With the help of the consultancy firm Tecnica (Maputo) the Grupo was able to develop an emergency plan to reinforce the embankment over a length of 800 meters. The cost were estimated at US 3.1 million. See: Emergency plan downtown Xai-Xai (2018).
Elements of the financial sustainability of the Xai-Xai masterplan
The masterplan consists of the combination and integration of several related components; improved sanitation, higher availability of fresh water for drinking water and/or irrigation, higher dikes to deal with the 2000 flood levels, pumping stations to drain storm water during to the river, and increase of population of lower Xai-Xai from 4000 inhabitants in 2018 to 100.000 in the near future. More inhabitants at lower Xai-Xai will reduce the pressure and erosion on uphill Xai-Xai at the sandy dunes.
Each of these components of the masterplan are effective and are supported by the local stakeholders. However, it does not indicate yet how to finance the masterplan, once the investments have taken place. How to finance the operation and maintenance (O&M) of the plan? It is obvious that the increase of new habitats will be financed by the owners or by the low cost real estate companies through their rent. However, all the other components have a strong public aspect and will (most likely) not be financed by the private sector. Therefore, the financial sustainability will cover only the maintenance and operational costs. Investments in the Infra-structure are considered a public responsibility.
But how to achieve this financial sustainability? There are basically three possibilities. The (1) local and national government can finance it from their regular budget, those (2) who benefit from the improved services pay for it and last but not least (3) a combination of the two.
The Grupo holds the position that a full payment by the local and national government of all the O&M costs, is risky. The very reason is that maintenance and operational costs are not popular among politicians, all over the world. In times of austerity these costs are the first to be skipped; costs that have a strong social component such as health and food supply will dominate the agenda of politicians and will have priority. It has also quite often shown that a full payment by the government will not increase the involvement of the users, not stimulate the efficient use of resources and might increase the costs.
But how about the full payment for these services by the users? Are all users financially capable of paying for these services?
At present the beneficiaries (water users, land owners and owners of real estates) do – in general - not pay for the services. It is also fair to say that the services are not of high standards at this moment. So why should they pay for services that are unreliable? Part of the challenge is that the services will be brought up to standards; no more waterlogging, protection against floods, availability of more fresh water, less waterborne diseases and less traffic jams and accidents.
But the reality at this moment is that beneficiaries do not pay for these services and therefore, the challenge is how to convince and stimulate the beneficiaries to pay. It is for sure not only an administrative and practical challenge but also a political challenge. Without political support at village and city level it might not work.
The brochure (see: Masterplan Xai-Xai) summarizes the revenues and costs of a possible financial structure in securing the financial sustainability. The revenues have to be calculated on the basis of the annual costs for maintenance and operation. The level of revenues from the beneficiaries is both a financial and political issue. A social policy might result for those in better financial situations to pay more than those in weak financial situations.
#4: The smallholders at left bank of Baixo Limpopo
Preamble