Support to transboundary water resource management in SADC
Business Case
February 2012
SADC Water-RSAP3 : Business Case - Final
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Contents: Business Case
Section
Page No:
Contents
Abbreviations & Acronyms
2
3
Intervention Summary
6
1. Strategic Case
A. Context and need for DFID intervention
B. Impact and Outcome
8
8
15
2. Appraisal Case
A. Feasible Options & Theory of Change
B. Assessing the evidence
C. Costs and Benefits
D. Value for Money
E. Summary VFM Statement
16
16
22
26
35
36
3. Commercial Case
Direct Procurement
A. Procurement/Commercial requirements
B. Competition
C. Market response
D. Key Cost Elements
E. Contract Award
F. Performance management
Indirect Procurement
A. Proposed Funding Mechanism
B. Value For Money
38
4. Financial Case
A. Costs & Forecast
B. Programme/Administration Budgets
C. How will funds be paid out
D. Assessment of Financial Risk
E. Expenditure Reporting
45
45
46
46
47
48
5. Management Case
A. Management arrangements
B. Risk Management
C. Conditions
D. Monitoring & Evaluation
50
52
53
53
54
Endnotes
Appendix 1: List of Design Report Background Papers
Logframe
SADC Water-RSAP3 : Business Case - Final
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39
39
39
40
40
41
43
57
60
Separate file
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Abbreviations and Acronyms
AfDB
African Development Bank
AMCEN
African Ministerial Council on Environment
AMCOW
African Ministers Conference on Water
ARD
African Regional Department
AU
African Union
AUSAID
Australian Government Overseas Aid Program
BMZ
German Federal Ministry for Economic Cooperation and
Development
CBO
Community Based Organisation
CSO
Civil Society Organisation
CEDAW
1979 Convention on the Elimination of All Forms of Discrimination
against Women
CEO
Chief Executive Officer
CLP
Chars Livelihoods Programme
DANIDA
Danish Aid
DFID
Department for International Development
DBSA
Development Bank of South Africa
DOVVSU
Domestic Violence and Victim Support Unit
DRC
Democratic Republic of Congo
DRR
Disaster Risk Reduction
DV
Domestic Violence
EC
European Commission
ELMS
SADC Environment and Land Management Sector
EPA
Economic Partnership Agreement
ES
Executive Secretary
EU
European Union
FDI
Foreign Direct Investment
FGEF
French Global Environment Fund
GDP
Gross Domestic Product
GEF
Global Environment Fund
GES
UNDP Gender Equality Strategy
GIS
Geographic Information System
GMISA
Groundwater Management Institute South Africa
GSIC
Gender Steering and Implementation Committee
GWA
Gender Water Alliance
GWI
Ground Water Institute
GWP
Global Water Partnership
GWPSA
Global Water Partnership Southern Africa
HYCOS
Hydrological Observation System
I&S
Infrastructure and Services
IA
Implementing Agent
IBRD
International Bank for Reconstruction and Development
IBT
Inter-basin transfers
ICP
International Cooperating Partner
IDP
Internally Displaced Person
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ILC
International Law Commission
IPCC
Intergovernmental Panel on Climate Change
IPP
Independent Power Producer
IWRM
Integrated Water Resource Management
IWRDM
Integrated Water Resource Development and Management
JMP
Joint Monitoring Programme
JURBS
Joint Umbeluzi River Basin Study
JWC
Joint Water Commission
KE
Key Expert
KfW
German Development Bank (Kreditanstalt für Wiederaufbau)
LIMCOM
Limpopo Commission
M&E
Monitoring and Evaluation
MDG
Millennium Development Goals
ME&R
Monitoring, Evaluation and Reporting
MIC
Middle Income Country
MOWAC
Ministry of Women and Children Affairs
MS
Member State
MTR
Mid-Term Review
NAWISA
The Network for Advocacy of Water Issues in Southern Africa
NEPAD
New Partnership for African Development
NGO
Non-governmental Organisation
OKACOM
Okavango Commission
ORASECOM
Orange-Senqu Commission
PANAFCON
Pan African Implementation and Partnership Conference on Water
PAP
Priority Action Programme
PIDA
Programme for Infrastructure Development in Africa
PIF
Programme Implementation Framework
PIM
Programme Implementation Manual
PMSU
Programme Management Support Unit
PPDF
Project Preparation and Development Fund
PPP
Public-Private Partnership
PPR
Post-Project Review
PRSP
Poverty Reduction Strategy Paper
PSC
Project Steering Committee
RBO
River Basin Organisation
REC
Regional Economic Community
RISDP
Regional Indicative Strategic Development Plan
RSAP
Regional Strategic Action Plan
RSAP1
Regional Strategic Action Plan, 1998-2004
RSAP2
Regional Strategic Action Plan, 2005-2010
RSAP3
Regional Strategic Action Plan, 2011-
RSWIDP
Regional Strategic Water Infrastructure Development Programme
SA
South Africa
SADC
Southern Africa Development Community
SADCC
Southern African Development Coordinating Conference
SAPP
Southern Africa Power Pool
SIDA
Swedish Aid
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SSR
Self Sufficiency Ratio
TA
Technical Assistance
TAC
Technical Advisory Committee
TFCA
Trans-Frontier Conservation Areas
ToR
Terms of Reference
TWM
Transboundary Water Management
TWRM
Transboundary Water Resources Management
UK
United Kingdom
UN
United Nations
UNCSD
UN Commission on Sustainable Development
UNDP
United Nations Development Programme
UNEP
United Nations Environment Programme
UNGASS
UN General Assembly Special Session
UNICEF
United Nations Children’s Fund
UNILC
United Nations International Law Commission
UNOPS
United Nations Office for Partnerships
USAID
United States Aid
WB
World Bank
WD
Water Division
WHO
World Health Organisation
WIN-SA
Water Information Network – South Africa
WISA
Water Institute of Southern Africa
WRC
Water Research Commission
WRTC
Water Resources Technical Committee
WSCU
Water Sector Coordinating Unit
WSRG
Water Strategy Reference Group
WSSD
World Summit on Sustainable Development
ZAMCOM
Zambezi Commission
ZRA
Zambezi River Authority
===============
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Business Case and Intervention Summary
Intervention Summary
Title: Support to transboundary water resource management in SADC
What support will the UK provide?
How much funding does the UK expect to provide?
£37.3 Million
Period of funding?
4 years (2011/12 – 2014/15)
Why is UK support required?
Some 95 million people live in the 13 shared river basins of Southern Africa. Despite the risk of
flooding, access to water for drinking, sanitation, agriculture and industry is already limited,
constraining human development and economic growth.1 Many people suffer from floods or droughts
on a regular basis.
These problems are likely to worsen as the climate changes. Increasing temperatures in Southern
Africa are predicted to change rainfall patterns. Storms are likely to become both more sporadic and
more violent, increasing the risk of both drought and flood.
As water supply falls, demand is set to rise as Southern Africa’s population grows and urbanises.
Further reduced water resources have potentially severe development impacts, especially on food
security: agriculture – the largest water-consumer on the continent – needs to increase output by 3.3%
per year just to feed Southern Africa’s growing population. Declining flow rates also threaten the
industrial and hydroelectric potential of rivers in the region.
All major river basins in Southern African cross international borders,2 meaning water usage in one
country will affect downstream neighbours. This means that national development aspirations of one
country potentially conflict with those of another.
Good governance of transboundary rivers can maximise cooperation and manage conflict. But existing
international institutions – at both regional and River Basin levels - remain under-strength and need to
perform this task better than they have been. Unless international support is able to help improve the
effectiveness of these organisations, tensions between riparian states may not be effectively managed,
and critical investment in infrastructure will not be forthcoming.
The complex mix of issues involved means that there is no single measure that will have meaningful
impact. As a result, the members of the Southern African Development Community (SADC) have set
out a range of approaches, coherently planned and co-ordinated under the Regional Strategic Action
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Plan for Integrated Water Resource Management and Development.3 We will provide support in three
overarching, mutually-supportive and inter-dependent ways through a mix of:
Building the capacity of national and regional institutions to manage transboundary rivers:
Different countries managing different sections of a international river typically can lead to inefficient
management of the river and tensions between countries. In many international river basins, these
problems are overcome through the establishment of River Basin Organisations (RBOs) – international
organisations with membership of all riparian states – which advise member states on the impact of
their respective decisions on the river as a whole, and can provide a forum for joint decision-making
and action. We are supporting the establishment, strengthening and functioning of River Basin
Organisations in Southern Africa through a range of activities, including legal and institutional
development, training for RBO staff, technical studies and tools for water resource management, and
demonstration projects for efficient water use. As states cooperate more closely through the RBOs,
the programme will support flood early warning and preparedness interventions (such as dam
synchronisation on major regional rivers). This sort of intervention is key to help manage current and
future climate risks of extreme flood and drought events.. We are also supporting the SADC
Secretariat to monitor the functioning of RBOs, and to facilitate effective interaction of RBOs and their
member states.
Facilitating the design and implementation of infrastructure investments:
Many potential medium to large scale water infrastructure projects do not attract investment because
they are unable to produce pre-feasibility and feasibility studies to the standard required by
international financiers. We will provide resources for an expert facility in this field to develop prefeasibility and feasibility studies for these projects, helping move projects from concept to actual
implementation, catalysing climate smart development for member state populations. Prioritised
projects are likely to involve aspects such as hydro-electric generation, water storage and flow
regulation, hydrological monitoring and water supply enhancement and protection.
Direct design and implementation of climate-resilient infrastructure:
We will fund a number of small-scale infrastructure projects. This will give our programme the ability to
intervene where the need for water security is greatest. An example is protecting and enhancing water
supply – in a context of climate change unnecessary wastage and loss of water will be unsustainable.
Implementation of such projects in border areas will also help demonstrate to member states the value
of transboundary cooperation, building commitment for longer term and more sustainable cooperative
management of rivers in Southern Africa
Our partners in this work will be SADC, the German government (GIZ) and the United Nations
Development Programme (UNDP).
What are the expected results?
This programme will improve the governance and management of transboundary water resources and
support development of essential infrastructure. The following benefits will be realised:
-
Improved water management will indirectly benefit at least 95 million people in the shared river
basins of the SADC region. For example, more equitable sharing of water resources will help
provide water for human consumption, agricultural development, industrial development and
hydropower generation;
-
At least 9 million people will directly benefit from reduced vulnerability to flooding.
-
At least 3.5 million people will directly benefit from improved access to drinking water.
-
Trust, partnership and cooperation built between SADC states will lead to improved water
management and, through this, reduced risk of conflict, accelerated poverty reduction, greater
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food security and faster economic growth.
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Business Case
Strategic Case
A. Context and need for a DFID intervention
1. Water in Southern Africa: shared rivers and shared problems
International borders in Southern Africa ignore the shape of the region’s river basins. This means
most of the rivers in Southern Africa are shared by several countries. The SADC region has 15
major river basins which are shared by two or more countries (see Map 1). Thus one of the defining
features in the region is shared watercourse systems, with complex water rights and potential
conflicts over the use of the shared resources. This common heritage also presents tremendous
opportunities for cooperation in managing the shared resources for regional economic development
and regional integration.
The boundaries of all twelve continental SADC States in Southern Africa enclose thirteen major
international river basins. In addition, parts of the Congo and Nile river basins fall within the SADC
region. All continental SADC countries with the exception of the DRC4 share at least one
transboundary river basin with another SADC member State – Mozambique shares nine basins. The
entire territories of Botswana, Swaziland and Zambia are in transboundary basins, as are most of
Lesotho, Malawi and Zimbabwe.
Map 1: The shared water basins of the SADC region
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2. Water in Southern Africa: A policy priority for DFID and the region
DFID
This proposed support to SADC’s agenda on Transboundary Water Management aligns well with UK
and DFID’s current policy and planning. DFID's overarching aim in the area of Water Resources
Management is to increase water security of poor people in developing countries by supporting
the efficient use of water to strengthen growth and reduce vulnerability to floods and droughts. This
is in recognition that the impacts of climate change on people will be felt mainly through water (Stern
Review 2006). Water is not uniformly available, and is concentrated in particular areas and in
particular times of the year – necessitating effective management of competing demands for this
resource. With a rising population and increasing climate uncertainty this will become more
difficult. DFID recognises that good management of water resources, particularly in the face of
climate change, is a key factor in providing poor people with sustainable access to clean drinking
water, and thus also improving sanitation and hygiene practices and preventing diarrhoea and other
illnesses. DFID operates at three levels on water resource management: globally, regionally and
nationally.
Key sectors that the UK International Climate Fund will prioritise for investment on adaptation include
interventions on Water Resources Management - that can range from initiatives at international level
(cooperation between neighbouring countries on a shared, but under threat, resource) to local
initiatives such as river basin management, rainwater harvesting and irrigation.
Strengthening Africa’s water security through improved management of transboundary water
resources in East and Southern Africa, and national level integrated water resource management is
also an adaptation priority for DFID Africa Division’s strategy on Climate Change.5
SADC
In recognition of the urgent and significant need to rectify current inadequate transboundary water
management, SADC Member States have engaged in wide ranging and intense consultations since
the mid-1990s on development of the water sector in the region, developing policy, strategy and
plans. While not underplaying the implementation challenges, this reflects substantive regional and
Ministerial endorsement and ownership of this SADC facilitated agenda. It has brought about a
heightened awareness of the importance of water for socio-economic development, regional
integration and poverty reduction.
Their efforts show recognition of the range of institutional, technical, economic, social and
environmental factors which still constrain effective management of the region’s water resources. In
planning terms, the principal resulting current initiative is the third Regional Strategic Action Plan
(RSAP3) - which this proposed programme would support.
3. Water in Southern Africa: Why it matters
Efforts to meet MDGs, secure economic growth and manage flooding in Southern Africa are heavily
constrained by poorly managed waters. Poor water supply and inadequate sanitation is calculated to
cost between 3.26% and over 5% of regional GDP, sums which exceed the total flows of aid and
debt relief into the region.6 The various links between water and development in the region are
examined below.
Water supply for drinking and sanitation
Across SADC over 98 million people lack access to UN-defined ‘improved’ water supplies7 and 175
million lack access to ‘improved’ sanitation8. Whilst SADC estimates low levels of coverage cost
member states $11.5 billion or 3.26% of GDP, others estimate that poor sanitation alone costs 5% of
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GDP in sub-Saharan Africa – a figure in excess of total annual flows of aid and debt relief 9. The
human toll through diarrheal disease accounts for 1 in 5 child deaths or 1.5 million deaths per year
and has a greater combined impact on the health of under-fifteens than HIV, malaria and tuberculosis
combined.10 And with an estimated 40 billion hours spent fetching water each year in Africa, the
impact of poor water provision go well beyond health11.
Only 40% of SADC countries are on track to meet the MDG target on water supply. Only 13% of
countries are on track to meet the MDG target on sanitation12. Functional water systems are
generally a pre-requisite for both.
Water and food security
Food security is one of the most off-track MDGs in Southern Africa. It will not be achieved unless
annual agricultural output is increased by at least 3.3 per cent.13 Moreover, the agricultural sector
contributes more that 35% of the SADC regional economy, and employs a large majority of the work
force.14
The principle constraint on agricultural productivity in the region is the very low level of irrigation
coverage. Perhaps as little as 1.7% of agricultural land is irrigated,15 ensuring food production is
reliant on regular and reliable rain-fall patterns.16 In turn, the spread of irrigation is constrained by
limited water storage capacity. Average per capita storage capacity in Africa is about 200 cubic
meters a year, much less than that of countries in other regions.17 Although dams in some SADC
countries, such and Zimbabwe and Zambia, hold very large bodies of water, often these are
designed for hydroelectric production: topography and human settlement patterns means these dams
supply relatively little water for agriculture.18 Overall in Sub-Saharan Africa, countries store only 4%
of their annual renewable flows, compared to between 70% and 90% in the developing world.19 Very
little water is thus stored in locations where it could be usefully turned to agriculture.
Water and economic growth
Much of SADC’s potential for growth - in mining, agricultural processing and manufacturing - is
heavily dependent on intensive water use. Water shortages threaten to be a significant constraint on
future growth.
Availability of electrical power is another limiting factor on industry across much of SADC. Although
hydroelectricity makes up 32% of Africa’s energy output, sum output remains the lowest per capita
globally. The entire generation capacity of the 48 countries of sub-Saharan Africa, at 63 gigawatts
(GW), is comparable to that of Spain20. Africa’s exploitable hydroelectric potential is estimated at
approximately 1.4 million GW hours/year, sufficient to supply electricity for the entire continent 21. But
only about 7 % of this economically feasible hydropower potential has been exploited22. In a carbon
constrained world, Africa could benefit as a net exporter of clean power if this potential were realised.
Flooding
Floods can take a devastating toll on livelihoods and economies in the region. For example, flooding
in Mozambique in 2000 destroyed 250,000 homes, 140,000 hectares of agricultural land and the
livelihoods of 113,000 small holding families.23 Economic losses from the flood have been estimated
at US$419m, whilst the cost to donors of the humanitarian intervention exceeded US$450m.24
Whilst this Mozambique example was particularly severe, many SADC countries suffer flooding on a
regular basis. Thousands of hectares of agricultural lands were destroyed during the 2011 rains in
Angola, Botswana, Lesotho, Mozambique, Namibia, Zambia, Zimbabwe and South Africa.25 Whilst in
many parts of the world the impact of flooding is mitigated using coordinated networks of dams to
disperse floodwaters safely, such arrangements are not embedded in SADC practices.
Water and conflict
In international trans-boundary river basins, water usage in one state impacts on users in other
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states. Tensions between riparian states can arise when water flows from upstream to downstream
states reduce in quantity or quality to the extent that development in the latter is compromised. This
can lead to political tensions and even armed confrontation. On a continent where 62% of the land
area is drained by shared waters, every continental African state faces the challenge of managing
such tensions. The challenge is exacerbated by highly variable climates, resulting in droughts, floods
and variable river flows even in normal years.
Southern Africa in particular has been characterised as a hydro-political hot spot, second only to the
Middle East. Rapid development of water resources in SADC has outstripped governments’ capacity
to collaboratively manage the implications for water users, leading analysts to include six of SADC’s
transnational river basins - the Incomati, Kunene, Limpopo, Okavango, Orange and Zambezi among those most at risk from conflict globally 26 27 28. The risks to stability in the region are also
illustrated by the regular violent conflict between water users at a sub-national scale.
