30 December 2017

Ethiopia: Inventive Water Financing to Prop Up GTP II Targets


There are significant barriers to households and businesses committed to engage in the water, sanitation and hygiene (WASH) scheme in Ethiopia. This challenge requires innovative approaches to support the government's efforts in advancing water supply and sanitation (WSS) access through self-supply, writes Salfiso Kitabo (skitabo@water.org), country director of Water.Org in Ethiopia.

Ethiopia's ambition to become a low middle-income country is enshrined in its national 2025 vision. The delivery of this national target is driven by a series of five-year Growth & Transformation Plans (GTPs), the first of which ended in 2015 with remarkable achievements in real gross domestic product (GDP) growth, infrastructure and social development.

Generally speaking, Ethiopia has in the recent past been seen as an economic power-house to reckon with in the region in adopting innovations and technologies that help address various socioeconomic challenges. In fact, Ethiopia was applauded as the first country within the sub-Saharan African region to have met its millennium goals in maternal health care.

The second edition of GTP kicked off in 2016 and runs to 2020, and within the GTP II framework, water and sanitation programmes have been singled out and given due prominence in driving the government priorities in addressing its water, sanitation and hygiene (WASH) agenda.

WASH coverage in Ethiopia is very low compared to other African countries. Due to this, the prevalence of communicable diseases is very high in the country. Diarrhoea continues to be the leading cause of death among children under five years of age in the country.

GTPII targets to provide 98pc of the population with access to safe water supply for the rural dwellers and 100pc for urban areas. Achieving GTP II targets and universal coverage means that an additional 26.6 million rural and 4.4 million urban people in 6,284,000 households in Ethiopia would gain access to safe drinking water.

However, a significant shortfall in financing for water supply and sanitation (WSS) access exists, and this setback in funding is one of the biggest challenges to solving the water and sanitation crisis in Ethiopia and around the world.

The government has introduced self-supply as one of the solutions to help finance access to water and sanitation in the country. However, it is one of the significant barriers facing households and business operators who are committed to engage in a WASH scheme in Ethiopia. This challenge requires innovative approaches to support the government's efforts in advancing WSS access through self-supply.

Water.org's work directly supports the government's self-supply initiative and goals. Through its innovative WSS financing model, WaterCredit, Water.org works with microfinance institutions to connect people at the base of the economic pyramid (BOP) to affordable loans, so they are empowered to access safe water and sanitation solutions in their households.

The upfront cost of a toilet or a piped water connection can easily equal to a household's entire monthly income, especially in a country where the majority live below a dollar a day. However, many BOP families are willing to make this investment if they can spread the cost over time by taking a loan.

Water.org is working with microfinance institutions in Ethiopia to help fill this gap by developing loans for water access and toilets. This innovative method will ultimately enable many families who could not have otherwise met this fundamental need through self-supply, thereby helping the Ethiopian government reach its 30pc target.

Microfinance loans can be offered by many actors and collectively cover a large geographic proportion of the country, allowing many interested people to take action on their behalf without waiting for the arrival of government programmes. Such a multitude of actors offering water and sanitation microloans create the potential for the government to achieve its targets at a faster rate.

Through this innovative approach, the Water.org has helped over seven million people across the 10 countries it operates in have access to safe water and sanitation.

Microfinance, which has been proven in other countries in Africa and around the world as an essential tool for dealing with the water and sanitation crisis, is an innovative approach that supports the government's efforts in ensuring everyone has access to safe water and sanitation in the country. Accordingly, there is an urgent need for all microfinance institutions in Ethiopia to integrate microlending for water supply and sanitation into their portfolios and offer these loans across the country.

Adoption of innovative financing mechanisms such as WaterCredit can help the country to achieve its GTP II goals and place Ethiopia amongst the top nations in Africa using creative ways to expand water supply and sanitation to its populace.

Salfiso Kitabo (Skitabo@water.org) Is Country Director of Water.org in Ethiopia

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