WASH PAD FINAL 2015-2020 vf.pdf

WATER, SANITATION,

AND HYGIENE

(WASH)

Project Appraisal Document

Economic Growth Office USAID/Senegal

December 11th, 2014

Table of Contents

I. EXECUTIVE SUMMARY 1

II. RELATIONSHIP TO WATER DIRECTIVE, USAID WATER STRATEGY, AND USAID/SENEGAL’S

COUNTRY DEVELOPMENT COOPERATION STRATEGY (CDCS) AND RESULTS FRAMEWORK 2

III. RELATIONSHIP TO PARTNER COUNTRY AND OTHER DONOR PROGRAMS 6

IV. PROJECT DESCRIPTION 8

Problem Statement 8

Key Challenges and Opportunities 14

Technical Approach 18

V. IMPLEMENTATION PLAN 28

VI. SUMMARY FINANCIAL PLAN AND COST ESTIMATE 33

VII. MONITORING AND EVALUATION PLAN 34

VIII. ANALYTICAL CONSIDERATIONS 35

APPENDICES

I: GOS Actors, Policies, and Laws in the WASH Sector 42 II: Donor Projects in WASH Sector 44 III: Challenges for Sustainable Water, Sanitation, and Hygiene Interventions in Senegal 46 IV: Logical Framework 50 V: Expanded Project Design 48 VI: Independent Government Cost Estimate Summary 57 VII: Indicators 58 VIII: Expanded Analyses 60 IX: PAD and Procurement Timeline 63 X: Acronym List 64

Executive Summary

In Senegal, access to safe drinking water and poor sanitation are still major constraints, particularly in rural areas, despite the Government’s efforts. As a result, prevalence of diarrheal diseases is high and is the second leading cause of death for children under the age of five, killing more than 40,000 children annually. The effects of diarrhea are varied and include malnutrition, cognitive deficiencies, and long-term chronic illness. Recognizing the link between access to safe drinking water and the prevalence of diarrheal diseases, as well as the link between access to water for food production and a diverse, nutritious diet, this paper outlines the United States Agency for International Development’s (USAID) five-year project to improve the nutritional status of women and children through increasing access to water for multiple uses, increasing access to sanitation infrastructure, and improving hygiene practices in the most malnourished regions of Senegal. The project will be implemented from FY2016 to FY20201, and will align with the Government of Senegal’s (GOS) post Millennium Development Goals (MDG) strategy for water and sanitation.

The 2015 MDG goal for water and sanitation is to decrease the number of people lacking sustainable access to safe drinking water and basic sanitation infrastructure by 50 percent. While Senegal has already achieved the MDG targets for potable water and basic sanitation in urban areas, the situation in rural areas is mixed. Thanks to extensive investment in the water, sanitation and hygiene (WASH) sector, Senegal is close to achieving the MDG target in rural areas for safe drinking water -- 59 percent of the population has sustainable access -- but only 39 percent of households have access to improved sanitation2. These national statistics mask the regional disparities, with the Eastern and Southern regions of Senegal facing the largest gap in access. USAID/Senegal has made strong investments in WASH and nutrition but much work remains to achieve the MDGs in these regions.

In order to capitalize on prior work, USAID will focus its efforts under this project on building a more sustainable, demand driven model for water and sanitation service provision, encouraging private investment in the water and sanitation sectors, improving the management capacity of local water users’ associations (ASUFOR) as well as government actors, and improving the institutional and government environment to support these efforts. The project will total approximately $48 million and encompass one contract to an international firm, one cooperative agreement to a local organization through the Development Grants Program, one or more government to government mechanisms, private public partnerships and/or micro-financing through the development credit authority (DCA), and a performance monitoring evaluation contract. The area of intervention will be in the Casamance regions of Ziguinchor, Sedhiou, and Kolda, as well as Tambacounda, Kedougou and Matam.

1 The funding will be from WASH Earmark funds from FY13-FY 18

2 WHO/UNICEF Joint Monitoring Programme. www.wssinfor.org.

Relationship to Water Directive, USAID Water Strategy, Mission CDCS and Results Framework

The project will contribute to the Mission’s Country Development and Coordination Strategy (CDCS) Results Framework via Development Objective (DO) 1: Increased inclusive economic growth and DO2:

Improved health status of Senegalese population. (See Results Framework below)

Figure 1: Mission Results Framework from the CDCS

Improving access to clean water, sanitation and improved hygiene will directly support DOI/IR 4, “Improved nutritional status, especially of women and children.” The evidence from the USAID/PEPAM project shows that increased access to potable water and sanitation reduces diseases, which in turn positively impacts nutritional health.3 The project will also support DO2/IR2, “Improved health seeking and healthy behaviors,” by stimulating sanitation and hygiene behavior change. Combining improved access to water and sanitation infrastructure with focused, locally-adapted, community-led behavior change campaigns will promote consistent and proper use of the new technologies and ensure improved health and nutrition outcomes.

