January 24, 2011

The Impact of the Financial Crisis on Financial Flows to the Water Sector In Sub-Saharan Africa

Here are highlights of a report published in late 2010 on the impact of the global financial crisis on financial flows to the water sector in Sub-Saharan Africa. The goal of the study was to analyze how the water sector is presently financed and then trace the impact of the crisis on these financing sources. The lead author was John Joyce of the Stockholm International Water Institute (SIWI).  Jakob Granit (SIWI), Emmanuel Frot (Stockholm University), David Hall, Public Services International Research Unit (PSIRU) and David Haarmeyer (Independent Consultant) were co-authors.

The report concluded that the general low level of investment finance to the water sector will continue hamper growth in Sub-Saharan Africa, which includes the countries where we are drilling borehole wells, Niger and Mali, West Africa. The water sector in Sub Saharan Africa (SSA) is characterized by low levels of investment, cost ineffective service delivery and weak governance.  On the positive side, recent economic data indicate that the economic impact of the crisis appears to have been temporary on SSA economies, due to positive and high macro-growth forecasts and improved commodity revenues.

However the report stated that: “We do not know in real time how the financial crisis will impact on donor decisions. There may be a lagged impact where disbursements in the near future will turn out to be much less than commitments given before the crisis. This outcome could be even more likely to be negative should the crisis continue to linger or turn into a double-dip recession. Based on past crises, donor responses, and historical disbursements data and a number of strong caveats, we estimate a scenario where water aid in 2018 will be $103 million lower than without the crisis.


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