TOC o “1-3” h z u Introduction. PAGEREF _Toc519778749 h 2Global statistics. PAGEREF _Toc519778750 h 2Water Financing PAGEREF _Toc519778751 h 5Stakeholders. PAGEREF _Toc519778752 h 5Government stakeholders in Kenya. PAGEREF _Toc519778753 h 5Main Sources of Funding. PAGEREF _Toc519778754 h 7Results Based Financing. PAGEREF _Toc519778755 h 8Blending Finance. PAGEREF _Toc519778756 h 9Other Sources of Funding. PAGEREF _Toc519778757 h 10General Challenges and shortcomings of the sources. PAGEREF _Toc519778758 h 12Success Stories. PAGEREF _Toc519778759 h 12REFERENCES. PAGEREF _Toc519778760 h 14
Introduction.Water is such a precious commodity for it is linked to the basic survival of mankind. Almost all activities do need water at some point in time. Water is needed for domestic and industrial or commercial use. For domestic use water is needed for cooking, household chores like cleaning and even sanitation purposes. It can also be used for subsistence agriculture where the products are used for domestic consumption. On the other hand for industrial use water is used for industrial processes as an input e.g. in beverage manufacturing, or by the machines employed in the industries. It is therefore important that water be conserved and used economically. There is also the need of having new water sources while the traditional ones are being conserved. Water is therefore necessary for human existence and sustainability of the ecosystems.

The World Bank is the world’s largest source of multi-lateral funding of financing for water in developing countries. They have identified five priority themes as to where the action is critically needed. The themes:
Sustainability- which simply means that the water resources available today can continue to produce water in the near future. The theme focuses on conserving the available water sources and the need of building and maintaining adequate water infrastructure.

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Inclusion- basically ensures that everyone in the society benefits from the available water. The World Bank strives to ensure that water projects do meet this agenda.
Institutions- these are the formal and informal organizations that are involved in either water production or distribution.
Financing- the theme centers on the need of having new and innovative sources of finance in the water sector.
Resilience- has to do with the management of water resources and the related infrastructure with regards to changes in the environment such as climate variability and extreme weather conditions. It calls for climate and disaster risk consideration and solutions to ease water constraints.

Global statistics.According to The projected demand for water is set to increase to 5.5 cubic kilometers of water by 2020. The graph below shows the projected water demand trend from 1980 to 2030. The units are in cubic kilometers.

Global freshwater use has increased from nearly six-fold from 1900s to 2014 as shown below. This can be attributed to more activities in the agricultural, industrial and municipal uses.

A further analysis of the fresh water use shows that OECD countries use about 20-25% of global fresh water, BRICS (Brazil, Russia, India, China and South Africa) account for 45% while the rest of the world account for 30-33%.

Globally 70% of water is used for agriculture as shown in the graph below;

The graph clearly shows that in Sub-Saharan Africa, South Asia and Middle East ; North Africa agriculture is the most active water user. Agriculture contributes up to 80% of water usage in these areas. Domestic and industrial usage account for very little in the graph above.
The World Bank estimates that about 663 million people in the world lack access to improved water sources. This is confirmed by their survey of about 37 countries in Africa where 82% of governments confirmed that their current sources of financing are not sufficient to meet their national targets for drinking water.
The access to improved water sources worldwide has increased from 76% in 1990 to 91% by 2015. However access in Su-Saharan Africa remains lowest at 40-80% of households. Rural households had a 85% of access to improved water sources while the urban population had a 97% access worldwide. The graph below gives a visual representation of the population that have gained access to improved water sources from 1990-2015.

The SDGs specifically SDG 6 emphasizes on the importance of water as a right and ensuring it is available and sustainable to all. WHO and UNICEF puts it that there are about 2.1 billion who lack access to clean drinking water. Achieving the SDGs will require a scaling up of investment into water production, distribution and ultimately sustainability. There is also the need of emphasizing the value of water in order to channel investments into this critical area.

Sadoff et al (2015) puts the economic losses of water scarcity on a global level at USD 260 billion a year from inadequate water supply and sanitation, USD 120 billion a year from urban property flood damages and USD 94 billion a year from water insecurity to existing irrigators.

