Water: Towards a Culture of Responsibility

5: Funders, Often Criticized But Indispensable

V. FUNDERS, OFTEN CRITICISED BUT INDISPENSABLE International financial institutions are not loved. They are accused of being “accomplices” in world economic liberalisation and of having imposed painful structural adjustment programmes on countries on the verge of bankruptcy. Some of their solutions are considered to be inappropriate in dealing with a region’s economic collapse. Indeed, the 1997-1998 financial crisis in South East Asia, then in other emerging countries, has shown that several countries, which came out of it best, followed the opposite strategy to the measures recommended by the International Monetary Fund (IMF). International financial institutions are blamed because, sadly, the remedies they propose are not painless and affect poorer populations. They are criticised for not reflecting the differences between countries in their administrative advice, and for depending too heavily on the developed countries that founded them or endowed them with capital. Their high running costs and their battalions of experts shock the poor. They are decried for interfering in the management of developing countries or, on the contrary, for their passivity . They are reviled for doing too much or too little. They are criticised as much for their power as for their impotence. Finally, one of their great wrongs is not to have achieved a goal that depends but little on them: banishing wretched poverty from the world. In the case of water, international financial institutions have been taken to task for having encouraged, in developing countries as elsewhere , full cost recovery from service users or, at least, fuller recovery. International financial institutions have also encouraged public-private partnerships, which are disliked by a good number of associations. In the past they recommended privatisation, including the sale of infrastructures to private operators, which was clearly inappropriate for developing countries. For water as for other sectors, they prefer to give loans, rather than grants. In theory, loans encourage recipients to made good use of the moneys received, but also forces them to repay, which is obviously disagreeable. Who does not prefer a gift to a loan, even at subsidised rates? Because of the way in which international financial institutions function, most of their financial aid is given to states, and they cannot pay them directly to local authorities or to NGOs (even if this constraint has been wiped out, as, for example, when aid is conditional upon results). This results in a partial siphoning off of the funds 111 by intermediary bureaucracies, and sudden disappointments when one calculates the sums that actually reach projects on the ground. Together with development aid agencies and other funders, international financial institutions suffer from being organisationally bloated in the multiple structures dealing with water questions. At UN level alone, 23 agencies or programmes are involved with water. If the funders recognise the vital importance of water and sanitation in human development , this priority does not translate in amounts lent or given. Their reputation suffers from slow progress, which remains well behind expectations. Delays in advancing towards the Millennium Goals, for instance, have raised questions about their efforts and efficiency. Although many programmes they have financed have improved water and sanitation services, many others have not achieved a service of sustainable quality, and many advances have been simply obliterated by the frantic growth of towns in many developing countries. Nevertheless, international financial institutions, development aid agencies and other funders in general, have a key role to play in access to water. This role is not only concerned with finance and innovation, but also with their contribution to the debate: they move it forward through the initiatives they fund and the ensuing evaluations. AN OVERVIEW OF PUBLIC AID FOR WATER AND SANITATION If we make a rapid examination of public aid for water and sanitation , what do we see? Firstly, there are not many generous countries. For a long time, the most generous country has been Japan. It is the most important source of public development aid, with an average of $850 million for the period 2003-2004, that is, a bit more than a fifth of the total aid for water and sanitation. Within the G8, Germany and Japan spend nearly 6 % of their aid on water and sanitation, as against less than 3 % for the USA, Italy and the UK. Secondly, multilateral aid is developing. It now represents nearly a third of global aid, as against only a fifth in 1998. That is progress, because multilateral aid is directed more towards very poor countries than is bilateral aid. The World Bank and the...