WFF unlocks local capital market development by providing alternative, credit worthy long term investments opportunities for the local pension funds and other investors of the domestic capital market. WFF’s target is to provide approximately 20 million people with sustainable access to safe water and adequate sanitation and hygiene. READ MORE
Author: Alisher Makhmudov
Global pooled finance initiative for water gets EUR 10.0M Dutch government backing
A new water financing facility aims to leverage €1 billion of debt finance from local institutional investors.
“The loans would be used for longterm investment in potable water or sanitaion services, and the requirement is that they generate sufficient revenue to make debt repayment possible.”
“The loans would be used for longterm investment in potable water or sanitation services, and the requirement is that they generate sufficient revenue to make debt repayment possible.”
POOLING RESOURCES TO BRIDGE KENYA’S FUNDING GAP
The $400 million funding deficit in Kenya’s National Water Master Plan will need to be met from sources other than the pulic purse. A new pooled water facility could go some way to taking up the slack.
National water financing facilities
Establish sustainable domestic non-bank organisations to finance water and sanitation utility infrastructure investments.
“There is a long history of these structures working, and the beauty is that they can be tailored to the legal and institutional framework of each country.”
“There is a long history of these structures working, and the beauty is that they can be tailored to the legal and institutional framework of each country.”
Water financing
Mobilise local currency capital from the domestic institutional investors by issuing bonds through pooling of investments and arranging guarantee structures, if needed.
Water utility and project development
Support water infrastructure project development and governance for water utilities to create bankable investments for investors.
Tapping local capital markets
The Water Finance Facility (WFF) mobilises large-scale private investment from domestic institutional investors, such as pension funds, insurance companies and other qualified investors, 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 projects of credit worthy water and sanitation companies, 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.
