DIRECTIONS IN DEVELOPMENT Infrastructure Africa’s Water and Sanitation Infrastructure Access, Affordability, and Alternatives Sudeshna Ghosh Banerjee and Elvira Morella Africa’s Water and Sanitation Infrastructure Africa’s Water and Sanitation Infrastructure Access, Affordability, and Alternatives Sudeshna Ghosh Banerjee and Elvira Morella Vivien Foster and Cecilia Briceño-Garmendia, Series Editors © 2011 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved 1 2 3 4 14 13 12 11 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. ISBN: 978-0-8213-8457-2 eISBN: 978-0-8213-8618-7 DOI: 10.1596/978-0-8213-8457-2 Library of Congress Cataloging-in-Publication Data Africa’s water and sanitation infrastructure: access, affordability, and alternatives / editors, Sudeshna Ghosh Banerjee, Elvira Morella. p. cm. Includes bibliographical references. ISBN 978-0-8213-8457-2 — ISBN 978-0-8213-8618-7 (electronic) 1. Water utilities—Africa. 2. Water-supply—Economic aspects—Africa. 3. Sanitation— Economic aspects—Africa. 4. Sewage disposal—Economic aspects—Africa. I. Banerjee, Sudeshna Ghosh, 1973- II. Morella, Elvira, 1976- III. World Bank. HD4465.A35.A47 2011 363.6'1096—dc22 2010047886 Cover photograph: Arne Hoel / The World Bank Cover design: Naylor Design Contents About the AICD xvii Series Foreword xix Acknowledgments xxi Abbreviations xxvii Chapter 1 The Elusiveness of the Millennium Development Goals for Water and Sanitation 1 A Timely Synthesis 3 Data Sources and Methodologies 4 Key Finding 1: Wide Differences in Patterns of Access to Water 10 Key Finding 2: Equally Wide Differences in Patterns of Access to Sanitation 13 Key Finding 3: High Costs, High Tariffs, and Regressive Subsidies 16 Key Finding 4: The Stark Challenge of Financing the MDG 18 Key Finding 5: Institutional Reform for Better Water Sector Performance 24 A Multidimensional Snapshot of WSS in Africa 27 v vi Contents Annex 1.1 Surveys in the AICD DHS/MICS Survey Database 28 Annex 1.2 Surveys in the AICD Expenditure Survey Database 29 Annex 1.3 Introducing a Country Typology 30 Notes 31 Bibliography 31 Chapter 2 Access to Safe Water: The Millennium Challenge 33 The Importance of Wells and Boreholes in Water Supply 33 Low Access to Piped Water. for Various Reasons 37 Multiple Players in the Urban Water Market 42 The Role of Wells, Boreholes, and Surface Water in the Rural Water Market 49 Steep Growth of Wells and Boreholes as Sources of Water 52 Notes 59 References 59 Chapter 3 Access to Safe Sanitation: The Millennium Challenge 63 The Predominance of On-Site and Traditional Pit Latrines 63 The Sanitation Challenge across Countries 66 Steep Increases in the Use of Traditional Pit Latrines 69 Good Progress in a Handful of Countries 71 References 81 Chapter 4 Improving the Organization of the Water and Sanitation Sectors 83 The Heterogeneity of the Urban Water Market 84 Varied Institutional Models for Nonpiped Services in the Urban Water Market 102 Many Levels of Government Players in the Rural Water Market 110 Many Players with No Clear Accountability in the Sanitation Market 115 Notes 120 References 120 Contents vii Chapter 5 Urban Water Provision: The Story of African Utilities 123 Access to Utility Water 124 The Pace of Expansion of Utility Water Coverage 126 Water Production Capacity Varies from Country to Country 128 Two-Part Tariff Structures for Piped Water 128 Sewerage Charges Linked to Water Bills 131 Modest Water Consumption by End Users 132 Substantial Water Losses in Distribution System 136 Difference in Quality of Service among Country Groups 138 Technical Efficiency and Effective Management of Operations 139 Financial Efficiency and the Alignment of Operations and Finances 142 The High Cost of Inefficiencies in Operations and Pricing 146 The Role of Institutions in Improving Performance 153 Annex 5.1 Utilities in the AICD WSS Database 158 Notes 159 References 159 Chapter 6 Cost Recovery, Affordability, and Subsidies 161 Average Monthly Spending on Water 161 Wide Price Variations among Service Providers in the Urban Water Market 162 Two-Part Tariffs and the Small Consumer 168 Paying for Water: How Common? 