Financing the millennium development goals (MDGs) for water and sanitation: Issues and options

Abstract

The cause of institutional reform could be furthered considerably if capacity is built to ensure that appropriate technologies and financing packages are designed, implemented and effectively monitored. For this reason, it is important to understand that infrastructure financing trends vary by sub-sector (water supply, wastewater), by geographical region and by sources of financing (domestic or international private sector). There are a number of lessons that can be drawn from financing of investments in sectors like energy and telecom; one of the most significant lessons is the importance of legal and policy frameworks and autonomy and accountability of local authorities. Subsequent sections of this chapter attempt a categorisation of countries depending on levels of economic growth and sector reform with a view to exploring differences in types of demand for multilateral financing in the water sector. The importance of multilateral development issues like aid harmonisation, budget support and local twinning projects are discussed. Private sector financing of investments in the water sector are also discussed based on examples of Dutch development cooperation; role of commercial banks, small-scale service providers and usefulness of a franchise approach by NGOs. © 2010 Springer Science+Business Media B.V.