This synthesis report, commissioned by WaterAid, explores how water and sanitation services are financed at the local level across 15 countries in Africa and Asia. It analyzes five key funding sources—inter-governmental transfers, sector project funds, off-budget funds, local government budgets, and service provider budgets—through a decentralization lens. The study highlights challenges such as limited local control, unpredictable funding, and weak accountability, while also identifying pathways for reform. It emphasizes the need for deeper fiscal decentralization, enhanced local capacity, and better coordination among actors to improve service delivery.

Publicly funded water utilities often struggle to sustain service improvements due to limited resource mobilization. To address this, recent panels led by Michel Camdessus and Angel Gurria have emphasized the need to tap into domestic financial markets. A workshop explored two key financing challenges: raising additional funds and ensuring sustainable service delivery. Discussions focused on utility reforms, creditworthiness, and innovative financing strategies, supported by case studies and a utility readiness survey. Key lessons and follow-up activities are outlined in this paper

In January, 1998 the Ahmedabad Municipal Corporation successfully issued the country’s first municipal bonds without a state guaranty, marking an important milestone in the development of a debt market for urban environmental infrastructure in India. Today, this market now promises to grow rapidly, for over twenty cities and urban authorities have received credit ratings for their own proposed municipal bond issues. For the last three years, the FIRE(D) Project has played a key supporting role in this process, working at national, state and local levels, and with the country’s leading financial institutions and credit rating agencies, to facilitate the development of a municipal bond system. As this system has evolved, new issues have emerged relative to the regulation of local borrowing. This Project Note outlines these issues and recommends a framework for a regulatory system.

Mobilizing domestic funds for urban infrastructure requires creditworthy cities. Formal credit ratings are costly and uncertain, so the PAS Creditworthiness Assessment Framework offers a simpler, data-driven tool for ULBs to self-assess financial and service performance. Tested in 30 cities across 10 states, it helps identify gaps and guide improvements to attract private investment and access municipal finance.

The development of commercially viable infrastructure projects requires the introduction of (at least gradual) tariff reforms and a move toward cost recovery or an efficient pricing regime. Consequently, it is common to find apprehension among elected representatives, academics and bureaucrats when the focus turns to the impact of such projects on the poor. However, significant benefits for the poor may be derived from a commercial orientation. The FIRE(D) Project has worked to explore implementation arrangements that ensure access for low income groups to city-wide systems. This Project Note reviews tariff and subsidy issues, approaches to integrating the needs of low income settlements with city-wide services and policy issues to be addressed in the future.