New models for financing essential services

Abstract

In recent years, states across the African continent have increased their investments in the water, sanitation and energy sectors. However, the extent of the infrastructure remains well below the global average, and population growth in Africa will intensify demand for basic services. The question of financing these services – capital-intensive at first and only generating a return in the long term – is strategically important. With the emergence of decentralized systems, primarily in the energy sector, private actors such as businesses, foundations, impact investment funds, etc., have increasingly financed infrastructures that are alternatives and/or complementary to centralized services. Although a driver for progress and innovation, private financing can never fully meet the vast need for financing. It cannot replace public financing, particularly in low-profitability regions where households lack the means to pay for services and equipment. New mindsets and new forms of (de)regulation are needed to bring together all actors, public and private, international and domestic, to find ways to finance these services.