Water: a most precious commodity and a basic right

Thousands die every day from the consequences of drinking from tainted sources. We can make a differ

It’s easy to take water for granted. While the current drought in parts of the UK means that some of us are facing temporary restrictions such as hosepipe bans, we all know that when we turn on the tap there will be enough safe, clean water for our daily needs, from drinking to washing and cooking.

In parts of Africa and Asia, the value of water is felt much more deeply.  “Water is everything. Once you have water you have hope for tomorrow,” explains Alice Nirere from Ntarama village, Rwanda, where WaterAid installed a new rainwater harvesting system last year. “Things have changed a lot now we have water near to us; we don’t have to toil anymore.”

At WaterAid, our vision is of a world where everyone has access to safe water, sanitation and hygiene. Over the past seven years, the New Statesman and its subscribers have been helping us step closer to this goal, donating over £25,000 to our work to improve access to these vital services in communities across Africa and Asia. That’s over 1,600 lives changed; from children who are healthy and no longer missing school to women and girls who are able to spend time with their families, get an education or earn a living.

The transformation brought by safe water and toilets is clear to see. In the villages of Ambolotarakely and Manjaka in rural Madagascar, WaterAid is working in partnership with communities to install water points, build latrines and school toilets and set up handwashing facilities. As a result, the villages have seen a huge reduction in diseases related to water and sanitation, and school attendance has shot up. As well as providing clean, safe water to drink, the run-off water from the village water points is used to grow vegetables to sell – an important source of income in an area ranked among the poorest in Madagascar.

Sadly, this example is far from the reality for millions of people in the world’s poorest communities. In fact, a staggering 783 million people are currently living without this most basic necessity. For these communities, finding water is a daily struggle, with women and children spending hours each day walking to collect water from unsafe sources such as streams, ponds and unprotected wells. Along with poor sanitation, this dirty water causes diseases that kill 4,000 children every day.

This can be prevented. Having clean water and toilets available close to home not only saves lives but transforms them too.  It helps communities take the first, essential steps out of poverty. Free from the burdens of illness and hours spent fetching water, time can be spent in more productive ways such as working, taking care of children or going to school. The impact is so huge that for every £1 spent on water and sanitation, £8 is returned in increased productivity (UNDP Human Development Report, 2006).

On a global scale, progress is being made, and earlier this year the UN reported that the Millennium Development Goal (MDG) to halve the proportion of people worldwide living without safe water had been met. While this is undoubtedly a significant achievement, a renewed effort to reach the nearly 800 million still without access to clean water, and the 2.5 billion who have nowhere safe to go to the toilet, remains critical. With current slow rates of progress making the target for providing sanitation one of the most off track MDGs, world leaders need to take action now to tackle this crisis.

The numbers may sound daunting, but a world where everyone has access to safe water to drink is achievable, and could be only a generation away. Universal access to both clean water and adequate sanitation could save the lives of 2.5 million people who die every year from diseases caused by dirty water and the lack of toilets. With the help from supporters such as the New Statesman, we will keep working to make this a reality.

Barbara Frost is Chief Executive of Water Aid

Find out more about WaterAid’s work at www.wateraid.org

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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