The Impact of the Global Financial Crisis on Financial Flows to the Water Sector in Sub-Saharan Africa

This report highlights the impact of the global financial crisis on financial flows to the water sector in Sub-Saharan Africa. Their goal was to unpack how the water sector is presently financed and then trace the impact of the crisis on these financing sources.

The purpose of this report is to provide an analysis of the impact of the global financial crisis (“the crisis”) on financial flows to the water sector in Sub-Saharan Africa (SSA). To gain an insight into the impact requires first of all an understanding of how the water sector is financed and then the extent to which these financing sources are impacted by the crisis. The paper assesses the impacts of the crisis in the following three water sub-sectors: water supply and sanitation (WSS), irrigation and hydro electric power. Financial
flows from the public sector, Official Development Assistance (ODA), non-OECD countries (such as China); private sector capital; and household/farmer self-finance are analysed.

This report complements a 2009 report by the Stockholm International Water Institute on the impact of the financial crisis on the water sector prepared for the Swedish International Development Agency (Sida) (Winpenny et al., 2009). The two major conclusions in the 2009 report were that the financial crisis had overlapped with the earlier food crisis, and that it, together with fluctuating energy costs, compounded the economic problems of many SSA countries; and secondly, that the financial impacts would be superimposed on the basic problem of underinvestment in water services that undermines growth projections in SSA and the possibility of reaching related Millennium Development Goals (MDGs).

The paper is structured as follows: Section 2 presents key messages, Section 3 discusses the methodology, Section 4 establishes a baseline, Section 5 looks at how these financing sources may have been impacted by the crisis and Section 6 estimates the impact and offers a conclusion.