The project will contribute to DO1 by strengthening the private sector WASH actors, and helping them to be more profitable. More importantly, however, it will increase access to water for multiple uses, such as small-scale agriculture, which will increase economic productivity. This will have direct positive effects for women and girls, who will spend less time collecting water and thus devote their energies to more economically productive uses, such as market gardens or attending school. The reduction in disease also means that people will be sick less often, resulting in better nutrient absorption. This will reduce the negative effects of stunting (also known as being chronically malnourished or having short height for age) on overall development and enable increased productivity. Being sick less often also

3 The availability of potable water reduced by 57% the cases of water-borne diseases in the targeted regions and 97% of those who benefitted from improved latrines and adopted hygiene and sanitation-related good practices said that diseases related to fecal peril decreased by 93%.

USAID/PEPAM Mid-Term Evaluation, pg. 41-42.

saves money that would otherwise be spent on medicine.4 In addition, women most often take care of the sick in their households. By having fewer incidences of illness, women will have more time for other activities.

The project is also aligned with the water earmark and the USAID Water Strategy. The FY 2014 Appropriations Act language states, “Of the funds appropriated by this Act, not less than $365,000,000 shall be made available for water and sanitation supply projects pursuant to the Senator Paul Simon Water for the Poor Act of 2005 [Public Law 109–121].” WASH funds for USAID/Senegal come from this appropriations bill and must meet the funding directive. These funds are aligned with the first Strategic Objective (SO1) of the USAID Water Strategy, which seeks to improve health outcomes through the provision of sustainable safe water supply, sanitation and hygiene. Beginning in FY 2014, eligible activities under the directive should be linked to the achievement of the three intermediate results (IRs) included under SO1:

• IR1.1 – Increase first time access to, and improve the quality of, sustainable water supply services;

• IR1.2 – Increase first time sustainable access to improved sanitation services; and

• IR1.3 – Increase prevalence of key hygiene behaviors.

In addition to aligning with SO1 of the USAID Water Strategy, this project will also align a portion of its activities with SO2, namely to manage water in agriculture5 sustainably and more productively to enhance food security.

USAID/Senegal has and continues to invest in improving WASH and nutrition outcomes across sectors.

In southern Senegal, a $21 million WASH project entitled USAID/Millennium Potable Water and Sanitation Project (USAID/PEPAM) was started in June 2009 and is ending in December 2014. As part of this WASH project, two complementary projects were implemented: the Water and Development Alliance with the Coca-Cola Foundation ($2 million) and the Development Grants Program ($2 million) implemented by the local NGO Caritas.

In eastern Senegal, the USAID/Senegal flagship Yaajeende Feed the Future (FTF) agriculture project (2012-2016, $40 million) currently concentrates on the production of and access to nutrient-rich foods and includes WASH components. The Health, Population and Nutrition Office’s Community Health Program (2011-2016, $40 million) works nationwide to train cadres of community health volunteers to promote hygiene and nutrition specific behavior changes in their communities. In addition, through

4 USAID/PEPAM Mid-Term Evaluation. Pg 39, 41-42

5 There will be no large scale irrigation under these WASH activities.

USAID/Senegal’s Middle School Construction program, the GOS built 44 middle schools to date with latrines and water points throughout rural Senegal.

Building on this work, USAID/Senegal’s new five year project is founded on the development hypothesis that if both the demand for water and sanitation and the supply of quality WASH services increase, then sustainable6 access to sanitation and water for multiple uses will increase and communities will improve their hygienic behaviors. Sustainable access and behavior change will lead to a reduction in diarrheal disease which will lead to reductions in malnutrition in the highly affected regions, bolstering improvements in child health and economic development.

The Results Framework for the project appears on the following page.

6 Sustainable access means that the demand for water and sanitation services is met but also that capacity exists for the private sector, the local water users associations (ASUFOR) and the government actors (local, regional and national) to manage and operate the systems and maintain the infrastructure so that there is limited to no disruption in service.

Figure 2: WASH Project Framework

2. Increased market-based provision of WASH products and services

1. Demand generated for WASH products and services

3. Improved provision and management of multiple use water systems

4. Improved enabling environment for equitable delivery of WASH services

• Sector research and evaluations

• TA for policy frameworks of OFOR and

ASUFORS

• Advocate for alignment with international definitions of

WASH

• Integration of ICT for M&E and user engagement

• Technical capacity development for local orgs. & GOS

• Sanitation and Hygiene Behavior Change/CLTS campaigns

• Social Marketing of water treatment

• Capacity building of community health, agriculture, education workers and volunteers

• Targeted campaigns based on gender

• Business development services for WASH service providers

• Development of a range of market-based, poor -inclusive products and services

• Strengthen service chain

• Increase the purchasing power of households through financing

• Access to credit for private sector

• Maintain, rehabilitate and extend water systems for multiple uses

• Business development services for ASUFORs and private operators

• Build capacity in planning, contracting, financial and operational management, customer service, water safety

Senegal WASH Framework

Sustainable access to quality water and sanitation services increased and improved hygiene practices adopted in targeted communities