4. Water scarcity in Southern Africa: Projections
A number of projected water demand and supply factors suggest growing challenges ahead for the
SADC region. The key issues are explored below.
Increased water demand
Population growth: At current rates of population growth, by 2025 Lesotho, Mauritius, Mozambique
and Tanzania will join Namibia, South Africa and Botswana in approaching the status of water scarce
nations in SADC, defined as when water supplies drop below 1,000 cubic metres per person per
year.29 This measure does not reflect the full aridity of the region: large bodies of water in Zimbabwe
and Zambia are remote from population centres, meaning in reality that access to water for
productive use is limited.
However, an approach which delineates between ‘economic water scarcity’ where resources exist
but where investment is required to tap latent capacity to manage those resources, as opposed to
'physical water scarcity’ where the forecast demand cannot be met even after accounting for future
adaptation, is more encouraging. These findings suggest that with sufficient investment to improve
supply-side infrastructure and enhance irrigation efficiency, all Southern African countries (bar South
Africa) will be able to meet projected future demand.30
Urbanisation: Future population growth will take place primarily in urban centres, with 95% of global
growth expected there by 2030.31 By 2025 about 56% of the population in SADC is predicted to be
urbanized, increasing the domestic demand in direct proportion to the population increase and
standard of living32. Rapidly growing cities in Southern Africa already face multiple water challenges.
With water demand outstripping reticulated supply, at least a quarter of SADC’s urban population is
reliant on informal access to groundwater via boreholes and hand dug wells. These unmanaged
urban groundwater resources, the fastest growing form of UN-defined ‘improved’ water source in
SADC, face significant risks through degradation and depletion33.
Industrialisation: Much of SADC’s potential for growth, in sectors such as mining and extractive
industries, agricultural processing and manufacturing is heavily dependent on intensive water use.
Some commentators suggest that rapid economic growth will see industrial demands surpass
agricultural by 2025.34 Even if this is not the case, there is a strong and well evidenced correlation
between economic / industrial growth and water consumption. For example, South Africa already
consumes 50% of water in SADC.35
Diet changes: Whilst food insecurity in SADC remains severe, evidence from China and India
suggests that development and urbanisation is often accompanied by changing diets. As SADC
urbanises and more Southern Africans emerge from poverty, the projected shift towards Europeanstyle diets could mean that more water will be required for each calorie of agricultural output: meat
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production is water intensive whilst cereals such as wheat require more water than traditional grains
like sorghum. On average, the demand for cereals is expected to grow by 37% between 2000 and
202536.
Decreased water supply - but increased risk of flooding
Climate change: There is broad agreement among climate change models that, on average, the
south western part of SADC will become dryer and the northern parts of SADC will become wetter.
This suggests that those areas currently experiencing or threatened by water stress will receive less
rainfall still under climate change scenarios. 37
Throughout the region, rainfall is likely to become more sporadic and characterized by higher
intensity events. This will further increase the risk of flooding.38
More sporadic, 39unpredictable and intense rain patterns are likely to have a significant development
impact. By 2030, climate variability will impact particularly severely at the household level in Africa,
with the poor often having to pay more for food. Without action there will be increased likelihood that
household assets will be reduced or liquidated, livestock sold, children (girls first) removed from
school and workers will have to migrate – often exacerbating urban squatter/slum dweller stresses
and increasing xenophobia and tribal or racial conflict40.
5. Responding to water stress in Southern Africa: Reasons for a multi-country and regional
approach
As noted in section 1, river basins in Southern African are transboundary. In order to overcome
‘collective action’ problems in managing transboundary rivers, states across the world have
developed River Basin Organisations (RBOs). Globally, the International Network of Basin
Organizations currently has 133 member organizations in 50 countries.41 This section examines in
further detail the ‘collective action’ problems which states sharing river basins in Southern Africa
need to overcome. It also examines the advantages offered by addressing the problem at the
regional (SADC) level, as well as at the river basin level.
Interventions at the river-basin level
All of the major river systems in Southern Africa cross international borders. This means changes to
water usage in one country will affect downstream riparian states. Any infrastructural intervention in
this sector will inevitably be multi-country in impact. The first challenge posed by the interconnected
nature of Southern African river systems is to ensure the benefits from any infrastructure investment
are shared between all riparian states, or at a minimum that costs are not imposed by one riparian on
another without compensation. Failure to adopt this approach will lead to tension between riparian
states. This logic puts a strong emphasis on mutual governance of international river basins, with
information and decision-making shared by riparian states.
Secondly, the systemic nature of river basins means that many problems – such as flooding – affect
more than one country, and often cannot be addressed by one country in isolation. Where, for
example, flooding is a problem for more than one riparian, a river-basin approach will allow the costs
of disaster risk reduction schemes to be shared. And where flooding in down-stream states can only
be addressed through interventions in an up-stream riparian, then a river-basin approach, which can
compensate the upstream state for permitting interventions or changing its behaviour, which will
crucial.
Recent studies have sought to quantify the economic costs of non-cooperation between states who
share river basins where dominant users are irrigation and hydropower. An examination of the
Zambezi using this new methodology suggested that the annual average cost of non-cooperation
would reach $350 million - around 10% of the total benefits derived from the system.42 In many
cases, River Basin Organisations – international organisations deriving expert membership all
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riparian states – are the focus for cooperation over transboundary waters.
Interventions at the regional level
A benefit of working at the regional level is the positive role that SADC is able to play in helping
member states overcome political barriers to cooperation over transboundary waters. Good
management of river basins is inherently vulnerable to the ‘tragedy of the commons’, where different
riparian states seeks to maximise the benefits they extract from water resources flowing through their
respective territories, given they cannot be sure that others are not doing the same. Electoral cycles
reinforce the pressure on riparian states to extract maximum benefit in the short term.
The decision by SADC to embed cooperative governance of transboundary waters as an
international norm stretching beyond any given river basin or set of circumstances puts pressure on
member states to share benefits from shared waters, even if it may not be in their immediate selfinterest. Working with and through SADC also gives a political legitimacy and weight to interventions
sponsored by outsiders, helping to overcome some of the challenges which arise in this intensely
sensitive field of work.
It should be pointed out that adopting a regional approach does not preclude work with national water
authorities. Indeed, in order to encourage long-term engagement of riparian countries with
transboundary water management, it is important to demonstrate benefits of effective transboundary
management at country level, especially those upstream, for whom the benefits of improved and
more equitable management will be less immediate.43
6. Building water security: What works?
A number of approaches to improving water security have been attempted in different areas of the
world. This section briefly overviews interventions which the evidence suggests may be effective.
The interventions listed here are not mutually exclusive. The options considered in the appraisal case
constitute a range of alternative blends drawing on these different options.
Institutional capacity building interventions44
Strong institutions, designed to manage the competing demands of water users – including across
national and international boundaries – and able to help investors secure returns, are critical for
building water security. But extensive evidence, drawn from across the sector, indicates such
institutions are often not yet able to fulfil their mandates 45 46 47. Poor performance at both the River
Basin Organisation (RBO) and national level can result from a lack of knowledge and data, a lack of
political support and commitment at the national level, a heavy reliance on donors keen to see quick
results, a lack of stakeholder participation, issues of financial viability, and the departure of trained
personnel from the region.
But evidence favours adoption of approaches which emphasise detailed analysis of the factors
determining institutional performance, in advance of initiating capacity building interventions and
institutional reforms.48 Without this, interventions may simply focus on the wrong issues. For
example, some expensive sector reforms may have given the illusion of progress, whilst masking and
by-passing root issues such as poor public sector pay and a’ brain drain’ from the sector 49.
Properly implemented, such an approach can:



address the root causes of performance rather than symptoms;
embed a learning-by-doing approach which empowers practitioners;
support workplace autonomy, creativity and leadership skills;
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



bring together duty bearers with rights holders (i.e. practitioners together with those
affected by their decisions and actions);
prioritise transparency and accountability, in part by resolving issues of sovereignty
and clear lines of responsibility to build incentives;
prioritise long term practitioner-to-practitioner support over short term and expensive
consultant led ‘drop in’ support;
take an action-learning approach to build an evidence-base.
Evidence of the success of this approach can be found in DFID Annual Reviews of the current phase
of support to SADC Transboundary Water Resource Management. The project scored high (2,1,1) in
reviews over the last three years. It has succeeded in institutionalising the role of SADC Water
Division in supporting the institutional capacity of River Basin Organisations (RBOs). SADC Water
Division staff coordinate a range of RBOs, helping share experiences across the sector, offer
technical support to RBOs, and offer joint training opportunities to staff. DFID reviews have found that
the advantage of supporting SADC to perform this role on a continual, ongoing basis, rather than
using programme funds to purchase discreet capacity-building inputs from service providers, is one
of legitimacy and sustainability: Water Division staff operating under SADC’s mandate from member
states find it easier to discuss difficult issues with RBO staff over long periods of time than external
consultants.
Stake-holder engagement interventions
One approach to supporting performance in water institutions is through boosting levels of
accountability, through enabling citizen, media and political performance monitoring and oversight.
In addition to boosting accountability of water institutions 50, improved stakeholder engagement can
help balance priorities between user groups, essential to which is more effective partnering of
government and private sectors with civil society. Such an approach can help ensure that decisions
made by elites do not collide with the interests of some social groups, leading to potentially violent
repercussions.
Large-scale Infrastructure interventions
Large-scale infrastructure – such as major dams and large water transfer schemes – is often
proposed as a solution to problems of water security. Whilst systematic documentation of the social
and economic benefits of large-scale infrastructure development in SADC is hard to find, experience
elsewhere on the continent indicates potentially significant development gains from the approach.51
For example, the storage capacity behind the High Aswan Dam supplies water to meet the domestic
and industrial needs of 60 million people. It is widely considered to have saved Egypt from the
disasters that afflicted most of Africa during the great drought of the late 1980s. In India, investments
in large-scale water infrastructure bringing water to previously water-scarce areas have resulted in a
dramatic economic shift, with once-arid areas becoming the centres of economic growth.52 At the
same time, the negative social and environmental impacts of some large dams have been well
documented.
Small-scale Infrastructure interventions
Small-scale infrastructure investments offer the rural poor options to boost water storage through
relatively inexpensive measures including systems of small off-stream reservoirs and farm ponds.
Such measures are often require little space and few labour inputs.53 While the lifetime delivery costs
of large dams are around one third those of small and medium sized dams, benefits of smaller
infrastructure include avoiding the environmental costs associated with very large reservoirs. 54
Large-scale studies have demonstrated that the high operational flexibility of small-tanks and the
effectiveness of cascade systems can provide substantial benefits over large reservoirs, though it is
important to ensure small-tanks do not take up the most valuable agricultural land.55
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Agricultural interventions
Strong evidence now exists that improvements in rain-fed agriculture and micro-agricultural water
management technologies have the potential to make a major contribution to improved water and
food security56. Rain-fed agriculture – which uses ‘green water’ rather than extending the ‘hydraulic
mission’ of large-scale storage infrastructure for ‘blue water’ – can make major contributions to
breaking the poverty trap in small-holder African agriculture, improving food security, and promoting
broad-based agricultural growth57,58,59. (DFID SA, though our Climate Smart Agriculture Programme,
are working with the tripartite to address the policy impediments to successfully scaling-up these
technologies at both national and regional levels.)
Water accounting interventions
Improved understanding of how water flows through national and regional economies through the
application of ‘water footprinting’ can help decision-makers explore the value of water in their
economies the potential for importing and exporting of water intensive products as part of
approaches to water security, boosting water security.60
Benefit-sharing interventions
Sharing the benefits from infrastructure interventions can pre-empt tensions between riparian states.
Most benefit-sharing arrangements involve hydro-electric dams feeding more the one riparian, but
the potential for sharing other economic benefits from shared water exists. However, success of
such an approach requires complex but effective institutional arrangements at both national and
regional levels.
B. Impact and Outcome that we expect to achieve
The proposed intervention Impact is:
Climate resilient human development, human security and economic growth in Southern
Africa.
The Outcome will be:
Peaceful and climate resilient management of shared water resources in SADC for the benefit
of the poor.
As set out in the Strategic Case, we plan to achieve this outcome through three overarching,
mutually-supportive and inter-dependent ways through a mix of:
Building the capacity of national and regional institutions to manage transboundary rivers:
Different countries managing different sections of a international river typically can lead to inefficient
management of the river and tensions between countries. In many international river basins, these
problems are overcome through the establishment of River Basin Organisations (RBOs) –
international organisations with membership of all riparian states – which advise member states on
the impact of their respective decisions on the river as a whole, and can provide a forum for joint
decision-making and action. We are supporting the establishment, strengthening and functioning of
River Basin Organisations in Southern Africa through a range of activities, including legal and
institutional development, training for RBO staff, technical studies and tools for water resource
management, and demonstration projects for efficient water use. As states cooperate more closely
through the RBOs, the programme will support flood early warning and preparedness interventions
(such as dam synchronisation on major regional rivers). This sort of intervention is key to help
manage current and future climate risks of extreme flood and drought events.. We are also
supporting the SADC Secretariat to monitor the functioning of RBOs, and to facilitate effective
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interaction of RBOs and their member states.
Facilitating the design and implementation of infrastructure investments:
Many potential medium to large scale water infrastructure projects do not attract investment because
they are unable to produce pre-feasibility and feasibility studies to the standard required by
international financiers. We will provide resources for an expert facility in this field to develop prefeasibility and feasibility studies for these projects, helping move projects from concept to actual
implementation, catalysing climate smart development for member state populations. Prioritised
projects are likely to involve aspects such as hydro-electric generation, water storage and flow
regulation, hydrological monitoring and water supply enhancement and protection.
Direct design and implementation of climate-resilient infrastructure:
We will fund a number of small-scale infrastructure projects. This will give our programme the ability
to intervene where the need for water security is greatest. An example is protecting and enhancing
water supply – in a context of climate change unnecessary wastage and loss of water will be
unsustainable.
Implementation of such projects in border areas will also help demonstrate to
member states the value of transboundary cooperation, building commitment for longer term and
more sustainable cooperative management of rivers in Southern Africa
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Appraisal Case
Introduction
The Strategic Case examined the transboundary nature of river basins in Southern Africa, assessed
why water is important to development in region, and reviewed different approaches to transboundary
water management. It summarised a broad agreement in the literature that medium- and large-scale
infrastructure can have major development impacts. However, it also noted that unless transboundary
interventions are agreed and managed through an effective and accountable international governance
framework, tensions will be raised as down-stream states receive less water. Effective transboundary
water governance can be seen as an essential foundation on which negotiated, mutually-beneficial
infrastructure can be built.
The Strategic Case also examined the positive impact of small-scale infrastructure, such as farm
ponds, and the potentially transformative impact of climate resilient agriculture.
The three options set out in the appraisal case respond to this evidence. Output one builds the
institutional capacity of transboundary water governance in Southern Africa, whilst outputs two and
three support infrastructure interventions – interventions which will both generate development impact
in their own right, but also boost states’ incentives to join together in shared governance of shared
waters. Very small-scale infrastructure and climate-resilient agriculture will not be addressed through
this Business Case, since DFIDSA is already funding interventions in this area through our Climate
Smart Agriculture programme.
The evidence for the effectiveness of the respective options has been taken from, amongst other
sources, 12 background papers specially commissioned for this design. These are referenced, and
are available from DFID on request.
A. What are the feasible options that address the need set out in the Strategic Case?
Theory of Change
The overall logic model for this programme may be summarised as follows (Figure 4):
i.
DFID have identified strengthening Africa’s water security through improved management of
transboundary water resources - and national level integrated water resource management - as a
climate change adaptation priority for the African continent.61
ii. As indicated in the Strategic Case, key issues and challenges facing the African water sector
include declining water availability in some basins, inadequate governance frameworks, inefficient
existing infrastructure and, inadequate levels of infrastructure development. These challenges are
exacerbated in the SADC region, which is dominated by river basins that are shared by two or
more countries. Any response to the additional water stresses expected from climate change must
be done in an integrated way that also tackles existing water management challenges.
iii. Significant technical progress must be made, but set in a context of clear political backing and
mandate. The challenges of transboundary water management in the SADC region are
acknowledged by Member States in their SADC Protocol on Shared Water Courses62. This
provides an overarching and mandated framework and is augmented by various supporting
documents – Regional Water Policy63, Regional Water Strategy64 and Climate Change Adaptation
Strategy for the water sector65.
iv. The SADC Regional Strategic Action Plan (RSAP) for Integrated Water Resource Management
and Development66 provides a structured plan to implement the Protocol on Shared Water
Courses. The implementation of the RSAP is funded through contributions from the SADC
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Member States and from the International Cooperating Partners (ICPs). Implementation is guided
by the Water Resources Technical Committee (comprising SADC Member States) and the Water
Strategy Reference Group (comprising the ICPs).
v. Extensive consultation with key regional stakeholders has confirmed the complexity and
interconnectedness of the issues. An integrated approach is required. The proposed programme
would support the implementation of RSAP 3 and focus on three inter-related groups of activities –
capacity development, project preparation and transaction support and the delivery of climate
resilient infrastructure.
vi. Capacity building. Low human and institutional capacity in transboundary water resource
management leads to both poor understanding of the nature of challenge and threat, and also to
an inability to adequately respond. Building on achievements through RSAP 1 and 2, the
programme would prioritise enhancing capacity to deliver at the River Basin Organisation level,
enabling riparian states to engage effectively.
vii. Project Preparation and Transaction Support: This would co-finance an existing SADC Project
Preparation and Development Facility (PPDF) hosted by the Development Bank of South Africa
(DBSA) near Johannesburg. A deficit of well-designed and properly costed infrastructure projects
within a functioning enabling environment lead to an investment shortfall that runs to many billions
each year. The project preparation and transaction support component of the programme would
result in a series of well-designed and financed projects at the regional and cross-border level.