Water FinancingThere is currently a gap between the financing and future needs in the water sector. The OECD world water council attributes this to:
Water being an undervalued resource that investors who depend or affect its availability do not properly account for it. Such investors include urban developers or even farmers.

The water service provision is usually underpriced thus leading to poor cost recovery of water investments.

The water infrastructure is usually cost intensive coupled with long payback periods. This discourages private investors leaving the sector for the government solely. Most water projects are designed to last for about 50 years.

Management of water resources do generate a mix of public and private benefits that cannot easily be monetized thereby making it difficult to determine the monetary flows.

There is generally lack of access to analytical tools and data for complex water projects and their track record. This deters investors.

The water projects are often too small and specific making it difficult to have financing models for them.

The financial flows may benefit bankable projects but not the community or the environment thereby raising the question of how to ensure that most beneficial projects from a social perspective attract financing.

The existing business models may fail to support operation and maintenance efficiency.

Stakeholders.In this sector there are different stakeholders involved in the planning, financing and implementation of the projects.
The national and county governments- are involved in the strategic planning of the water resource management through means such as planning for the infrastructure and acting as a middle point in the inter-sectorial coordination. E.g. agriculture and municipal services. The government is also involved in the identification of the sources of financing and/or provision of subsidy. It also sets standards for the drinking and waste water treatment.
Specialized national financial intermediaries-act in between the government and the service providers e.g. development banks and environmental funds. Their main role is to channel money to the borrowers.

Water utilities- mostly founded by the government and can receive funding from internal or foreign sources.

Water associations- act as cooperatives and can be used to develop water and sanitation services for a specific area that is usually lightly populated.

Regulator- a body whose mandate is to ensure that the water services providers both private and public do act in public interest.

Service providers- provide the water services. Can either be public or private.Consumers- ultimate end user and responsible for paying for the services.

Government stakeholders in Kenya.The different government bodies in the water sector include:
Water Appeal Board (WAB) The WAB was established to preside over disputes within the water sector arising from decisions of the MWI, WASREB and the WRMA with respect to the issuance of permits or licences under the Water Act 2002. Its mandate is limited to water sector conflicts and permit/ license issues; other matters are referred to the court system.
Ministry of Water and Irrigation (MWI) MWI is responsible for policy development, sector-wide co-ordination, and overall monitoring and supervision. It is charged with ensuring effective water and sewerage services and promoting the sustainable development of resources for agricultural, commercial, industrial, energy and other uses.
Water Services Regulatory Board (WASREB) The WASREB is responsible for the regulation of water and sewerage services including licensing, quality assurance, and issuance of guidelines for tariffs, prices and disputes resolution. It oversees the implementation of policies and strategies relating to provision of water services. It provides licenses to and monitors the performance of the Water Service Boards (WSBs) and approves the Water Service Providers (WSPs) chosen by those boards.
Water Resources Management Authority (WRMA) The authority is responsible for sustainable management of the Kenya’s water resources. It is responsible for the implementation of policies and overall strategies relating to Water Resources Management (WRM) and for developing guidelines and procedures for the allocation and monitoring of water, water catchment protection and management.
Water Services Boards (WSBs) The WSBs are responsible for the efficient and economical provision of water and sewerage services in their areas of jurisdiction. They implement the directives of WASREB. Their tasks include coordination with WRMA as to WRD and permits, development of facilities (including securing land or entitlements), preparation of business plans, setting performance targets for and monitoring water service delivery and contracting the water service providers (WSP) in their area. In total there are 8 such boards namely: Athi, Tana, Rift Valley, Northern, Lake Victoria North, Lake Victoria South, Coast and Tana-Athi.
National Water Conservation and Pipeline Corporation (NWCPC) NWCPC is a State Corporation established under the state Corporation’s Act with the mandate to operate water supplies on commercial basis in large Municipalities serving urban centers. As such, NWCPC plays an important role as both developer and care taker of water supply systems throughout Kenya.

