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Private sector, a beacon to accelerate wash services for Agenda 2030

BY: David Aidoo

The world is plagued by many development setbacks. In a collective effort to address global development challenges, world leaders came together to develop the Sustainable Development Goals (SDGs). The SDGs highlight targets and timelines that can guide the implementation of the goals.

The private sector plays a pivotal role in the achievements of the SDGs. The 2022 Edelman Trust Barometer cited the private sector as the only trusted global institution to address the world’s most pressing problems which include the Sustainable Development Goals (SDGs) and by extension, SDG 6: Clean Water and Sanitation.

The SDGFund on partnering to achieve SDGs, especially SDG 6 by 2030 states that the private sector has to be fully on board to ensure the achievement of the overarching “universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity”.

Seven years into the outdooring of the SDGs and eight years more to go “how has the private sector been involved in the call to action”? What can the private sector do more or do less to ensure all SDGs, particularly SDG 6 is achieved?

The Private Sector

The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or nonprofit, rather than being owned by the government.

A joint report by 31 multilateral and bilateral development finance institutions states that the private sector is recognized as a critical stakeholder and partner in economic development, a provider of income, jobs, goods, and services to enhance people’s lives and help them escape poverty.

The International Monetary Fund (IMF), reported that the private sector accounts for over 60 percent of Gross Domestic Product (GDP) in most countries, giving an indication that the sector contributes more to the world’s GDP than the public sector.

Hoedoafia, Mabel and Akosua reported in their article “Private Sector Development in Ghana: An Overview” that before independence, Ghana’s economy was highly dependent on manufactured products from the British.

As a result, the development of local enterprises was relegated to the background. Colonialism impeded the expansion of indigenous private sector due to such dependence. Ghana embarked on a Structural Adjustment Programme in the 1980s which gave prominence to the private sector as an engine of growth in the country. Since then, other policies and programmes have been instituted by successive governments to make the private sector flourish and drive the country’s economic prosperity.

The African Development Bank reporting its achievement under the Fund for African Private Sector Assistance noted that more than 85 percent of the sector is dominated by Small and Medium Enterprises (SMEs), and that the sector alone contributes 70 percent of Ghana’s GDP. Ghana’s economic activities contributing to its GDP have been structured into three sectors, thus the Agricultural sector, the Industry sector and the Service Sector. Among the three sectors, private sector is present and dominating in all as contained in the April 2020 Edition of the Rebased 2013-2019 Annual Gross Domestic Product.

Financing the Sustainable Development Goals (SDGs)

In September 2015, all UN member states adopted the overarching 17 Sustainable Development Goals (SDGs) as part of the 2030 Agenda for Sustainable Development which sets out a 15-year plan to achieve the Goals. United Nations estimates that USD$5 trillion to USD$7 trillion per year between 2015 and 2030 is needed to achieve the set of SDGs globally, with the estimates being USD$3.3 trillion to USD$4.5 trillion per year in developing countries, mainly for basic infrastructure, food security, climate change mitigation and adaptation, health, and education.

The IMF in 2019, also put out that an additional spending of about USD$1.3 trillion per year from 2019 to 2030 is required to make meaningful progress toward the SDGs related to infrastructure in low-income developing economies and emerging market economies combined, and another USD$1.3 trillion for the SDGs related to health and education. Sustainable Development Goal 6 (SDG 6) provides details on global targets for Water, Sanitation and Hygiene to be achieved by 2030 towards the realization of an overarching call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. To achieve SDG 6, the World Bank estimates that it will cost approximately USD$114 billion a year from 2021 to 2030, and those are only the costs for constructing new infrastructure, not the costs of operating and maintaining infrastructure over time.

