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<International Source Book On Environmentally Sound Technologies
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1.9 Financing (Topic i)

The new agenda for water and sanitation sector management is increasingly based consciously or unconsciously on an investment-tariff model which attempts a comprehensive analysis of demand for these services, particularly for urban areas. The analysis necessarily includes different investment scenarios - phasing of investments; analysis of affordability, willingness to pay the costs of services provided and how these affect the viability of different investment scenarios and the sustainability of the services provided.

1.9.1 Cost of water supply, wastewater and stormwater services

The average cost of water in Africa was $0.45/m3 in 1990 while average water tariff was $0.46/m3. The latter rose from $0.29 in 1985. Nevertheless average tariff exceeds average cost only in 42% of the countries in 1992 (from only in 22% in 1985). The cost of water is almost twice that in southeast Asia due to higher construction costs. Data from Ivory Coast, Uganda, Nigeria, Ghana and Kenya show that prices paid by the under-privileged in African cities to water vendors is 4-11 times that charged by public utilities in these same cities.

Table 1.18: Africa: Unit costs of construction of water supply and sanitation systems, in US$ per capita
  Urban Water Supply Urban Sanitation System
Year House Connection Stand post Sewer connection Other means
1985 106 55 150 116
1990 91 55 120 100
Source: WHO (1992).

WHOs estimates of per capita cost of sewer connection shows that it decreased to US$120 in 1990 and for other options than sewerage system it was $100 (Table 1.18).

The figures (given per site) for South Africa (Table 1.19) is much less for both waterborne (including unsewered septic tanks) and other systems given in Table 1.18. Ironically the cost of the bucket system is higher (Table 1.19) than those of intermediate systems. The seeming anomalous situation is due to high recurring cost of doing the nuisance job of collection and emptying the excreta, and would also serve as a deterrent.

Table 1.19: Costs of human waste disposal per site, in South Africa
Average Costs
Capital (US$) per site
  Waterborne Loflos VIP Buckets
On site 190 207 259 103
Reticulation 241 - - -
Connector service 86 - - -
Treatment works 121 - - -
Total 638 207 259 103

O&M                                                                                             US$/household/month

On site maintenance 7.6 10.9 4.6 2.6
Water 22.4 1.6 - -
Reticulation 13.8 - - -
 Collection/Emptying - 3.4 3.4 39.3
Connector service 2.6 - - -
Treatment works 5.7 1.7 1.7 4.3
Total 52.1 17.6 9.8 37.5
Total unit cost per household/ month 8.1 2.8 2.4 4.5

For Namibia, the income and expenditure associated with the water supply alone shows that unit cost in 1991/92 was R0.89/m3, while the unit income was R0.76/m3. For sewerage, the shortfall is significantly higher.

In South Africa Central government expenditure on "sewerage and sanitation" (both current and capital) was 3.5% of social security and welfare expenditure and 1.5% of the general government expenditure. Expenditure on state water schemes and services was half of that spent on sewerage and sanitation largely because urban water supplies are essentially self-financing.

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