Filling the Global Sanitation Finance Gap
Photo: Water and Sanitation Program (WSP)
Some 768 million people worldwide don’t have access to safe, healthy water sources, and 2.4 billion people live without access to safe sanitation, such as an on-site toilet or connection to a sewerage network -- around 900 million must defecate in the open.
The situation is particularly difficult in Sub-Saharan Africa and parts of Asia. Approximately 70% of people in Sub-Saharan Africa and 53% of people in South Asia still lack access to basic sanitation.
Installing safe toilets is especially critical for the health and well-being of children. Ending open defecation can save children’s lives by reducing disease transmission, stunting, and malnutrition. Girls are especially affected. Without adequate sanitation facilities, they are more likely to drop out of school or are vulnerable to assaults while seeking privacy.
Lack of sanitation is also detrimental to economic growth. Poor sanitation costs some countries billions of dollars, amounting to the equivalent of 6.7% of GDP in Bangladesh (2007), 6.4% of GDP in India (2006) and 7.2% of GDP in Cambodia (2005) annually. The costs stem from premature deaths, healthcare and pollution, as well as lost time and productivity seeking treatment and finding access to sanitation facilities.
For more than 15 years, the Global Partnership on Output-based Aid (GPOBA) has used an approach called output-based aid (OBA) to tackle this development challenge. This form of results-based financing (RBF) provides subsidies to public and private service providers based on verification of pre-agreed project targets defined during project design, holding them accountable to deliver results.
In Senegal, GPOBA provided a US$5.8 million results-based grant to deliver safe and affordable sanitation services to 103,000 people through the installation of 11,495 facilities. The Office National de l’Assainissement du Sénégal (ONAS) contracted out the service delivery to the Agence d’Exécution des Travaux d’Intérêt Public contre le sous-emploi (AGETIP, or the National Agency for Public Works and Underemployment), which pre-financed the facilities.
Local firms installed the facilities, consulting firms provided technical studies and supervision, and neighborhood community-based organizations (CBOs) carried out social intermediation, hygiene promotion, monitoring, and collected user contributions. Additionally, municipalities then engaged in information and communication activities. Once the facilities were properly installed, GPOBA disbursed the final round of funds.
In Bangladesh and Ghana, two recently completed sanitation projects have also demonstrated successful results.
Bangladesh has almost ended the practice of open defecation—now down to one percent. This has helped reduce health risks-- especially for children under five -- and has provided safety, dignity and security to women and adolescent girls.
In rural Bangladesh, GPOBA worked with local microfinance institutions to help transition households to the next generation of toilets—hygienic latrines which fully confine feces and harmful pathogens from both the environment and the user. The project helped 170,000 low-income, rural households, representing a total of 850,000 people, access microloans to purchase affordable hygienic latrines from local construction firms. GPOBA jumpstarted the effort with a US$3 million grant, which mobilized an additional US$22 million from microfinance partners.
GPOBA’s contribution was designed to stimulate the market for sanitation in rural Bangladesh by enhancing the attractiveness of borrowing by increasing access to and affordability of higher-quality latrine options for poor households, as well as reducing the risk of lending for the microfinance partners involved.
In contrast, sanitation has not been prioritized in Ghana, where economic growth has led to rapid urbanization. Only 23% of households nationwide have a toilet or improved latrine; in the greater Accra area, only one-third have access to a flush toilet. This lack of sanitation has led to outbreaks of cholera and the second-highest open defecation rate among African countries.
GPOBA teamed up with the government of Ghana to supply low-income communities with low-cost toilets. A US$4.85 million grant from GPOBA supported product development to meet the needs of households, engaged with private service providers to improve their business model, mobilized financial institutions to commercialize lending for toilets on a larger scale, and subsidized the installation of 7,685 sanitation facilities in the low-income communities of Accra.
In conjunction with Sri Lanka’s National Water Supply and Drainage Board, GPOBA is currently providing subsidies for both improved sewerage connections and on-site latrine facilities to connect low-income households in the Greater Colombo area. Thanks to RBF, a household near an existing sewer network can be connected at a cost 20-50% less compared to before OBA, and has already benefited 9,000 households in Colombo and surrounding area. For those living further away where network extension costs would be prohibitive, the project has implemented on-site sanitation systems (septic tanks and decentralized wastewater treatment systems) along with improved management that includes fecal desludging and disposal/reuse/treatment. Therefore, lower-income residents not living near an existing sewer network can still access improved sanitation facilities, These on-site options, have benefited 565 households and cost 25% less than conventional sewer connections. Whether connecting households or providing safe and improved latrines, these solutions have been designed to provide all recipients with equal levels of quality.
As the cases of Senegal, Bangladesh, Ghana and Sri Lanka demonstrate, OBA can be an effective approach for helping to fill the sanitation financing gap.
To learn more about our water and sanitation work visit our website.
Development Financing for Results (Video)
Expanding Hygienic Sanitation in Rural Bangladesh with Microfinance
Bangladesh: Sanitation Microfinance for Rural Households
Building the Market for Urban Sanitation in Ghana
New Approaches for Urban Sanitation in Sri Lanka
 “Sanitation.” World Bank, www.worldbank.org/en/topic/sanitation.