Car project for Drinking Water Supply and Sanitation in Three Divisional Headquarters and Surrounding Rural Areas Appraisal Report

III. PROJECT 
FEASIBILITY 
3.1 
Economic and Financial Performance 
3.1.1
The project has multiple financial and socioeconomic benefits. It will help to 
guarantee drinking water supply to the population of three major towns and nearby villages; 
improve hygiene, sanitation and health; and ensure better profit sharing among economic 
agents (State, companies, sector operators, consumers, etc.) Given its social character and the 

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resources put at its disposal by way of grants and contributions from the beneficiaries, the 
priority objective of the project will be to guarantee financial balance for operators and 
ensure the sustainability of facilities. 
3.1.2
Economic return is measured through benefits that the community derives from 
the supply of drinking water, access to sanitation services, time gained by shortening the 
distance covered and time used to fetch water, creation of direct and indirect jobs, reduction 
in the prevalence of water-borne diseases and improvement in general living conditions. The 
economic rate of return (ERR) which reflects these benefits stands at 22.4%. This rate is 
calculated based on investment and operating costs, income generated from selling water and 
collecting sanitation fees, converted into economic costs and benefits, plus other quantifiable 
benefits represented by: (i) the value of working days generated during the project 
implementation phase; (ii) easing of the strain involved in fetching water in terms of number 
of hours gained and put into more useful purposes; and (iii) savings on the health budget 
owing to the reduction of water-borne diseases. Assuming the opportunity cost of capital is 
12%, the net present value stands at CFAF 4 billion, indicating a significant impact for all 
economic agents, including the beneficiaries. The detailed calculation of the economic rate of 
return is appended to this report.