Water infrastructure finance constraints: Shared lessons from Africa and Europe

Challenges to water infrastructure financing are typically project identification, prioritization, and preparation; resulting in slow development and implementation of water infrastructure projects. This paper elevates challenges identified and addressed through AEWPP projects include insufficient long-term capital planning, tariff setting challenges, and human resources management challenges.

Recommendations are drawn from practical engagements of the Africa EU Water Partnership Programme and its partners in supporting water infrastructure development in Africa and Sweden, as well as recommendations from stakeholders elevated during the public discussions at SIWI’s World Water Week 2018 in relation to the three challenges discussed in this issue paper.

Summary

Challenges to water infrastructure financing are typically project identification, prioritization, and preparation; resulting in slow development and implementation of water infrastructure projects. This paper elevates challenges identified and addressed through AEWPP projects include insufficient long-term capital planning, tariff setting challenges, and human resources management challenges.

• Increase human resource management capacity for long-term capital planning at the level of the responsible government entity to evaluate life-cycle project costs and utilize and manage alternative procurement processes.
• Ensure integrative long-term planning around the three sources of finance for water supply, tariffs, transfers and taxes, to enable the continued expansion and maintenance of water networks.
• Establish tariffs reflective of the values of waters (economic, environmental, social, cultural) while ensuring basic guaranteed water standards for all.
• Mainstream new technologies to improve asset management and financial governance of water utilities.
• Increase private sector participation in the delivery of water infrastructure and related services through long-term performance-based contracting.

Citation

The Africa-EU Water Partnership Project (AEWPP) is a joint undertaking by the European Union, the African Ministers Council on Water (AMCOW) and the Government of Sweden through Sida that aims to enhance the financial viability of water infrastructure projects in Africa by making more public and private capital accessible for water-related infrastructure projects and encouraging and supporting African governments to invest in water governance through capacity building.

AEWPP is financed by the European Commission and project implementation is assigned to the Stockholm International Water Institute (SIWI).