The Addis Ababa Action Agenda on Financing for Development which preceded the adoption of the seventeen SDGs including SDG 6 provides a global framework for financing sustainable development, and supports implementation of the 2030 Agenda, including all the SDGs. The Agenda aligns all domestic and international resource flows, policies, and international agreements with economic, social, and environmental priorities. It incorporates all the SDG implementation targets into a comprehensive financing framework and serves as a guide for further actions by governments, international organizations, civil society, philanthropists and most importantly the private sector.

The second section of the agenda referred to as the “Action areas” identifies seven ways resources can be mobilized at all levels to support the implementation of Agenda 2030, and more specifically the SDGs. Domestic and international private business and finance comes after Domestic Public Resources, given an indication of the important role private sector is to play in the achievement of the SDGs. The Agenda also states among other things that private business activity, investment and innovation are major drivers of productivity, inclusive economic growth, and job creation. The agenda further invited private sector to engage as partners in the development process, to invest in areas critical to sustainable development, and shift to more sustainable consumption and production patterns.
The World Economic Forum’s Sustainable Development Investment Partnership, working with the government of Ghana published the Country Financing Roadmap (CFR) for SDGs in June 2021 for Ghana.

In the report, the total cumulative 10-year cost from 2021 to 2030 for achieving the SDGs including SDG 6 in Ghana was estimated to be USD$522.3 billion, averaging around USD$52.2 billion per year. The CFR for SDGs continues to state that total funds budgeted for SDG implementation in 2019 was USD$9.3 billion, and in 2020 it dropped marginally by 2.2 percent to USD$9.1 billion. Table 1 shows that SDG budget for 2019 represented 18 percent of the estimated yearly cost, while that of 2020 was 17 percent. The budgets for both 2019 and 2020 indicated a whopping gap in SDG investment in the country of 82 percent for 2019, and 83 percent for 2020 as shown below:

  • Summary Data on Ghana’s SDG Financing
  • Indicators USD 2019 USD 2020
  • Estimated SDG Cost 52.2 Billion 52.2 Billion
  • SDG Budget 9.3 Billion 9.1 Billion
  • Percentage of SDG Budget against Estimated Cost 18% 17%
  • Percentage of SDG Financing GAP 82% 83%

The CFR for SDGs identifies two sectors to support address the Country’s SDG Financing Gap, which are the sustainable infrastructure and Micro Small and Medium Enterprise (M/SME) sector. The M/SME as already stated accounts for 85 percent of business within the private sector and contributes about 70 percent of GDP. The M/SME sector which falls under the private sector is therefore a priority sector with the potentials to affect several SDGs including SDG 6.

The Ministry of Sanitation and Water Resources (MSWR), is one of the infrastructure ministries of the country, which is responsible for the water, sanitation, and hygiene (WASH) sector working towards the accomplishment of SDG 6.

Its establishment in 2017 by the government brought excitement to WASH sector players as it was a bold step to provide the needed governance and infrastructure to support the realization of the SDG 6. The then chairman of coalition of non-governmental organizations in water and sanitation Mr. Martin Dery was captured in the dailies saying “this is a dream come true as we have been calling for this for many years. It is our hope that this will go a long way to give meaning to Ghana’s commitment to achieving the SDG-6 - Ensure availability and sustainable management of water and sanitation for all”.

2017 Infrastructure Budgets Allocation Figure 2: Budget for MSWR (2017-2019)

The government, following the establishment of the MSWR, allocated a budget of GHC255 million (USD$58M) representing 10 percent of the total budget of GCH2.6 billion for the seven infrastructure ministries of the 2017 budget estimates. The GHC255M budget for the MSWR was higher in nominal terms than that of Ministry of Works and Housing who had GHC108M representing 4 percent of the total infrastructure ministries budget; and the Ministry of Aviation who also received a budget allocation of GHC59M, representing 2 percent of the total infrastructure ministries budget as can be seen in figure 1.
Table 2 below provides information about budget allocations for the MSWR from 2019 to 2021. From the table, budget allocations for the ministry have been increasing year on year as can be seen on the graph in figure 2. 2020 budget stood at GHC361.5M, which was 46% higher than budget allocation for 2019 which was GCH246.9M. For 2021, the budget allocated to the ministry was GHC560.9M, which was also 55% higher than allocation made to the ministry in 2020. Whilst there have been an overwhelming increase in budget allocations for the ministry in the last three years, a UNICEF report on WASH budget brief indicated that the annual allocations falls below the average yearly estimates of GHS 1,750 million to provide basic WASH services.

