Impact of prices and tariffs on fecal sludge management in Africa : a paper presented at the second conference on developments in faecal sludge mana...

The social and economic benefits of providing quality sanitation to the poor are colossal, but such benefits are realized at very high costs on investments or utilities. Tariffs and prices/charges are the means by which private and public utilities achieve fiscal sustainability. Just like in most sectors, cost recovery is crucial for investments in the sanitation sector. African utilities (both private and public) operate in a high-cost environment. These high costs, occasioned by the need to recover investments and cover at least partial operation and maintenance costs, make sanitation prices and tariff higher in the continent. How do these high or low prices and tariff affect fecal sludge management in Africa? This paper investigates this issue based on a recent urban sanitation price and tariff benchmarking case studies carried out in six countries of Africa by WSA and other partners. The research process involved six major stages including development of data collection tools, preliminary exchange meetings, field data collection and analysis, national validation workshops, cross-country validation workshop and report writing. Examined is the impact of prices and tariffs using five major criteria: equity, economic efficiency, fairness, affordability, cost recovery and incentives for scale up. The results from the analysis of the six country case studies indicate that social welfare is not maximized when it comes to economic efficiency of the models under investigation. None of the models examined were found to have incentives which ensure that, for any sanitation supply cost, the poor obtains the largest possible aggregate economic benefits. In terms of equity/affordability, existing models do not perceive a reliable and sustainable sanitation as a basic right or entitlements when compared to its role in promoting and sustaining acceptable public health and poverty alleviation. Moreover, most of the price/tariff models exhibit incorrect pricing signals in terms of cost recovery. Full costs are not recovered through sanitation tariffs/prices. [authors abstract]