Stronger service providers, better services for all

Urban poorLow income consumers

Pro-poor finance mechanisms

MDGs need management plus finance

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Advising on Pro-poor Financing Modalities for WASH