Sources of OWNP funding
You have already read about the stakeholders of the OWNP and seen the important role of some of these as sources of funding for the Programme. OWNP funding comes from the following sources, which are described in turn:
- The government of Ethiopia
- External financing agencies (development partners who are donors)
- Non-governmental organisations (NGOs)
- Participating communities in rural areas
- Water utility earnings.
Government of Ethiopia
Direct government financial support for WASH comes from a block grant that is channelled from federal to regional governments for both recurrent and investment costs. A block grant is an allocation of funds, usually on an annual basis, from federal to local levels of government. Investment costs, also known as capital costs, are the costs of new programmes and projects that only occur once. These include design, construction and commissioning costs. Recurrent costs include all the continuous costs of running an organisation or programme. Staff salaries are usually the largest component of recurrent costs.
In addition to the block grant amount there may also be federal government contributions that come as special purpose grants like the MDG fund, Food Security Programme, etc. to regions. Part of these funds may be allocated to WASH at regional level.
External financing agencies
(Note: You may recall from Study Session 9 that there is some confusion and overlap between the terms used to describe organisations that provide developmental assistance. ‘External financing agencies’ in the OWNP context means all donors other than NGOs [which are considered separately below]. External financing agencies are also referred to as ‘development partners’, even though this term can have a broader meaning, as discussed in Box 9.1. Frequently this term is capitalised as ‘Development Partners’, also abbreviated to DP, and is generally used to refer to the major donors only.)
Contributions from donors that are made specifically for the OWNP constitute the core budget and are held in the Consolidated WASH Account (CWA), which is described more fully in the next section. Development partners may also provide resources that contribute to the OWNP but not through the CWA. These are included in the resource mapping process for the consolidated annual WASH plans at all levels. (This was described in Study Session 10.)
NGOs can be both investors in, and implementers of, the OWNP. Their budgets are not aligned with the government financial management rules and policies because they each have their own processes and systems. Their contributions may directly fund their own projects or be channelled to other implementing bodies. However, NGO-planned expenditures on WASH are also included in resource mapping for consolidated annual WASH plans at all levels, from federal to kebele.
Communities undertaking WASH projects may contribute to construction, installation, or to operation and maintenance. The contribution may be in cash or ‘in kind’ (i.e. providing goods or services instead of money, for example by providing labour or materials (Figure 12.1). Cash contributions from a community will only be used for the specific WASH project being implemented in their village. The amount of contribution depends on the residents' capacity to pay. People who cannot afford to pay the amount in cash, will contribute materials or work as a daily labourer for the project.
Water utility earnings
Contributions from urban residents are through water service charges that provide earnings for the water utilities. The water utilities measure how much water is used by their customers and charge them accordingly (Figure 12.2). They contribute to the OWNP from these earnings.