A distress call about water access
Gaps in sub-Saharan Africa’s water infrastructure could be filled by adopting financial models inspired by the transport sector, says NAI guest researcher Dr Cush Ngonzo Luwesi.
“Water has a dual characteristic. It is seemingly a public good that belongs to everyone, but it is also a private good that belongs to the enterprise that produces the water. Someone has to pay for the infrastructure that makes water available for you and me”, says Ngonzo Luwesi.
He specialises in the field of water finance, on how to source funds to build water storage and other necessary water infrastructure. The situation in his native DR Congo clearly illustrates why water finance is important.
“Congo has great water resources, yet even in [the capital] Kinshasa you will find beautiful houses with toilets and everything, but they don’t have water.”
Ngonzo Luwesi has spent the past ten years outside his country, lecturing and managing major water projects in Kenya, Ghana and elsewhere in East and West Africa. In Kenya the government has put a lot of effort into water resource management and catchment protection.
“Also in fairly undeveloped rural areas of Kenya people will have water”, he says.
In Ghana, the emphasis is on energy, with large-scale hydro-energy programmes to serve the industrial sector.
However, according to Ngonzo Luwesi, all governments in sub-Saharan Africa are struggling to persuade private investors to put their money into water projects.
“Investors say that there is a lot of risk because the government will come and set a price for you. The investor knows that the price should be the market price, yet the government will say ‘No, it is about people’s lives, so you cannot go beyond this price’. So finance becomes very critical: who is going to cover the deficits? If I am doing business and I don’t have profits, who will want to invest in the future?”
Together with NAI researcher Atakilte Beyene, Ngonzo Luwesi is working on a book about water development, a project he describes as “a distress call” to governments and financiers to develop new water resources in response to climate change.
“Firstly, governments are urged to demonstrate political goodwill by engaging with development partners, banks, other private sector actors and the general public on water finance using communication – what we call ‘societal marketing’”.
“Secondly, governments also need to prioritise water in the public budget, to show private companies that public institutions can be trusted. It is only then that banks, donors and other private sector investors will develop financial products that are tailored to the needs of public institutions”.
Ngonzo Luwesi says that the unpredictability of the water sector explains why water finance has yet to incorporate financial mechanisms that are already an integral part of other sectors. He mentions a report from the US Department of Transportation that describes a form of lease used in the transport sector, something that Ngonzo Luwesi says could be adapted for use in the water sector as well. The idea is to allow a private company to pay for necessary infrastructure – for example, water storage – and allow the company to reap the profits for a number of years before passing ownership to the government.
“If governments rely on taxes and revenue alone they will not be able to do it. However, if people from other sectors can come and divert their funds in the water sector – then we can sustain.
From the NAI Library, related reading
Water governance decentralization in Sub-Saharan Africa : between myth and reality / Joao Mutondo, (2016)
Enhancing the climate resilience of Africa's infrastructure : the power and water sectors / Raffaello Cervigni… (eds.), (2015)
Innovative water resource use and management for poverty reduction in Sub-Saharan Africa : an anthology / with an introduction by Paulos Chanie, (2014)