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2.1 Topic k: Financing

In African countries, the central government generally finances MSWM and other municipal activities through taxes collected by the Treasury. Even municipal property taxes and direct taxes on household refuse collection flow to the coffers of the central government. These funds are then allocated across the different central government ministries and to the municipalities. MSWM is then funded by allocations from the responsible ministry for capital projects and special projects (such as public education) and by municipal allocations for operation and maintenance.

Under this system, MSWM is just one of many ministerial and municipal responsibilities. Funding for MSWM reflects the priorities of the responsible ministry and of the municipal government. It does not accommodate the actual budget required for the MSWM program, projects, and operations. Inadequate funding is often the result.

User fees are based on a flat rate for collection service to households and commercial establishments. Where this service is provided by the private sector it is likely that the fees yield full cost recovery plus a profit for the service provider. In other cases, where the municipality charges a user fee, full cost recovery may not be realized and the service is subsidized by funds from other sources. Examples where municipal user fees are used include Accra; Conakry, Guinea; and some suburbs of cities in South Africa. In some cases these revenues are retained by the municipality specifically for their MSWM activities. In others the funds go into the general municipal pool. Special taxes are also used to raise revenue for MSWM services. In Dakar an MSW collection tax is imposed by the central government and is collected by the Treasury. In Bamako a cleansing tax based on property value is levied and direct user fees are also employed in some areas. Direct user charges also prevail where pre-collection services are provided by community organizations. These revenues cover part or all of the costs for community collections though they may not extend to covering the cost of emptying the communal receptacles and disposing of their contents. These latter costs are borne by the municipality. Direct municipal charges appear to be an emerging instrument for cost recovery in African cities. However the practice is not yet widespread and in general, residents pay via indirect local taxes.

International aid has been provided for studies, projects, and equipment across the continent. Some of the agencies which have participated in such aid are UNCHS (Habitat), UNDP, DANCED and DANIDA of Denmark, GTZ of Germany, JICA of Japan, NORAD of Norway, SIDA of Sweden, USAID, several European Union programs, and, of course, the World Bank. Aid ranges from little more than studies of the MSWM in specific African cities to funding and technical support. In the area of solid waste management, GTZ, JICA, and the World Bank provide the most substantial and regionally diverse assistance. Funds and technical support have been provided for program development, such as GTZ's involvement in changes to the MSW collection system in Accra, Ghana. Collection vehicles are also commonly donated for municipal operations.

In summary, financing options include taxes, user fees, bank financing (for private service providers), and international aid. The central government is the main mechanism by which these options are exploited. The Treasury generally controls the collection of taxes and the flow of funds to municipalities. Direct user fees collected and retained by municipalities are a relatively new instrument for cost recovery in several African cities. These generally provide partial recovery of the MSWM service costs. Direct user charges are also applied by private service providers. It is likely that these cover full costs of the service, which primarily involves collection.

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