GPOBA Provides US$1.15 million Grant to Assist Communities to Develop their Water Infrastructure

Nairobi, December 6, 2006—The World Bank has provided a grant of US$1,151,300 to assist communities’ investment in water infrastructure and help the country to reduce poverty and reach the Millennium Development Goals (MDGs).

The grant, funded by the United Kingdom’s Department for International Development (DFID) and the World Bank’s International Finance Corporation (IFC) under the Global Partnership for Output Based Aid (GPOBA) administered by the World Bank, is being made available to partially finance community water projects after extensive consultation with the Ministry of Water and Irrigation, the Athi Water Services Board, and other government agencies. K-Rep Bank Ltd, a leading commercial bank specialized in providing access to finance to the poorest in the country, will administer the grant.
 
Kenya‘s community water projects face a number of challenges, including inability to access finances to develop their infrastructure and reduce poverty in their areas. This grant will be a catalyst in increasing the communities’ access to financial services on a pilot scale and set the stage for learning that will lead to national level programs in the future.

“This grant will increase the voice of the poor and help them to make their own decisions about  the services delivered to them,” said Colin Bruce, World Bank Country Director for Comoros, Eritrea, Kenya, Seychelles and Somalia, during the signing ceremony today between the World  Bank and K­Rep Bank in Nairobi.

“The use of innovative subsidies to promote transparency and accountability in operations is of key interest to the World Bank globally and this project, by involving the private sector, will help  to do that,”  said  Mr. Bruce during  the  signing  ceremony, which was  witnessed  by Kenyan  Government officials representing  the  Ministry of Water  and  Irrigation  and  the  Athi Water  Services Board.

The grant will target about 20 community water projects in the Athi Water Services Board area  and will help them to access loans for infrastructure development. It will also assist in capacity  building of the communities who opt to develop their infrastructure.

The  Government of Kenya’s Water  Act of 2002 emphasizes the  importance of private sector engagement in water  provision and highlights the  need  for water  services to operate  on a  sustainable basis. One key feature of sustainability is that water supplies should be able to pay  the costs of their operations and maintenance.

The specific objectives of the grant include to: 

  • Facilitating the provision of loan financing to small water projects – where other financial  resources are not available, there is the capacity to pay back loans and there is interest from  the project membership in taking a loan; 
  • Catalyzing  the  creation  of support services for small water  providers that add  capacity to  small providers’ operations and help to increase their sustainability.

”Small water providers need access to credit finance to develop their businesses, and with these  loan funds, customers of the water providers will benefit from increased access and quality of water services,” said  Kimanthi Mutua,  Managing  Director of K­Rep Bank  Ltd  at  the signing  ceremony in Nairobi.

The pilot project will finance up to 40% of the total investment cost of new or expansion projects for water supply infrastructure in the five districts of Athi Water Service Board’s jurisdiction—  Kiambu, Thika,  Machakos, Makueni and  Kajiado. Communities which have  expressed  their interest in taking out a loan to finance their projects, and who meet the credit requirements of K­ Rep Bank will be eligible for the grant.

The grant will be paid to the community projects when  they have successfully finished their project and will be used to reduce the total loan amount. The grant will also provide a fixed subsidy amount to each community participating in the pilot  to hire  expert engineering  and  financial skills to  assist in project  implementation  and  then  manage it well after its implementation.

Early investigations used  to develop  this project were  financed  by the  World  Bank’s Public­  Private Infrastructure Advisory Facility (PPIAF) and were managed by the Water and Sanitation  Program ­Africa (WSP­Af), a global program administered by the World Bank.

K­Rep Bank was considered to implement the  grant due  to its history of commitment to  providing  financial services to  the  country’s poor and  also its engagement in exploring  the  possibility of such innovative  financial support  to the  water sector. K­Rep’s extensive  engagement with IFC in  other  activities has demonstrated its capacity to develop  and  provide  innovative services to its clients. Within K­Rep Bank, key senior staff has been assigned to the  management of this project.

For more information on the World Bank’s work in Kenya visit: 

http://www.worldbank.org/ke