Catalyzing Domestic Private Finance for Water and Sanitation Infrastructure in Frontier Economies
- Water Finance Facility (WFF) develops country-focused financing platforms to issue local currency bonds targeted at domestic institutional investors, to fund pools of loans to utility-scale water and sanitation service providers. It is active in its first country of operation, Kenya, through the Kenya Pooled Water Fund
- WFF was established in 2017 and is managed by a dedicated team of 8 professionals in Amsterdam and Nairobi
- As at January 1, 2018, WFF has received EUR 10 million in seed funding from the Netherlands Ministry of International Trade and Development Cooperation (DGIS), to fund WFF’s first development phase consisting of the implementation of the concept in Kenya and achieve a portfolio target size exceeding USD 200 million equivalent by 2016
- WFF is seeking further funding to proceed to development phase 2, where it will implement the concept in a further 2 countries and ultimately has the ambition to achieve a financing portfolio size of EUR 1 billion in selected developing countries
WFF is established in partnership with DGIS to develop long-term local currency private finance options at scale for the water and sanitation services in developing countries. More than EUR 650 million of the world’s poorest people are living without access to clean drinking water, and addressing this issue has been acknowledged a priority in the Sustainable Development Goals (SDG 6). Traditionally, public sector budget allocation backed by official donor flows have been the predominant funding source for water utilities, but these sources are agreed to be vastly insufficient to achieve SDG 6 targets. Unlocking private finance is crucial as additional funding.
By applying financial structuring skills and the support from donors and development finance institutions, WFF is able to de-risk portfolios of loans to creditworthy water and sanitation service providers to a level where domestic institutional investors can invest. Long-term local currency finance is the optimal funding solution to cover the capital investments needed for the required improved services. WFF engages in an early stage, assisting water utilities with the scoping and implementation of the capital investment projects funded by the loans.
The WFF team is preparing the first KES 4,5 billion bond to be issued in Kenya to fund loans to 6 water utilities by the end of Q2 2018.