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Target 6.2 of the Sustainable Development Goals calls for universal access to sanitation by 2030. The associated indicator is the population using ‘safely managed’ sanitation services. Shared sanitation is classified as a ‘limited’ sanitation service and some donors and governments are reluctant to invest in it, as it will not count towards achieving Target 6.2. This could result in poor citizens in dense slums being left out of any sanitation improvements, while efforts are diverted towards better-off areas where achieving ‘safely managed’ sanitation is easier. There are sound reasons for labelling shared sanitation as ‘limited’ service, the most important being that it is extremely difficult – for global monitoring purposes – to differentiate between shared toilets that are hygienic, accessible and safe, and the more common ones which are poorly designed and managed. There is no reason to stop investing in shared sanitation. ‘Safely managed’ represents a standard countries should aspire to. However, the 2030 Agenda and the human rights recognise the need for intermediate steps and for reducing inequalities. This calls for prioritising investments in high-quality shared toilets in dense informal settlements where it is the only viable option (short of rehousing) for improving sanitation services.

The sanitation sector is gradually realizing that the effectiveness of approaches such as Community-Led Total Sanitation (CLTS) is limited by inadequate access to finance. Households are not able to construct durable facilities and sanitation services are unable to develop so as to respond to demand. At the same time, there is fierce competition among microfinance services providers that is pushing institutions towards more remote customers and to offer innovative products. In addition, the rise of mobile banking and digital finance has lifted many poor people out of financial exclusion. These factors have created a nexus between microfinance and sanitation with high growth potential. However, the sanitation microfinance market remains small to date. Since 2010, the SHARE research consortium has investigated global experiences and lessons for using microfinance to develop sanitation services. A SHARE action-research in Tanzania triggered selected financial institutions to offer financial products for sanitation and generated lessons for scaling up sanitation microfinance. This article presents the findings from the SHARE research, in the context of broader developments in the microfinance markets and key findings from other donor-led initiatives.

Providing sustainable water supply and sanitation (WSS) services in developing countries remains an immense, and increasingly urgent, challenge. Chapter two sets out how the sector is currently funded and why business as usual is insufficient for meeting WSS-related goals, covering the size of the investment gap, and the challenges presented by the status quo. Chapter three proposes a financing framework toward more effective use of existing funds to enable the mobilization of new sources of finance, and explains the benefits and costs of commercial finance. Chapters four to six detail the three components of the financing framework, providing practical advice and global experiences that demonstrate how countries can begin to make progress. Chapter seven summarizes how stakeholders can bring the three components together to mobilize commercial finance, and provides the main conclusions and recommendations of the report.

Several studies have sought to evaluate the economic costs and benefits of investing in sanitation. These studies highlight the economic gains associated with improved sanitation, raising awareness among decision-makers of the importance of such investments. To increase our understanding of the sanitation sector, however, it is critical to go further and apply economics to the analysis of how sanitation markets work or, more often, fail, so as to identify potential improvements. Sustainable sanitation requires that several mutually dependent services be provided, including collection, transport, treatment, and reuse. In each of these segments, service delivery is often inadequate due to failures either on the demand or on the supply side. Investments by households or service providers are driven by their own perception of economic benefits rather than macroeconomic arguments. This paper argues that economics can be used to evaluate what drives decisions across all these segments and support public policym...

The main objective of this report is to provide data and insights on the role of grant funding and concessional financing in meeting the Sustainable Development Goal for water (SDG 6 known as the water SDG)). These sources of funding are collectively referred to in this report as aid flows to the water sector. This report was prepared as an input into the High-Level Panel on Water. Data analysis underlying the report was conducted using two main databases on aid to the water sector. The OECD Development Assistance Committee (OECD/DAC) database is the most comprehensive, while the WASHfunders.org database provides complementary data on aid from philanthropic organizations. The report starts by giving a global-level account of the scale of aid flows (chapter 2). It then examines how this financing is allocated (chapter 3) and who provides development financing to the water sector (chapter 4). Key challenges for improving the use of such development financing in the water sector are identified as a basis for formulating a set of key recommendations for the development finance community (chapter 5).