Why international aid for water, sanitation and hygiene is still a critical source of finance for many countries

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Courtesy of DelAgua Group

This new WaterAid report, based on analysis by Development Initiatives, shows that for many low-income, Least Developed Countries and fragile states, international aid or ODA remains a vital resource for financing development.

2015 is a landmark year for the water, sanitation and hygiene sector. It brings to a close the Millennium Development Goals period, marked by its many successes but also its failures. It also signals the start of the new Sustainable Development Goals era with all countries committing to end water and sanitation poverty for good, achieving universal provision of these essential services by 2030 at the latest.

Alternative sources of finance— growth in domestic resources, remittances, foreign direct investment and other official flows— will not be sufficient to bridge the outstanding financing gaps in the medium-term.

The Third International Financing for Development Conference in Addis Ababa in July 2015 should reaffirm the vital contribution of ODA in financing the human right to water and sanitation and other essential services.

The report identifies 45 countries which – by virtue of the proportion of their people without access to the bare minima of water, sanitation and hygiene services, their low national resource availability and overall levels of poverty – are counted as high priority countries for aid investments in water, sanitation and hygiene.

For example, Rwanda has a 63% share of population in extreme poverty and 36% share of population without access to sanitation.

None of the 45 countries met the Millennium Development Goal sanitation target, and less than half reached the water target. Furthermore, those people counted as having access to ‘improved water’ may not be drinking water that is safe: a 2013 study of water quality found that the current definition of ‘improved’ does not reliably predict microbial safety. 5 In 15 of the countries, more than 80% of the population is without basic sanitation.

More than half of the countries in the group register very low government revenue per capita, at less than $400 annually. With such low levels of feasible revenue available to government, the scope for domestic public spending on basic services is inevitably severely constrained and therefore unable to meet the huge needs.

International financial flows will be an important part of funding the post-2015 development framework, and for many developing countries a broader range of external finance is available than 15 years ago at the beginning of the Millennium Development Goal period.

Aid is the most important source of international support directed to reducing poverty and enhancing access to basic services in developing countries. In 2013, global aid flows to water and sanitation reached US$6.6 billion—a ten-year high. However, while volumes have increased, water and sanitation ODA has fallen to a smaller share of global aid, representing 3.9% of all aid.

It is important to learn from the successes and failures of the Millennium Development Goal period and to look ahead at the challenges that will have a major impact on delivering universal access to water, sanitation and hygiene—including inequality between and within countries, growing populations, urbanisation, climate change and stress on water resources—and factor these realistically into policy choices and financing options.

View the full report from WaterAid.

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