Financing Water and Sanitation Services: USAID Water and Development Technical Series

This brief is part of USAID 's Water and Development Technical Series, which provides guidance on important topics for developing and implementing water and sanitation activities in support of the U.S. Government Global Water Strategy and USAID’s plan under the strategy.

Governments have set ambitious targets for universal access to safely manage water and sanitation services by 2030, requiring an unprecedented mobilization of funding to meet this goal. The purpose of this technical brief is to provide guidance on factors to consider in USAID’s water and sanitation programs that aim to increase the effectiveness of current funding and mobilize additional public and private funds to expand and improve water and sanitation services globally.

KEY TAKEAWAYS

• Maximizing value from existing public funding and mobilizing additional funds from domestic public resources and user fees needs to be prioritized by policymakers, planners, and development practitioners.
• While bridging the financing gap requires expanded utilization of private finance, successfully leveraging this finance requires creditworthy water and sanitation service providers and a strong governance system.
• Addressing policy, legal, and regulatory framework bottlenecks and other enabling environment issues, including governance, are fundamental to unlocking investment. This includes strengthening monitoring and accountability systems.
• Private finance currently plays a small but important role in the sector. It is therefore vital that development partners work in coordination to target creditworthy service providers operating in favorable enabling environments, where it makes the most sense to attract private finance.
• Development practitioners must consider country governance capacity and service provider creditworthiness in order to assess the potential to access different types of financing and plan for long-term reform.