This would enable the preparation and design of major capital infrastructure schemes over the
next 5-10 years – attracting international finance, including for multi-purpose storage investments
viii. Pro-poor Climate Resilient Infrastructure Delivery Facility (CRIDF) for Immediate Project
Implementation. This would mean an international consortium to design, manage and pre-finance
implementation of a range of SADC priority small-medium scale infrastructure works (within a
framework for water security and climate resilient development). The longer-term emergence of
evidence of country-level benefits from cooperation brokered by SADC Water Division and RBOs,
makes difficult decisions by African leaders a challenge to justify to citizens. Through the delivery
of climate resilient infrastructure to nearly two million people, the programme would enhance
mutual cooperation on transboundary water management. Women and girls will directly benefit,
such as through household-level improvements which will save time and calories through reducing
distances to collect water, better personal health, dignity, and personal security.
ix. Figure 5 (see Box 3 below) illustrates the inter-related way in which the three key design features
are mutually supportive and mutually reinforcing. The programme design weaves these threads
together to make for a coherence and co-ordinated package responding to and commensurate
with the complex multi-faceted challenges.
x. The three key design features would directly deliver a stronger SADC water sector together with
climate resilient water infrastructure to nearly two million people. This would ensure increased
adaptive capacity and greater productive utilisation of the water resources in the shared river
basins that dominate the SADC region. These direct impacts together with the enhanced evidence
base generated by the programme would greatly enhance the trust and partnership between the
various stakeholders. This in turn would result in indirect benefits for the 95 million people living in
the transboundary river basins in the SADC region as these waters will be better managed to
meet future demand and address climate change impacts, stimulating increased investment from
both within the region and from external sources.
xi. Progress in this way would lead to multi-sector impact on poverty reduction, food security,
industrial development, regional integration and regional economic growth.
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Theory of Change
DFID Support to Transboundary Water Management in SADC
Key issues
to be addressed
Inadequate water resource in
light of forecast demand
Inadequate governance
frameworks
Climate change
impact
Regional water strategy
Protocol on shared
watercourses
Regional
water policy
Inadequate levels of
infrastructure development
Input from SADC
Member States
Table 4.
Assump. 3
Input from other
partners e.g. GWP
Water Regional Strategic
Action Plan:
RSAP3
Climate change
adaptation strategy
BEFORE
Inefficient existing
infrastructure
ICP inputs
Internaional Cooperating Partners (ICP)
coordination via WSRG
Infrastructure Facilitation and Provision
Capacity and knowledge
development
Macro
(Regional)
(OPI 1.1)
Meso
(RBO)
Local /
National
Medium-Large Infrastructure
Information,
generationa
management and
communication
Figure 7
Risk 7
Project submission by SADC and SADC
Member States
(OPIs 2.1)
Water
Management
.
Water
Policy
Figure 7
Risk 3
Small scale measures
and infrastructure
Project
Approval
Completion of feasibility
studies
Public- Private
Partnerships
(OPI 1.3)
RBOs established/
strengthened (OPI
1.2)
Completion of
feasibility and
design studies
(OPI 3.2))
Transaction adviser
engages with potential
financers
Figure 7
Risk 6
Gender mainstreaming
Adaptive capacity / climate resilience strengthened
PROGRAMME INPUTS
Figure 7
Risk 2
Financing
secured (OPI 2.3)
Evidence
base
enhanced
Figure 7
Risk 5
Figure 7
Risk 4
Transboundary Water
Management
Infrastructure Secured
(OUTPUT 2)
Capacity and knowledge
development
(OUTPUT 1)
Small scale Climate
resilient infrastructure
implemented
(OUTPUT 3)
(OPI 3.1 and 3.3)
Improved levels of
development and
functioning
of infrastructure
Use of quality
information and
guidance by decisionmakers
Water resources better available to
meet forecast demand
(OCI 2)
AFTER
Effective Governance
Frameworks fully
established
(OCI 4)
Climate change
resilience
(OCI 1)
Increased investment in
SADC water sector (OCI
6 & II 3)
Figure 7
Risk 1
Trust and Partnership
enhanced
(OCI 3)
Gender
mainstreamed
(OCI 5)
Table 4.
Assump. 1
Table 4.
Assump. 2
Key
II - Impact indicator
OCI - outcome indicator
OPI - output indicator
Peaceful and climate resilient management of shared water resources in SADC for the benefit of poor
people (OUTCOME)
Sustainable access
to water
(II 1)
Regional Integration
/
co-operation
(II 3 and II 4)
Food security e.g.
irrigation and
agriculture (II 2)
Key to shapes
Document
Input
Assumption / risk
Process
Data
Decision
Poverty Reduction and Regional economic growth
Figure 4: Theory of Change : SADC Water-RSAP 3 support design logic
(Original high quality image attached as separate excel file)
1. Option identification
The SADC Regional Water Policy was designed to provide a framework for the sustainable, integrated
and coordinated development of national and transboundary water resources through its nine thematic
areas. The RSAP 3 (2011-2015) continues to guide implementation of the policy, with its goal to
strengthen the enabling environment for regional water resources governance, management and
development through the application of integrated water resources management (IWRM) at all levels.
The IWRM pillars of water governance, water management and infrastructure development led this
Business Case to the three options selected as the most appropriate for appraisal.
The RSAP is the mechanism adopted by SADC Member States for implementing their regional water
policy and strategy; and incorporates the recently approved Climate Change Adaptation Strategy for
the SADC water sector. There is no alternative broad-reaching regional plan with such a level of
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political mandate and endorsement. Reviews of its first two phases (RSAP1 and RSAP2) have shown
satisfactory progress with implementation.
RSAP3 identifies 15 programmes with priority interventions under each programme. There are a total
of 70 priority interventions – approximately 5 per programme. These interventions fall into local and
national level activities, and cover water policy, water management, and infrastructure development
issues.
Table 5 summarises the potential options available and considered to develop a third phase of actions
to support RSAP3. The three feasible options are incremental rather than substitutional in character.
The incremental approach was taken given the inter-related nature of constituent elements, all of
which are required to address the problems identified in the Strategic Case. A do-nothing scenario
was also considered (see end of section). Various delivery mechanisms were also considered within
main options (see commercial and procurement cases). Feasible options were developed and tested
through a mix of quantitative (CBA/economic) and qualitative (political, institutional, social,
environmental/climate change) and feasible delivery appraisal criteria (Table 6).
Table 5: Feasible Options Matrix
Option
Title
1
Capacity Building
2
Augmented Capacity
Building
3
Full Implementation
4
No DFID support
(Counterfactual)
Description
Building the institutional capacity
of SADC Secretariat, River
Basing Organisations and
communities to implement the
RASP 3 through Integrated
Water Resources Management
(IWRM).
Capacity Building + Infrastructure
Project Preparation/Transaction
Support
Capacity Building + Infrastructure
Project Preparation/Transaction
Support + Infrastructure Delivery
Capacity Building terminated at
end of 2011
Output Combination
Output 1
Outputs 1+2
Outputs 1+2+3
-
Option 1 looked at just Output 1 objectives –Capacity Building at regional, RBO and national levels.
RSAP3 Capacity Building comprises a complex array of activities, with GIZ, GWP and UNDP identified
as implementers of various activities.
Option 2 provides Improved Infrastructure Project Preparation and Transaction Support, coupled with
Output 1. Within this option consideration was also given to the re-balancing and enhancing of GIZ
activities, the allocation of resources to the African Development Bank (IPPF), the creation of a
Special Purpose vehicle in DBSA, or the resourcing of DBSA PPDF. Infrastructure support without
further enhancement of the enabling environment (via Output 1) was not considered viable. Without
improved understanding and skill sets, it was believed that large-scale infrastructure investments
would prove exceptionally challenging, expensive and inefficient to deliver.
Finally, Option 3 offers (through Output 3) additional direct implementation of smaller-scale climate
resilient infrastructure, in combination with outputs 1 and 2.
Further detail on the outputs contributing to these options is presented below.
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Detail on component Outputs
Output 1: Capacity and climate change knowledge to manage transboundary water at regional,
river basin and local level is improved (GIZ Implementation/SADC Water co-ordination)
Key RSAP 3 areas that would receive capacity building support include the development of RBOs,
awareness and communication, research and education, stakeholder participation and regional
instrument support (monitoring of Protocols, harmonisation of regulations and approaches,
development of climate change adaptation strategy).
As a strategic plan, the RSAP needs to be dynamic. While the RSAP 3 goals and objectives should
not change over time, the projects and interventions identified at this stage should remain flexible and
adjusted as the context changes and results are achieved. The interventions to be implemented at
any time will also depend on the funds available.
GIZ has been identified as a strong agency to channel the funds through for capacity building. GIZ has
already received funding from DFID and is currently being supported by other bilateral donors. Other
agencies like the Global Water Partnership (GWP) and the UNDP (the latter specifically for gender
mainstreaming) may be contracted to support specific areas as per their comparative advantage.
Output 2: Transboundary Water Management Infrastructure projects prepared and financing
secured (Projects Prepared and Transactions Supported)
This proposes to use an established Financing Institution (Development Bank of South Africa - DBSA),
providing sufficient resource to develop 2-3 large (tens of £m) transactions to financial closure. It also
aims to set up a scheme and framework for receiving additional resources (from multiple sources)
should they become available in the future. Overall risk would be mitigated by limiting the initial
contribution and through DBSA’s management and scrutiny mechanisms.
Scope of activities under the DBSA Project Preparation and Development Facility (PPDF)67
The activities eligible for financing under the PPDF facility are: pre-feasibility and feasibility studies,
design finalisation, finance negotiation and arrangement, other advisory services, environmental and
social impact assessment as well as any other activity of an advisory, technical or operational nature
related to preparation of projects. See table below for more detail.
Table 7: PPDF Services
Pre-investment Activities: The activities cover provision of technical advice and assistance in analysing
projects, including preparation of project proposals, review and revision of project proposals, environmental
and social impact analyses. Early stage project assessment (pre-feasibility phase) will also be supported if
the project is of regional strategic importance.
Enabling Environment Activities: Enabling environment activities include provision of assistance in
programmes aimed at improving enabling environment for delivery of infrastructure services, namely:
consensus-building for appropriate policy, regulatory and institutional reforms; identification, promotion and
dissemination of best practices in infrastructure development and operations.
Studies: PPDF resources will be applied to undertake the preparation of new studies, pre-feasibility or
feasibility studies, update or additional analysis of existing studies, environmental and social impact
assessments, design studies and other related studies in order to improve on the project quality and enhance
prospects to attract financing for the physical/investment project. The PPDF would also cover baseline data
surveys, preparation of technical specifications and revision of project preparation studies that are considered
to be incomplete or requiring updating.
Advisory Services & Transaction Support: Advisory & transaction services related to infrastructure
development include activities designed to assess key opportunities for private-public partnerships, where
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limited and timely assistance in their preparation and implementation is required. They also include advisory
services on public-private partnership options; including concessions, due diligence activities, finance, capital
markets, project structuring, legal and transaction advice etc.
Technical Assistance: PPDF resources can be applied to promote a participatory approach in project
formulation and design. In this regard, technical assistance and the costs of development and presentation of
workshops, seminars and conferences involving stakeholders of the targeted project would qualify for
assistance under the facility. PPDF grants would also be applied to other unforeseen preparatory activities
unique to the targeted project, provided that sufficient justification is made to the satisfaction of the PPDF.
Capacity Building: PPDF resources may also be applied to support targeted capacity building of SADC
Member States and Specialised Infrastructure Development Institutions, specifically in connection with
activities mentioned. Capacity building initiatives of a general nature (i.e. those not linked to identified
projects, processes, and activities) would not be supported by the facility, but can be referred to service
providers operating under Output 1.
Output 3: Small scale climate resilient water infrastructure implemented
(Climate Resilient Infrastructure Delivery Facility – CRIDF)
An internationally tendered consortium of infrastructure and other specialist skills would provide
assistance to SADC Member States, designing, managing and supervising the development of local
skills and contractors to build smaller-scale climate-resistant infrastructure at the 1-3 year and £1-6M
cost scale.
The kind of small to medium scale projects envisaged for delivery include:




Coastal zone protection: sea dikes, river dikes.
Water supply infrastructure (for household, agricultural and industrial use) for areas suffering
drought or saline intrusion.
Sanitation provision (with appropriate health and hygiene education).
Riverine protection such as dikes and dams to prevent flooding and adapt to variability in
runoff.
Overall, the focus would be on ‘no regrets’ or ‘low regrets’ options - investments that are robust under
most climate scenarios until better information is available.
Project selection criteria & sustainability
The starting point will be the 66 priority projects identified for the infrastructure conference in Maseru in
September 2011. Projects would have to be proposed by a SADC Member State, RBO or SADC
themselves. There may be projects being identified and developed through other ICPs work – USAID
in Okavango, African Development Bank in Ruvuma, Save and Busi, GWP work on Climate, Water
and Development Programme in Africa in Limpopo basin through DFID central funding and in other
basins funded by this programme. These could also be considered as long as they were put forward
by a SADC Member State, RBO or SADC.
Criteria for selection will be developed by the CRIDF (in association with the World Bank so that the
criteria can also be used to mobilise WB funds). Example criteria would be: design and implementation
can be under actual implementation before March 2015; the transboundary nature of project (and no
objection from other riparian countries in the basin); climate resilience (see next sub-section); and a
commitment from institutions of a SADC Member State to take over operation, maintenance and
management together with some proof that a budget for this has been allocated or will be allocated.
Accepted standard due diligence would apply (economic (CBA), environmental, social, gender,
technical etc).
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Climate resilience68
One of the key criteria for project selection would be climate resilience. Given this there will have to be
some kind of screening – exactly what this is and how rigorous it is will be decided through programme
implementation and stakeholder consultation. Tools exist for climate risk management, screening and
vulnerability (especially in the WASH sector) but these are in their pilot stages and it remains to be
seen how effective these are in practice. The CRIDF will review tools such as ADAPT and ORCHID
for climate risk screening, financial screening tools (these will be used anyway as part of the CBA /
economic analysis) and vulnerability assessment tools such as the Water Economy for Livelihoods
Approach (WELS) and water safety plans.
Option 4: DFID support finishes at the end of 2011
A do nothing scenario was considered – essentially to stop DFID funding and exit at end of 2011. Not
all progress would cease, particularly in relation to general capacity building - other partners would still
continue with some support at reduced scale and pace. However, there would be a risk of a domino
effect as a result of perception of withdrawal due to poor GIZ performance or a lack of confidence in
SADC Water Division (when recent evaluation does not support that conclusion).
B. Assessing the strength of the evidence base for each feasible option
In Table 8 below the quality of evidence for each option is rated as either Strong, Medium or Limited
Table 8: Quality of evidence
Option
1
2
3
Evidence rating
Strong
Limited
Medium
Option 1 (Capacity Building)
The evidence regarding the effectiveness of capacity-building interventions – both in the water sector
and beyond it – is very robust.69 It demonstrates that the effectiveness of interventions has been
variable. This is partly related to the complexity and multifaceted nature governance in general, and of
water resource management in particular, where success is slow to manifest and attribution is difficult,
limiting the incentives for high performance by both institutions and individuals.70 Empirical case
studies of capacity building and water management reveal explicit constraints (including limited
finances, human resources, equipment, data, and issues of co-ordination and process); and tacit
constraints (including issues of power, authority and legitimacy, such as unresolved mandate overlap,
low political will and confused sovereignty; issues of integrity, motivation; and low institutional
incentives and accountability).71 Countering the latter can be especially hard, underlying the World
Bank finding that only ‘half of all projects that aimed to strengthen local capacity and 2/5 of all projects
that supported institutional reforms were successful.’72
However, evidence from the previous phase of our intervention, (Annual Reviews, scoring 2, 1, 1 over
the life of the programme) demonstrates the programme has indeed succeeded in addressing capacity
constraints and institutional reform in-the-round. The reviews note the range of contributions the
programme has made towards the development of RSAP III – the policy agreement negotiated by
SADC WD and agreed by SADC ministers which acts as a framework to guide member states’ and
partners’ approach to transboundary waters in the region for the next 5 years. This includes
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communicating the success of the previous RSAP; building support for RSAP III from member states
and donors; generating the evidence-base for the policy; supporting drafting; and working with SADC
WD to ensure key priorities – on climate change, gender – are integrated into the document. Taken as
a whole, the latest AR concludes it is unlikely that RSAP III would have been developed without
support from the programme. The RSAP 3 product is assessed to be addressing tacit constraints on
capacity, clearly setting out the respective mandates of SADC, RBOs, national and local governments.
Through the endorsement by SADC ministers, RSAP 3 also secured an unequivocal statement on the
legitimacy of RBOs and a demonstration of high-level political will behind transboundary water
management. The intermediary role of SADC was shown to overcome political constraints; and
through the small-scale infrastructure component of output 1, the GIZ team were able demonstrate to
potential spoilers immediate-term dividends from engaging in transboundary water management. The
very close relations with between the GIZ team and their SADC counterparts underlies all of the
successes set out in the ARs and above.
The programme has also engaged with shaping the day to day operations of RBOs. It supported
SADC WD to develop and publish guidelines on the function of River Basin Organisations – bodies
formed of experts from all riparian states which, in international best practice, inform and coordinate
policies of their respective governments. Largely through the technical and political support of the
programme, riparians have reached accord regarding the status of water resources in the OrangeSenqu basin, and significant progress has been made towards a similar agreement for the Limpopo.
The programme team leverage SADC’s political influence to overcome the challenges which
development assistance faces in traction River Awareness Kits have been prepared for the Kunene
and Orange-Senqu rivers, ensuring key hydrological data and relevant policies are available to all
interested parties, including the public, addressing poor incentives for performance by boosting
accountability.
In these ways, the previous phase of the programme clearly contributed to the general adherence to
the SADC Transboundary Water Protocol.73
The detailed examination of capacity building interventions – both in the water sector and beyond it –
available in the literature, combined with our own experience of the previous phase, allows a ‘strong’
evidence rating to be allocated to this option.
Option 2 (Capacity Building + large-scale infrastructure)
The absolute need for infrastructure in order to stimulate economic and human development in Africa
has been comprehensively researched and reviewed by the World Bank (endnote for AICD 2008/9) and
the AfDB (endnote PIDA 2010/11).
Nonetheless, donor support to project preparation has not been widespread, so the evidence base for
the effectiveness of this type of intervention is relatively weak.
