Financing for Community-Level Water Systems in Ghana

Public-Private Partnerships (PPPs) are supposed to provide an effective way to tackle the challenges associated with providing basic water services in rural Ghana. The Capstone project aims to devise a rural water services project within the framework of PPPs that could set an example for similar projects. Drawing on the lessons learned from the study of the legal framework for PPPs in Ghana, two successful experiences - one in Uganda and another in Madagascar - and of models which incorporate both water and solar energy services, the Capstone team proposed a PPP structure and a business model as below.

With respect to the PPP structure, the team proposed a Build-Operate-Transfer structure through which Safe Water Network would be able to ensure capacity building at the local level. The model would be funded by several entities including international donors and private lenders, and would include the incorporation of a special purpose vehicle (or an SPV) for the purpose of the project. After the contracted period, the ownership of the project would be transferred to the local community, who could choose to renew the existing contract with the private operator, or to operate the system on its own.

As for the business model, taking into consideration private operators’ current challenge to recoup initial investments and charge sustainable yet affordable tariffs, the proposed model encompassed additional sources of revenue, such as the installation of private and semi-private connections and the offer of solar energy services to off-grid communities.