One of the biggest challenges that Sub-Saharan Africa faces is the lack of access to clean water and to proper sanitation facilities.
One of the biggest challenges that Sub-Saharan Africa faces is the lack of access to clean water and to proper sanitation facilities. Together, unclean water and poor sanitation are a leading cause of child mortality.
In Africa alone, universal access to water and sanitation would bring an estimated annual economic benefit of $22 billion, and African women would particularly benefit from such increased access. Today, women and girls in Sub-Saharan Africa spend up to 4 hours per day fetching water; without this burden, women could increase their agricultural farm yields by 20-30%. Reducing the distance to a water source has also been identified as a way to empower women, especially regarding girls’ school attendance. Studies have shown that with clean water and accessible toilet facilities, girl school enrolment rates increase by over 15%.
The links between a lack of water and sanitation access and development goals are clear, and the solutions to the problem are known and cost-effective. It is estimated that every $1 spent on water and sanitation generates five-seven times more in increased economic opportunities.
However, private financing for water supply and sanitation in developing countries has lagged far behind than for other infrastructure sectors, reflecting in part the absence of private capital contributions and the lack of appetite to bear some of the risks associated with these projects.
According to the “2012 Status Report on the Application of Integrated Approaches to Water Resources Management in Africa”, by the African Union, infrastructure development and financing is one of the main priorities assigned by African countries to various water resources management issues.
As The World Bank reported in its paper “Water PPPs in Africa”, the activity has been limited but the types of projects are well documented. The different PPP schemes that water and sanitation projects can follow are:
- management contracts,
- concessions or
- Build-Operate-Transfer concessions.
From 1992 to 2012 there were a total of 51 PPP in the water and sewerage (including desalination) sector in Africa. The bulk to the total investment went to North African countries, with the majority of projects in Sub-Saharan Africa leveraging private sector management skills and efficiencies rather than investments.
Some key success factors for water and sanitation PPP projects in Africa are:
- Strong political support and a long-term commitment from both partners, public and private.
- Define the exact structure and risk allocation model according to the specific transaction, market and country situation.
- Tariffs are always a complex topic, but costs need to be considered when setting water prices.
- Combine funding from the public partner with private sector skills and expertise.
- Operational efficiencies are the most consistent contribution of PPPs to utility performance, resulting in the reduction of non-revenue water, improvement of bill collections and better productivity.
The most successful schemes in water and sanitation projects with private sector participation can be developed in those markets where PPPs are already working. Therefore the markets in Africa with the largest potential are those where PPPs are already being developed: South Africa, Ghana, Kenya, Tanzania, Uganda, Morocco, Algeria, Tunisia, Egypt, Lesotho, Benin, etc; and additionally, those markets where private sector participation in water has been successfully working lately, such as Ivory Coast or Senegal.
PPPs are not a magic formula to address water and sanitation investment and development problems in Africa, but there are successful schemes in the developing world (according to the note “Water P-Notes April 2010” of The World Bank), that can be replicated in many African countries:
- Concessions with cross subsidies from electricity, surcharges or other means.
- Lease contracts with enhanced incentives for operational efficiency.
- Mixed-ownership companies.
- Concessions with public grants for some investments to minimize the impact on tariffs.
InfraPPP Advisory Services is a consultancy firm specialized in Public Private Partnerships and infrastructure-related management consulting assignments. We advise public and private clients in different kinds of advisory assignments, with a global reach
We offer a broad range of services to private investors, governments and public agencies:
- Feasibility & Pre-Feasibility Studies
- Project Identification Plans & Assessment of PPP programs
- Structuring PPP projects
- Support in PPP tenders
- PPP Capacity Development
- Creation of PPP Units
For more information please contact our partners:
Alvaro de la Maza Alba Jose de la Maza Alba
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