What we do and how it impacts where we do it
The Water Financing Facility (WFF) mobilizes large-scale private investment from domestic institutional investors such as pension funds and insurance companies by issuing local currency bonds in the capital market in support of their own country’s’ national priority actions on water and sanitation service delivery. The aim is to develop several country level water financing facilities, which can issue bond in their capital markets to provide long-term loans to public or private water utilities that have little or no access to commercial finance or that have access at unfavorable terms, such as short tenors. Through the pooling of credit worthy water projects, the bonds will have lower risk. This risk can be further reduced, if reserve funds, guarantees, soft loans or grants for blended finance can be incorporated into the capital market structures.
The first National Water Financing Facility (NWFF) has been initiated in Kenya with support of the Netherland Embassy in Nairobi, the Kenyan National Treasury, the Ministry of Water and Irrigation, the Water Sector Trust Fund, USAID, SIDA and SNV. The Kenyan NWFF will shortly be incorporated with a Kenyan Board and senior staff members and expects the first issuance of bonds (approx. KES 3.5 Billion for 6 Water Services Providers) to be issued by the end of the first quarter of 2018. This long term local currency financing will enable water and/or sanitation access to about 800.000 additional people, of which about 25% are poor and or living in rural areas. We expect the Kenya NWFF to be able to plan similar bond issuances each year going forward. The global WFF is targeting other countries to be operationalized soon, possibly including western Africa (franco-phone region), South Africa, Peru, Indonesia, Vietnam.
WFF is soliciting grants to fund i) operational start-up expenses of WFF at global level, ii) NWFF set-up and project development costs in target countries, and iii) contribution to credit enhancement for specific transactions in target countries (see Table below). WFF, supported by the Global Innovation Lab for Climate Finance, seeks to obtain a total of Euro 65 million in co-financing support from development partners, international financing institutions and other organizations (see table below). The Netherlands Minister for Foreign Trade and Development has already provided EUR 10 million in seed-funding to date.