171 Recovering Operating Costs: Affordable 173 The High Cost of Connecting to Water and Sanitation Services 176 The Cost of Subsidizing Capital and Operating Expenses 179 Poor Targeting of Utility Subsidies 180 Connection Subsidies as a Viable Alternative 184 Annex 6.1 Methodology for Estimating the Annual Gross Profit and the Annual Cross-Subsidy between Household Consumers and Standpipes Captured by Standpipe Operators in a City 187 viii Contents Notes 188 References 189 Chapter 7 Spending Needed to Meet Goals in Water and Sanitation 191 The Challenge of Expanding Coverage 191 The Unit Cost of Service Provision across Countries 197 To Close the MDG Coverage Gap 202 Annex 7.1 Unit Cost Matrix Model: A Methodology for Estimating Nonstandardized Unit Costs of Network Assets 209 Annex 7.2 Methodology for Quantifying Rehabilitation and O&M Needs 213 Notes 214 References 214 Chapter 8 Bridging the Funding Gap 215 Current Spending on Water and Sanitation 215 Poor Budget Execution by the WSS Sector 220 Even after Efficiency Savings, a Persistent Funding Gap 224 Limited Scope for Raising Additional Finance 231 Promising Ways to Increase Funds 239 Other Ways to Reach the MDG 240 Notes 248 References 248 Chapter 9 Policy Options for the Water and Sanitation Sectors 251 Policy Options for the Water Sector 251 Policy Options for the Sanitation Sector 260 Reference 267 Appendix 1 Access to Water Supply and Sanitation Facilities 269 Appendix 2 Institutions in the Water and Sanitation Sector 293 Appendix 3 Performance Indicators of Selected Water Utilities 323 Contents ix Appendix 4 Tariffs 349 Appendix 5 Affordability of Water and Sanitation 365 Appendix 6 Funding Gap for Water Supply and Sanitation 371 Index 387 Boxes 2.1 The Problem of Shrinking Households 38 2.2 Coverage, Access, and Hookup Rates: Relationships and Definitions 40 2.3 Legalizing Household Resellers in Côte d’Ivoire 48 2.4 The Opportunity Cost of a Distant Water Supply 50 3.1 Ethiopia’s Success with a Community-Led Program 77 4.1 Senegal’s Successful Experience with Private Sector Participation 88 4.2 Regulation in Water Reseller Market in Abidjan 109 4.3 Issues Constraining Rural Water Supply in Cross River State, Nigeria 111 5.1 Burkina Faso’s Sanitation Tax 134 5.2 Methodology for Estimation of Hidden Cost 147 5.3 Uganda’s Successful Case of State-Owned Enterprise Reform 156 6.1 Piped Water Delivered through Public Standposts in Kigali, Rwanda 165 7.1 The Construction Index Factor 201 7.1A Unit Costs of Infrastructure Projects Study 211 Figures 1.1 JMP and AICD Estimates of the Prevalence of “Improved” Water Supply and Sanitation 6 1.2 The Sanitation Ladder 7 1.3 Dependence on Surface Water in Urban and Rural Areas, 1990s versus Early 2000s 14 1.4 Coverage of Water Services, by Income Quintile 15 1.5 Coverage of Sanitation Services, by Income Quintile 16 1.6 Annual Growth in the Use of Sanitation Types, 1990–2005 17 x Contents 1.7 Affordability of Full-Cost-Recovery Tariffs in Low-Income Countries 19 1.8 Hidden Costs and Institutions 25 2.1 African Households’ Access to Various Forms of Water Supply 35 2.2 Extent of Access to Piped Water through Household Connection, by GDP and Urbanization Rate 37 2.3 Country Scatter Plot of Current Access Rates for Piped Water and Demand-Side Factors in Coverage Deficit 42 2.4 Working Status of Rural Water Points 52 2.5 Annualized Change in Coverage of Various Water Sources, 1995–2005 55 2.6 Annualized Change in Coverage of Various Water Sources, 1995–2005 56 2.7 Four Solid Performers in Expanding Access to Safe Water, 1995–2005 58 3.1 Population That Has Wastewater Connection in the Utility Service Area 64 3.2 Population Sharing Water and Toilet Facilities 65 3.3 Access Patterns across Income Quintiles 66 3.4 Annualized Growth in Coverage in Urban and Rural Areas, 1995–2005 70 3.5 Growth in Access