SNV egroup discussion Topic 2: Can public funding (taxes and transfers) in sanitation contribute to greater equity?

  • Patricia77
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  • I am Economist, with a Master's Degree in Management, Formulation and Evaluation of Development Projects. I have been coordinating programs for more than 10 years and currently with the leading water and sanitation sector in Honduras for SNV.
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Re: SNV egroup discussion Topic 2: Can public funding (taxes and transfers) in sanitation contribute to greater equity?

Dear All,

My name is Patricia Solórzano, I’m working as SL – WASH – SNV | Honduras – Nicaragua in Central America. My contributions about the topic 2 are:

I want to share some context:

In Honduras, financing mechanisms for the water and sanitation sector are financed through a combination of three sources; The first source of financing comes from the fees charged by service providers based on volume, socioeconomic conditions or a combination of both. The second source of financing is taxes, which contribute to complement the operating costs and some investment costs that are covered by the rates. Tax revenues are generally transferred directly in the form of budget allocations granted by the national or municipal administration to service providers or institutions in the sector and, indirectly, through tax transfers made by the national government to municipal governments. The third source of financing for the sector, mainly for investments, is provided by external transfers, in the form of donations or credits granted by donors in favour of national and local institutions and service providers.

1) Do you consider that the current use of taxes and transfers in sanitation (in your city or country) is contributing to reducing inequality in sanitation services? Why/ Why not?
In the case of Honduras, not, if it is the way it is currently being done, where there is no clarity regarding the allocation of tax and transfer by sectors and regions in the country. There is also an important element and that there is no effective monitoring and follow-up system that records irregularities in the presentation of sanitation services by population strata.

2) Do you think that this is even a realistic and/or desirable expectation?
I consider it realistic if the Law is fulfilled, in the case of Honduras. In my opinion the regulations are defined, unfortunately there is no political will that this is complied with in accordance with the regulations, where the use of taxes and transfers should be oriented by consumption, sector, region, etc.

3) In your view, what would be required to ensure the use of taxes and transfers contributes to reducing inequalities in sanitation services? (or said otherwise: “how?”)
The issue of taxes and subsidies for the operation and maintenance of services must be defined, and the technical capacity of municipal units must be supported with reliable monitoring and follow-up systems that allow monitoring the reduction in the inequality gap. The rates reduced to large companies, lack of willingness or ability to pay by users are the main factors that affect sustainability in the area of sanitation, by achieving equity in services.

At the Government level, it may be possible to adapt the financing of public spending to a decentralized sector, by adopting a sector financing policy to promote the efficiency of service providers, stimulate cost recovery mainly through the tariff, define a scheme of subsidies that allow the poorest citizens to have access to services.
Ensure the strengthening of national institutions so that they can effectively exercise the roles of rectory, regulation, and provision of technical assistance.

Best Regards,

Patricia Solórzano
SNV | Leader Sector WASH, Honduras-Nicaragua
Cel. (504) 31869610
Telf. (504) 2239-6938
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  • Patricia77
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  • I am Economist, with a Master's Degree in Management, Formulation and Evaluation of Development Projects. I have been coordinating programs for more than 10 years and currently with the leading water and sanitation sector in Honduras for SNV.
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Re: RV: [urbansan] Topic 2 Egroup discussion Sustainable cost recovery and equity in urban sanitation

At the Government level, it may be possible to adapt the financing of public spending to a decentralized sector, by adopting a sector financing policy to promote the efficiency of service providers, stimulate cost recovery mainly through the tariff, define a scheme of subsidies that allow the poorest citizens to have access to services.
Ensure the strengthening of national institutions so that they can effectively exercise the roles of rectory, regulation, and provision of technical assistance.

Best Regards,

Patricia Solórzano Leiva
SL WASH | CA
SNV Netherlands Development Organisation

Patricia Solórzano
SNV | Leader Sector WASH, Honduras-Nicaragua
Cel. (504) 31869610
Telf. (504) 2239-6938
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  • chemisto
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Re: SNV egroup discussion Topic 2: Can public funding (taxes and transfers) in sanitation contribute to greater equity?