Whilst the “bankability” of infrastructure projects in SSA has been targeted by various different donorfunded facilities, most of these facilities appear not to have been designed or resourced to respond to
the key challenges of project preparation: (i) the process is more complicated than anticipated; (ii)
more “upstream” preparation is required in SSA, where legal, policy, and regulatory reforms are
needed for PPPs; and (iii) more professional expertise, and far more funding, is required than
anticipated. Existing facilities often have too little grant money, too little expertise, are unable or
unwilling to cooperate on big projects, and often do not have sufficient independence from their host
institutions to consider all implementation options. To restate: a Project Preparation Facility as
envisaged by this Business Case has not been implemented before, meaning evidence is relatively
sparse.
Moreover, only 15 major infrastructure PPPs in SSA have been developed, meaning the evidence
base here is also rather narrow.74 However, the success of PPPs in other regions demonstrates the
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clear potential for expanding this model.
Overall, the strength of evidence for the kind of intervention detailed in option two can only be
described as ‘limited’.
Option 3 (Capacity Building + large-scale infrastructure + small-scale more immediate
infrastructure)
There are instructive examples of more modest preparation facilities that have successfully targeted
client needs.75 They include: (i) DFID’s Nigeria Infrastructure Advisory Facility (NIAF), which has
helped reform Nigeria’s upstream legal-regulatory environment for infrastructure projects, including
PPPs; (ii) the EU’s Infrastructure Projects Facility of the West Balkans (IPF), which funds and
manages downstream project preparation needed to attract financing from EU lenders; and (iii)
USAID’s Municipal Infrastructure Investment Unit (MIIU), which provided transaction assistance and
on-the-job training to South African municipalities, resulting in 45 PPPs and US$900 million in
investment over an 8-year period.
Despite historical low usage of PPPs in SSA’s water sector, several kinds of small-scale projects offer
the possibility of quick wins, because they employ risk-reduction principles now used in other regions:
(i) Utility performance improvement PPPs have already been used in South Africa (and not captured in
the statistics mentioned above). They involve work by private partners to improve non-revenue water
performance or billing and collection results, with compensation coming as a percentage of revenue
savings; (ii) Facility design, construction, and operation PPPs are being developed for waste treatment
facilities and water storage in Egypt and Rwanda. They can be done on a performance basis by
private partners, if the partners are relieved of the commercial risks associated with these facilities.
This is the “PFI approach” used successfully in the UK.; (iii) Improved urban water distribution PPPs
have long been implemented in West Africa via management contracts and leases; (iv) Design, build,
operate irrigation PPPs are being developed in Egypt, Zambia, Malawi, and Ethiopia; and (v) Outputbased aid (OBA) has been used in Kenya to facilitate dozens of micro-PPPs to extend water services
to poor communities in peri-urban areas.
Thus, an evidence score of “Medium” is assigned to this Option 3.
What is the likely impact on climate change and environment for each feasible option?
Table 9 below sets out the potential positive and negative impacts and opportunities of each option
against climate change and environment criteria. 76
Table 9: Impacts and Opportunities
Option
1
2
3
Climate change & environment
risks and impacts, Category (A, B,
C, D)
C
B, A
C, B (but to A overall since Option 3 is
incremental on Option 2)
Climate change and environment
opportunities, Category (A, B, C, D)
A
A - but longer term & mitigation required
A- but longer term & mitigation required
Categorise as A, high potential risk / opportunity; B, medium / manageable potential risk / opportunity; C, low / no risk /
opportunity; or D, core contribution to a multilateral organisation.
Overall Impact Categorisation: Category B in first 3 years. Probably Category A in year 4 onwards
(review status at MTR after year 2).
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Overall Opportunity Categorisation: Category A.
Given the breadth and diverse components of the programme, appraisal of climate and environment
risks and opportunities has been undertaken at output level first, to inform the aggregate assessment
at option level above.
Output 1 (Capacity Built)
Category C/B No/Low Risks – Strong opportunity
What the programme is actually going to deliver through funded activities, and what beneficial
improvements in the enabling environment (in a variety of aspects) may facilitate over a longer (510year) timescale must be taken into account. The balance of evidence strongly indicates that
Capacity Building type interventions are generally low risk (category C). There is the possibility of
some very small minor demonstration infrastructure projects that may be initiated under the framework
of Output 1 (for example minor water supply and water efficiency works). These are certainly of a
manageable scale and risk, and GIZ has applicable due-diligence procedures in such cases.
Output 2 (Pre/Feasibility/Transaction & Implementation of medium/large capital works)
As a demand led facility the specific issues will vary according to factors such as the particular type of
project, stage of project cycle and scale of intervention. The PPDF Category may therefore range
across C/B/A. Category B & A will be subject to additional DBSA EIA/Climate/Environmental
Safeguard processes. Some projects put forward will pose risks so the due diligence process will be
important. With suitable risk management, such investment projects can also yield strong Climatechange environmental opportunities and benefits..
As a larger-scale project moves to implementation and completion, so activities move from low impact
project preparation and transaction support to potentially significant. Any delivery institution that
undertakes detailed design for major capital works will be required to undertake internationally
acceptable safeguard assessments and design in mitigatory measures as a matter of course. At the
mid-term of the programme the situation regarding risk levels of any prioritised projects will be
reviewed to re-confirm appropriate management arrangements are in place.
Output 3 (Small Scale pilot/demonstration & implementation programmes)
Category C/B Impacts – depending on specifics of intervention.
As for output 2, the precise nature of the risks and opportunities will depend on the specifics of the
interventions that are put to the CRIDF facility for funding. Given the small scale nature of the
envisaged interventions the risk are likely to be commensurately lower. Nevertheless, the tendering
and contracting process will be undertaken in a manner to ensure that the winning consortium
commits to applying an appropriate level of environmental and social due diligence. By it is design the
CRIDF will be proactively promoting climate change beneficial projects.
Table 10: CEA Scoring & Evidence Rating
Output
1
2
3
Climate Change &
Environmental Risks
& Impacts, Category
(A,B,C,D)
C/B
C/B/A
C/B
Evidence
Rating
Strong
Limited
Medium
SADC Water-RSAP3 : Business Case - Final
Climate Change &
Environmental
Opportunities,
Category (A,B,C,D)
A
A
A
Evidence
Rating
Strong
Medium
Strong
Page 27 of 62
Table 10 above sets out the CEA score. “Limited” categorisation has been assigned not because
there is not a strong body of evidence over potential impacts/effects from various actions that are
possible, but because the precise actions are a matter for on-going and more detailed implementation
design as the programme proceeds.
In contrast to the variable risks identified, the Climate Change & Environmental opportunities are
universally strong and positive in their potential. Output 1 will make a significant difference to the
quality of the scientific, management and political debate over key decisions that have to be taken in
SADC. Output 2, particularly where hydropower investments result in Carbon emission mitigation,
also has the potential to generate substantial co-benefits. And Output 3 has the ability to yield
relatively immediate climate adaptive solutions of benefit to a range of affected poor people.
Climate and Environment Sensitivity Analysis
Table 11 sets out the Climate and Environment Sensitivity Analysis. There are no issues that are not
predictable and that cannot be addressed through design and implementation.
Table 11: Climate and Environment Sensitivity Analysis
Outputs
Positive Impacts
Negative Impacts
Comment/Mitigation
1. Capacity Built
i. Improved stakeholder
understanding of wide
range of climate &
environmental issues.
-
Capacity building process
overwhelmingly positive in
impact on climate &
environment. Adaptive
preparation strengthened
and rational and better
informed choices made.
ii. Establishment &
strengthening of institutions
& Laws to Protect &
Manage transboundary
water sustainably.
iii. Adaptation to climate
change initiated.
2.Pre/feasibility
&Transactions
completed.
2. Small to Medium –
scale infrastructure
implementation
iv. Some CC mitigation
through lower energy use.
Preparatory work for major
investment & “bankable”
climate adaptation and
climate mitigation projects.
Programme design
envisages mostly climate or
environment neutral or
positive impacts (water and
sanitation; small-scale flood
and drought control
measures; minor irrigation
etc).
Potential for access to
improved and predictable
water resource to result in
greater use – as a result of
minor pilot and
demonstration projects –
e.g. Drinking Water &
Sanitation; commercial &
industrial use.
Variable scarcity of water
resource for consumptive
use. Impact negligible on
water-rich basins, and
reduced in water-scarce
areas by improved IWRM
Case-specific
consequences. In general,
climate and environmental
impact and effect will be no
more than moderate and
manageable when projects
eventually built – 4-10yr
timescales.
Where finance or co-finance
for significant impoundments
for hydropower production, a
full EIA/EA will be required
as part of the project
preparation process and
through normal DBSA due
diligence process.
Growth of human
settlements, demographic
shifts/migration, and
conflict-related
concentrations of people
may be drawn to areas
improved by project
activities.
Where finance or co-finance
for significant impoundments
for hydropower production, a
full EIA/EA will be required
as part of the project
preparation process and
through normal DBSA due
diligence process.
C. What are the costs and benefits of each feasible option?
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This section gives a summary of the results of the economic cost benefit analysis, and methodology. 77
Table 6: Criteria for assessing feasible options
Criterion Description
Political
1.
High political commitment to water is demonstrated by ongoing support at regional level and by riparian states
to the establishment and operationalisation of River Basin Organisations in line with the Protocol on Shared
Watercourses.
Institutional
2.
Strategic relationships, trust and governance mechanisms are strengthened for individuals, organisations and
institutions with responsibility for co-operation in transboundary basins through a better understanding of the
complexities of water resource and climate risk management for development within the SADC water sector
Technical
3.
Additional funding for climate-smart water infrastructure is leveraged and infrastructure at small and mediumscale is underway within 2-4 years.
4.
Good Value for Money is achieved, in terms of economy, efficiency and effectiveness.
Social & Gender
5.
Water management nationally, cross-border and basin-wide is improved to the optimum benefit of relevant
stakeholders and especially women and children and the poorest members of society.
Operational
6.
Robust and internationally-accepted water resource, climate and additional relevant evidence is generated
and used by SADC Water Division and riparian states to inform decision-making on TWM.
Expected resource costs of the intervention – methodology
For the capacity building component, a breakdown of costs was provided by the implementing agents.
For the project preparation and infrastructure delivery components, the cost structures are estimated
based on past experience of similar interventions. The total programme costs - admin and portfolio
funding - are spread across the programme duration (4 years) and discounted using the social
discount rate.
When appropriate the cost effectiveness of measures has been calculated. This involves dividing the
discounted economic costs with associated numbers of beneficiaries (thus factoring in the attribution
of the intervention to the benefits) – so the notional number of benefits that are attributable to the
costs.
Expected benefits of the intervention (all options)
For all the feasible options the incremental benefits were:
a) identified
b) quantified; and when data was available there were
c) valued (or monetised)
The expected benefits described below are incremental benefits, i.e. over and above the
counterfactual.
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a) Identification of benefits
For all options in this intervention, the medium and long term benefits resulting from the interventions
have been identified78 at the impact and outcome level. These are summarised below.
Direct benefits (policy, regulatory and decision-making/resource-allocation benefits)
Option 1 address two of the three pillars: water governance and water management by building the
capacity of SADC Secretariat and river basin organisations to improve governance and management
of water resources within the sector. The focus on option 1 will be to build the institutional and human
resources capacity of river basin organisation to apply the IWRM. Option 1 will have the following two
direct benefits:


Strengthening of the enabling environment for regional water governance; and
Implementation of basin wide planning.
Options 2 and 3 will have option 1 plus other two components on project preparation and financing of
small scale water infrastructure and will focus on the other pillar of the IWRM: infrastructure
development.
The additional direct benefits of options 2 and 3 (over option 1) will be:


Development of bankable infrastructure projects; and
Demonstrating of the positive effects of small water infrastructure pilots.
Other Indirect benefits
To a different degree all three options will generate indirect benefits. As indirect benefits, these are
more difficult to quantify and to attribute to the interventions.
Household level benefits






Greater welfare and better health due to lower incidence of diseases and greater hygiene
Economic gains due to less time spent collecting water (particularly women) due to better
access)
Consumer surplus effects of having more water available (distributional gains to society)
Reduced water bills (distributional gain) due to cheaper piped water rather than costly water
supplies through private providers
Longer term benefits due to greater human capital accumulation, as children spend less time
collecting water and more time at school;
Reduced vulnerability to floods and droughts – effective water management avoids shocks
Economy wide benefits




Gains to industrial and agricultural sector – due to better regional cooperation leading to
more optimal implementation of projects. (There are negative benefits too – associated with
this).
Protection of water resources – investments in managing the water supply and demand
balance can ensure that infrastructure is not over sized compared to optimal needs and can
cost effectively help reduce water resource pollution at the source.
Fewer opportunities for corruption - through better managed institutions, organisations,
systems and processes.
Avoided costs of water shocks due to hydrologic variability (better climate resilience) -
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


Variable hydrology – high rainfall in the north and lower rainfall in the South needs efficient
water management to avoid droughts, - crop yields reduction, costs of imports, famines, food
insecurity. These are non-marginal effects. Empirical evidence from Ethiopia indicates that
the impact of varying rainfalls is significant on crop yields such as: cereals, pulses, oilseeds
and coffee. Fluctuations in cereal yields are extremely high and closely follow the pattern of the
rains. Yields declined by as much as 25% in 1984, 17% in 1994 and 10% in 1997.
Greater energy access both at the household and firm level - greater coordination and
hence greater exploitation of hydro power through the construction of large scale dams, thus
leading to the benefits of greater clean energy access. This has the added co benefits of
carbon mitigation benefits to society. (There are also negative benefits associated with dam
construction, which must be factored in).
Job creation benefits through infrastructure projects – thus reducing unemployment, and
contributing to economic growth.
Better water efficiency conservation, due to the reduction of non-revenue water (leakages).
Environmental benefits
The linkage between well-functioning aquatic and wetland ecosystems and healthy water resources is
increasingly acknowledged. There is growing mutual recognition that the environment is a legitimate
water user and that aquatic ecosystems are the basis of a healthy, sustainable water supply.
Ecosystem services are the benefits people obtain from ecosystems. These include provisioning
services such as food, water, timber, and fibre; regulating services that affect climate, floods, disease,
wastes, and water quality; cultural services that provide recreational, aesthetic, and spiritual benefits;
and supporting services such as soil formation, photosynthesis, and nutrient cycling. The human
species, while buffered against environmental changes by culture and technology, is fundamentally
dependent on the flow of ecosystem services, which are often regional in nature, so must be
addressed with a harmonised and regional approach.
Reductions in conflict
There is significant conflict amongst water users due to exceptional variation in rainwater, and sub
optimal management of this variation, giving rise to inefficiencies in water supply and a mis-match
between supply of water in one country and the demand from downstream beneficiaries in another
country. Cooperation in this regard can reduce the probability of such conflicts caused by the demand
and supply mismatches. This benefit is considered to be quite significant in IWRM interventions. For
example, it has been estimated that the value of the peace dividend for the Kunene water supply
project between Namibia and Angola is 50 – 75 Million US Dollars per year.79
Gender benefits
The focus of the RSAP 3 support programme is to meet the needs of the poor and most vulnerable.
Water access and quality is a particular burden for women and girls in the SADC region80. The explicit
gender mainstreaming focus in this programme will result in approaches and interventions at various
levels (policy, plans and projects) which better address the needs of women and children and reduce
their vulnerability.
At the policy level, whilst the importance of gender is now recognised in RSAO 3, no water sector
specific gender framework has been agreed. This programme will measure development and
implementation of such a gender policy at the outcome level. By year 2 we expect the gender
framework preparation by SADC Water sector to be completed. By year 3 gender mainstreaming will
have been integrated into the institutional framework of TWM in SADC Member States. And by the
end to the programme, SADC WD gender policy will be under implementation; RBO gender strategy
will be in place; and, RSAP infrastructure projects will produce gender disaggregated data.
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In addition, at the institutional level, we are in a position to demand that each organisation receiving
DFID funding – at the regional, river-basin or local level - employs at least 0.1 FTE expert on genderrelated issues in IWRM annually. We will do so if so advised during the approvals process.
At the field level, the programme is likely to benefit women and girls disproportionately. Anticipated
interventions include improving early warning systems – an effective measure to increase disaster
preparedness for women and households across the SADC region. Through the small scale
infrastructure provision women and girls will benefit directly and will enable them to devote more time
to other activities that would result in improved health, education, and productive activities. Planning
processes, training and project selection criteria will promote inclusion. The acquisition of new skills
and involvement in this manner will lead to increased women’s empowerment and improve power
relations.
b) Quantification of benefits
Not all the benefits identified can be quantified and valued. In this cost-benefit analysis, lack of data
and (for some indirect benefits) a lack of direct attribution have been constraints. To avoid potential
erroneous estimations, no benefits have been valued for the capacity building component (option 1).
For the project preparation and infrastructure components, the following benefits have been quantified.
Given that these are a subset of the total benefits likely to occur from the interventions, they are an
underestimate of total benefits:






Health benefits from improved hygiene
Opportunity costs of time spent collecting water
Lifestyle and aesthetic benefits from doubling water intake
Household cost savings due to cheaper water access
Economy wide cost savings due to non-revenue water
Carbon reduction benefits from hydro plants
Methodology used to quantify benefits
Due to the nature of the interventions – demand driven funds for projects yet to be identified - it is not
possible to directly quantify these benefits. Instead, a proxy approach has been used by selecting two
case studies for project preparation in infrastructure development and valuing them directly. The
returns from these case studies were then generalised for the entire fund.
For the project preparation component (Output 2), the Kunene transboundary water project for Angola
and Namibia Phase 1 (2010 to 2012) is taken as an example project81 and a CBA was undertaken for
this. The returns and impacts of this project are considered indicative as the average for projects of its
type for the project preparation component. The results are thus generalised and extrapolated for this
component.
For the infrastructure delivery component (Output 3), the Zambia cross border water and sanitation
suite of projects from SADC annex project selection have been taken as an example of a project
portfolio. The Emfuleni water conservation project was also taken as an example CBA. Both case
studies give rise to similar returns.
