In Ethiopia, despite great attention to water supply, sanitation and hygiene (WASH), there have been numerous problems related to the implementation of WASH projects. One such problem relates to matching funds and utilisation of capital budgets. In the World Bank's Ethiopian Water Supply and Sanitation Project (EWSSP), the Bank covers 85% of the statement of expenditure (SOE) provided to it, using Channel Two (directly through the sector ministry, the Ministry of Water Resources – MoWR). The region is to cover the rest in matching funds (supplied through Channel One – i.e. directly from the Regional Treasury). Benishangul-Gumuz region has been unable to properly hold the 15% matching funds for which it is responsible. Such difficulties can directly and/or indirectly impact utilisation of the donor's funds. Resolving such bottlenecks is a priority in improving sectoral service delivery in Benishangul-Gumuz. This case study examines primary and secondary data to find out what has happened in the allocation of matching funds to the EWSSP in Benishangul-Gumuz, also comparing this with experiences in other regions. It aims to identify factors influencing matching funds allocation and utilisation in the EWSSP and other projects, as well as any recourse measures to be taken.
Recent progress, which involves the setting up of WASH implementation structures and guidelines and the harmonising of financing channels, will undoubtedly improve the performance of the water sector. However, it is necessary to have actual integration of sector bureaus in order to be able to propose alternative solutions for the problem of matching funds. In all regions, there was low integration and a communication barrier between sector bureaus and woredas. This leads to a lack of allocation of funds and finally to an underspending and lack of use of donor funds.
Alemu, E.; Endeshaw, A.; Nemera, G.; Wube, M. Working Paper 10. Matching funds allocation in the Ethiopian Water Supply and Sanitation Project (EWSSP): A case study in Benishangul-Gumuz regional state. RiPPLE Office, Addis Ababa, Ethiopia (2009) 53 pp.