The World Bank Group provided $30.3 billion for Water and Sanitation Services to client countries during FY2007-16. The World Bank accounted for the largest share with $28.4 billion (93 percent), followed by the International Finance Corporation (IFC) with $1.5 billion (5 percent), and the Multilateral Investment Guarantee Agency (MIGA) with $0.4 billion (2 percent).
Lack of financial viability and accountability of service providers are at the core of gaps and disparities in global water and sanitation services, and the World Bank Group’s response has been inadequate. Only 4 percent of the Bank’s water and sanitation-related projects declared financial viability as an explicit objective. While 71 percent of evaluated projects report moderately satisfactory or better development outcomes, over 40 percent of these projects face significant or high risk to their outcomes, mainly due to lack of financial viability, diluting the impact of the nearly $30 billion of World Bank Group’s finance for this sector during 2007-16.
Securing financial viability and institutional accountability is also crucial to attract much needed investments into the water and sanitation service sector, including private sector finance. Of the $30 billion of WBG’s support for WSS during 2007-16, IFC and MIGA account for only 5 percent and 2 percent, respectively. . This presents a formidable challenge for the successful application of the World Bank’s new “Cascade Approach” to the sector.
The water and sanitation services sector faces cross-sectoral challenges that are approaching crisis proportions in many areas, but the World Bank Group has not developed yet a systematic response to address such challenges. Competing demand for water resources from agriculture and industry, climate change, pollution of water bodies (which are the very source of water supply) from untreated wastewater, and poorly managed solid waste and industrial effluents, present a formidable set of interrelated development challenges. With a few exceptions, the concerned Global Practices in the World Bank Group are not sufficiently coordinating their efforts to address these issues, or to support client governments to deal with them in a systematic manner.
Without tackling financial viability and cross-sectoral impacts head-on, credible progress towards SDG 6 is unlikely. SDG 6 has raised the bar from simple access to water supply and sanitation to universal access to adequate, reliable, safe and affordable service delivery by 2030. To effectively support client countries, move towards SDG 6, the Bank Group must help develop solutions to the issues of financial viability, institutional accountability and cross-sectoral impacts. Currently, there are few sustainable models for addressing these issues in fast developing low-income and low middle-income countries, for example.
IEG’s evaluation also highlights pioneering and successful initiatives by the Bank in the Water and Sanitation Services sector in several countries. The challenge is to replicate these positive experiences elsewhere. Bank projects in Brazil and Morocco have helped improve WSS utility performance and accountability, and facilitated private sector participation in Colombia. Community-based rural WSS has been mainstreamed in several countries with positive results, and decentralized cell phone-based M&E systems in Indonesia have promoted service provider accountability. Bank projects have helped Mexico and Brazil deal with extreme water stress situations and are helping Argentina, Egypt and India with reducing the impact of wastewater on water bodies.
See Chapter 2: Portfolio Focus and Results, Chapter 3: Access and Service Delivery Equity, Chapter 4: Financial Viability of Service Delivery, Chapter 5: Environmental Sustainability of Water Resources, and Chapter 6: Institutional Accountability.
Recommendation 1: Increase the World Bank Group’s diagnostic efforts for enhanced engagement on reducing disparities in water and sanitation service access between and within regions, countries, and urban and rural areas. This is especially relevant for lower-income countries and lower-middle-income countries of Sub-Saharan Africa, Asia, and Latin America, with a large concentration of the poor in several sub-regions, and peri-urban and rural areas. In particular, rural water and sanitation service schemes need increased and dedicated technical and management support.
Recommendation 2: Align the results frameworks and key performance indicators of World Bank projects with SDG 6 needs and increase support to client countries to build their evidence base for water and sanitation service access and service delivery. Results frameworks and KPIs of World Bank projects should track service delivery outcomes (i.e. adequacy, reliability, quality, and affordability), and the degree of access and services to the poor. The World Bank should support client countries to set up systems to track access and service delivery, drawing upon experience with harnessing information and communications technology for the purpose.
Recommendation 3: Engage intensely with client governments on water and sanitation service sector reforms to strengthen the financial viability of service providers and to create conditions for increased access to commercial finance, in keeping with the new Cascade Approach. This could be pursued by increasing the level of engagement with client governments for establishing legislation/regulation requiring consumers to pay tariffs that enable service providers to operate with greater financial autonomy. Customized WSS funding models could be created in consultation with country level stakeholders to increase access to commercial finance, and to provide wider scope for IFC and MIGA engagement in the sector.
Recommendation 4: Increase cross-sectoral collaboration to address complex water and sanitation service-related challenges (such as municipal pollution, groundwater over-abstraction, and resilience to climate-induced events) in lending, technical assistance and knowledge support. This could be achieved through increased coordination within units of the Water GP, with other concerned GPs (Social, Urban, Rural and Resilience; Environment and Natural Resources; and Health, Nutrition and Population) and the cross-cutting solution areas (CCSA) for Climate Change at the level of country strategy, and throughout the project cycle. In addition, the World Bank should increase engagement with client countries to create coordination, planning, and implementation mechanisms between relevant ministries and implementing agencies.
Recommendation 5: Enhance knowledge and learning in the water and sanitation service sector in client countries through effective partnerships and capacity-building. Maintain and enhance the World Bank’s distinctive role in generating and sharing knowledge through analytical work – notably by the Water and Sanitation Program (WSP) and Water Partnership Program (WPP) – and technical assistance and capacity building through investment projects with a clear link to project outcomes in their results frameworks.