For both components there is considerable uncertainty surrounding the types of projects that could be
funded. The two case studies chosen are a narrow subset of the types of projects that could be
funded. Different types of projects are likely to have varying returns, depending on their coverage and
focus. For example, projects that work on irrigation, water storage, water monitoring, and hydro power
generation are likely to have a different emphasis on the benefits. It is difficult to say how much the
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actual benefit-cost ratio is likely to deviate from the ones calculated in the two case studies. However,
returns for the two case studies were calculated conservatively, as a significant proportion of benefits
were not quantified or monetized.
c) Valuation of benefits
In order to value the (indirect) benefits, the following methodologies were used:
Health benefits: To value the health benefits, firstly, the number of beneficiaries is estimated within
the river basins. Next the diseases averted attributable to better water and sanitation are estimated, in
terms of DALYs averted. This is based on empirical evidence taken from OECD. 82 The total DALYs
are calculated, and valued using GDP per capita. These benefits accrue over a 20 year lifespan and
are discounted at a conventional 3%.
Experience shows that constructing water supply and sanitation facilities is not enough to improve
health; sanitation and hygiene promotion must accompany the infrastructure investments to realize
their full potential as a public health intervention83. Improved hygiene (hand washing) and sanitation
(latrines) can have more impact than drinking water quality on health outcomes, specifically reductions
in diarrhoea, parasitic infections, morbidity and mortality, and increases in child growth84. Water supply
and sanitation interventions undertaken under this programme will be accompanied by appropriate
health and hygiene promotion activities.
Opportunity costs of time spent collecting water: Using the population statistics, assumptions are
made on the number of hours spent collecting water per household per year. 85 These time savings
are valued using appropriate wages that could have been earned instead. This valuation takes place
over an average life span of 20 years, discounted at 10%.
Lifestyle and aesthetic benefits from doubling water intake: assumptions are made about the increase
in water consumption due to better access using evidence from Whittington et al. As a portion of these
benefits will accrue to health gains, such double counting is avoided by reducing this value by 50%.
The volumes per household are valued using a local retail tariff86 for water to proxy such welfare gains.
This retail tariff proxies the (unavailable) shadow value of water.
Cost savings due to cheaper water access: to value the transfer to beneficiaries from access relatively
cheap piped water compared to expensive private providers previously, the difference in price is
estimated and used to value the water consumption per household87.
Cost savings due to a reduction in non-revenue water: this measures the reductions in leakages, and
revenues achieved due to this. This is valued by applying the bulk water tariff taken from the project
documents.88
Environmental benefits in the form of carbon reductions from hydroelectric plants – valued using
assumptions on the social cost of carbon, emissions factor, capacity factor.89
Risks and opportunities involved in implementing the intervention
These risks have in part been discussed in Section B, under the Quality of Evidence, but for Option 2
and 3 they are re-stated here for ease of reference.
For Output 2 within option 2 – the project preparation facility, past experience highlights significant
risks. “Bankability” of SSA projects has been targeted by various donor-funded facilities, but most of
these facilities have not been designed or resourced to respond to the key challenges of project
preparation: (i) the process is more complicated than anticipated; (ii) more “upstream” preparation is
required in SSA, where legal, policy, and regulatory reforms are needed for PPPs; and (iii) more
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professional expertise, and far more funding, is often required than anticipated. Existing facilities have
too little grant money, too little expertise, are unable or unwilling to cooperate on big projects, and
often do not have sufficient independence from their host institutions to consider all implementation
options.
For Output 3 within Option 3 – a number of delivery facilities have successfully targeted client needs.
They include: (i) DFID’s Nigeria Infrastructure Advisory Facility (NIAF), which has helped reform
Nigeria’s upstream legal-regulatory environment for infrastructure projects, including PPPs; (ii) the
EU’s Infrastructure Projects Facility of the West Balkans (IPF), which funds and manages downstream
project preparation needed to attract financing from EU lenders; and (iii) USAID’s Municipal
Infrastructure Investment Unit (MIIU), which provided transaction assistance and on-the-job training to
South African municipalities, resulting in 45 PPPs and US$900 million in investment over an 8-year
period.
Results of the cost benefit analyses: Quantification and Valuation
The analysis takes an incremental approach – the options build on each other.
Counterfactual: Capacity building terminated at the end of 2011
For this option, the funding to the GIZ capacity building programme will cease. No costs will be
incurred from 2012. An abated programme will continue with AusAID and BMZ support (unless such
an apparently adverse signal from DFID causes other sponsors to withdraw too). The negative
impacts of limited water resources management will continue:







Weaker institutions in the water division of SADC and the River Basin Organisations;
Lower capacity in the organisations in the form of less training and skills upgrading for key
personnel;
A number of potentially viable infrastructure delivery projects will not be undertaken, resulting
in a substantial reduction in IWRM benefits as described above, and a potentially lower volume
of carbon mitigation in the region;
Due to reduced capacity within the institutions there are likely to be less bankable project
preparation documents, thus reducing investor price signals leading to lower infrastructure
investment and associated benefits
Lower volumes of additional private sector investment leveraged;
Increased constraints on natural resources and ecological heritage including forests,
biodiversity, water catchment areas and water resources, are likely to take place, based on
unsustainable water use. This is likely to lead to increasing the vulnerability of poor
communities to climate variability and climate change;
Fewer reductions in carbon emissions will take place. A lock-in of carbon intensive
technologies could thus be encouraged, accompanied by an increased cost for intervention to
reduce GHG emissions in the future.
Option 1: Capacity building
As mentioned above, quantifying (let alone valuing) with any degree of certainty the direct and indirect
benefits of a programme that aims to build the institutional capacity of river basin organisations is
virtually impossible.
In terms of delivering direct benefits, it is not possible to pin point and directly attribute such benefits to
inputs, because the benefits are tenuously linked to the activities. Significant other activities such as
political will, infrastructure investment throughout the supply chain, appropriate legislation,
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coordination and others must take place to ensure that momentum is created to give rise to benefits.
For this reason, benefits are not likely to materialise quickly.
The immediate benefits are likely to comprise better human capital, better systems and processes
within the RBOs and SADC and national and local institutions of water resources management, which
will accrue within and beyond the timescale of the programme. Benefits of improved water
management in transboundary river basins will, for example, include equitable sharing of water
resources that will ensure water for human consumption, agricultural development, industrial
development and hydropower generation. The household- and economy-wide and environmental
impacts resulting from these benefits will arise later, alongside other interventions that need to take
place.
In isolation, the impact of this programme is hard to calculate. It is useful to document recent Annual
Reviews have been very positive, stating that experience elsewhere indicates that sound water
management generally has direct positive impacts on target groups. In addition, the contribution to
‘peace and security’ is probably and potentially substantial, although hard to measure: Worldwide
experience shows that there are potentially serious negative implications due to the lack of
cooperation (regarding transboundary water resources).
Based on the current status, the
programme’s impact was judged as a 1. The review also states that “The programme is playing a
pivotal role in regional water cooperation. It gained unique trust through its close relationship with
SADC, RBOs, and Member Countries”.
The following table present the costs and the quantification of indirect benefits to households for option
1:
Table 12: Economic options appraisal summary statistics Option 1
Incremental costs
Total Budget (DFID and non DFID)
£25m#
DFID budget
£13.8m
Present value discounted costs
£23m
DFID proportion of funding
54%
Assumed administrative overhead
20%
Assumptions
Number of households indirectly benefiting in total
19m
Number of people indirectly benefiting
95m
Timescale of benefits horizon
20 years, with benefits emerging
in year 6 after project start date
# (Later revisions result in this figure set to £28.9M in Logframe. The same comment applies to Tables 13 and 14.)
In conclusion, there is limited information to conclude whether this option will give rise to high VFM.
Whilst the capacity building is likely to give rise to identified benefits, many other investments, political
changes and other factors will need to be in place to extract maximum VFM.
Option 2: Summary of results for capacity building + project preparation / transaction support
The results analysis is built incrementally on those from option 1. For the project preparation
component, the costs have been estimated from a review of similar initiatives (EEP, NIAFF, DBSA
PPDF). In terms of the benefits, the Namibia and Angola cross border Kunene WatSan project case
study is used as an indicative example, and those results are generalised for the fund.
The results are summarised in table 13. A 4.8% attribution rate is applied for the intervention to the
benefits, based on the average cost contribution of the project preparation documents to the benefits.
A failure rate of 50% of projects is factored in. There are likely to be 200,000 direct household
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beneficiaries for the fund, based on the Kunene case study. A BCR of 2.0 is estimated.
Table 13: Appraisal summary statistics - Option 2 Project Preparation / Transaction Support
component only
Option 2:
DFID Budget allocation £m
Admin overheads proportion
Total budget
Total economic costs (discounted at 10%/yr)
Attribution of entire intervention to benefits
DFID portion of budget for multi- partner intervention
DFID staff allocation (FTE)
Number of beneficiaries
Direct beneficiary households
No. people directly benefiting
Indirect beneficiary households levered
Economic analysis for each option
Net Present Value
Benefit-Cost Ratio
Economic cost per person
Project preparation
£5.0m
20%
£20m
£17.5m
4.8%
26%
20%
200,000
1m
Not quantified
£4.7m
2.0
£267
In terms of cost effectiveness, the cost per person is estimated at £267. Cost effectiveness measures
are often benchmarked against GDP per capita, particularly in the field of health. Unit costs that are
around the GDP per capita mark or lower are considered cost effective. The GDP per capita figure for
the region is £130890. Thus the modelling suggests that this component is cost effective.
The Kunene example does not show any carbon reduction benefits, as it is not a hydro project. In
terms of the SADC project list, most of the regional projects involve hydropower generation. There are
thus likely to be significant benefits in the form of carbon reductions that are not illustrated in the above
cost benefit analysis (for example, as shown by the feasibility studies of the Batoko Gorge91 hydro
power station).
Thus, generalising the Kunene returns for the entire fund is a conservative approach and is likely to
understate the benefits. Hence project preparation fund is likely to offer good VFM, given its
conservative BCR of 2.0.
Option 3: full implementation: capacity building + infrastructure project preparation /
transaction support + infrastructure delivery (quick wins)
The returns for this option build incrementally on options 1 and 2. The two case studies (Zambia water
and sanitation projects92 and Emfuleni water conservation) give rise to very similar Benefit to Cost
Ratios of 2.3 and 2.2 respectively.93 These results are generalised for the entire fund (Table 15).
Table 15: Economic options appraisal summary statistics Option 3
Option 3:
Capacity building
Project preparation
DFID
Budget
allocation £m
Admin overheads
proportion
Total budget
Total economic costs
(discounted at 10%/yr)
£13.8m
£5.0m
Infrastructure
delivery
£18.0m
20%
20%
20%
£25m
£23m
£20m
£17.5m
£18.0 m
£15.5m
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Attribution of entire
intervention to benefits
DFID portion of budget
for multi- partner
intervention
DFID staff allocation
(FTE)
Number of beneficiaries
Direct beneficiary
households
No people directly
benefiting
-
4.8%
100%
54%
25%
100%
50%
20%
20%
Not applicable
200,000
174,000
Key personnel within 1m
institutions – not
quantified
19m
Not quantified
Indirect beneficiary
households levered
Economic analysis for each option
Net Present Value
Benefit-Cost Ratio
Economic cost per
person
£4.7m
2.0
£267
868,750
Not quantified
£18.6m
2.2
£89
The analysis indicates a BCR ranging from 2.0 to 2.2, and cost effectiveness ratios ranging from £89
to £267.
Cost-Benefit Analysis conclusion
Option 3 shows slightly greater BCRs and cost effectiveness than option 2, indicating that it is likely to
offer better VFM. In addition, it has a wider variety of components, thus spreading risk more widely.
It should be noted that all the economic indicators underestimate benefits because they exclude
environmental, carbon mitigation, and peace dividend impacts, in addition to excluding leverage gains
and indirect beneficiaries, which are likely to be significant.
The environmental benefits include flood and drought avoided for decades, for up to 95 million people
living in the SADC continental river basins; agricultural production and economic growth, avoidance of
famine and potential forced migration and conflict are other potential benefits.
The Strategic Case has highlighted the energy demand and deficit that Africa/SADC faces over the
next 2-3 decades, and the long-term bringing on-line of a range of possible hydropower projects
(through PPDF support) will yield very significant benefits in terms of carbon emissions from fossil fuel
energy generation systems. Maximising demand management concomitantly with increasing supply is
also necessary, as is close attention to environmental and social safeguards.
The overarching, and generally underestimated benefit from Option 1 (capacity building) is an
improvement in human development capital and institutional capability. Thus better and more reliable
data production and effective transboundary water management decision-making prospects are
enhanced, as will be supporting political will.
D. What measures can be used to assess Value for Money for the intervention?
To assess the value for money during the programme duration, the following measures needed to be
taken into account for economy, efficiency and effectiveness.
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Economy and efficiency







Administrative overhead to portfolio fund ratio (benchmark of 20%94)
Key cost drivers within the administrative overheads
Ratio of project preparation documents to implementation costs (benchmarked with other facilities)
Degree to which projects achieve bankability
Failure rate of bankable projects (in terms of securing investment funding)
GIZ arrangements for procurement processes
Speed at which inputs are converted to outputs – (measured by time taken for procurement, etc)
Effectiveness






Quantification of benefits as outlined in appraisal, and iterative calculations of NPV, BCR, IRR at
key points during the programme;
Unit cost measures, in terms of cost per person reached;
Unit cost - cost per bankable project documentation
Cost per unit of CO2 saved
Cost per additional cubic meter of water accessed
Cost per DALY avoided
Equity

When collecting data on who benefits from the programme, we will disaggregate the data by
gender and by social economic status. That will inform whether the poor, the disadvantaged and
women are benefitting from the programme.
Many of the above metrics would be undertaken during an impact evaluation at the end of the
programme. The data would not be available earlier in some cases.
The intervention would no longer represent good Value for Money if administrative costs were
escalating significantly. A re-evaluation would be needed if administrative costs were around 40-50%.
VFM would also be compromised if the failure rate of bankable projects was significantly higher than
the predicted 50%.
E. Summary Value for Money Statement for the preferred option
Recommendation
Regarding option 1, in terms of cost economy, the administrative overhead of 20% is reasonable.
The Evaluation of its existing Phase 2 concluded that the use of resources is highly efficient, and that
there are no notable examples of better cost economy within other programmes. In terms of
effectiveness, this is the most difficult item to measure, and its impacts on households, environment,
and economy are highly uncertain and will need wider initiatives and investments to take place in
tandem to be effective.
It is widely acknowledged that institutional performance across the full range of functionalities needed
to achieve water security requires very significant improvement. Improving the capabilities of
government and non-governmental institutions to develop and implement appropriate plans, policies,
decision making frameworks, controls and investments - and to monitor and evaluate their
performance - at local, national and regional/transboundary scales lies at the crux of water security in
SADC. However, the barriers to this performance are many and root causes are often poorly
understood, with politically safe initiatives to ‘build capacity’ masking a range of tacit and systemic
constraints. The World Bank meta-analysis of 1,864 water projects over 11 years (1997-2007) is
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instructive95. Only half of projects that aimed to strengthen local capacity and 2/5ths of projects that
supported institutional reforms were successful. Greater leverage and greater success was achieved
when activities were associated with lending (and presumably tranche-release conditionality), but
overall, weak institutional capability resulted in less effective outcomes.
Option 2 builds on option 1 incrementally. For the project preparation component, in terms of cost
economy, the administrative costs are again 20%, which are considered reasonable. In terms of
efficiency, if projects reach bankability, through this fund, there is scope for them to be implemented,
and this would be an efficient use of funds. However, there are high risks associated with this. In the
past, “bankability” of SSA projects has been targeted by different donor-funded facilities, but most of
these facilities have not been designed or resourced to respond to the key challenges of project
preparation. This intervention specifically aims to overcome these problems.
In terms of effectiveness, the CBA indicates that there is good potential to give rise to good returns; a
conservative BCR of 2.0 has been calculated. In terms of cost effectiveness, this option scores well,
with a cost per person of £367. This is below the regional GDP per capita of £1308, so is deemed as
cost effective.
For option 3, the analysis builds incrementally on option 2. For the infrastructure delivery component,
In terms of cost economy, administrative costs are again a reasonable 20%.
In terms of effectiveness, the infrastructure delivery component shows relatively high benefit to cost
ratios of 2.2. There is also good cost effectiveness, a figure of £89, which is more cost effective than
the project preparation facility.
There are risks associated with infrastructure delivery. The track record of PPPs in the African water
sector is not encouraging, with water PPP investment accounting for less than 1 percent of total
private infrastructure investment in SSA from 2000-09 (via just 15 projects). But many of the smallscale PPP “quick wins” developed in other regions have not yet made an impact in SSA, and the
current GIZ programme support to RSAP is making headway on establishing smaller pilot PPPs. But,
as noted earlier, there are instructive examples of success. Also, the success of infrastructure delivery
facilities such as NIAF, IPF and MIIU should be noted.
For this reason, the Financial Case has proposed a relatively modest initial allocation to largescale project preparation through PPDF. Subject to performance and additional resource
availability, scaled-up contribution would be considered.
The implementation of Output 3 (within option 3), by an international consortium with vested financial
interests in ensuring quality and value for money (since they will be pre-financing interventions from
their own resources and will be subject to external monitoring) is part of the risk mitigation that the
programme design addresses.
To conclude, all three options are recommended on the grounds of value for money. Option 3
offers the highest VFM in terms of economy, efficiency and effectiveness, and is also likely to
have the greatest in-built risk mitigation, and on grounds of operational sustainability and selfreinforcement, transformation and leverage in design. It is presented as the preferred option.
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Commercial Case
Direct procurement
A. Clearly state the procurement/commercial requirements for intervention
Intervention title
Transboundary Water Management in SADC
Sub-project
Capacity development at Macro (Regional), Meso (cross-border) and Micro
(local / national level) (GIZ implementation). 13.8 Million Pounds (including
£1.1M for GWP SA services under their Water, Climate and Development in
Africa programme – contracted via GIZ)
Procurement route Indirect
Sub-project
Gender mainstreaming in transboundary water management (UNDP
implementation). 1.4 Million Pounds (included in £13.8M total, and possibility
of contracting through GIZ financial payment with MoU/Exchange of Letters to
DFIDSA to be explored further by DFID).
Procurement route Indirect
Sub-project
Regional infrastructure project preparation (DBSA). 5 Million Pounds
Procurement route Indirect
Sub-project
Climate Resilient Infrastructure Delivery Facility (CRIDF). 18.2 Million Pounds.
