Q&A: Kevin Rudd on creating 'financial cocktails' for WASH

ALICANTE, Spain — The progress dial on Sustainable Development Goal 6 — access to clean water and hygiene for all — is turning very slowly, says Kevin Rudd, former Australian prime minister and high-level chair of Sanitation and Water for All, a partnership focused on galvanizing political leadership and accountability in water, sanitation, and hygiene. Describing WASH as “the poorest of the poor cousins” among the SDGs, Rudd said finance ministers must stop running from sector ministers and start looking at creative financing solutions. This is paramount as financial resources shrink amid the COVID-19 pandemic. Even before the pandemic struck, 80% of low- and middle-income countries said they didn’t have the resources to meet their national WASH targets. But Rudd offered reassurance. “While there is a crunch in public finance, there are still sources of private finance which can be harnessed for these purposes,” he said, adding that "financial cocktails” of public and private finance could provide solutions. To help finance ministers mobilize such solutions and make better use of public funding, SWA released a handbook on public investment in water and sanitation, ahead of a series of virtual meetings it will hold with finance ministers in November and December. The how-to guide aims to open the minds of cash-strapped ministers to other ways of financing sanitation projects, Rudd explained. “That's my principal objective: to make ministers believe that this is a practical, how-to handbook, which they can put on the cabinet table.” --— Kevin Rudd, high-level chair, Sanitation and Water for All Speaking to Devex, Rudd shared thoughts on the need for creative financing and how the development community can support the push for greater investment in WASH. This conversation has been edited for length and clarity. What exactly does the handbook include and how are you hoping it will be used? What I would really like is for it to become the sort of document that a finance minister or a sector minister can pick up and walk into the prime minister's office and say, “this explains to us how we can finance sanitation ... and here are 20 or so practical examples from countries around the world showing us how it has been done.” That's my principal objective: to make ministers believe that this is a practical, how-to handbook, which they can put on the cabinet table and say “hey, look, we can actually do this. We shouldn't just put this in the long-term, too-hard basket" ... My core proposition has been, if there's enough case studies in the water sector about how you can make creative financing options from public finance, development banks, blended finance, not-for-profit, social enterprises, and private sector operations — if we can apply all those models from the water sector to the sanitation sector, given some of its peculiarities, then how can we make that work? At SWA, we have sat down and listened to so many ministers from so many countries over the last several years. This is the practical outcome of that work. When you refer to creative financing options, what might some of those be? For example, it’s entirely conceivable that you can use financial cocktails — both public and private finance — to do local sanitation projects that are within municipalities, in rural areas, or on a larger scale in cities. If that’s not possible, then there are community financing options which are not profit based, but which are effectively run as social enterprises. And then thirdly, there are for-profit sanitation projects that can be delivered. When we scoured the literature and the case studies around the world, it was hard to find effective examples of for-profit sanitation projects, but drawing on the water experience, there are principles that can be applied. The purpose, again, of the handbook is to look at not just theoretically how this could be done, but to provide people with practical examples. Over the next two months, SWA is hosting three regional meetings of finance ministers, in Latin America and the Caribbean, Africa, and Asia-Pacific. What are you hoping will come from those? What we've done in terms of our regular meeting of finance ministers and sector ministers is two things. One is to do everything we can — including with the support of the managing director of the International Monetary Fund as well as the president of the World Bank — to cause finance ministers to conclude that sector ministers are not their enemies, but their friends. That seems a strange thing to say, but if you're a finance minister and you look at sector ministers for WASH, the temptation is to run screaming from the room because you know they're going to come and ask you for big buckets of money. What we're seeking to do is to change the worldview of finance ministers to cause them to conclude that if you crack the nut when it comes to WASH … you provide a major economic turnaround for your country, community, or region by fixing these problems. But there's a second factor as well, [for] finance ministers to conclude that even if we cannot draw on huge quantities of public funds — given the nature of the COVID-induced recession — there are these other creative financing options, which involve blended finance, community-based social enterprises, and for-profit possibilities as well. These are our two objectives, and that's why we are bringing the finance ministers together. Do you think that COVID-19 is helping to make that message resonate, given WASH's importance in fighting the pandemic? There's one further dimension to our argument in the context of the COVID-19 crisis, and it's self-evident: unless you've got water and you've got water attached to sanitation, then the ability to manage basic hygiene — as it relates to washing your hands and other hygiene-related requirements — disappears. Your ability to manage the virus is in direct correlation with the availability of water, fresh drinking water, as well as water for sanitation and general hygiene purposes. So unless we do SDG 6, we can't effectively combat COVID-19. “[Provide us with] additional examples because we intend to make this a rolling, updated digital publication. It's [the handbook] not just a one-off, static piece of work.” --— Kevin Rudd, high-level chair, Sanitation and Water for All How can people outside the political system — the WASH NGOs and professionals — support the work you’re doing? My request to people in the development community would be when they read the handbook if they see any errors in it, that they let the SWA secretariat … know with some constructive criticism. If they see areas in the handbook where they think we could benefit from a whole bunch of examples that we haven't included, I would invite them to provide us immediately with those additional examples because we intend to make this a rolling, updated digital publication. It's not just a one-off, static piece of work. My request to the international community would also be, please help us propagate the handbook to your local, regional, and national governments and in countries where you're working, because our job is to turn the dial as far as progress is measured on SDG 6.