Water Services Trust Fund (WSTF) WSTF is a State Corporation with the mandate “to assist in financing the provision of water services to areas of Kenya which are without adequate water services”. It acts as a basket fund for mobilizing resources and providing financial assistance towards capital investment costs of and capacity building for providing Water Service and Sanitation (WSS). This includes awareness building and promotion of community management of water services. Its current development partners include SIDA, DANIDA, EU, AfDB, GIZ, KfW and, and the the Finish Embassy.
Investing in water security comprises of a number of activities each with its own characteristics. E.g. constructing a new water plant vs. refurbishing an existing one. The financiers also do have different characteristics such as investment objectives, risk and liquidity needs. The working paper goes on to classify water investments through indicators such as scale (watershed to household), function (water supply or waste management) and operating environment (ownership, governance and regulation). There therefore exists a number of investment vehicles and products that can easily be used to finance the expansion of water services.
They include;
Fixed income categories- they are usually made up of bonds such as project bonds and municipal bonds.

Mixed or hybrid categories- made up of mezzanine finance or subordinated loans.

Equity categories- such as yield companies or direct investment in the infrastructure and public private partnerships (ppp).
However the previous methods of financing do work well in the developed countries. This is due to their strong and robust financial markets whereby the above products do come in as alternative investment products. They give investors an alternative investment option to choose from.

Another reason could be due to availability of funds whereby the financial institutions are have sufficient funds to develop the above products and in case of a shortfall the government comes in and acts as a guarantor.

It is therefore justifiable to say that the previously named products do not work well in Africa due to the small financial markets and also the financial institutions and investors in general do not see them as viable investment products.

The exact information about the performance on water financing is hard to get due to lack of data and adequate information.

Main Sources of Funding.The UN-Water GLAAS report released in 2017 states that currently there are three Ts that act as sources of finance i.e.

Taxes from individuals and businesses.

Transfers such as overseas aid or aid from development partners.

Tariffs paid by the respective households and businesses.

The three sources are the most common sources of financing for water supply projects in both urban and rural areas. They act as the bedrock of financing. Waters and sanitation providers can also access micro-credit loans from local financial institutions.
In Kenya taxes from individuals and businesses are collected by the local revenue authority and issued to the respective ministry through a budget allocation. The water sector which is currently under the ministry of environment and natural resources provides its estimates for a financial year which are then allocated by the treasury. The relevant ministry was allocated Ksh. 73.5 billion for the financial year 2018/19. Irrigation projects were awarded Ksh. 8.5 billion during the same financial year. Water resource management was given Ksh. 7.2 billion while water and sewerage infrastructure development was given Ksh. 33.7 billion.
The Kenyan parliament enacted a legislation that led to the formation of the Water Sector Trust Fund (WSTF). Its main mandate is to provide conditional and unconditional grants to the counties and to assist in the financing and development of water services in marginalized and undeserved areas. It offers investment services such as urban investments, rural investments, water resources investments and result based financing.
Of interest is the urban investment services where it through the Urban Projects Concept (UPC) it responds to water and sanitation challenges of urban-low income areas. The areas have been inhabited by approximately 8 million people and they do have inadequate water supply and shortages. The programme has been financed by European Union and the German Investment Bank (KfW).

Transfers in Kenya comes from majorly development institutions, international donors, development partners and friendly countries. For example it has received some funding from the GIZ on water sector reform in Kenya. KfW and the Bill ; Melinda Gates foundation. Some of the donor partners include JICA, USAID, UKAID, DANIDA and Swedish International Development Agency (SIDA). Governments do help with water projects e.g. the Dutch and Finnish government.
Tariffs are usually paid by the water consumers to the different water service providers such as Nairobi Water and Sewerage company and Eldoret Water and Sewarage Company. The water services providers have structured the consumers into domestic/residential, commercial/industrial, government institutions, government funded institutions e.g. public schools, water kiosks, ATM water dispenser and bulk water supply services. The smallest consumption block is 0-6 that is charged a flat rate of Ksh 204 while the biggest consumption block is ;60 which is charged at Ksh 64 per M3 . However tariff charges suffer from non-payment of the dues hereby referred to as Non-Revenue Water (NRW). Non-Revenue Water can be classified as water representing the total amount of treated water which a water service provider does not get paid for and comprised of physical leakage as well as illegal water connections and accounting deficiencies. It presents a special case for water financing. The capital investment can be low, with short pay-back periods, and returns better guaranteed if performance contracts are applied. Most importantly there is a ready client – the water service provider currently incurring financial losses due to NRW.
The private sector participation can be encouraged so as to improve project viability through performance-based contracts to reduce non-revenue water. Where a utility is losing revenue from water losses, water theft or billing issues, performance-based contracts can be employed to incentivize specialized private sector contractors, through a bonus linked to performance, to reduce such revenue loss. This approach incentivizes among other things rigorous project scoping and options analysis and provides for some sharing of risk between a contractor and a utility. In cases where the utility is considered too risky for financing by the private sector, ring-fencing or direct financing to the private contractor can be applied as described below. All these measures effectively reduce the risks associated with non-revenue water projects, allowing lenders to participate.

