Brussels, 28 January 2004
The European Commission has adopted a concrete proposal to allocate €1 billion from the 9th European Development Fund (EDF) reserve to improve access to water and sanitation for people in Africa, Caribbean and the Pacific (ACP). This forms part of the campaign to deliver on international targets to halve by 2015 the proportion of people without access to safe drinking water and basic sanitation. The proposal would establish a facility to enhance the use of development aid to leverage significant amounts of funding for water and sanitation infrastructure from other financial sources, including private sector investments. This catalytic effect should be achieved through the provision of: (i) Technical assistance for the development and reform of water sector policies; and (ii) flexible and innovative methods of financing water and sanitation projects and programmes.
European Commissioner for Development and Humanitarian Aid Poul Nielson said: "Since the world summit in Johannesburg, much useful work has been done in reinforcing co-ordination and maximising the effect of available resources for water and sanitation. But if we are to give reality to the goals we have set ourselves we must now forcefully address the financing gap that we face. Significant amounts of additional funds are needed to deliver access to water and sanitation for the poor. And they are needed know. I therefore encourage member states to use this opportunity and take a bold and urgent decision on the mobilisation of the proposed € 1 billion from the 9th EDF to increase access to water and sanitation for people in ACP countries. "
1.1 billion people in the world lack access to safe drinking water and 2.4 billion people do not have access to sanitation facilities. In response to this situation, world leaders gathered at the World Summit for Sustainable Development (WSSD) in Johannesburg in 2002 set themselves the goal of halving by 2015 the proportion of people without access to safe drinking water and basic sanitation. While much is being done already to achieve these goals, funds remain scarce. It has been estimated that there is a current annual financing gap of € 42 billion if the targets on water and sanitation are to be met.
The objective of the proposed water facility is to boost the delivery of water and sanitation infrastructure in ACP countries by actively addressing the financing gap. With the € 1 billion water facility it would be possible to promote new initiatives, provide technical assistance, build research and management capacity in ACP countries and most importantly provide the flexible source of funding which is often the missing link in financing of sustainable water and sanitation related programmes. The facility would therefore have an important catalytic effect in generating additional funds for water and sanitation.
The proposed facility is based on three key principles:
- Governance: It will offer a helping hand to those ACP countries that display real commitment to the development of sound national water policies. Funds would be invested in measures to build or strengthen institutional and regulatory frameworks which are seen to be a precondition for recipient countries' ability to attract more funds;
- Ownership: The facility will be demand driven. It will be an instrument to support and deepen the involvement of actors in ACP countries in the design and implementation of water policies;
- Innovation and flexibility: A maximum impact will be sought by offering creative combinations of grants with other financial sources (such as soft loans, loan guarantees, micro-finance etc.) to fund basic infrastructure. The proposed funds could constitute the necessary seed capital to get projects off the ground. And it should be a tool in forging the public private partnerships needed to increase funding.
In 2000 member states allocated €13.5 billion to the 9th EDF. At the same time member states decided to keep €1 billion in reserve to be released pending a favourable outcome of the performance review of the EDF which is foreseen for 2004. Based on an analysis of funds available for co-operation with ACP until the end of the 9th EDF in 2007 the Commission is proposing to release this "conditional" €1 billion. The funds proposed for the present initiative have not previously been allocated to specific activities. The proposed increased effort on water and sanitation would therefore not be implemented at the expense of other activities within the 9th EDF.
Based on figures from the OECD development assistance committee it is estimated that the EU spends €1.4 billion a year in international aid for water and sanitation programs. Within the framework of the 9th European Development Fund € 555 million have already been allocated to water programmes in 14 ACP states.
In response to the commitments taken at the WSSD, the EU launched a Water Initiative. Community, member states, civil society, financial institutions and the private sector are working together to: (i) Reinforce the political commitment to improve access to clean water and sanitation in the context of poverty reduction; (ii) promote public/private partnerships, and strengthen institutional capacity at regional, national and local level; (iii) improve co-ordination and co-operation in the implementation of water-related activities; (iv) encourage regional and sub-regional co-operation on water management issues; and to (v) generate additional funding, through the development of new, flexible and innovative funding mechanisms that will attract new partners.