Universal access to clean and safe drinking water continues to be a global and national challenge. It is estimated that 663 million people worldwide still use unimproved drinking water sources, including unprotected wells, springs and surface water. Nearly half of all people using unimproved drinking water sources live in sub-Saharan Africa (Progress on Sanitation and Drinking Water 2015 Update and MDG Assessment)
In Kenya approximately 45% of the population do not have access to clean and safe drinking water and one of the major constraints contributing to this is inadequate financing for the water sector. The Kenya National Water Master Plan estimates that to meet the goal of achieving universal access to clean and safe water by 2030 approximately KES 1.7 trillion is required. However the Kenyan government can only provide KES 592 billions of this amount leaving a funding shortfall of 1.2 trillion.
Kenya Markets Trust through funding from UK’s Department for International Development (DFID) and Gatsby Africa (GA) has a water strategy and theory of change anchored on stimulating the emergence of alternative and innovative financing mechanisms within the water sector. These include models that tap into private sector financing in the form of commercial financing, blended financing, public private partnerships, equity investments and the capital markets.
One such financing mechanism that KMT has partnered with is the Kenya Pooled Water Fund (KPWF)
Kenya Pooled Water Fund (KPWF)
Kenya Pooled Water Fund is the first initiative under the Kenya Innovative Finance Facility for Water (KIFFWA) that involves the development and financing of bankable proposals for water utilities(WSPs). The concept draws in and combines donor guarantees and local capital markets (bonds issuance) to lend to utilities the required finances at affordable rates. Six utilities i.e. Embu, Thika, Nairobi, Kisumu, Nyeri and Meru, have agreed to fully participate in the 1st round of bond issuance to inject the required financial resources for infrastructure development.
KMT has signed a tripartite agreement with KPWF and its implementing partner SNV to support two out of the six utilities, Thika & Embu, to develop technical designs and complete tender and contract documents that will position them to attract private sector funding through the KPWF bond issuance.
The Kenyan government has demonstrated commitment and willingness to Kenya Pooled Water Fund initiative by allocating a reserve fund of USD 2.5 million under the 2016/2017 budget. Further discussions have been held with the national treasury to allocate an additional USD 2.5 million to the reserve fund under the fiscal year 2017/2018. It is anticipated that KPWF will attract a further USD 35 million funding during its implementation phase.