Results Based Financing.Results based financing (RBF) has to do with financing being aligned with the attainment of certain pre-agreed targets. It provides funding for an initiative after results have been delivered. Results based financing works or supports investments linked to:
Construction or expansion of water and sewer networks to reach unserved consumers.

Rehabilitation or improvement of existing networks; the non-revenue water reduction programmeWater and/or sewer connection to households to publicly accessible points
Water and sewer treatment facilities.

According to a report by Castalia Strategic Advisors that was reporting to the Bill ; Melinda Gates Foundation RBF projects on average deliver 94% of targeted outputs while 71% of projects delivered outputs at or above average levels. Blending finance is a mechanism where the loan and grant are combined in order to make the infrastructural projects more viable.
The water fund has a Results based Financing facility as a new business model that to finance water projects whereby the Water Service Providers (WSPs) get loans from local financial institutions at market rates. On completion of their products the water service providers can apply for one-off subsidies as provided under the RBF programme.
Some of the achievements of the RBF program include disbursement of Ksh 338.18 million to finance various projects and disbursement of subsidies valued at Ksh 69.48 million.
The results for the financing show that 3,645 households or 21,650 people have benefitted. Breaking down further 16,940 people have access to individual water connection while 4,290 people have access to a water kiosk and 420 people are accessing yard taps.

In the year 2006 Global Partnership on Output Based Aid (GPOBA) launched a project that was seeking to improve access and efficiency to water services to the urban poor in rural and peri-urban areas in Central Kenya. The investments were made through commercial loans and the community equity blended with output-based subsidies from GPOBA. It partnered with Water and Sanitation Program (WSP), water fund and K-rep bank (now sidian bank). It reported that it was able to do 17,500 water connections and had 202,000 beneficiaries. Funding for the initial phase of the project was approximately USD 1.1 million which was provided by World Bank’s GPOBA. GPOBA provided capital subsidies to the Community Water Projects (CWP) that were chosen in a transparent manner. The project were funded by the CWP’s own equity (20%) and the rest a loan from K-rep bank (80%). The bank followed its normal due diligence process when giving the loan. An independent audit consultant was then hired to verify the progress of the project and upon successful implementation or completion of a given sub-project the CWP was then eligible for a 40% subsidy of the total eligible costs of the project. This allowed the CWP to repay part of the loan and also make it affordable for them to service the loan. This gave the bank a better risk management opportunity and at the same time it gave the CWP more incentive to complete and successfully implement the project.
Blending Finance.Blending finance makes use of different types of financing facilities such as grants and technical assistance or interest rate subsidies. Projects supported by blending facilities can broadly be classified as:
Infrastructure investment.

Institutional capacity building
Integrated water management.

Infrastructure investment aim at rehabilitation, improvement and/or extension or construction of physical water supply and sanitation infrastructure. Some examples of the blended finance projects include:
Extension and rehabilitation of wastewater plants and pumping stations (STEP I and II) in Tunisia (EU investment grant EUR 8 million). The project provides for rehabilitation and extension of 19 wastewater treatment plants and 13 pumping stations in Tunisia. It aims to reach about 1.1 million people by 2021. The total cost is EUR 127 million a grant of EUR 3 million being received in 2008. KfW Development Bank has provided a loan of EUR 55 million and the co-financier is Agence Française de Développement (AFD) with a loan of EUR 18.5 million.

Drinking Water Efficiency Programme in Morocco (EU technical assistance and investment grant of EUR 7 million). The programme aims at having a permanent drinking water supply for approximately 30 urban centres in Morocco. KfW is the lead financial institution, providing a loan of EUR 40 million; the programme is co-financed by the AFD, with a loan of EUR 30 million. The total project cost is EUR 101 million.