Intermediate Results

Illustrative Activities

Objective

Relationship to Partner Country and Other Donor Programs

USAID’s current WASH portfolio is fully integrated into the national Millennium Water and Sanitation Program, designed by the GOS to coordinate donor contributions towards meeting MDG targets for water and sanitation. The proposed WASH project is intended to serve as a follow on project to ensure the sustainability of and expand the gains accomplished by the USAID/Senegal WASH, health and nutrition projects as they apply to GOS goals in those sectors. The project also aims to continue contributing to the GOS MDG targets and will align with the roadmap established by the GOS post 2015 MDG strategy, and the Plan Senegal Emergent (PSE) that prioritizes water and sanitation. The new WASH project is aligned with the GOS Sanitation strategy in terms of promoting a demand driven approach, encouraging the private sector to enter the market, and testing new financing mechanisms to increase household (HH) purchasing power. The project will have a strong learning and innovation focus, which will generate new, evidence-based information that the GOS can use in the implementation of its strategies.

Over the course of several different consultation meetings with the GOS and donors active in the sector, the design of this project has evolved to ensure alignment with GOS priorities, meet the GOS’s needs as stated by the Minister of Hydraulics and Sanitation and capitalize on potential synergies with other donors. The Minister identified three areas where USAID/Senegal could be of assistance: continue investing in WASH infrastructure, technical assistance to the OFOR, and water treatment facilities, especially in areas with high risk of salinization of ground water.

There has been much evolution in the legislative and policy environment in Senegal relevant to the WASH sector (See Appendix I for more information on the different government entities, policies and laws in place relevant to the WASH sector). The most recent change has been in water production and infrastructure maintenance, which will move from a highly centralized, government-run structure to a more private sector-led model. The Department of Equipment and Maintenance (DEM), under the Ministry of Hydraulics and Sanitation, is being transformed into a new statutory body entitled the Office of Rural Boreholes (OFOR). The OFOR will be responsible for managing the public service of supplying safe drinking water and the assets of the rural water supply system. The GOS is supported by the World Bank (WB) and the Belgian Technical Cooperation (CTB)7 in the development and implementation of OFOR, especially in the central part of the country where the changes are first being implemented.8 While the central government will remain responsible for installing and rehabilitating major water

7 The World Bank will provide both technical assistance and capacity building for the new OFOR program. This will include how to lead the procurement process and implement the OFOR program throughout rural Senegal. CTB is providing support to implement pilot projects to test the new OFOR system as well as conducting a tariff study.

8 The law authorizing the establishment of OFOR was passed in December 2013. The new system is being tested in central Senegal which has more mature and larger water production systems. The first bids have been issued for private operators to manage two of the largest systems in the central zone.

infrastructure, OFOR will contract with private companies for the production of water and the maintenance of water supply infrastructure.

It remains unclear whether actors exist who can provide these services in rural Senegal. Thus, the USAID project will capitalize on its comparative advantage and significant experience from the USAID/PEPAM activity and Feed the Future projects and support the development of private sector actors to fill this role. The project, using the OFOR’s needs assessment and other planning documents, will provide support in terms of technical assistance in planning, contract management, and monitoring and evaluation of the private operators. In addition to supporting the OFOR program at the central level, USAID will continue to provide technical and managerial assistance to the regional technical services in the South to ensure that there is maintenance of the existing water infrastructure until the OFOR program is implemented.

To increase sustainability and local ownership, the project will also work closely with local governments to improve their capacity in planning and oversight of the WASH investments in their communities.

Although the water and sanitation sector is managed at the central level, local governments spend quite a lot of their budgets on infrastructure to provide access to clean water. Local governments have become more vocal about their desire to see devolution of this sector to them. As the decentralization act moves forward, it remains to be seen how local governments’ role might change in this sector. The GOS at the national level is concerned about the local governments’ capacity to plan, budget, and manage water systems. The project will work with the GOS to build the capacity of local governments who show initiative to provide water and sanitation services and may test different financing mechanisms that local governments could use to supplement their budgets for use in increasing access to clean drinking water and sanitation.

The project will work closely with the WB to support the OFOR as well as continue to work with the WB’s Water and Sanitation Program (WSP) to advocate for policy changes regarding the reduction of subsidies. WSP is focusing more on urban water and sanitation issues, which will not be a component of this project.

The CTB has been working in the central part of the country, primarily on water quality. It is also supporting the implementation of the reforms by implementing pilot projects to test the new OFOR system as well as conducting a water tariff study. The African Development Bank (ADB) and the European Union (EU) are active in the Tambacounda and Casamance regions where this project will also work. USAID expects there to be the greatest overlap with the EU, as they will be launching, as part of the program, a private sector component to intervene in sanitation, which would be in line with USAID’s approach in the Casamance.

