Rural WSS Financing

Predictable financing and robust delivery mechanisms are at the heart of scaling up sustainable rural water supply and sanitation (WSS) services. Countries face big challenges in financing the necessary capital investment and maintenance costs needed to achieve the Millenium Development Goals (MDGs).

Besides a general shortfall in funding, user financing is inadequate among poor rural populations, attracting small-scale private sector investment is often difficult, and sanitation and hygiene promotion are grossly underfunded.  

Several key principals underpin sustainable rural WSS financing:

	Promoting increased capital cost recovery from users
	An upfront cash contribution based on willingness to pay
	100 percent recovery of operation and maintenance costs. Improve community level financial management and resource mobilization, especially for major repairs/replacements and service expansion
	Financing mechanisms (public and private sector) in place and financial intermediation options (such as household credit for on-site sanitation) to increase internal resource mobilization
	Providing detailed information on costs to allow for informed choice, and seek to reduce investment costs through lower cost options and more efficient delivery mechanisms

Governments are increasingly putting the necessary frameworks in place to increase funding and efficiency of resource flows while experimenting with different models of user financing. Rural WSS is now often part of national planning by appearing in Poverty Reduction Strategies and Medium Term Expenditure Frameworks. As a result, the external support provided by the World Bank and its partners can be better aligned within national goals and policies, become more predictable, reduce government transaction costs, and where appropriate, be delivered as direct budgetary support.

The World Bank is able to provide budget support through Poverty Reduction Support Credits and can help governments increase efficiency of financing through Public Expenditure Reviews.

The World Bank is ramping up efforts to maximize the health benefits from public WSS investments by promoting corresponding household investment in sanitation facilities and national level financing of hygiene promotion through combined government, donor, and industry programs such as Public-Private Partnerships for Handwashing with Soap.