Institutional capacity building aims at strengthening the organizational financial and managerial capabilities of water utilities and other organizations. It focuses on areas like planning, developing, financing and managing water supply and sanitation projects. An examples of such a programme include:
Central Asian Technical Assistance Framework (EU technical assistance grant of EUR 7.3 million). The Technical Assistance Framework facilitates project preparation by financing, among others, feasibility studies, due diligence, project implementation support, corporate development and creditworthiness enhancement programmes. The EBRD is the lead financial institution, with an approximately EUR 300 million loan foreseen. Assistance provided will significantly reduce the time needed to prepare projects, thus limiting the risk of cancellations and cost overruns, as well as enhancing the positive environmental and financial effects. The project will also have a strong demonstration effect.

Integrated water management projects aim at promoting an all-rounded approach to water management issues such as climate change, water service to the poor and de-pollution of water bodies. They mostly do have an investment as well as a physical infrastructure component.
A good example is the Mulonga Peri-Urban Water and Sanitation Action in Zambia. The project entails an investment into the water supply and wastewater treatment with an EU grant for extension of services to the poor (ACP-EU Water Facility grant of EUR 5 million). The project consists of rehabilitating and expanding water and wastewater services provided by a local water service utility, The Mulonga Water and Sewerage Company, by providing (i) capital investment for potable water production facilities and a distribution network as well as sewage network and wastewater treatment facilities; (ii) improving the efficiency of service provision, including metering; and (iii) expanding and improving water and sanitation infrastructure in low-income areas. The total project cost is EUR 156 million; and is being implemented by the EIB.

Another example of Blended Finance would be The Lake Victoria Water and Sanitation Initiative. Three financial institutions (the EIB, the AFD and KfW) are pooling their lending with grant support from the EU-Africa Infrastructure Trust Fund (ITF) in order to tackle pollution of the lake. The three institutions are first concentrating on the three largest towns on the lake: Kampala, Uganda, Mwanza , Tanzania and Kisumu Kenya. Each financial institution will be the lead financier on one project; the EIB will take the lead for Tanzania, and the AFD will be responsible for the Kenya project. In Uganda, work has already started under KfW’s lead to upgrade the run-down water network and existing water treatment plants. Its overall objective is to improve the health situation of people living around the region by increasing supply of drinking water and reducing the risk of waterborne diseases. It makes use of grants and interest rate subsidies that are pro-poor and to make the investment to be affordable.

Other Sources of Funding.Tremolet (2012) gave other sources of finance that can be used by small-scale water and sanitation providers. They include:
Microfinance mechanisms like loans, savings & loans combined or group lending and solidarity mechanisms.

Mesofinance financial requirements that are not typically covered by the banking system. It is a segment that is typically not covered by micro finance institutions or banks. They usually range from USD 2,000-USD 100,000. E.g. small-scale water and sanitation project.

Medium term loans especially for community based organizations.

Short term loans as working capital. (Finances small scale equipment). They can also be used to cover working capital requirements or cushion the cash flows.

Capital investment loans.

Leasing of expensive assets e.g. water treatment equipment. This is a contract where one party (the lessee) is able to make use of an equipment by paying instalments to another party (the lessor) usually the owner of the equipment.

Savings accounts
Overdraft facilities.

Guarantees- a guarantee is an arrangement where a third party agrees to underwrite the financial commitment entered into by two parties. Guarantees can be provided by a number of institutions including the local government and donor organizations.

Concessional loans- a concessional loan is a type of loan that is given at favorable terms e.g. lower interest rate, longer repayment periods or a grace period.

Equity investments- this is where the investors buy a stake or part of ownership of a given project. This is the preferred form of financing by international organizations like the IFC.

Grants which is basically a loan that does not have to be repaid. Grants can take the form of:
Capital grant-also known as a hardware subsidy which goes to supporting the purchase of property, equipment or construction of the facility.

Operating grant- given to provide support for the day-to-day running of the organization.

Seed financing- provides the initial capital for a revolving fund or during the launch of the organization.

Software support- funds channeled to finance ‘soft’ activities like market research.