The ADB will be working on major drinking water and sanitation infrastructure and subsidized household connections infrastructure through their Water and Sanitation Sector Project (PSEA). A further 18.74 billion francs (38.4 million USD) loan and grant program over four years was approved to improve access to drinking water supply and sanitation for the people of the Louga, Kaffrine and Tambacounda regions, in continuation of two previous bank operations. The project will also implement an urban component to rehabilitate and extend the Dakar and Ziguinchor sanitation networks. The project aims to improve the sector’s governance through:

• Establishing an appropriate monitoring and evaluation mechanism;

• Implementing the action plan for integrated water resources management; and

• Supporting privatized management of rural drinking water facilities.

USAID’s project will coordinate with the ADB’s PSEA project to ensure there is no overlap in activities in Tambacounda and the Casamance and identify synergies. As the ADB will continue to build infrastructure to increase access, the USAID project can work with the GOS on the financial planning and management aspects of these systems, as well as coordinate ASUFOR capacity building and support to privatize these systems through the new OFOR policy. It will also work closely on the M&E component to make sure various activities fit within the overall GOS system that the ADB is helping to develop.

The EU project will provide multi-village water supply infrastructure, work with communities on Community-Led Total Sanitation (CLTS), and develop water resource management plans for five watersheds. The EU is currently working with the regional technical services of the Ministry to choose sites, and USAID has provided information on the areas where USAID/PEPAM worked. The project will work closely with the EU to ensure that there is no duplication of activities. It will coordinate with the EU to harmonize the targeting of subsidies for water and sanitation infrastructure in the region as well as harmonize the training of ASUFORs and private sector operators to manage the new water supply systems and provide lessons learned for implementing CLTS. In addition, the EU will be starting a pilot program with a local NGO that will focus on creating a private sector market for latrines through encouraging entrepreneurship, strengthening the sanitation value chain and providing microfinance.

This project will be one of the pilot projects that USAID will hope to learn from.

The EU also plans to work closely with the Ministry of Hydraulics and Sanitation to enable them to receive budget support in the coming years. As part of the preparation for that support, the EU intends to perform a public financial management review of the Ministry. This review presents an opportunity for USAID to collaborate with the EU to conduct a joint Public Financial Management Risk Assessment Framework (PFMRAF) assessment. This work will build upon the Luxembourg Development Cooperation’s ongoing work providing technical assistance to the GOS to improve its management capacity in budget planning, implementation, monitoring and reporting, and administrative contracting.9 It will use as a baseline the capacity assessment that was conducted in regards to planning, implementation, reporting and oversight of those entities responsible for the management of financial resources.

9 The LuxDev program is a national government-wide program entitled PAEX SEN/030.

As USAID moves forward with the WASH project, there will be a focus on ensuring coordination between these donors through the donor working group on rural water and sanitation, which USAID is now co-chairing with the Belgian Technical Corporation (CTB). This will help prevent duplication of activities, align with GOS priorities, and ensure the most effective approach to working in the same target areas. Donor coordination will also help to achieve policy goals, such as reducing market distortions from subsidies, development of private sector service provision, maintenance of water infrastructure, and increased government resources brought to the sector. A key part of this project is building on the existing policy dialogue with other donors and continuing to build the relationship with the GOS.

(See Appendix II for a more comprehensive look at Donor activities in Senegal.)

Project Description

Problem Statement

An unsafe water supply, inadequate sanitation, and poor hygiene contribute to more than 88 percent of the cases of diarrheal diseases internationally, according to World Health Organization estimates.10 In recent years, diarrhea mortality has fallen sharply internationally, thanks in particular to the increased use of oral rehydration therapy (ORT), as well as new vaccines against rotavirus and cholera. However, diarrheal diseases remain the second leading cause of death in children under the age of five, killing an estimated 1.87 million children each year.11 Diarrheal diseases are caused by over 50 known pathogenic agents that live in human and animal feces. These agents are primarily spread through ingestion— either directly through contaminated hands or indirectly through contaminated drinking water, soil, utensils, food, or flies. (See Figure III, below.)

10 WHO, 2004. Water, Sanitation and Hygiene Links to Health Facts and Figures.

http://www.who.int/water_sanitation_health/publications/factsfigures04/en/

11 Lopez AD, Mathers CD. Measuring the global burden of disease and epidemiological transitions: 2002-2030. Annals of Tropical Medicine and Parasitology. 2006 Jul-Sep;100(5-6):481-99. http://bit.ly/1432BJm http://www.who.int/water_sanitation_health/publications/factsfigures04/en/ http://www.ncbi.nlm.nih.gov/pubmed?term=Lopez%20AD%5BAuthor%5D&cauthor=true&cauthor_uid=16899150 http://www.ncbi.nlm.nih.gov/pubmed?term=Mathers%20CD%5BAuthor%5D&cauthor=true&cauthor_uid=16899150 http://www.ncbi.nlm.nih.gov/pubmed/16899150 http://www.ncbi.nlm.nih.gov/pubmed/16899150

Figure 3: Transmission pathways for diarrheal disease-inducing pathogens

Once in the body, these agents cause diarrhea and, with repeated episodes, can lead to malnutrition, particularly among children. Studies indicate that the odds of a child being stunted by the age of two significantly increases for every five episodes of diarrhea the child experiences, with as much as 25 percent of all stunting attributable to repeated episodes of diarrhea before age two.12 The chronic enteropathy -- or hyperactive immune response from these repeated episodes -- can further contribute to malnutrition.13

Beyond these direct health and nutrition effects, the lack of consistent access to safe drinking water and sanitation facilities negatively affects labor force participation, labor productivity, school attendance, environmental conditions, and gender equality. This is a vicious cycle that is further compounded by socio-economic and geographic realities in the target regions.

