Financing sanitation infrastructure

  • simon
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Financing sanitation infrastructure

In the recent past, domestic capital market has emerged as one of the most important infrastructure and services development financing in the developing countries. What is the potential and the opportunities for sanitation infrastructure and services financing by funds raised through domestic capital market in the developing countries? Are there any examples of countries where this has been tested?
How can this be modeled for sustainable sanitation services provision for the poor communities?

Simon Okoth
Senior Project Manager,
SuSanA Project Phase III, Stockholm Environment Institute (SEI)
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  • Marijn Zandee
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Re: Financing sanitation infrastructure

Dear Simon,

I don’t think I can really answer your questions; however, as I find the topic interesting I would like to ask you some questions to see if I understand your question correctly.

When you refer to using the local capital markets to raise funds, do you refer to the government borrowing money by issuing bonds to local (within country) financial institutes and individuals?

If so, on which kinds of products and services should the government spend this money? Conveyance and treatment of sewage and sludges? Or would you suggest they build toilets for the wider population?

Finally, I would be interested to know why you think the government should borrow money rather than raise taxes? The bonds the government issues will have to be paid back, so the tax money will have to be raised at some point.

I could imagine that when building, for example, a road a government could argue (correct or not) that it will lead to economic growth that will help pay off the loan (bonds) later. Perhaps here is the start of an answer to your questions. Would the markets belief that the investments in sanitation will yield sufficient economic growth to justify government borrowing?

Regards
Marijn

Marijn Zandee

Kathmandu, Nepal

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