New Government Spending Watch data and report –A balance between government, donor and private funds (3/4)

This third blog is part of a four-part blog series written by Jo Walker who manages the Government Spending Watch (GSW) programme. It reflects some of the conclusions outlined in the most recent Government Spending Watch report “Financing the Sustainable Development Goals: Lessons from Government Spending on the MDGs”.  This week’s blog features some key financing solutions for the WASH sector.

Aid must continue to be a vital international resource.

Donor aid accounts for a remarkable amount of government spend at present in water, sanitation and hygiene (WASH). In fact, donors fund more than three quarters of WASH government spending (and the donor share has gone up by 3% since 2012). Of the sectors which Government Spending Watch (GSW) tracks, our recent 2015 report shows that WASH has been the only sector which has registered large increases in ‘on budget’ donor funding since 2012 (GSW tracks only ‘on-budget aid’, as the name suggests this is aid which is reflected in governments budget documents, an thus is aligned to their own programmes and priorities). As a consequence, aid continues to be a vital source of finance in WASH, and it must continue to play a role in helping ensure that public funds play a role in reaching the very poorest and most marginalised. WaterAid recently estimated that there will be a need for a doubling in aid spending to meet the post-2015 SDG WASH targets.

Spend it better.

However, there is a need for improvements to aid so it can also work as hard as possible in supporting governments own efforts – and governments themselves must do more. While aid must continue to be a major source of finance, there are also worrying concerns about government commitment to WASH spending and overdependence on donor aid.  Any recent financing growth – or maintenance of spending – has been largely driven by donor financing to the sector. There is also a strong correlation between donor aid and shortfalls in implementation in the WASH sector (in terms of what government plan to spend and actually spend). There are larger spending shortfalls in WASH than in any other sector we track.

Research carried out by GSW for WaterAid (in an upcoming publication) has identified this lack of financial absorption in the sector is at least partially due to a mismatch in donor spending to government plans. If spending is to be accelerated post-2015, donors are going to need to simplify their procedures, and use government systems wherever possible, preferably by providing budget support in order to improve spending.

Finally, governments also need to scale-up their own spending, especially in terms of allocating enough to adequately cover operating costs (or ‘recurrent’ spending) to ensure projects run properly and sustainably. Currently, and at least partially as a result of the donor dominance in the sector, there is a mismatch between funds for investment (capital spending) and costs to keep things running – especially in rural areas.

At GSW, we work across a number of sectors, and we are acutely aware of the need to increase not only WASH sector spending but the whole resource envelope available for development – so as to avoid competition for the same finance pie which will be further stretched to meet the more ambitious SDGS.  We believe that the development community needs to work together work across sectoral interests, and mobilize together to make sure tax revenue, innovative finance and aid are sufficient to fund the extra public spending we need across the whole SDG agenda.

This blog is part of four-part blog series written by Jo Walker who manages the Government Spending Watch (GSW) programme. GSW believes that there is an urgent need for a much clearer picture of government spending, and for citizens, and their representatives in civil society organisations, to have access to comprehensive and timely data, so that they can hold their governments to account.

-> Read the final entry of our series “WASH spending needs better tracking to increase impact” (4/4) to learn more about the necessity to hold governments accountable for progress of financing the SDG commitments.

-> Read the second blog in the series “Scaling-up WASH spending to reach everyone, everywhere” (2/4).