General WASH Sector Context

Access Rates in Senegal

Although access rates to safe drinking water and sanitation facilities have shown a steady increase, there are disparities between water and sanitation, as well as between the urban and rural areas. This is evident when reviewing Senegal’s achievements towards meeting the Millennium Development Goals (MDG). The MDG for water and sanitation is to decrease the number of people lacking sustainable access to safe drinking water and basic sanitation infrastructure by 50 percent.

12 5. Checkley W, Buckley G, Gilman RH, Assis AMO, Guerrant RL, Morris SS, Mølbak K, Valentiner-Branth P, Lanata CF, Black RE. Multi-country analysis of the effects of diarrhea on childhood stunting. Int J Epidemiol. 2008; 37(4):816-830

13Gibbons T, Fuchs GJ. Chronic enteropathy: clinical aspects. In Nutrition Support for Infants and Children at Risk. Ed. Cooke RJ. Nestle Nutrition Workshop Series Pediatric Program. 007;59:89-101; discussion 102-4, 2007.

While Senegal has already achieved the MDG targets for potable water and basic sanitation in urban areas, the situation in rural areas is mixed, with rural sanitation lagging behind. Although the GOS claims that Senegal has met the MDG for water in both urban and rural areas,14 according to the WHO/UNICEF Joint Monitoring Program (JMP), which collects data for the MDGs, Senegal has not reached the MDG for water nor for sanitation when averaged at a national level, but does show an increase in coverage.15 The following charts show JMP access rates for Senegal at the national level for water and sanitation and a dotted red line showing the percentage needed to achieve the MDG.

Figure 4: Trends in access for water and sanitation coverage (data from WHO/UNICEF Joint Monitoring Programme)

The access rates are lower in rural areas and disparities exist between different regions. The Casamance has been identified as having the lowest access rates to improved drinking water in the country, notably in the regions of Sedhiou and Kolda. The regions of Tambacounda, Matam (formerly part of St. Louis) and Louga also fall below the national rate for access to improved water, according to the national water report by the GOS (2013). The table below shows both general access rates for an improved drinking water source and levels of access to clean drinking water by a more complex, motorized water production system with a water tower and household connections (Approvisionnement en Eau Potable - AEP system). The improved sources include traditional wells and communal boreholes with hand pumps. These are considered an improvement from collecting surface-water from rivers for example, however, the traditional wells do not provide the same quality of drinking water as the AEP systems and are more easily contaminated. The GOS is moving towards installing more AEP systems which, in the long run, have a lower total cost/capita than the other systems.

14 Senegal Ministry of Hydraulics and Sanitation. PEPAM 8eme Revue Annuelle Sectorielle Conjointe 2014. Pg 6.

15 WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation. www.wssinfo.org

0.0 20.0 40.0 60.0 80.0

100.0

Trends in improved sanitation coverage in Senegal

0.0 20.0 40.0 60.0 80.0

100.0

Trends in improved water coverage in Senegal

Figure 5: Regional Access Rates to Improved Water (Revue PEPAM, 2013)

Regions in Senegal that have the lowest access rates to safe drinking water and sanitation are also the poorest and have the highest malnutrition rates. These communities are in remote areas of Senegal, are difficult to access, and have few economic opportunities other than subsistence farming and livestock herding. These livelihoods are further restricted by low and variable rainfall that negatively impacts agricultural yields, as well as poor infrastructure for accessing markets, inputs, and information. Low economic productivity and income generation, as well as limited accessibility, impede access to safe drinking water and sanitation services. These factors also impede the production and purchase of diverse and nutritious foods. The problem is further complicated by the more than 30 year separatist conflict in the Casamance. The region does not have the same amount of drinking water and sanitation infrastructure that other regions have due to the difficulty in accessing the villages but also the fear of rebel groups targeting assets of companies and projects implementing infrastructure projects.

These economic and geographic challenges are evident in the targeted regions of the project: the Casamance, Matam, Kedougou and Tambacounda. Sixty-four percent of the population in Tambacounda and 63 percent of the population in Kolda live below the poverty line—with measures indicating that the intensity and the severity of the poverty are more elevated there than in the rest of the country16. The lack of WASH services, the remote rural location, and the lack of economic opportunities combine to create profound, negative effects on nutrition in these regions. In

16 Catin, Haze, and Sy. 2012. Disparités régionales de pauvreté au Sénégal et déterminants : un modèle économétrique spatial Communication présentée aux XXVIIIe Journées de l’Association Tiers-Monde, Orléans, June, 2012. http://lead.univ-tln.fr/fichiers/2013-1.pdf http://lead.univ-tln.fr/fichiers/2013-1.pdf

Tambacounda, 14 percent of children under the age of five are stunted and stunting rates in Matam (22 percent) and Kolda (31.6 percent) are even higher.17

The communities in these regions need access to water for multiple uses - drinking, washing, small scale agriculture (market gardens) and livestock - to improve their health and nutritional status, and also to increase their economic productivity and incomes (refer to Appendix III).