MSWR Budgets (2019-21)

  • DETAILS 2019 2020 2021
  • BUDGET GHC 246.9M 361.5M 560.9M
  • PERCENT CHANGE 46% 55%
  • BUDGET USD 47.5M 64.6M 95.1M
  • GDP USD 68.3B 70.0B 77.6B
  • BUDGET/GDP 0.07% 0.09% 0.12%

This also provides further data on how much the yearly budget allocation of the ministry is represented as a ratio of the country’s GDP. From the table, budget allocations as a ratio to the country’s GDP in 2019 was 0.07 percent, which increased to 0.09 percent in 2020, and increased again in 2021 to 0.12 percent.

The World Bank’s technical report on WASH financing recommends 0.64 percent GDP of countries in sub-Saharan countries to be allocated to the WASH sector, and in all the three years, none of the allocation came closer to even a quarter of the recommendation.

The Private Sector and the Sustainability Development Goals (SDGs)

Agenda 2030 considered the private sector as an essential stakeholder and has an influential part in the progress of the SDGs, particularly SDG 6, because the sector is a crucial player in the economic investments.

The World Bank Group asserts that ending poverty and reducing inequality by 2030 are ambitious goals, and the gap in funding between what is needed and what is available amounts to trillions of dollars each year.

The only way to spur this level of investment is by creating new markets and bringing innovative solutions to developing countries, which requires the private sector participation.

Since 2008, the UN Global Compact has organized annual summits of the UN Private Sector Forum, aiming to enhance the dialogue between governments and the private sector.

This forum substantially focuses on the SDGs since they were adopted in 2015, including the obligations of multinational companies to support the SDGs, particularly focusing on pilot projects, gender quota, and investment in sustainable infrastructure. The private sector is an important stakeholder under the Agenda 2030, which can lead the progress for achieving the SDGs, particularly SDG 6, because the sector comprises the largest part of the economy (Abe et al. 2019).

Private sector is a job creator, source of technological innovation, and fundamental for capital and tax income, which are the main solution drivers for the economy, society, and environment (Frey and Sabbatino 2018). Buhmann et al. 2019 stated that private sector benefits the society and the achievement of the SDGs particularly SDG6 via expertise, knowledge, technology, and financial resources. Scheyvens et al. 2016 also affirmed that private sector has different capabilities such as technology innovation, responsiveness, manpower and resources to assist in achieving the SDGs, especially SDG 6. In line with this notion, Pedersen 2018 stated that the private sector plays a significant role in attaining the SDGs especially the SDG 6 through contributing resources, expertise, and experiences.

Since the 1990s, international financial institutions have played a significant role in promoting private sector participation in the water and sanitation sector. In addition to promoting private service delivery and financing models through loan conditionalities, the World Bank has been actively involved in shaping water policy discussions at the global level. In April 2016, less than a year after the launch of the 2030 agenda, the UN Secretary General Ban Ki-moon and World Bank Group President Jim Yong Kim launched the High-Level Panel on Water (HLPW) in support of realising the target of the SDG 6. In March 2018 at the end of their two-year mandate, the HLPW produced an outcome document titled “Making every drop count”, which outlined its recommendations for the implementation of the SDG 6. Among its key messages, the report calls for “higher and more effective private sector investments” in water infrastructure and the promotion of partnerships.

