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How do you finance water utilities when traditional sources of capital dry up?
In this WASH Talk episode host Andy Narracott asks Pim van der Male and David Onyango about commercial financing options for water utilities. Turning to commercial finance from domestic banks as a solution for existing financing gaps in the water sector is important but comes with its own challenges. For instance, since water is considered a social good, it is perceived to be unable to generate sufficient revenues. Water companies also have insufficient assets to use as collateral and are strongly linked to government with very limited commercial experience of borrowing from banks. Last but not least, banks require a proven track record, which due to a lack of consistent data collection is challenging for water utilities, according to David Onyango.
The Kenya Pooled Water Fund aims to make commercial finance more attractive to both borrower and lender. Pim van der Male explains how the programme works and which other countries would be suitable for this type of funding. Significant risks, such as changes in government support and the consequential importance of clearly communicating how this type of funding fits into political strategy are discussed as well.
Our guest speakers:
|Pim van der Male is Senior Policy Officer Water at the Ministry of Foreign Affairs, Netherlands. A Human Geographer by trade, Pim has been working with organisations like SNV, UNFPA and UNDP in a range of countries (e.g. Papua New Guinea, Sudan and Tanzania). He joined the Ministry of Foreign Affairs in 2005 and has been involved in the water sector for over 5 years.|
David Onyango is Managing Director of the Kisumu Water and Sewerage Company in Kenya and board member of The Global Water Operators Partnership Alliance (GWOPA). GWOPA is a UN-Habitat body promoting improvement of water services in the world.