Financing of the WASH Sector in Senegal

The WASH sector has shown an increasing trend in financing over the last eight years, growing at a rate of just under 10 percent per year. The sector is financed heavily by subsidies provided by donors. The rural water sector financing totaled $446 million in 2013, which was 95 percent of the identified need by the GOS. The following pie chart shows the different types of financing for the water sector18.

Figure 6: Financing of the Water Sector in 2013

For sanitation, the sector is also largely financed by subsidies but has a larger proportion of loans. In 2013, the funding amounted to $128 million, which is 67 percent of the identified need. This is three and a half times less funding than was spent in the rural water sector despite there being more unserved people in sanitation.

17 World Food Program, Comprehensive Food Security and Vulnerability Analysis: Senegal. 2011. http://www.wfp.org/content/senegal-analyse-globale-vulnerabilite-securite-alimentaire-nutrition-december-2011

18 Senegal Ministry of Hydraulics and Sanitation. “PEPAM 8eme Revue Annuelle Sectorielle Conjointe 2014 ». Pg 7.

45%

31%

18%

5%

Financing of the Water Sector 2013 Total funding = $446 mn

Subsidies

Loans

Government

Local Government http://www.wfp.org/content/senegal-analyse-globale-vulnerabilite-securite-alimentaire-nutrition-december-2011 http://www.wfp.org/content/senegal-analyse-globale-vulnerabilite-securite-alimentaire-nutrition-december-2011

Figure 7: Financing of the Sanitation Sector 2013

These funding levels, although significant, are insufficient to meet the needs of the rural population in both access to safe drinking water and sanitation. This is especially true when one considers that, although funding and coverage have increased over time, the 2.6 percent annual population growth has still led to an increase in the unserved. In the rural water sector, the number of unserved has grown by 17 percent since 1990. In the rural sanitation sector, the number of unserved has grown by 28 percent since 1990.19

Unserved Populations in 2013

Urban unserved pop (millions)

Rural unserved pop (millions)

Water Supply 0.4 3

Sanitation 1.93 4.67

Figure 8: Unserved Populations in Urban and Rural Water Supply and Sanitation in Senegal in 2013

At current rates of investment, Senegal will reach the MDGs for water/sanitation by 2020/2040 and universal coverage in 2040/2060.

Key Challenges and Opportunities

In Senegal, access and coverage rates are limited by a challenging enabling environment for the WASH sector. Issues related to the enabling environment can be grouped into three major categories: an

19 WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation. www.wssinfo.org

47%

43%

10%

Financing of the Rural Sanitation Sector 2013 Total funding = $128 mn

Subsidies

Loans

Government underdeveloped private sector, weak governance and management capacity, and policies that do not support sustainability. (Please see Appendix III for a more detailed breakdown of key challenges.)

Underdeveloped Private Sector

The private sector is relatively small and underdeveloped in the area of operating and managing water production and maintenance, especially of small-scale water systems and the provision of sanitation products and services. The value chains for both water supply and sanitation and hygiene products are fragmented and transaction costs are high. Furthermore, tax exemptions for donors and projects importing equipment and products for WASH decrease the competitiveness of private sector suppliers.

Access to credit for investments in water and sanitation infrastructure, both for companies providing services and for those wanting to purchase services, is extremely low if not non-existent. With high transaction costs, fragmented value chains and limited to no access to financing, innovations in service provision, efficiency gains, and other factors contributing to growth in the sector are not achieved, keeping prices high and limiting access.

Additionally, the current system does not create the right incentives for the private sector to develop nor for people to pay for safe drinking water and sanitation, which impacts sustainability. Donor financing and subsidies skew the market, eliminating incentives for private providers to invest and for citizens to independently purchase appropriate water and sanitation services. The latter is especially true for the sanitation sector, which has one of the highest subsidization rates globally20. Private sector providers actually increase their prices for donor financed projects and have few incentives to increase efficiencies or improve the quality of their services. For poor communities who must make hard choices on how to spend their limited resources, water and sanitation costs are thought to be the responsibility of the state and donors. This limits access and creates further dependence on donor projects and financing.

Weak Governance and Management Capacity for Water Systems

Beneficiaries have a poor understanding of the real costs of water supply services—the investments costs borne mostly by donors are not included in the operational and maintenance costs and the latter are often poorly represented or not represented at all to beneficiaries. As a result, communities are supplied with services that they cannot support or maintain after donor subsidies and projects end.