Procurement route Direct
Sub-project
Evaluation (£300,000)
Procurement route Both indirect and direct
The option of providing direct funding to the SADC Secretariat for some or all of these activities was
considered. Recent EC support has led to significant improvements in the SADC Secretariat
processes and systems for planning, financial management, monitoring and evaluation, and human
resource management. An institutional assessment of these systems to be completed before the
end of 2011 is likely to conclude that the Secretariat is now eligible for budget support from the EC 96.
Despite this assessment the new systems are not yet fully tested so direct funding to the SADC
Secretariat at this stage would be a high risk approach and is not recommended. In addition in all
discussions with the SADC Water Division it has been made clear that their perception of their role is
in coordination and facilitation rather than implementation.
The Climate Resilient Infrastructure Delivery Facility (CRIDF) will be contracted directly to an
international multi-disciplinary engineering company or consortium. The use of regional partners in
the consortium will be encouraged. The facility will be hosted by DBSA to ensure synergy with the
project preparation activities under output 2 of the programme. The facility will identify and prioritise
projects, finalise design and ensure capacity development at local level as well as actually
implementing the infrastructure on the ground. Representation in Gaborone will be required. It is
recommended that this be co-located with GIZ in close proximity to SADC Water Division.
Impact evaluation of the programme will be led by an external contractor, who may sub-contract
additional external members of the evaluation group. In the first instance, we intend to procure the
impact evaluation via GIZ under delegated cooperation, subject to confirmation of adequate
measures to ensure that the full independence of the impact evaluation is not compromised (see
M&E section). If such assurance is not achieved, we would procure directly.
Additional discrete
targeted pieces of evaluation analysis may also be procured directly.
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Procurement of these services will be through competitive open tendering according to OJEU
procedures, and selection of contractors will be carried out by the DFID Southern Africa regional
office in Pretoria together with DFID Procurement Department and the SADC Water Division.
B. How does the intervention design use competition to drive commercial advantage
for DFID?
The use of tendering for the procurement of the CRIDF and evaluation services will ensure that
commercial advantage is achieved through competition.
The adjudication of bids and proposals for the CRIDF will primarily be on the basis of ability to
identify, finalise design and implement small scale water infrastructure within the life of the
programme. Adjudication will also take into account the ability of the contractor to provide on the
ground capacity building during the design and implementation of the small scale infrastructure
projects. Adjudication will not be on the basis of cost alone: additional considerations such as
quality, past performance and the ability to provide capacity development will also be considered, in
order to ensure that optimum value for money is obtained.
Impact evaluation will occur after two years and at the end of the programme. For reasons of
continuity the same contractor will ideally be used on each occasion; however this will occur under
separate contracts, with renewed use of the contractor dependent upon adequate previous
performance.
C. How do we expect the market place will respond to this opportunity?
Experience from infrastructure delivery facilities and evaluation services included in other DFID and
EC programmes indicates that internationally there is a sufficient supply base for the delivery of these
components of the programme, and so it is reasonable to expect that there will be an adequate
response to invitations to submit bids or proposals. It is probable that the larger the potential
resource envelope being offered for tender, the larger and potentially more capable will be the
organisations that will be interested in this international competitive tender.
Whilst it is not clear that there is sufficient capacity within the region to provide the services required,
the use of regional companies (perhaps in partnership with one or more international company) will
be explored during the procurement process. Potential benefits of this include:
-
Greater knowledge of the environment in which the programme is implemented
Strengthening of local capacity,
indirect “trickle-down” economic benefits to local economies; and
Reduced costs.
Initial identification of potential contractors will take place through an invitation for expressions of
interest, for which guidelines have been drafted.
D. What are the key cost elements that affect overall price? How is value added and
how will we measure and improve this?
The major cost variables for the CRIDF will be professional fees, although the ability to provide
capacity development at a local level is likely to represent a further factor. Costs for works
contractors and supplies at a local level will not be a major cost variable as it is anticipated that all
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those that bid will incur similar costs in this respect. Addition of value will be ensured through the use
of international engineering companies, and Terms of Reference will provide the framework within
which their performance will be managed. DFID together with the SADC Water Division will select the
contractor on the basis of their ability to deliver value for money, will develop the Terms of Reference,
and will provide quality assurance.
The major cost drivers for evaluation will be professional services. Addition of value to the
programme will be ensured by the use of accredited evaluation contractors with sufficient capacity to
perform the tasks required to a high standard. Terms of Reference will be used to define the
framework (including key performance indicators) within which contractors will be expected to work:
these will provide the benchmark against which satisfactory performance is measured, and payment
will be made upon their fulfilment.
E. What is the intended Procurement Process to support contract award?
Procurement of the CRIDF will take place through a competitive process in which international
engineering companies will be invited to submit their methodology, experts and costs for the
assignment. Previous experience and performance of operating similar facilities be included
amongst the evaluation criteria. The adjudication of submissions will be performed by the DFID
Regional Office for Southern Africa in conjunction with DFID Procurement Department and the SADC
Water Division in order to provide expert support and quality assurance. In addition to cost,
evaluation criteria will include previous performance on operating similar facilities, methodology,
experts proposed and their ability and experience of building capacity at local level during the design
and implementation of infrastructure.
Impact evaluation will also be procured through a competitive tender process which will be open to
contract suppliers, in order to identify the supplier able to deliver this service to a required standard at
lowest cost. Previous performance and knowledge of similar programmes and their context be
included amongst the evaluation criteria.
Both of these procurement processes will comply with DFID standard procurement procedures.
Procurement of the CRIDF should commence immediately on the signing of the agreement and
should be operational within the first six months of the programme.
F. How will contract & supplier performance be managed through the life of the intervention?
Performance management for the CRIDF will be integrated into each element of the contract design
and implementation process. This will include specified milestones (reflecting each stage of the
facilities operation including project selection, design and implementation) at which performance will
be assessed, and payment will be made according to outputs at each of these stages. Management
of the infrastructure implementation facility will be carried out by the DFID regional office for Southern
Africa, in conjunction with the SADC Water Division which will provide technical support. The DFID
ARD Infrastructure Adviser will be consulted over appropriate professional technical advisory
oversight requirements for DFID.
The Programme Management Board (see Management Case) will contribute to the contract design,
implementation plan and performance indicators for the impact evaluation. Satisfactory performance
of the appointed impact evaluation contractor (and eligibility for payment) will be assessed by DFID
Southern Africa and the programme management Board. Provided performance is adequate, the
preferred option will be to use the same contractor for each evaluation, and the prospect of further
work will generate an additional incentive to deliver a high quality product.
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Indirect procurement
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
Output 1:
The complexity and geographic dispersal of the activities under output 1 of the programme exceeds
the capacity of DFID to deliver the interventions directly, and to manage the numerous contracts that
this would require. This output of the programme will therefore be implemented through indirect
procurement to GIZ, UNDP and GWPSA.
Procuring GIZ activities:
Delegated cooperation to GIZ was used for the previous phase of the transboundary water
management programme to SADC. Evaluations have indicated that such an arrangement worked
well for the delivery of the capacity building programme. Using an existing funding mechanism will
enable our support to deliver early results than choosing an alternative route (direct or indirect) which
would require a minimum of six months to set up appropriate management systems and develop a
trusting relationship with SADC Water Division which is key for successful implementation.
Additionally selecting an alternative procurement route would not only mean our funding would be in
direct competition with work undertaken by GIZ (funded by AUSAID) but it would also not offer value
for money for DFID’s resources. Additional DFID staff time would be required in managing strained
relationships caused by having two delivery models operating in the same region trying to achieve
the same objectives.
Approach 1 (preferred):
The indirect procurement of output 1 of the programme to GIZ will be managed through a Delegated
Cooperation agreement. This is considered to be appropriate for the following reasons:
- a tender and contract process is not considered to be viable for the reasons outlined above
- It provides effective means of reducing the management burden to DFID that would be
imposed through the use of commercial contracts
- They enable existing activity by GIZ to be harnessed and expanded through the provision of
additional resources.
Delegated cooperation will additionally deliver value of money through the assets that GIZ will bring
to the programme, which include technical expertise in water policy, capacity development and
transboundary water management, operational capacity in Gaborone, Botswana close to the SADC
Water Division, strong and transparent organisational and financial management processes, and
engagement with key stakeholders at regional, river basin and national / local levels.
Approach 2:
An alternative approach to the utilisation of GIZ would be the indirect procurement of another regional
capacity building organisation. The use of the Global Water Partnership Southern Africa was
specifically investigated in this respect. Whilst potentially GWPSA could offer the complete range of
services required the focus of their work has been at the national / local level; there would be a cost
associated with gearing up so that GWPSA could offer the full range of services to be provided by
GIZ. In addition GWPSA are not located in Gaborone, Botswana close to the SADC Water Division,
and they have not been successfully offering the required services since 2005. This option is
therefore likely to represent poorer value for money than the delegated cooperation with GIZ. This
having been said there is a clear role for GWPSA in the programme relating to capacity development
at the national / local level – this is addressed below.
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Procuring UNDP activities:
Approach 1 (preferred):
A Memorandum of Understanding between GIZ and UNDP will be developed for the component of
the programme to deliver gender mainstreaming in transboundary water management. UNDP have
developed a global proposal on this subject and are seeking GEF funding for this initiative. UNDP
are currently complementing this proposal to take into account the AMCOW policy and strategy for
mainstreaming gender in the water sector in Africa, and focussing a proposal for the SADC region.
The indirect procurement of this component of the programme will be managed by an MoU. This is
considered to be appropriate for the following reasons:
- a tender and contract process is not considered to be viable because of the unequalled
expertise that UNDP have in this area and the proposal that has been developed
- the synergy that will be developed between this component of the programme and the GEF
funded global initiative both of which are managed by UNDP
- It provides effective means of reducing the management burden to DFID that would be
imposed through the use of either commercial contracts or procurement of UNDP input
directly by DFID.
- the assets that UNDP will bring to the programme, which include technical expertise, strong
and transparent organisational and financial management processes, and engagement with
key stakeholders at regional and national level in the SADC region.
Approach 2
An alternative approach for this component of the programme would be for DFID to indirectly procure
the expertise of UNDP through an MOU arrangement. Whilst this approach maintains UNDP
activities, it would also increase the management burden on DFID. It could also lead to weaker
synergies between the GIZ and UNDP activities.
Procuring GWPSA activities:
Approach 1 (preferred)
An Accountable Grant Contract between GIZ and GWPSA will be developed for the component of
the programme to deliver a Water, Climate and Development programme in the SADC region. GWP
have developed a global proposal on this subject (and are seeking central DFID funding for this
initiative). Currently the programme will only cover the Limpopo basin in the SADC region. The
SADC TWM programme will fund the extension of this approach into one or more other shared river
basins in the SADC region. As GWPSA is a not for profit organisation the indirect procurement of
this component of the programme by GIZ will be managed by a grant contract. This is considered to
be appropriate for the following reasons:
- the assets that GWPSA will bring to the programme, which include technical expertise, strong
and transparent organisational and financial management processes, and the country
partnerships they have developed throughout the SADC region.
- using GWPSA for this work will ensure synergies will be developed between this component
of the programme and their wider programme on water, climate and development in Africa
- GIZ contractual ownership of this component will ensure maximum possible synergy with the
overall direction of the programme.
- This arrangement also provides effective means of reducing the management burden to DFID
that would be imposed through contracting GWPSA directly.
Approach 2
An alternative approach for this component of the programme would be for DFID to procure the
service directly from GWPSA. Whilst this approach maintains GWPSA activities, it would also
increase the management burden on DFID. It could also lead to weaker synergies between the GIZ
and GWPSA activities.
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Output 2:
Approach 1 (preferred)
Output 2 of the programme involves the preparation of regional infrastructure projects. SADC have
established a project preparation development fund for this purpose. The SADC Secretariat has
signed a Memorandum of Understanding with the Development Bank of Southern Africa (DBSA) for
“The programme management and provision of corporate services and facilities by the DBSA to the
SADC Secretariat to create operational capacity for project preparation and development facility
(PPDF).” The European Commission and KfW are providing funds for the PPDF through agreements
with the DBSA. Output 2 of the programme will therefore be implemented through indirect
procurement to DBSA. DFID are already providing financial support to project preparation facilities
that are housed in DBSA.
The indirect procurement of output 2 of the programme to DBSA will be managed through a
Memorandum of Understanding. This is considered to be appropriate for the following reasons:
- a tender and contract process is not considered to be viable because SADC have already
assigned the programme management of the PPDF to DBSA
- DFID is buying into an existing arrangement which has well established systems in place to
enable DFID funds to deliver quick results.
- It provides effective means of reducing the management burden to DFID that would be
imposed through the use of commercial contracts
- They enable existing activity under the PPDF to be harnessed and expanded through the
provision of additional resources.
Indirect procurement of output 2 to DBSA will additionally deliver value of money through the assets
that DBSA will bring to the programme, which include technical expertise in project preparation and
project financing, strong and transparent organisational and financial management processes, and
engagement with key stakeholders at regional and national level in the SADC region.
Approach 2
An alternative approach for the delivery of output 2 of the programme would be the establishment of
a new project preparation facility or the use of an existing project preparation facility. This would
have the advantage of having a dedicated facility for this programme. However, it would either entail
the cost of setting up a new facility or mean that a facility that was not dedicated to infrastructure in
the SADC region was being utilised. In addition there are multiplier effects because the PPDF
already has funding from the EC and KfW which means that the overall funds for project preparation
are greater. Additionally more DFID staff time would be required in managing strained relationships
caused by having two delivery models operating in the same region trying to achieve the same
objectives. These options are therefore likely to represent poorer value for money than the indirect
procurement of DBSA.
The potential financial risks of using indirect procurement (as opposed to commercial contracts) will
be mitigated through the use of breakpoints (pauses) to ensure that the services provided are
appropriate and of high quality, and by cross-checking the prices of services against those of similar
inputs in the SADC region and elsewhere.
B. Value for money through procurement
The implementation of the majority of output 1 will be assigned to GIZ through a delegated
cooperation agreement. When placing orders with consulting firms on behalf of clients, GIZ is
contractually obliged to apply the relevant national and European regulations on the award of
contracts and public price law.
UNDP Procurement is based on competitive bidding. DFID has signaled confidence in UNDP
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procurement processes through our core contribution to the organisation.
GWPSA implements its activities through the members of its country partnerships. The procurement
of any services by these members will be governed by their procurement procedures which meets
DFID’s requirements.
The implementation of output 2 will be assigned to DBSA through a Memorandum of Understanding.
A governance structure and operational guidelines have been developed for the PPDF being
operated by DBSA; these have been agreed with the SADC Secretariat. As part of this process,
given DFIDSA runs a number of other programmes through DBSA, we will be looking for
economies of scale and, potentially, a direct DFID/DBSA portfolio relationship. In addition
guidelines for the procurement of services have been developed for the PPDF . These are adapted
from the African Development Bank Rules and Procedures for the Use of Consultants. May 2008
Edition. While the specific rules and procedures to be followed for procuring service providers
depends on the circumstances of the particular case, five main considerations guide the PPDF’s
policy on the selection process:
a) the need for high-quality services,
b) the need for economy and efficiency,
c) the need to give all qualified service providers an opportunity to compete in providing
the services financed by the PPDF,
d) the PPDF’s interest in encouraging the development and use of national and regional
service providers, and
e) the need for transparency in the selection process.
It will be a key priority to ensure that funds for the programme retain a high value for money. All
implementing agencies will be tasked with developing clear guidelines as to evaluating value for
money.
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Financial Case
A. What are the costs, how are they profiled and how will you ensure accurate
forecasting?
The overall disbursement that is possible under the current design is set out in Table 16, in £Millions.
Any “front-loading” of programmes and appropriate accounting processes for DFID will require very
early engagement with potential development partners to set in train the mechanisms that can accept
funds against credible plans or existing disbursements.
Were additional funds available
subsequently, the design could accommodate an increase of £5M to Output 2 (Project
Preparation/transaction support – DBSA/PPDF) and £10M to the Output 3 TA and Capital
expenditure element for Climate Resilient Infrastructure Delivery. This could be managed through
years 2-4. In addition, £300, 000 evaluation funding has been added, to be split between the 3 pillars.
This is shown below as split between three pillars
Table 16: Overall disbursement possibilities under different CBA/VFM option scenarios (£Millions )
Option 1
Option 2
Option 3
Capacity
Capacity
Capacity building, project
building
building +
preparation / transaction
project
support and infrastructure
preparation /
delivery
Transaction
Support
DFID Budget allocation £m (current (2011) total budget envelope of £37m)
Capacity building
13.8
13.8
13.8
Project preparation/trans. Support
5
5
Infrastructure delivery
18.2
Total
13.8
18.2
37
Additionally, £300,000 will made available for evaluation.
Other partners’ anticipated contributions
Component
Capacity building
Project preparation/transaction support
Infrastructure delivery
Other donors extra contribution
Ausaid: £6.35M
GIZ/BMZ: £5.25M
Total: £11.6M
KfW: £4.27M
EC: £10.48M
Total: £14.75M
Although this is not included in the CBA, the World
Bank’s conservative estimate for complementary
fund allocation is US$50M. The TA element of DFID
Output 3 could facilitate targeting and project
preparation for this contribution.
In addition, GIZ’s current work is funded as follows:
BMZ: £5M;
DFID: £2M
AusAid: £1.7M
Total: £8.7M
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Annual disbursements against each output are set out in Table 17 below. The year 1 and 2 figures
represent what is practicable to manage/scale-up for within implementing partners/agents. If
additional adjustments are required, then these can be designed for in year 2.