Grants are particularly suited to address constraints that related to capacity building and informational availability rather than lack of adequate capital. E.g. software support. Grants can also have a systemic impact especially when it is used to improve the conditions of, say, the SME market, like market information and business support.
Use of concessional loans is particularly limited for the market is still in its early stages. To add on most concessional loans are denominated in foreign currency while the local service providers earn their revenue in local currency. This exposes them to significant foreign currency exchange rate risk.

However international development institutions and donors are moving away from direct grant-making to more of budgetary support and performance based funding. This is so because there is a need of empowering and strengthening the local public sector and relevant institutions in order for them to take charge for the development agendas.
Guarantees are a good source of finance for the projects for they facilitate access by the local borrowers to funding and they also protect the lenders from currency risk. However if a guarantee is structured poorly it can then make the entire loan to be expensive and the local financial institution may refuse to lend over and above the guaranteed amount thereby making the leverage effect to be minimal. A good example would be the CLIFF programme by a British based charity Homeless International with support from the DFID and Sida. CLIFF is a facility that enables organizations working with the urban poor to access greater public resources including sanitation. It was piloted in India but then expanded to Kenya and Philippines. Under the program donors give grants to CLIFF which are then channeled to into a revolving fund by Homeless International. Being supported by the fund, implementing partners do take loans from their local commercial banks and the partner lacks the collateral for the loan Homeless International acts as a guarantor. CLIFF was able to implement about 29 projects during its first phase with four being in sanitation. For a guarantee to work the project must me financially viable and have clear revenue streams. Provision of guarantees therefore needs to be coupled with project preparation and financial management skills.
Equity investments foster a more commercial approach as this makes the organization to ensure that a project gives returns on investments. They can also help in strengthening the balance sheet of an organization making them to be able to take on more debt thus increasing their financial capacity. However equity investments are not considered by some organizations due to their charitable status which means they are not for profit organizations. As a result a mismatch occurs for the investments do expect returns. Equity investments are deemed to be more risky than other forms of financing such as concessional loan.

Another challenge would be that feasibility studies for the water projects do emphasize on technical feasibility and not financial feasibility. As a result financial modelling is not incorporated into the intended project until at a later stage. This could lead to a scenario where the project is developed but it is not financially feasible.
Some projects are also not conceptualized to maximize the potential economic benefits in the areas where they are located. It would make a stronger appeal to the financiers if the project is conceptualized to include multi-purposes such as water storage, power, irrigation and even tourism.
General Challenges and shortcomings of the sources.Other general challenges that water projects experience when sourcing for funding include;
Small-scale water service providers and private water service providers rarely receive subsidies from the government or international donors.
These investments do not directly generate income that can be monetized directly therefore there is a reluctance to borrow especially from commercial banks and financial institutions.

Microfinance and financial institutions are reluctant to give funding because the projects do not often give direct revenue streams to guarantee repayments of the loans.

The financing providers do not know the need of these sector they therefore perceive it as being too risky.

The managers of the water projects may not have been trained in basic business and accounting practices and therefore are unaware of the requirements of financial institutions when they make a loan application.

Unfavorable borrowing conditions such as high interest rates or the short maturity periods may for the water projects investment make it difficult to attract funding.

When it comes to grants the project being implemented can come to a stop when the grants stop flowing.

Grants can lead to market distortion especially when it is transformed from one form to another e.g. from a capital subsidy to a revolving fund. The recipients may fail to remit payments over time.

Lack of self-sufficiency whereby the water services providers are not able to count on other sources of income such as tariffs and budgetary allocation. As a result they cannot carry out their activities such as investment.

Success Stories.Some of the success stories include the Urban Investments by WSTF. It has led to an improvement in the standards of living of the slum dwellers and better health for the children. The water kiosks established by the WSTF in conjuction with KfW has led to improved access to water, a drop in water borne diseases and improved house hold hygiene. The fund reports that it has invested Ksh 3.6 billion into the program and approximately 2 million urban Kenyans have access to water as a result. It has alo led to the construction of over 600 water kiosks, construction and rehabilitation of over 2,000,000 km of pipeline and construction of public sanitation facilities and water storage tanks.