With the inception of the SDGs in 2016, the Government of Ghana has been making every effort to fully meet all of its Sanitation and Water targets by 2030. The national vision for water and sanitation sector is “Sustainable Basic Water and Sanitation Service for all by 2025” which guarantees “all people living in Ghana have access to adequate, safe, affordable and reliable basic water service, practice safe sanitation and hygiene and that water resources are sustainably managed”. The government is ‘courting ‘the private sector to invest in these areas with all its potential of turning waste to energy and wealth through recycling and attendant employment benefits, especially for youth. Under the Sustainable finance section in The Country Brief, prepared by the government ahead of the Sanitation and Water for All (SWA) 2019 Sector Ministers’ meeting states that one of the critical bottlenecks to overcome to address WASH inequalities and ensure universal access is the heavy reliance on donor funding (over 80% of sector budget) with low public investment and limited leveraging of private sector resources. The brief continues to state that government has taken concrete policy measures with ongoing water sector reforms to make both urban and rural water service providers achieve financial and commercial viability with cross-subsidy and tariff reforms to support poor households. This will help address challenges of low capital maintenance and renewal cost, inadequate operating and current maintenance cost as well low tariffs charge by utilities.

Diageo, operating in Ghana via Guinness Ghana Breweries PLC, is one of the multinationals working to support the realization of the agenda 2030, most especially the SDG 6 in the country. Diageo in 2020 launched Society 2030 where it announced a range of 25 bold and ambitious goals. The plan, “Society 2030: Spirit of Progress” is designed to make a positive impact on the world by 2030, in the ‘Decade of Action’ to achieve the United Nations Sustainable Development Goals. Diageo has partnered various organization to see the achievement of its ambitious goal in support of the SDGs. In Ghana, it has partnered WaterAid Ghana to improve access to WASH services both in quality and quantity in rural communities. The partnership has recently led to the handing over of an integrated solar mechanized water system in the Garu District Assembly and the Jirapa Municipal Assembly in the Upper East and the Upper West Regions respectively, serving over ten thousand citizens with safe water.

The innovative systems are connected to healthcare facilities, communities and markets to support economic and social activities in the two regions.

Conclusion

In the perspective of the SDGs, it is obligatory for the private sector to support the implementation procedures, considering the social, economic, and environmental aspects (Rashed et al. 2020). Many researchers have confirmed this and gone further to state that effective and practicable partnership between the public and private sector is the approach. This approach is expected to create valuable opportunities and tackle the challenges towards achieving the SDGs in the assigned time to succeed as Ghana’s SDGs investment, including the SDG 6, has an annual average shortfall of USD$42.9 billion. Therefore, it becomes imperative that the private sector starts to modify their plans and develop strategies that could align with the SDG requirements. Indeed, the private sector like Diageo (Guinness Ghana Breweries PLC) has taken actions to advance SDGs via several voluntary initiatives that have already been implemented, such as corporate social responsibility, circular economy, and other environmental voluntary initiatives on how the sector can provide its contribution to attaining the SDGs by 2030. Several researchers have equally declared that the private sector holds the power to fast-track attainment of the SDGs. It is therefore in the right direction that the President of Ghana, Nana Addo Dankwa Akuffo-Addo, during a breakfast meeting with key private sector players in July 2022 stated among other things that despite the challenges the country was facing, his administration would continue to use the private sector as a vehicle to lead the social and economic transformation of the country. It is also in the right direction to add that government should as a matter of urgency take bold steps to increase its SDG investments (especially the SDG 6) to close the current annual gap of 82% to augment investments that will be coming in from the private sector.

The author is the Grants Manager and covers the position of Senior Manager, Business Development for WaterAid Ghana. He has a Master’s Degree in Business Administration (Finance) from KNUST, a Fellow of Association of Certified Chartered Accountants UK (ACCA UK), and an associate Member of Chartered Institute of Taxation Ghana (CITG). He has interest in Development and Sustainability Financing, as well as Resource Mobilization and Management in support of the achievement of the SDGs).
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