Table 17: Annual financial flows/disbursements
Implementer
Output Year 1
Year 2
Year 3
1a. GIZ
One
1
2.8
3.5
1b. GWP
One
0.1
0.2
0.4
1c. UNDP
One
0.1
0.3
0.5
2a. DBSA/PPDF
Two
0
1.5
2
3a. CRIDF/TA
Three
0
2
2.5
3b. CRIDF/Capex Three
0
2.5
3.5
4. Evaluation
All
0.1
Sub-Totals £M
1.2
9.3
12.4
Year 4
4
0.4
0.5
1.5
2.5
5.2
0.2
14.1
sub-T £M
11.3
1.1
1.4
5
7
11.2
0.3
37.3
Notes
Appointed by DFIDSA
Sub-contracted via GIZ
MoU with DFIDSA
TF payments
Direct Contract with DFIDSA
Same direct contract
The Deputy Programme Manager will ensure accurate forecasting through developing a strong
working relationship with all GIZ, DBSA, and CRIDF, enabling effective engagement on programme
issues including financial management issues. All delivery institutions will be submitting at least
quarterly financial reports (with provision for monthly reporting if required) and more detailed biannual
financial and narrative progress report which will also include an assessment of risks associated with
delivery. These reports will clearly indicate realistic projection of spend for the current financial year
broken down by quarter on all major budget category lines. DFID will require that delivery institutions
advise DFID in advance of any unexpected potential significant changes in forecasts. The Deputy
Programme Manager will rigorously reconcile these forecasts against (i) relevant data on Aries; (ii)
annual work-plans and budget; (iii) previous quarterly reports; and (iv) previous disbursements and
past spending trend. Any discrepancies will be quickly raised with implementers and necessary
changes to forecasts will be agreed. The Lead Adviser will also be consulted on all financial issues
identified as well as any changes to forecasts on Aries that need to be made.
B. How will it be funded: capital/programme/admin?
The programme will be funded from programme resources, and has been budgeted for in the
Operational Plan for DFIDSA. This will be R-del, although we are looking into options for converting
capital elements of output 2 and 3 to C-del.
There are technically no contingent or actual liabilities. However, if DFID decided not to proceed with
the capacity building primary contract with GIZ, then a managed and measured exit would be
developmentally desirable.
C. How will funds be paid out?
GIZ and DBSA will administer programme funds through an MOU with DFID. Payments to these
institutions will be made in advance on a quarterly or six-monthly basis based upon the liquidity
needs of the programme and satisfactory performance. Issuing funds quarterly in advance will
hamper delivery primarily due to the fact that DBSA and GIZ require funds to be deposited in their
bank account before they are able to commit funds in the form of contracts/agreements for
implementation activities.
Both institutions will pass funds on to other implementing agencies (such as GWP and UNDP)
SADC Water-RSAP3 : Business Case - Final
Page 48 of 62
through similar arrangements or by making payments to sub-contractors on a reimbursable basis.
Payments for directly procured services (CRIDF and impact evaluation) will be made directly to the
service providers in arrears and will be governed by the terms of the relevant contract. It should be
noted that payments for the CRIDF will include pre-financing of small –scale capital works.
The SADC TWM programme will develop and implement an exit strategy. The exit strategy will be
based on the stated goals for each of the programmes, and will highlight lessons learnt as well as
attempts to ensure long-term GHG mitigation activities and sustainable development goals are
continued into the future.
D. What is the assessment of financial risk and fraud?
Overall DFID considers the assessment of financial risk or fraud on the programme to be low.
Implementing partners chosen will all have sound financial management, procurement systems and
internal/external audit mechanisms in place to mitigate against this risk. In addition DFID-SA will keep
track of all audit plans and apply rigour in scrutinising all financial and audit reports. A detailed
analysis of risk is summarised in the table below.
Risk
Financial mismanagement or
fraud within GIZ
Financial mismanagement or
fraud within UNDP
Financial mismanagement or
Fraud with GWP
Financial mismanagement or
Fraud within the DBSA
Analysis and Mitigation
GIZ take their financial management responsibilities very seriously. They are
required to do so as they are BMZ’s respected implementation agency and
have a lot to lose if their reputational risk is damaged by audit criticisms or
allegations of financial mismanagement or fraud. GIZ have excellent
financial and procurement systems in place which meets international
standards. To date, audit reports on DFID’s previous support to the SADC
RSAP reveal no evidence of financial mismanagement or fraud. DFID
therefore considers the risk of financial mismanagement or fraud by GIZ to
be low. DFID will continue to scrutinise audit reports and ensure feedback
mechanisms are in place to ensure GIZ financial controls remain excellent.
UNDP has an institutional strategic relationship with DFD underpinned by a
framework MoU with UNDP New York. UNDP has satisfactory standard UN
financial management, controls and procurement systems in place. To date,
as far as the DFID project team is aware, audit reports on DFID programmes
have revealed no evidence of financial mismanagement or fraud DFID
therefore considers the risk of financial management or fraud to also be low.
To ensure this risk remains low, DFID will rely on GIZ, who have a good
team in Gaborone who have a good track record in contract/grant
management of other institutions including ensuring audits are carried out
and feedback mechanisms in place. DFID will track audits are being carried
out on time.
GWP is the recipient of core finds from DFID HQ and has satisfactory
corporate institutional financial management, control and procurement
systems in place. Audit reports on DFID funded activity reveal no evidence
of financial mismanagement or any fraudulent activity. DFID-SA expects
GWP to continue to demonstrate sound financial management of DFID
resources under this programme. DFID therefore considers the risk of
financial mismanagement or fraud by GWP to be low. Like UNDP, we would
expect GIZ to manage GWP appropriately and scrutinise GWP audit reports
ensuring feedback mechanisms are in place to follow-up on any issue that
may be identified. .
DBSA is a known and respected development bank within the region. DFIDSA has pre-existing MoU and contractual arrangements in place with
DFIDSA. An institutional analysis of DBSA, including financial management
aspects, has been undertaken by the EU in Gaborone prior to allocation
additional co-financing to the PPDF. This confirmed the suitability of DBSA
controls to receive and manage EDF funds. Additionally a recent audit of
SADC Water-RSAP3 : Business Case - Final
Page 49 of 62
Financial mismanagement or
Fraud within CRIDF Output
Financial mismanagement or
Fraud by Service Provider
undertaking Impact
Evalaution.
Delays in approval and
transfer of funds by DFID
and other funding partners
the EEP programme carried out by DBSA’s external auditors, KPMG, has
revealed no evidence of fraud or poor financial practice. These DBSA audits
on DFID funded programmes will take place on an annual basis and will
continue to provide assurances that funds have been spent on their intended
purpose. DFID will ensure all audit issues identified will be promptly acted
upon. DFID therefore considers the risk of financial mismanagement or
fraud by DBSA to be low.
This is probably where the highest risk exists where small-scale
infrastructure projects costing between £1m and £6m will be funded from this
output. The CRIDF will be contracted to a professional company who has a
good track record in managing and implementing similar small-scale
infrastructure facilities. It is envisaged that the professional company will
issue grants/contracts for the infrastructure projects. Financial capacity and
track record will be part of assessment process for selecting implementing
partners. Funds will be released in limited tranches against clear expected
outputs and financial reporting requirements on all infrastructure projects.
External audits will be carried out on a sample of infrastructure projects and
funding will be terminated if any evidence of financial mismanagement or
fraudulent activities is identified or performance targets not met. These
actions should mitigate against any potential risk of financial
mismanagement or fraud. DFID considers the risk here to be low to
medium.
Acceptable fiduciary capacity will be part of the tender assessment process.
Funds will be paid out in instalments against satisfactory progress and
financial reporting. DFID considers the risk of financial mismanagement or
fraud by the Service Provider undertaking Impact evaluation to be low.
This is a serious risk with large consequences on pace of implementation.
Implementing partners, through the supervisory Board if required, will
demand timely action from the donor partners. Donor performance will be on
the ToR of the evaluations.
E. How will expenditure be monitored, reported, and accounted for?
All delivery institutions will be required to submit quarterly/six-monthly financial expenditure reports
along with a narrative report on progress against the annual workplan and budgets. These reports
will clearly show detailed expenditure against approved budget lines. The Deputy Programme
Manager will rigorously reconcile expenditure reports,(as mentioned in Section A of the Financial
Case) against (i) relevant data on Aries; (ii) approved annual workplans and budget; and previous
expenditure reports. Any discrepancies will be quickly raised with implementers and where required
revisions to expenditure reports will be made. By this rigorous reconciliation, DFID will ensure that
no illegitimate or unapproved expenditure will be funded by DFID as well as ensuring that no further
tranches will be made if satisfactory performance is not evidenced by the reports.
In addition all delivery institutions will report to the Programme Management Board who will have
oversight of monitoring project progress including budgetary planning and expenditure execution
against agreed annual workplans and budgets. The Programme Management Board will be
responsible for approving all work programmes.
DFID will also undertake sample visits to project sites or recipients to check on physical progress.
These will be undertaken particularly during annual review missions.
Exit strategy
During the course of the programme DFID will ensure there will be clear, concise and timely
communication to all institutions on exit strategies, although we will address the issue of exit with
particular focus after the midterm review. These communications will help all institutions to predict
funding gaps for future years and plan accordingly.
Audit
The Programme will be subject to regular internal and annual external audit mechanisms defined by
SADC Water-RSAP3 : Business Case - Final
Page 50 of 62
requirements of standard DFID MOUs and Accountable Grants. Where appropriate, these will also
take advantage of audit processes available through partners or SADC or DBSA.
DFID will also commission an external audit on a sample of projects that are funded by the CRIDF.
Organisations benefitting from the CRIDF will have a requirement in their Grant Agreements to
submit annual audited statements.
Budget allocation for audit is within the allocations for each respective output.
SADC Water-RSAP3 : Business Case - Final
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Management Case
A. What are the Management Arrangements for implementing the intervention?
Overall advisory strategic guidance to the programme will be through interaction with the SADC
Water Division at the Water Strategy Reference Group. This group which enables ICP interaction
with the SADC Secretariat and SADC Water Division is part of the institutional framework for the
SADC Water Sector as illustrated below in Figure 5.
Figure 5: SADC Water Management Institutional Structure
Output 1
Management of the majority of Output 1 will be undertaken by GIZ through a Delegated cooperation
Agreement. This agreement will define precisely the roles and responsibilities of all parties in the
management of the output. The GIZ activities under Output 1 will be jointly funded by GIZ (Euro
6,000,000) and AusAid (AUD 12,500,000). Whilst activities related to gender mainstreaming in
transboundary water management will be carried out by UNDP, and activities relating to water,
climate and development in the SADC region will carried-out by GWPSA, GIZ will procure these
inputs on DFID’s behalf, and will assume ultimate responsibility for them.
Output 2
Management of Output 2 will be undertaken by DBSA through a Memorandum of Understanding.
This agreement will define precisely the roles and responsibilities of all parties in the management of
the output. Since PPDF will also receive funds from the EC and KfW, their views will be sought in
defining the MoU.
Output 3
For Output 3 a Consortium will establish and manage the Climate Resilient Infrastructure Delivery
Facility (CRIDF), selected through direct procurement via an international competitive tender. The
facility will be hosted by DBSA to ensure synergy with the project preparation activities under Output
2. Through the contract awarded the roles and responsibilities in the management of the facility will
SADC Water-RSAP3 : Business Case - Final
Page 52 of 62
be clearly defined.
Management entities for respective outputs will have responsibility for successful delivery and robust
technical and financial monitoring, progress assessment and reporting on their output. Six monthly
and annual reports will be produced, with more frequent financial reporting as required. .
Programme Management Board
Although this programme has three areas of activities, it is important that it is managed as ‘one
programme’, where synergies between outputs are exploited. A programme management board will
be established to ensure integration of the various components of the programme to achieve the
overall outcomes and impact. This board will comprise the managers of the different outputs, the
DFID programme manager supported by a DFID lead adviser and a representative of the SADC
Water Division. AusAid has also expressed interest to join the Board; final arrangements regarding
their involvement will be agreed during programme inception during overall finalisation of Board
Terms of Reference. The Board will be co-chaired by DFID and SADC Water Division. The board
will meet at least six monthly and where possible link timing to the WSRG. These meetings will
review the programmes strategy, technical progress and financial status, and discuss and give
approval to annual work plans and budgets. Outcome and Impact level monitoring will be captured
by RSAP M&E, supplemented by analysis commissioned by the Board as necessary.
This structure is detailed in Figure 7.
Figure 6: Programme Management Reporting Lines
Programme
Management
Board
UNDP
GIZ
DBSA
CRIDF
(output 1)
(output 2)
(output 3)
GWP-SA
Management processes and structure within DFID
This programme will be managed by a Deputy Programme Manager based in the DFID Southern
Africa Regional Office in Pretoria, South Africa supported by the regional climate change adviser.
He/she will meet regularly with the managers of each component. There will be approximately 0.3
FTE of DFID advisory input and 0.3 FTE DFID programme management. They will coordinate
component reporting as necessary to meet DFID annual review requirements.
Annual Reviews where possible will draw on the cadre 10% contribution of advisors across DFID and
would seek input from Research and Evidence Division, Infrastructure and private sector
development cardres.
Financial reports, compliance and administrative functions will be managed by the DFID programme
manager.
Summary reports will be provided on an annual basis as required for dissemination purposes,
SADC Water-RSAP3 : Business Case - Final
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including to update the International Climate Fund Board.
B. What are the risks and how these will be managed?
The key risks internal to the programme are:
-
The ability to successfully scale up the capacity building programme of GIZ in line with the
additional funds that a becoming available.
-
The full operationalisation of the PPDF and the ability of SADC / Member States to propose
projects that meet the requirements of the PPDF.
-
The identification of projects the preparation of which can be finalised and projects
implemented within the life of the programme
Within the programme the reporting structures and evaluation are instituted in order to address these
internal risks and ensure sustainability.
The key external risks to the programme are identified in the following Figure 7; mitigation measures
are described and an indication of the impact of these measures is given.
The fact that the
programme is structurally embedded and aligned with RSAPIII, which is the result of extensive
consultation amongst SADC Member States (both on it and related foundational policies and
strategies), gives it a strong base legitimacy. While this is important and provides a mandated
framework to work within, the programme design is also such that it is not overly dependent on
SADC secretariat’s internal capacity (either in technical or financial management terms) nor on the
state of particular SADC-Member State relationships which may vary over time. SADC has an
overall facilitation role which is both appropriate and potentially value-adding but the programme
design provides for (and financial resource distribution emphasises) interaction and support directly
with various River Basin Organisations and also with Member States, which gives a vital flexibility to
help navigate changes in the political landscape and relationships which are bound to occur over the
programme lifetime.
Figure 7: Programme Risks and Mitigation
Risks
1. SADC Political
Consensus
over approach
to water
resource
negotiations
reduces.
a. Regional
b. River Basin
Probability
Impact
(No mitigation)
Regional
Regional
River Basin
River Basin
2. Weak
Individual,
organisational
and Institutional
SADC Water-RSAP3 : Business Case - Final
Impact
(With Mitigation)
Regional
River Basin
Mitigation
Unlikely to be more than
individual Basin-wide.
Output 1 supporting
RSAP3 mitigates against
disagreement between
riparian states. Project
design addresses need to
ratify additional RBO
agreements. Part of
rationale of both outputs
2 and 3 is deliberately to
help build and sustain
political momentum.
Pooled ICP resources
through GIZ provides
coherence to single PoC
for SADC support and
Page 54 of 62
Capacity fails
to deliver.
potential to address
issues. Output 1 supports
capacity building at all
levels.
Expectation and
timescale-management
will be part of Output 2
process. DBSA can be
proactive in identifying
finance.
3. Larger-scale
Project
Preparation
and transaction
support fails to
deliver.
4. “Dead-weight
loss” of Public
Funds when
there is no
funding for
prepared
projects.
5. Medium &
Small-scale
demonstration
and pilot
programmes
not/poorly
implemented.
Programme
Beneficiaries
6. Demand
outstrips
resource
supply.
7. SADCs
infrastructure
prioritisation
project does
not result in the
selection of the
most
appropriate
projects.
Programme
Beneficiaries
Significant reputational
loss issues and threatens
finance supply. A risk to
be considered when
addressing market failure.
Interventions under
Output 2 will be proactive
in identifying finance
This will weaken political
support for SADC Water
protocol & process.
Competent design &
delivery agents will be
appointed under Output 3
to support Output 1
activities.
This situation already
exists – support to the
implementation of RSAP3
mitigates & provides a
platform for additional
resources to be drawn-in.
Does not significantly
impact programme
performance.
Programme will support
infrastructure prioritisation
through both Outputs 1
and 2.
Infrastructure delivery will
be supported through
Output 3.
Key: Red – High. Amber – Medium. Green – Low
Information on the climate change and environmental risks and opportunities are given in the
Appraisal Case section.
C. What conditions apply (for financial aid only)?
Not applicable, as the programme does not involve financial aid to government.
SADC Water-RSAP3 : Business Case - Final
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D. How will progress and results be monitored, measured and evaluated?
The monitoring and evaluation strategy will include a number of components:
1. Monitoring plan. The Programme Management Board will oversee provision of the relevant
monitoring information, in line with the monitoring plan, through annual progress reports from
the agencies responsible for the various components, enabling annual review by DFID,
including progress against all logframe targets. This plan will be based on the detailed
monitoring plan for each of the components, and will prioritise monitoring of the key indicators
in the programme logframe.. Monitoring will as far as possible be incorporated into routine
monitoring being conducted by the institutions/contractors responsible for the outputs, and
integrated into the RSAP3 wide monitoring framework. Utilising and building on the resultsbased M&E system developed by GIZ for its programme, the RSAP3 and for RBOs like
LIMCOM and ORASECOM, a progressively more detailed approach will need to be
undertaken. For example, initially number and nature of projects will be tracked but with
assumptions to estimate number of beneficiaries, but over time implementing agencies will
deepen monitoring and reporting of beneficiaries (including, if appropriate, through sample
based approaches) to ensure a robust basis to report on number of beneficiaries by mid/end
of project. .
2. Output 1 progress and results will be monitored by GIZ. During the second phase of the
Transboundary Water Management in SADC programme GIZ put significant effort into
establishing a results-based monitoring system. While the system still requires significant
refinement, this is already underway and it provides a firm basis to deliver reporting on
progress on indicators for output 1. Transparency is a key theme underpinning the system,
with an Internet-based version shortly to go live. GIZ will be responsible for securing the
required annual progress information from any major sub-contractors – eg GWP and UNDP.
3. Output 2 progress will be monitored by DBSA. The reporting arrangements for the PPDF are
defined in the operational guidelines that have been approved by SADC. DBSA will submit
progress reports on the activities of the PPDF, including applications, projects and programs
financed out of the resources of the PPDF and the status of financed projects. The PPDF will
be audited on an annual basis. The reports shall include the following:
a)
b)
c)
d)
e)
f)
a description of each activity approved since the last progress report;
consultants contracted by the sponsor;
brief description of the progress of on-going activities;
brief description of any proposed activities still under consideration;
a summary, in table form, of all Facility activities;
data on the approval process (e.g. number of requests received and number
approved, time taken to approve, etc);
g) a copy of the final version of each study completed;
h) a statement of cumulative receipts and expenditure; and
i) a statement of used resources of the Facility.
