Community development fund approach in RWS financing

In order to strengthen the real ownership and leadership of the communities in rural water supply implementation the Community Development Fund (CDF) approach was developed in Rural Water Supply and Environmental Programme in Amhara Region. The purpose of the CDF approach is to create an alternative funding mechanism, which is separate from the conventional governmental funding mechanisms, which are many times slow and bureaucratic and cannot support natural private sector development. In this approach the funds for the water supply construction are not anymore channelled to the implementing Water Office, instead the funds are transferred to the community using private credit institution in fund management. In CDF the community elects an executive body called WATSANCO, which manages the funds, construction and material management as well as the management of the water point after construction. Amhara Credit and Savings Institution (ACSI), a share company, which has branches in each Woreda (District) carries out the fund management with 2% commission only. The CDF project coordination at the Woreda level is carried out by the Woreda Community Development Fund Board (CDFB) having members from government offices and local organizations and private sector. CDF approach in funding will support the decentralization of responsibilities, i.e. initiating and implementing water supply projects by communities and user groups themselves, which will have a significant impact on the ownership issue from the very start. This approach has had enormous impact on the community’s capacity and it has also increased the rural water supply implementation pace. The approach builds the community capacity to take the lead of their own development with other sector development projects as well.