How can Kenyan commercial banks be encouraged to finance drinking water and sanitation projects? This is the question that drives the new initiative of the International Finance Corporation (IFC), the World Bank’s subsidiary responsible for private sector financing. In partnership with Water.org, a US non-profit development aid organisation, the agency recently made 10 billion shillings ($100 million) available to Kenyan commercial banks.
These funds are intended to guarantee part of the investments made by these financial institutions in drinking water and sanitation projects. The $100 million is provided equally by the IFC and Water.org. According to the World Bank’s subsidiary, these funds will allow, “structured credit enhancements such as risk-sharing facilities for water and sanitation loan portfolios provided by local banks, thereby mitigating credit risks and allowing local banks to introduce or increase loans for water and sanitation assets”.
The new funds should enable local commercial banks to work more closely with local utilities to provide safe drinking water and sanitation services in remote areas. Such projects are underway in several counties in Kenya. One example is the Voi sub-county, where the local utility Coast Water Services Board (CWSB) is currently building a water pumping station, which will operate on a small power grid. The water will be transported to a large 500 m3 concrete tank, then to another tank still made of concrete, but with a capacity of 225 m3 this time. The water will supply the Mbololo, Kangemi, Mbulia, Ghazi, Ndii and Mlilo villages through a 10 km pipeline.
Jean Marie Takouleu