4. Output 3 monitoring will be carried out by the contractor appointed to operate the CRIDF.
Monitoring will be integrated into each element of the contract design and implementation
process. This will include specified milestones (reflecting each stage of the facilities operation
including project selection, design and implementation) at which performance will be
assessed, and payment will be made according to outputs at each of these stages.
5. The current headline targets and results presented in the logframe have been defined to take
into account the demand-led and strong process dimensions to the programme.
SADC Water-RSAP3 : Business Case - Final
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Nevertheless, the results actually achieved will depend on the specific nature of the demand
that ultimately materialises during the programme period, especially in relation to the
infrastructure support elements, where the facilities are deliberately designed to have a level
of flexibility. Moreover it is appropriate that final investment priorities focus where the greatest
gains can be made, and make the most of political momentum and reward evolving
demonstration of strong performance. Expected results may therefore need to be adjusted as
programme implementation proceeds. Any relevant adjustments will be identified through the
annual review process. Logframe adjustments may also be made within programme inception
period (up to 4 months) in order to i) review levels of ambition and identify additional
milestones where possible to reflect the new DFID scoring system ii) address specific residual
definitions and baseline issues (such as relating to improved water supply definition and
outcome 3 upstream notification baseline); and iii) to enhance alignment with headline climate
change indicators for DFID’s Results Framework (expected to be finalised within 1 st quarter
2012). These aspects will all be confirmed by April 2012.
6. The programme will undergo an internal DFID annual review process in each year of the
programme. In addition independent review and evaluation will be undertaken at two key
points: a mid term review and formative evaluation at the end of Year 2, and an evaluation
including assessment of impact at the end of the programme. These will be led by an
independent evaluation consultant (or team), and should include expertise from governance,
civil society organisations and beneficiaries. The mid term review at the end of year 2 will
include:
a. A review of progress against the logframe indicators;
b. A review of the logframe indicators based on the M&E system that is being developed
for RSAP3;
c. Progress with the PPDF in terms of project selection and securing additional financing
from ICPs;
d. An assessment of the risk mitigation plan implementation and a re-assessment of risk
for the remainder of the programme;
e. A review of progress on establishing criteria for the selection of small scale climate
resilient water infrastructure projects, and a discussion with the WB on how these
criteria need to be revised to meet their requirements;
f. A review of progress on the GWPSA Water, Climate and Development programme;
g. Decisions on any reallocations of the funds to ensure efficient and effective spend.
7. In addition, the formative evaluation element at this stage will be designed to learn lessons
around the effectiveness, efficiency and relevance of the programme to date, in order to
inform and improve the implementation of the programme over its final two years. We suggest
external peer scrutiny of the Year 2 review and formative evaluation, with the findings being
incorporated into the implementation of the second half of the programme.
8. An independent evaluation will be undertaken at the end of the programme (and/or possibly
beyond the end of the programme to test longer term impact, subject to separate approval see paraqraph 9). Evaluation questions at this stage will focus on assessing the impact of the
programme’s key components and their sustainability. (Possible evaluation questions include:
What have proven to be key drivers of cooperative management and investment; Do River
Basin Organisations lead to increased investment in transboundary water infrastructure?;
What role have the infrastructure facilities had in increasing infrastructure delivery and in
leveraging investment from various sources?; Has the mainstreaming of gender resulted in
the greater involvement of women in planning and delivery as well as them being
beneficiaries of the programme?; impact on climate resilience? Sustainability of the capacity
built in RBOs through the project?). The final evaluation is also likely to include the other DAC
evaluation criteria assessed during the mid term formative evaluation, depending on the
strength of evidence it has already provided. We will work with programme partners during
SADC Water-RSAP3 : Business Case - Final
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the first six months of the programme to identify the most relevant evaluation questions, and
establish what type of evaluation design would be most appropriate to assess these, in time
to ensure any data needs for evaluation are incorporated into programme monitoring plans. It
will not necessarily be feasible to undertake a rigorous impact evaluation for this project, but
we will explore scope for meaningful control groups.
9. An initial allocation of £300,000 has been made to cover M&E for the programme (just under
1% of total programme costs). This is viewed as a minimum amount required to adequately
cover the planned evaluations and supporting evidence and analysis for this programme. It
includes approximately £60,000 to cover the costs of independent consultant team to lead the
formative evaluation at the end of year two; approx £140,000 to fund an independent
consultant team to lead an evaluation at the end of the programme, including assessment of
impact; and £100,000 to support additional pieces of independent analysis or data collection
to help capture evidence during the programme implementation which is identified as
important to inform programme strategy and the final evaluation/assessment of impact. If a
decision is taken in the first months of the project that rigorous impact evaluation will be
feasible, a separate Business Case will be prepared to request additional funding to cover the
substantially higher costs of this form of evaluation, including any necessary data collection. It
is expected that the additional costs of a rigorous impact evaluation could be up to £2 million
(bringing the M&E cost to around 6% of total programme costs). External audit costs?
10. Governance arrangements: We intend to ask GIZ as implementing agent for the programme
to manage the process of commissioning the mid and end programme independent
evaluations. An Evaluation Reference Group will be set up with representatives from GIZ,
funding partners, SADC and one or two River Basin Organisations. The group will have a
formal role in identifying the evaluation questions, designing and approving terms of
reference, ensuring an appropriate process is followed to select the independent evaluation
team amongst bidders, and will be the body to which the independent evaluation team
reports. If following more detailed discussions in the inception period, it is determined that the
safeguards for independence are insufficient, DFID will contract the evaluations directly (with
the same Evaluation Reference Group).
11. A key element of all the components of the monitoring process is the maintenance /
expansion of the literature / evidence base. This evidence will be disseminated to programme
partners, policy makers and beyond (such as AMCOW, other Regional Economic
Commissions, and associations of River Basin Organisations) to maximise uptake and impact
of the findings and promote transparency. Results will be published through the DFID
website. We believe that through the dissemination of lessons learned on the programme,
and the publication of achievements, the potential for leverage of significant additional cofunding from the ICPs for the implementation of the RSAP will be enhanced.
12. Details of impact, outcome and output indicators are provided in the programme logframe
together with sources, baselines and targets.
.
Logframe
Quest No of Logframe for this intervention: 3374836
SADC Water-RSAP3 : Business Case - Final
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ENDNOTES:
(Note: DFID commissioned 12 background papers to inform our design, which are
referenced below. We have fully incorporated all key findings into the Business Case, which
we intend to be read as a stand-alone document. However, readers in search of additional
information can obtain these background papers documents from DFID SA.)
1
UNEP 2010, Assessment of transboundary freshwater vulnerability in Africa to climate change. UN
Environment Programme.
2 Regional Climate Change Programme: Strategic transboundary Water resources Assessment. Nov
2009.
3 Revised Protocol on Shared Watercourses. SADC. August 2000.
4 The DRC shares the Congo basin with three SADC States (Angola, Tanzania and Zambia) and
many non-SADC countries. Similarly the DRC shares the Nile basin with Tanzania and many nonSADC countries
5 Africa Division Climate Change Strategy - achieving the five wins for Africa. DFID. November 2010.
6 WaterAid 2011, A Global Crisis. Website.
7SADC/EDF 2010. Economic Accounting of Water Use, ACP-EU Water Facility Grant No 9ACP RPR
39 – 90, Project Report.Final Report
8Water for People, 2011. Sanitation Matters, Issue 2, South Africa
9Water and Sanitation Program, 2007. Economic impacts of sanitation in Southeast Asia: summary
report, Hutton G, Rodriguez UE, Napitupulu L, Thang P, Kov P, World Bank.
10 Water for People, 2011. Sanitation Matters, Issue 2, South Africa
11WaterAid, 2005.Turning up the Heat, WaterAid London.
12WHO/UNESCO Joint Monitoring Programme in, AFRICAN DEVELOPMENT BANK, 2009.
Multinational support to SADC Regional Water Supply and Sanitation Programme, Appraisal Report,
May 2009
13 UNEP 2010
14 SADC 2011, Climate Change Adaptation in SADC: A Strategy for the Water Sector, p. 23
15 Extracted from FAO data-set, http://www.fao.org/nr/water/aquastat/irrigationmap/index20.stm
16 ActionAid 2010, Climate change, urban flooding and the rights of the urban poor in Africa.
17 Grey, David, and Claudia Sadoff. 2006a. “The Global Water Challenge: Poverty Growth and
International Relations.” Paper presented at Global Issues Seminar Series, World Bank, Washington,
DC, January 25.
18 Data set available at http://www.fao.org/nr/water/aquastat/data/query/index.html?lang=en
19 SADC 2011, Climate Change Adaptation in SADC: A Strategy for the Water Sector, p. 21
20Woldemichael D T, 2009. Climate change and transboundary water resource conflicts in Africa,
Workshop Report Edited and compiled by Dr DebayTadesse 29–30 September 2009, Mombasa,
Kenya, Institute for Security Studies
21 African Water Development Report 2007, coordinated by UN-ECA, accessed online
http://www.uneca.org/awich/ 12/09/08.
22World Bank 2010.Water and Development. An evaluation of World Bank support, 1997–2007.
IEG/World Bank, Washington DC
23 Africa Recovery, Vol.14#3, October 2000, page 13 (part of Mozambique: Country in Focus)
24 Natural Disasters Economic Loss Index (NDELI) cited Relief Web, accessed at:
http://www.reliefweb.int/node/360386
25 FAO, accessed at: http://www.fao.org/news/story/en/item/50394/icode/
26Wolf, A.T.; Yoffe, S.B. and Giordano, M. 2003. International waters: Identifying basins at risk. Water
Policy 5(1): 29‐ 60.
27Mbaiwa, J. E. (2004) who flags potential for conflict over shared water given increasing demand in
Angola, Botswanna and Namibia
28Wolf, A.T.; Yoffe, S.B. and Giordano, M. 2003. International waters: Identifying basins at risk. Water
Policy 5(1): 29‐ 60.
29Using the Falkenmark Water Stress Indicator
30Hepworth, 2011
31UNDP 2004.Water Governance for Poverty Reduction – Key issues and UNDP response to
Millennium Development Goals, New York.
32ECA, 2006
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Bank 2010.Africa’s Infrastructure: A Time for Transformation. EdsVivien Foster and
Cecilia Briceño-Garmendia. AgenceFrançaise de Développement and the World Bank
34ECA 2006
35 35Blignaut and van Heerden (2009). The impact of water scarcity on economic development
initiatives.Water SA35(4): 415-420.
33AFD/World
36Nyagwambo
37Lindemann,
38
2008
2005; Nyong, 2008
Ibid.
39
40
DFID 24 April 2009 Memorandum on Urbanisation and Poverty to UK International Development
Committee, 53pp.
41 Available at http://waterwiki.net/index.php/River_basin_organizations
42Tilmant, A, and Kinzelbach, W, The cost of noncooperation in international river basins in WATER
RESOURCES RESEARCH, VOL. 48, 2012
‘Capacityis the ability of individuals, institutions and societies to perform functions, solve
problems, and set and achieve objectives in a sustainable manner. Capacity Building is the
process through which the abilities to do so are obtained, strengthened, adapted and
maintained over time.’ UNDP 2006
45Balancing economic, social and environmental aspects for sustainable outcomes, InWEnt 2007
46Woldemichael D T, (ed) 2009. Climate change and transboundary water resource conflicts in
Africa, Workshop Report, 29–30 September 2009, Mombasa, Kenya, Institute for Security Studies
47 AfDB 2009
48Hepworth 2009
49Hepworth 2009
50Centre for Social Accountability, Budget partnership, ShahidiwaMaji 2009
51WORLD COMMISSION ON DAMS, 2000. DAMS AND DEVELOPMENT, A NEW FRAMEWORK
FOR DECISION-MAKING, Earthscan, London and Sterling, VA November 2000
52Briscoe, J, 2005. India’s water economy: Bracing for a Turbulent Future, World Bank,Washington.
53 van Koppen, Barbara, LARGE-SCALE AND SMALL-SCALE INFRASTRUCTURE FOR GROWTH
AND DEVELOPMENT, International Water Management Institute
Southern Africa Regional Program, Pretoria, South Africa
54Keller, Andrew; Sakthivadivel, R.; Seckler, David. 2000. Water scarcity and the role of storage in
development. Colombo Sri Lanka: International Water Management Institute (IWMI), vii, 20p.
(Research report 39).
55 Ibid.
56Falkenmark and Molden 2008; CA (2007) Water for food, water for life: a comprehensive
assessment of water management in agriculture. In: Molden D (ed) IWMI. Earthscan, London, UK
57 Merry and Sally (2008
58Hanjra M, FeredeT,Gutta D G, 2009. Reducing poverty in sub-Saharan Africa through investments
in water and other priorities, Agricultural Water Management 96 (2009) 1062–1070
59HUSSAIN I, GICHUKI F, LOUW A, ANDAH W. 2007. AGRICULTURAL WATER MANAGEMEN:
PATHWAYS TO BREAKING THE POVERTY TRAP: CASE STUDIES OF THE LIMPOPO, NILE AND
VOLTA RIVER BASINS. IRRIGATION AND DRAINAGE, Irrig.and Drain. 56: 277–288 (2007)
44
60Dabrowski,
et al (2009).
Africa Division Climate Change Strategy - achieving the five wins for Africa. DFID. November 2010.
62 Revised Protocol on Shared Watercourses. SADC. August 2000.
63 Regional Water Policy. SADC. 2005.
64 Regional Water Strategy. SADC. 2007.
65 Climate change adaptation in SADC. A strategy for the water sector. SADC. September 2010.
66 RSAP1, 1998-2004. RSAP2, 2005-2010. RSAP3, 2011-2015. SADC.
67 PPDF Operational Guidelines - PPDF Operational guidelines. SADC. July 2010.
68 Climate change, water resources and WASH – a scoping study by Calow, R, Bonsor, H, Jones, L,
O’Meally, S, MacDonald, A, Kaur, N. ODI Working Paper 237. September 2007)
61
SADC Water-RSAP3 : Business Case - Final
Page 60 of 62
69
It includes, for example, a World Bank meta-analysis of 1864 water sector interventions between
1997 – 2007, Parker, Ronald, 2010, An evaluation of World Bank support, 1997-2007: Water and
development, World Bank Group. See also DFID’s Literature and Evidence Review
70 Teskey, G , 2005. Capacity development and State Building: Issues, evidence and implications for
DFID Governance and Social Development Group (www.worldwaterweek.org/); see also Background
Paper 2, Political Economy)
71
Hepworth N 2009,CMS Information and Capacity Building, Multilateral Environmental Agreements
and the Biodiversity Liaison Group.
72 Parker, Ronald, 2010, An evaluation of World Bank support, 1997-2007: Water and development,
World Bank Group.
73 See Background Paper 3
74 See Background Paper 6
75 See Background Paper 6
77
Additional details underpinning the methodology and assumptions are presented in the Final
Design Report, Background Paper 1 (Economic Appraisal).
78 These benefits have been identified using information and evidence from project documents,
Copenhagen Consensus 2008 Challenge Paper: Water and Sanitation
Benefits of investing in Water and Sanitation.
79 Conflict prevention and peace dividends through cooperation on TWM in SADC. Prof Dr Jon Martin
Trondalen. August 2011.
80 http://www.unicef.org/wash/index_womenandgirls.html Water, Sanitation and Hygiene, (UNICEF,
2006).
81 Kunene transboarder project presentation, Kunene. Funding request for replacement of canal by
pipeline.
82 Benefits of investing in Water and Sanitation 2011, also DALY information from WHO.
83
Esrey S, J Potash, L Roberts, C Shiff 1991, Effects of Improved Water Supply and Sanitation on
Ascariasis, Diarrhea, Dracunculiasis, Hookworm Infection, Schistosomiasis, and Trachoma, WHO
Bulletin 69(5):609¨C621.
84
Hutley S, S Morris, V Pisana 1997, Prevention of Diarrhea in Young Children in Developing
Countries, WHO Bulletin 75 (2): 163¨C174
85 Copenhagen Consensus 2008 Challenge Paper: Water and Sanitation; SADC economic valuation
of water methodologies, Water for the Urban poor: water markets household demand and service
preferences in Kenya.
86 Taken from SADC economic valuation of water methodologies; GWP 2010.
87 Whittington D et al, 2008, Copenhagen Consensus 2008 Challenge paper, Water and sanitation.
88 May 2011: Emfuleni water conservation project: development partnership proposal.
89 DECC social cost of carbon, emissions factor and capacity factor taken from DFID Energy,
Environment Partnership draft business case, South Africa.
90 Source: World Bank.
91 Reference: Swaziland regional water infrastructure investment opportunities 2011; pre-conference
workshop update.
92 Water for agriculture and investment development: National investment profile, Zamia Nov 2010.
93 Further details available in background papers.
94 Benchmarks are taken from author’s analysis of challenge funds, DFID Energy, Environment
Partnership draft business case, South Africa; NIAF, PPDF.
95 World Bank 2008, Water and development: An evaluation of World Bank Support to 1,864 water
projects (1997-2007).
96 Verbal communication, European Union Delegation to Botswana.
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Appendix 1: List of Design Report Background Papers
Item
Introduction & Overview
Background Paper 1#
Background Paper 2
Background Paper 3
Background Paper 4
Background Paper 5
Background Paper 6
Background Paper 7
Background Paper 8
Background Paper 9
Background Paper 10
Background Paper 11
Background Paper 12
Background Paper 13
Background Paper 14
Background Paper 15
Background Paper 16
Background Paper 17
Introduction, Background & Summary and
Notes & ToR for service providers.
Economic Appraisal
Political Economy
Institutional Appraisal
Climate Change & Environment Appraisal
Social Development & Gender Appraisal
PPPs for SADC TWM
Regional Integration & Peace Dividend
Literature & Evidence Review and Theory of
Change supplement
Logical Framework
Consultation Record (a) & (b)
Bibliography/References
Maseru Sept 2011 Investment Conference
Background Report
RSAP 3 programme document
GIZ Phase 3 programme
UNDP PIF (gender mainstreaming)
GWP, Water, climate & development: An
African programme
DBSA/SADC PPDF MoU
# Annexes as separate files.
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