My name is Chemisto Satya Ali working with SNV in Uganda. My responses to the questions below.

1. Do you consider that the current use of taxes and transfers in sanitation (in your city or country) is contributing to reducing inequality in sanitation services? Why/ Why not?
The current use of taxes/transfers in sanitation in Uganda is contributing to reduced inequality in sanitation services in Uganda. The urbanization process in Uganda is characterized by uncoordinated planning and development leading to unrestricted sprawling of the major towns. According to National Development Plan II, planned urbanization is still low in most regions of Uganda ranging between 7% and 14.5%. Planned urbanization brings about better “urban systems that enhance productivity, liveability and sustainability”. The establishment of 4 Water and Sanitation Development Facilities (WSDFs) is addressing the inequality across the country. These facilities are heavily dependent on transfers. The question for me is whether the taxes/transfers in sanitation are sufficient to reduce the inequality in services? And the answer is NO.

2. Do you think that this is even a realistic and/or desirable expectation?
In the contemporary perspective in Uganda, this is not realistic. While this is a desirable expectation, it is not realistic to envisage a reduction in inequality of sanitation services. However, the gesture is good. First, Uganda’s proportion of taxes in the sanitation sector is so small (less than 0.1%) to the extent that it borders on insignificancy. So, transfers play a substantial role in sustaining the sub-sector. Secondly, the rate at which the population is growing far outstrips the provided budgets which are met by taxes and transfers. Uganda’s population is growing at just over 3% per annum. And according to the World Bank, Uganda’s rate of urbanization is over 13% and the population growth rates in urban centers is over 4.5% per year.

3. In your view, what would be required to ensure the use of taxes and transfers contributes to reducing inequalities in sanitation services? (or said otherwise: “how?”)
The following consideration are critical:
a. Giving sanitation it’s due share in Uganda is critical, be it in taxes and/or transfers.
b. There is need to match and or incrementally sustaining the percentage of taxes/transfers earmarked for sanitation services to the population growth rates. With an increased proportion of taxes/transfers, investments can then be made at scale and the impact felt across rather than the piecemeal approach that currently prevails.
c. There is need for institutional shifts - Will creating independent entity for sanitation help us in Uganda realize a reduction in sanitation services? I think so. This idea for some time now has been mooted. However, implementing it has not materialized. It ought to be tried. Can Uganda learn from other countries that have made this attempt?

Regards,

Chemisto Satya Ali
Advisor, Rural Sanitation and Behavior Change Communication

SNV Netherlands Development Organisation
Plot 36 | Luthuli Rise Bugolobi | P.O. Box 8339 Kampala- Uganda
www.snv.org/country/uganda
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Re: SNV egroup discussion Topic 2: Can public funding (taxes and transfers) in sanitation contribute to greater equity?

The following contribution to Topic 2 is from Reinilde in Kenya:

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Dear all,

My name is Reinilde Eppinga, WASH Advisor for SNV Kenya and look forward to engage more on sustainable cost recovery in the coming weeks.

Topic 2:
1) Do you consider that the current use of taxes and transfers in sanitation (in your city or country) is contributing to reducing inequality in sanitation services? Why/ Why not?

In different cities in Kenya there are plans to expand sewerage coverage through both government investments as well as input from international organisations (WB etc.). These sewers tend to benefit people living in city centres although there are also cases in which low income areas are included in these systems and there is also inclusion of decentralised treatment systems. In addition there are efforts by government and non-government actors to look at the introduction of a sanitation levy or tax/ amount on top of the water bill by all residents to cater for onsite sanitation services. This tax will then mostly benefit people with low incomes. Only those with a sewer connection will pay a higher tax. Water and sanitation companies in Kenya, for example, have started introducing pro-poor units (slowly changing name to low income consumer units) that look specifically at how those with low incomes can access water and sanitation services. In Kenya, the Water Services Trust Fund also supports water companies in providing sanitation options and decentralised treatment systems for those not connected to the sewer and having improved sanitation facilities. These initiatives often are targeted to the under-reached. The same is true for public toilets in some areas.

