Cost sharing for capital investment

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The idea is that end users contribute, mostly in kind or labour, to the cost associated to the capital investment. This is seem also as a way to enhance ownership and thus ensuring that service responds to demand.

Accordingly with the BMGF landscaping, this idea is increasingly accepted as best practice and mainstreamed into many national policies, especially in rural sector. Users contribute in cash (paying a connection fee) or kind (labour), mainly for the connection facilies of water systems. It is increasingly also needed for replacement and large repairs. It is recognized that poor would need support through differentiation in contributions.

Examples are mainly found in the water supply. A 1999 report of the Swajal project in UP, India claims that for the first time in India users are paying 10% of the investment cost of water supply.

The NGO Dustha Shasthya Kendra in Dhaka has negotiated with the water authority to locate at least 90 community water points in slum areas, providing improved water to more than 8,000 poor households. Before a site is built, the community signs an agreement with DSK that covers its obligations to run the site and the charges made to recover the costs of the water, maintenance and capital costs. [1].

This approach has high potential to reach also the poorer sections of the community, if properly targeted.