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Towards Inclusive Cities

Pro-poor Financing Modalities for WASH 

ADB Asian Urban ForumManila, 16th November 2011

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The gap

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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 INCOME

CONSUMERS

Increasing demand

Higher revenues

More capacityBetter services

URBAN

POOR

Declining demand

Lower revenues

Lower capacityPoorer services

Stronger service providers,

better services for all

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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 INCOME

CONSUMERS

URBAN

POOR

Stronger service providers,

better services for all

Urban poor

Low income consumers

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Management tools

Management Contracts

Concession Contracts

Affermage

Privatisation

Municipal Funding

• Recognise poor as market segment

• Tenders include professional partners for LIC

• Budgets & finance mechanisms for LIC

• Delegated management

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Finance tools

Insurance, Guarantees

Municipal Allocations

Equity

Concessionary Loans

Commercial Loans

INCENTIVISE

Progress Linked Finance (PLF)

Results Based Finance (OBA)

Grouped/Blended Finance5 Yr Sustainability Metrics

MOBILISE

City Level Cross Finance

Environment ChargeSanitation Tax

SME

Enterprise Growth Fund

Patient Capital

Microfinance

ENABLEConnection Policy

Concessional Finance for PS

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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 Provider

Grant (TA)awarded for

preparation

of rep scale

programme

Plan

assessed

Grant/loanawarded for

rep scale

programme

Increasedaccess and

commercial

viability

verified

Grant (TA) toenhance

capacity and

plan for city

wide scale up

Capacity toserve poor at

city wide

scale verified

Concessionaryloan finance

awarded for

city wide scale

up

Financing Partners

Service 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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(Sector)

Budgetsupport

Project

aid

Cash-on-

delivery

Output-

based aid

Progress-

linkedfinance

Explicit focus oncommercially

viable pro-poor

services

         

Demonstration

required to trigger

finance

         

Directly accessible

by serviceproviders

 

 

 

 

 

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 settlementsin a financially sustainable manner

• Linking finance to demonstrated results and capacity improvements toincentivise reform

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

• Providing an accessible finance option for such service providersregardless 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 INCOME

CONSUMERS

URBAN

POOR

Stronger service providers,

better services for all

Urban poor Low income consumers

Pro-poor finance mechanisms

MDGs need management plus finance

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Maputo 

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 Antananarivo

Hygiene

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Lusaka 

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Evidence that it works

2009-2011 Tana Lusaka Maputo

Access

Financial Cash positive for JIRAMA and

local service providers

Cash positive via delegated

management contracts

Cash positive for AdeM via increased

revenue and reduced losses

Capacity NRW strategy

Asset Management Improved

Connection process streamlined

Proposal writing Pro-poor unit established

3o networks implemented

Demand for legal connections

increased

Delegated management contracts

Policy Peri-urban a priority in JIRAMA

strategyPUA services included in MAP

Decentralised governance

LIC services tracked

More pro-poor connection policy

Water tariff review

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

 J  u  l -  0

  8

  O c  t -  0

  8

 J a  n -  0

  9

  A  p  r -  0

  9 J  u  l -  0

  9

  O c  t -  0

  9

 J a  n -  1

  0

  A  p  r -  1

  0 J  u  l -  1

  0

  O c  t -  1

  0

 J a  n -  1

  1

  A  p  r -  1

  1 J  u  l -  1

  1

117,000

-

20,000

40,000

60,000

80,000

100,000

 J a  n -  1

  0

  M a  r -  1

  0

  M a  y -  1  0

 J  u  l -  1

  0

  S e  p -  1  0

  N o  v -  1

  0

 J a  n -  1

  1

  M a  r -  1

  1

  M a  y -  1  1

 J  u  l -  1

  1

94,000

-

20,000

40,000

60,000

80,000

100,000

120,000

  J  u  l -  0

  8

  O  c  t -

  0  8

  J  a  n -  0  9

  A  p  r -  0  9

  J  u  l -  0

  9

  O  c  t -

  0  9

  J  a  n -  1  0

  A  p  r -  1  0

  J  u  l -  1

  0

  O  c  t -

  1  0

  J  a  n -  1  1

  A  p  r -  1  1

  J  u  l -  1

  1

98,000

Pop 1.5m

LIC 0.5m

Pop 1.1m

LIC 0.4m

Pop 3.1m

LIC 1.0m

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Advising on

Pro-poor Financing Modalities for WASH