A private water firm Aqua for All has launched a fund aimed at facilitating clean water and improved sanitation to populations in underprivileged areas.
The fund dubbed ‘The Challenge Fund’ was unveiled in Nairobi today ostensibly to enhance creditworthiness for small water infrastructure projects to expand and improve water services especially in peri-urban and rural areas.
According to the water trading firm, the Vision of the Fund is pioneering a revenue-based financing model for small-scale water providers in Kenya.
While presiding over the launch, Enginerr Kyengo Kimanthi representing Water, Irrigation and Sanitation Cabinet Secretary Alice Wahome said the fund features a “revenue based loan financing” solution to address the lack of collateral which has been a major hurdle in the water sector
Research shows that only 26.3 million people out of the over 48 million total population of Kenya live within the service areas of regulated water service providers.
The Water Services Regulatory Board (WASREB) report shows a large share of this unserved population lives in peri-urban and rural areas and largely rely on small scale water providers.
From the launch, it emerged that there are over 20,000 small, piped water operators and point sources in the Kenyan market, of which 7,000 are small community-based systems.
However, unlike public water service providers that receive funding for infrastructure expansion and improvement, these small-scale water providers (SSWPs) are often short of capital, which limits their ability to provide reliable services and expand their coverage.
Some of the partners involved in this project include; WASREB, Rural Focus and Smart People Africa while lending partners are Family Bank and Sidian Bank, as at now, meaning many more lenders could come up in support of the initiative.
“A recent study commissioned by Aqua for All revealed that the small-scale water provider market in Kenya presents a viable investment opportunity for domestic lenders to contribute to the goal of universal access. According to the study, about 52.6% of the surveyed small-scale water providers in Nairobi, Nakuru, Makueni, Machakos, Kajiado and Kiambu counties need financing, valued at more than Ksh1.4 billion. However, barriers such as licensing frameworks and the absence of bank-worthy collateral limit their ability to access.” Aqua for All said through a statement.
“By investing in small-scale water providers, we can bridge the access gap to clean and reliable water supply in Kenya and contribute towards achieving the SDG 6 (6.1) goal of universal access.”
Towards this goal, an innovative finance matchmaking platform dubbed ‘FundMyWater’ comes in handy to tackle the financing challenges of small-scale water infrastructure projects in Kenya and aggregates pipeline for lenders.
‘FundMy Water’ leverages technology to make water infrastructure projects fast, collaborative, secure and economically viable for financiers, funders and service providers. The platform enables lenders to connect with a pool of SSWPs and transact efficiently with the technical assistance of transaction advisors via an online deal.
The Challenge Fund aims to help 150 small, piped water providers raise Ksh330 million for micro and small water infrastructure investment projects over the next two years. The Fund will provide new or improved access to water for 200,000 people across Kenya, and build the capacity of two commercial banks to provide cash flow financing products for water investment projects in Kenya.
Kimanthi said the ministry fully supported the initiative noting that 70 per cent of Kenya population should be able to get access to safe and clean water that is readily available and accessible by 2030.