Economic feasibility studies and business plans are not part of the initial scoping process for determining what kind of system would be appropriate. Safe drinking water supply is given priority over other water uses despite the communities’ needs and preferences. This approach misses opportunities for providing a multiple use system (MUS) that meets the full needs of the communities and can be more sustainable.

20 Senegal has one of the highest subsidization rates in sanitation worldwide (World Bank Water Sanitation Program, Sanitation Financing for the Poor: A Six Country Comparative Review and Analysis, Jan 2010)

MUS in Senegal have shown to be more financially sustainable as people are more willing to pay for water when it is for revenue-generating activities.

Once a system is built, it is left to the community water user associations (ASUFORs) to manage. The ASUFORs are given a license from the Ministry of Hydraulics to provide and manage the production and distribution of water from boreholes. They are made up of elected members of the community and are responsible for limited maintenance of the distribution system, collection of fees, supervision of the operator if there is one, and representation of the community's interests to the GOS regional technical services. Even smaller systems, like community hand pumps, have small water management committees who operate the systems.

ASUFORs and management committees receive some training in financial and operational management from donor projects but too often the training is insufficient to prepare the ASUFORs to run a water system. After the projects end, the ASUFORs are left to manage the systems with little support. In addition, the current model does not have strong monitoring and evaluation of the systems nor ways for ASUFORs to communicate needs to the regional technical services like the Department of Equipment and Maintenance (DEM). It is the DEM that is responsible for any major repairs or rehabilitation of the water systems. With limited resources, the DEM cannot keep up with the needs of the system at a national level and many of the systems become inoperable. Communities then have to wait for donor projects to rehabilitate or provide new systems.

Water and sanitation in Senegal is the domain of the central government. Although local governments spend a substantial part of their budgets to provide safe water supply, since this is what communities demand, their role in overall governance and management of these systems is very limited. Local governments are not allowed to take on debt and are dependent on meager budgets to try and provide some services. With the new decentralization law, local governments will change from having the legal status of “Rural Community” to a new status of “Commune.” The new system will possibly help bring in new operational and financing abilities allowing for greater management of these services. However, it is unclear what will be the role of the new municipalities in non-transferred competencies, such as water and sanitation, and how the sector will be handled.

Policy Environment

The GOS has made great strides to increase access to safe drinking water and sanitation. Much of this has been supported by donor funding and a government policy to heavily subsidize infrastructure investments, as well as ”soft” investments, such as capacity building, awareness campaigns, and behavior change communication, that help develop the sector. This system of donor-financed projects is not sustainable however nor is it adequate to meet the needs of the population. Water production and distribution systems in industrialized nations are typically public investments and funded using market debt instruments and taxes. The systems are often managed by a municipality or private entity, all of which create economies of scale in provision and cost, and increase the accountability of the manager to ensure competitive pricing, quality service delivery and cost recovery through adequate pricing of water services. In Senegal, the central government, as the primary owner of the water infrastructure, faces major challenges in maintaining the water systems with limited human and financial resources. The donors invest in infrastructure but much less so in building financially viable water systems that the government and local water-users associations can manage and maintain. This leads to broken systems that go unrepaired for years until a new donor project can rehabilitate them or the GOS allocates funding to do so.

In areas with high poverty rates, subsidies do help to increase access. However, the GOS and donors continue to struggle with how to target water and sanitation subsidies to reach the most impoverished, rather than those who can afford the investments, as well as how to target subsidies so as to limit the negative impacts on the market.

The GOS is developing a new post-MDG policy for water and sanitation. It has completed a new sanitation policy that is geared towards more innovative financial mechanisms, focusing on encouraging the private sector to work on different aspects of the value chain and a reduction in subsidies over time (from 70 percent to 30 percent in 2025). However, it is unclear how subsidies will actually be reduced over this time period. The reduction is not gradual and will pose challenges to communities who expect high subsidization in this sector. Data is lacking on HH’s ability and/or willingness to pay, with or without financing, to purchase sanitation products and services. The government currently has very high standards for improved latrines to meet the MDG targets which are quite costly to purchase. These standards go beyond the standards set by the MDGs. The Community Led Total Sanitation (CLTS) approach, which was implemented by the USAID/PEPAM project, advocates for the purchase, without subsidies, of many different types of improved latrines that are affordable for various HHs so as to promote self-sufficiency and sustainability in access to sanitation.

One of the major reforms has been in the water supply sector. Recognizing that the GOS cannot finance and maintain water systems on its own, the government plans to transfer operations and maintenance of water supply systems in rural areas to the private sector. It has been working to restructure the Ministry of Hydraulics and Sanitation by creating a new semi-independent agency, the Office of Rural Boreholes (OFOR), to manage water production and contract out the operations and maintenance to private sector operators. There are many questions that remain unanswered as to how this will be implemented in practice, especially in areas that have small scale water systems.

