Kenya: Urban Water and Sanitation OBA Fund for Low-Income Areas

Gaining access to improved water supply and sanitation systems has been a persistent challenge in Kenya. In 2015, access rates were at only 30 percent for sanitation and 58 percent for water. Factors such as rapid rates of population growth, urbanization, and climate change have contributed to greater stress on Kenya’s water resources. Achieving universal access to safe water in Kenya will require an estimated $14 billion in investment in the water supply over the next 15 years, which cannot be achieved through public funding alone. In response to this problem, GPRBA in 2015 approved an $11.1 million grant to the Government of Kenya, supported by Sida. The Kenya Water and Sanitation OBA Fund for Low-Income Areas helps to incentivize urban water service providers (WSPs) to invest in water supply and sanitation improvement subprojects to benefit low-income households, by applying one-off RBF subsidies that help to make a connection to water and sanitation access more affordable. As part of the project, WSPs also receive technical assistance to support sub-project preparation and implementation. This includes support for the development of bankable proposals to secure commercial loans from domestic lenders on market terms to pre-finance the investments. Under this project, eight WSPs have signed loan agreements with three commercial banks to finance nine water and sanitation subprojects, valued at $14.3 million. The project is expected to help approximately 120,000 low-income beneficiaries gain access to water and/or sanitation, through 7,900 household sewer connections, 14,500 household water connections, and 40 improved community water points.