Water has always been used as a liquid metaphor for the concept of money or concepts in the finance industry. This includes financial lingo like, cash flow, liquidity, and frozen assets. Referencing an article on “Money is a lot like water,” it flows all over the planet and everywhere it goes it is useful. To this point, in the 2021 Philippine Water Supply and Sanitation Master Plan (PWSSMP), enabling access to funding and financing is one of the key reform areas identified as a critical part of the roadmap to sustainable access to safe water. There is a dire need for money to flow to make water flow sustainably.
It has been a year now since the Philippines, led by National Economic Development Authority, launched the PSWSSMP. Based on the masterplan, the total investment requirement for the Philippines to reach sustainable access to safe water and sanitation (WSS) by 2030 is P1.07 trillion pesos ($19.45 billion). The average annual appropriation by the Philippine Government for WSS investments is about P6.7 billion. There is an overwhelming finance gap of about P112 B per year.
Within the last five years, landmark legislations were passed in Congress that can enable greater access to finance to solve the water issue for Local Government Units (LGUs) and private SME players in the water sector. They are the Mandanas ruling and the Personal Property Security Act. In 2019, the Supreme Court finalized its ruling that LGUs are entitled to its just share on all national taxes, not just internal revenue taxes. This includes all collections of national taxes in the computation of the base of the just share of the LGUs. This additional source of funding can potentially fill the P1 trillion funding gap.
On the other hand, the Personal Property Security Act (PPSA) was passed in 2018 to update the Chattel Mortgage Act of 1906. The PPSA seeks to increase the confidence of financial institutions to lend based on movable assets as collateral vs. land. It is meant to enable Micro Small Medium Enterprises (MSMEs) to access financing through what they have like receivables, equipment, and others. Financial Institutions in the Philippines mostly require land or hard collateral to lend to MSMEs; however, MSMEs do not have land to serve as collateral. The PPSA provides for central repository of movable assets held as collateral and clear prioritization rules in case of default defining who has a first or priority claim, among others. All these enhancements to the Chattel Mortgage Act are meant to increase financial institutions’ confidence to lend to MSMEs. This includes MSMEs in the water sector.
Years passed and the much-needed operationalization and knowledge of these two enabling laws are still not reaching the right stakeholders and beneficiaries. Without the proper outreach, end beneficiaries like the MSMEs in the water sector, cannot maximize the benefits these laws are enabling, particularly the access to finance.
This is where multilaterals, bilaterals, social enterprises and NGOs can be a good strategic partner to operationalize these enabling laws and policies. These organizations have the mandate to work on various aspects of the sustainable development goals. More specifically, a good number of these organizations have a focus on access to finance and sustainable access to water. These organizations provide technical assistance and expertise to strengthen and operationalize enabling policies.
Sadly, the Philippines lags significantly in bolstering government support and public understanding of social entrepreneurship. So much can be learned from Singapore in how it supports social entrepreneurs and produce the much-needed social impact in its country, which includes solving for the financing of sustainable access to safe water.
The huge financing gap is a clear indicator of how water security should be approached with urgency by both public and private sector. Enabling policies need to move forward and be operationalized so both government and private sector can reap the benefits of increased access to finance. Advocacy for more enabling policies should continue for growth of social enterprises. We can adapt lessons learned from other countries on how to support social enterprises particularly focused on water. Innovation and technology can accelerate the scale for sustainable access to safe water.
Like money, if water is not sustained, nothing will be left to pass on to future generations. In Gandhi’s very words, “The earth, the air, the land, and the water are not an inheritance from our forefathers but on loan from our children. So, we have to handover to them at least as it was handed over to us.”
Gay Santos is the Regional Director for Southeast Asia at Water.org, a global NGO co-founded by Matt Damon and Gary White. She retired from the World Bank Group in 2019 and holds an MBA degree from the Johns Hopkins University in Baltimore, USA. The opinion expressed herein does not necessarily reflect the views of these institutions and the Manila Bulletin.