2) Do you think that this is even a realistic and/or desirable expectation?

Those making decisions for countries and cities are and, in my opinion, should be able to be sensitive to how investments affect all those living in that specific area. There are often ways in which funds can be used to reach those with low incomes as well. This can be done in different ways through different actors as some of the examples above refer to. A first step is actually knowing the population to be served and having data available to support targeted interventions. Stimulating private sector solutions for different market segments also needs to be considered.

3) In your view, what would be required to ensure the use of taxes and transfers contributes to reducing inequalities in sanitation services? (or said otherwise: “how?”)

There is a need for willingness of government and utility staff to consider and invest in the different and diverse needs of different groups in their service areas. Endorsement of the regulator to enable companies to charge a fee to enable provision of onsite sanitation services in addition to sewerage services by the companies is an example of awareness and willingness required to create a difference. Additionally there is also the need for up to date data of the targeted population and suitable technologies that can serve these different areas (e.g. pre-paid water meters, community water meters, faecal sludge management equipment suitable for low income areas, mobile transfer stations). Involvement of private sector actors can be key in creating sustainable solutions for those living in low income areas.

I am sorry I missed the first topic. Here a summerised input which provides some background to the above answers.

Topic 1:

In Kenya there is often a combination of water and sanitation company/county government owned trucks and privately owned exhauster truck companies that empty septic tanks and some pit latrines. There are often also informal, and increasingly more organised pit emptying groups, that empty pit latrines manually and with improved equipment like the gulper/rammer. These systems generally are financially sustainable as households pay the companies/emptiers for the services which they are able to grow over time. Toilet construction is done by households and organisations and generally not subsidized, individuals are upgrading their containment with time. Treatment plants though are in general poorly managed in Kenya and there are only a few examples of plants that are functional and for which the sewerage tax on top of the water bill is used for and sufficient to operate the plants sustainably.

Kenya is considering pilot of a sanitation levy/tax on top of the water bill to enable water and sanitation companies to work on ensuring faecal sludge from onsite sanitation facilities will also reach the treatment plant where it can then be co-treated, disposed and/or re-used. The tax will be partly used to cater for the transportation cost from mobile transfer stations to the treatment plant.

There is increased focus on the need to revive treatment plants, increase sewer networks and faecal sludge management transportation and collection systems as towns grow. Increased examples of re-use e.g. briquettes is providing a positive pull factor towards rehabilitation of treatment facilities as well as additional opportunity for private sector involvement and investment in the sector. Funds used for upgrading and expansion of large infrastructure are a combination of surplus from the companies, county and national level funding (including loans) as well as international organisations’ initiatives. Operational and maintenance costs paid from those paying for water services.

Kind regards,

Reinilde Eppinga
WASH Advisor
SNV Netherlands Development Organisation

www.snvworld.org/kenya

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Dr. Elisabeth von Muench
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This email address is being protected from spambots. You need JavaScript enabled to view it. Twitter: @EvMuench
Sanitation Wikipedia project leader: en.wikipedia.org/wiki/Wikipedia:WikiProject_Sanitation
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Re: SNV egroup discussion Topic 2: Can public funding (taxes and transfers) in sanitation contribute to greater equity?

Please find below the summary document that Antoinette Kome (SNV) prepared for the discussion Topic 2 "Can public funding (taxes and transfers) in sanitation contribute to greater equity?".

Head moderator of this discussion forum
(Funded via consultancy contract with Skat Foundation funded by WSSCC)

Dr. Elisabeth von Muench
Independent consultant located in Brisbane, Australia
This email address is being protected from spambots. You need JavaScript enabled to view it. Twitter: @EvMuench
Sanitation Wikipedia project leader: en.wikipedia.org/wiki/Wikipedia:WikiProject_Sanitation
My Wikipedia user profile: en.wikipedia.org/wiki/User:EMsmile

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