Output Based Aid in Murang’a South that was implemented in collaboration with the Murang’a South Water and Sewarage Company (MUWASCO). The program was financed by SIDA to a cost of USD 11.385 million. MUWASCO was then pre-financed by Sidian bank and it used the funds to introduce and improve infrastructure in the areas of Kenol, Sabasaba and Kabati. It targeted to provide over 1,500 individuals with access to clean water.
SafiSan: Upscaling Basic Sanitation for the Urban Poor (UBSUP)- the project was implemented by WSTF and was funded by the Bill & Melinda Gates foundation. It had 4 main objective being providing sustainable sanitation to over 400,000 people and safe water for 200,000 of the urban poor, capacity building, develop a sanitation up-scaling project that ensures there is sustainability of the facililities and finally have in place a monitoring system to track access to clean water and basic sanitation facilities. It was carried out in Embu town as a pilot study area together with Nakuru and Oloolaiser water service providers. EWASCO was able to develop about 200 toilets within a span of six months. Each toilet built benefits about 10 people therefore translating to about 2,000 people who have already benefited. The experience gained from this pilot study has been used to modify the project as it is being rolled out in the entire country.

Another success story is the an innovative and portable water distribution system that was funded by Safaricom Foundation and implemented in Kibera by Shining Hope for Communities (SHOFCO). It is an overhead water distribution system similar to the one used for electricity distribution and it terminates at various water kiosks within the area. It led to a reduction in price of a 20-litre jerry can from Ksh 5 to Ksh 2. It has also helped the residents to get reliable water and in the process avoid exploitative water vendors.
Merti Community Water Users Association-Merti town is located in the county of Isiolo. Residents here relied on the seasonal Ewaso Ng’iro river for all their water needs. When the river dried up there were a lot of conflicts related to watering points. This also placed a strain on the women who had to go for long distances in order to get water. They then formed the Merti Community Water Users Association and in the year 2012 they applied for a loan from WSTF. The fund was impressed by the association and it advanced Ksh 7.6 million with the local community offering construction materials and labor. This made them to rehabilitate two boreholes and activated a project of piping the water to people’s homesteads. Today it serves more than 20,000 people and has 1,000 metered connections.
Community based initiatives in Tanzania. SDI is a network of community based organizations that work with the urban poor in 33 countries across Africa, Asia and Latin America. The groups make use of grassroot savings and and credit schemes to promote their own development. In Tanzania Centre for Community Initiatives (CCI) a local NGO encourages slum dwellers to form groups of between 20 to 100 members and start a saving scheme. To date it reports of having established about 52 schemes in major cities across Tanzania. The local saving schemes then join together to form a city level federation. CCI was then able to form the ‘Jenga Fund’ that mobilizes savings from the federations then combines them with other sources of finance then offer them as loans for possible large-scale infrastructure project such as providing water connection for the whole community.

The decentralized Nyalenda piped water supply pilot project in Manyatta, Kisumu. This pilot project was established by KIWASCO with financial support of the French Agency for Development (AFD) to extend pipelines into the informal settlement of Nyalenda. It reaches some 20% of the 60,000 slum population through five extension lines each with a bulk water meter and a local operator who manages the system after the bulk meter. Two of these operators are individuals, the other three are groups. After the bulk meter each system has a pipeline with connections to a number of households as well as water kiosks (taps where an attendant sells water to the public; this may be individuals, but also groups including for example a women group with 14 members). The operator pays the bill for the bulk water (Kshs 25/m3 ) and is allowed to sell the water at a higher rate of Ksh. 37/m3 . Water kiosks in turn sell the water for Kshs2 for a 20 litre container (Kshs 50/ m3 ). KIWASCO is very positive about the approach and is keen to expand, but further analysis may be needed. In 2007, a team of the WSTF visited the system and marked both advantages and disadvantages including operators with a backlog in payment and having difficulties to control local vandalism and illegal connections
A success story for the leasing concept can also be found in Nairobi where the ministry of water is reviving eight water schemes so as to ensure more water is distributed efficiently to the city residents. Under the scheme the government leases water tankers to small-scale water providers. The government then ensures that it provides filling points for the water tankers who then undertake water delivery to remote and underserved areas of the city.

REFERENCES.Blending in the water and Sanitation Sector: Tools and Methods Series Reference Document No 21. Accessed online at http://mn-bb-16-002-en-n.pdf.


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