Another challenge with the new OFOR structure is the management of these systems in areas where ASUFORs have played a significant role over many years. In many rural areas in the South, the ASUFORs have managed the entire production and distribution systems since there were no private sector operators to provide that service. Adding additional layers to the costs of management by privatizing the production of water may not be economically feasible in many parts of the Southern region.

The creation of the OFOR and the move towards the private sector presents a great opportunity to improve the accountability and professionalism of the water production system in Senegal. Key to this will be to have an open and transparent bidding and contracting system, as well as a strong monitoring and evaluation system of the service provision and quality control. Additionally, skilled and capable private sector operators will be needed to provide water production and maintenance services. Perhaps most importantly, the GOS will need to communicate and work closely with the many stakeholders involved to get their buy-in.

Technical Approach

The purpose of this project is to increase sustainable access to quality water and sanitation services and improve hygiene practices. This will contribute to improved nutritional status, especially of women and children. This project does not aim to replicate USAID/PEPAM, but will continue to work in the same intervention areas to build on the innovative work already done and ensure that investments are maintained. The project focuses on enabling the private sector to provide quality water and sanitation services, reduce costs, and maintain the systems and infrastructure. It also will support the reform of the rural water sector to help develop the market for water and sanitation services. The project also aims to increase the capacity of the GOS at national, regional and local levels, private sector operators and businesses, as well as the ASUFORs, in planning, operational and financial management and monitoring and evaluation to ensure quality service delivery and sustainable provision of services.

There will be construction of water and sanitation infrastructure after careful financial analysis and GOS and community participation in the planning process. Investments in infrastructure will be implemented to ensure the financial viability of the water systems. This will increase coverage21 of water and sanitation services. The project will take a multiple use water services (MUS) approach that takes into account a diverse range of needs for both health and economic outcomes. It will also work closely with the GOS to improve the enabling environment, better target subsidies and promote evidence based decision making in policy implementation.

In addition, there will be a greater focus on increasing demand for sanitation services through continued promotion of the community led total sanitation approach, along with sanitation marketing and hygiene behavior change communication. Promoting sanitation services and integrated hygiene activities will be more of a focus than in the past, as this component is vital to ensuring that improved water sources and food sources are used as intended, remain uncontaminated, and that the transmission of disease is limited.

The project plans to target the same regions as the USAID/PEPAM project, as well as overlap with certain areas within the Feed the Future (FTF) zone of influence (Casamance, Matam, Kedougou and Tambacounda) to build upon the work that has already been done in nutrition and to leverage the ongoing FTF work.

21 Increasing coverage of services means that existing systems are maintained and new systems and/or connections are added.

The main development results expected are:

• Improved nutritional status and healthy behaviors;

• Diarrheal disease reduced;

• Increased access to safe drinking water and water for productive uses;

• Increased access to affordable and appropriate sanitation services;

• An expanded private sector providing quality WASH products and services;

The main outputs are:

1. Demand generated for WASH products and services;

a. Increased use of innovative financing mechanisms to increase purchasing power for water and sanitation services and increased economic productivity;

2. Increased market-based provision of WASH products and services;

3. Improved provision and management of multiple use water systems;

a. Increased capacity to manage water systems and

b. A more strategic multiple-use services (MUS) approach to water supply;

4. Improved enabling environment for equitable delivery of WASH services;

a. Increased managerial, financial and technical capacity at the local level and of OFOR at the central level;

The main assumptions are that:

• The situation in Casamance is stable enough to implement activities;

• More human and financial resources are provided to the regional technical services, especially the Sanitation Department to implement the Sanitation Action Plan;

• Ministry of Hydraulics will establish a regulatory framework for the implementation of the reform of the rural water sector;

• OFOR will be up and running and able to receive technical assistance;

• OFOR will be able to issue and negotiate contracts in a timely manner to generate revenue;

• GOS will be able to continue repairs and maintenance of the rural water system in zones where

OFOR is not yet operating;

• Decentralization policies will allow for some devolution to local governments;

• The capacity of enough WASH private sector operators can be improved to change the supply of services;

• Private sector operators are willing to change their management and operational practices;

• Efficiency gains in service chain can be achieved;

• Banks will lend with a loan guarantee and continue after the project ends;

• Consumers will be willing to take out loans for water and sanitation, despite other donor projects operating nearby;

• Communities are willing to mobilize funds and inputs for connections and other infrastructure;

• Donor Coordination sufficient for effective policy dialog and delivery of essential TA/training to

GOS;

• Donors/GOS reduce subsidies for WASH; and

• Mobile technology platform and infrastructure exists;

See Appendix IV for the complete Logical Framework and specific targets.

Demand Generated for WASH Products and Services

There is already strong demand for safe drinking water by communities, as well as a willingness to pay for improved water service delivery. Where the demand is lagging is in water treatment products for those areas that do not have safe drinking water systems or at the HH level. The project will continue to support Yaajeende and USAID/Senegal’s Health Communication and Promotion Program to generate demand for increased distribution, marketing and use of Aquatabs (a chlorine-based, point-of-use water treatment tablet) in areas where water from the local water source is not potable and requires treatment to be rendered hygienic.