The funding for water projects in Kenya will take a new turn as the state considers the issuance of water and infrastructure bonds. In the past, the government tried to attract private contributions through the Kenya Pooled Water Fund, which was included in the Water Ministry’s strategic plan from 2018 to 2022. However, a new partnership between the Kenya Association of Stockbrokers and Investment Banks (KASIB) and the Eldoret Water and Sanitation Company opens up alternative financing options through the capital markets. This will allow water companies in Kenya to raise the necessary funds through the stock exchange to bridge the funding gap of Kes 995 billion for water projects.
Kenya currently estimates that investments in Water Sanitation and Health (WASH) require Kes 1.8 trillion but faces a funding deficit of Kes 995 billion. By issuing water and infrastructure bonds, governments and water companies can generate capital to develop or enhance water infrastructure, such as treatment plants, sewer management systems, and distribution networks. This new opportunity presented by the capital markets reduces the reliance on government and development partners for funding, enabling water companies to carry out their development projects on a larger scale.
The President of Kenya is committed to raising funds from the capital markets and sees this initiative, along with the issuance of green finance and ESG frameworks, as the future of the capital markets. Water Service Providers have traditionally relied on funding from tariffs, taxes, transfers, loans, bonds, and equity investments. However, the partnership between KASIB and the Eldoret Water and Sanitation Company, along with their engagement with the Water Services Providers Association, aims to bridge the funding gap and fulfil the development projects in the water sector.
It’s worth noting that this is the government’s second attempt to raise funds from the financial markets for water and sanitation programs. The previous attempt involved the Kenya Pooled Water Fund, which was part of the Water Ministry’s strategic plan from 2018 to 2022. The objective was to raise Sh10 billion from local bond markets, but the goal was not achieved.
