Joshua Kibet is Aqua for All’s Water and Sanitation Finance Advisor based in Kenya. He focuses on building strategic partnerships to mobilise investments in water and sanitation and to scale up small and medium enterprises (SMEs). He explains how the COVID-19 pandemic has changed the situation in Kenya drastically.
No more business as usual
Aqua for All has almost 20 years of experience working with water and sanitation entrepreneurs in Africa and Asia. In 2019, they launched their programme ‘Making Water Count’, to stimulate sustainable innovations to accelerate access to safe water and sanitation. At the time, I could not foresee that a worldwide pandemic would have far-reaching consequences for our work and that of our local and international partners.
During online meetings with entrepreneurs, we discuss how the current situation has changed dramatically, affecting their operations. Water providers need funding urgently to meet the increased demand and safeguard access to water:
“The demand for water has increased significantly,
but not the ability to pay for it”
Boya Community Water Project (Kisumu County, Kenya)
The COVID-19 outbreak brought an abrupt halt to my continuous field visits, networking sessions and meetings with water and sanitation entrepreneurs and stakeholders. From my hometown, Eldoret, I continue working to keep “Making Water Count”.
Let me explain what the challenges and opportunities for water and sanitation enterprises in Kenya are during the COVID-19 pandemic and beyond:
Building partnerships during Kenya’s lockdown
On March 13, the Kenya Government confirmed the first case of COVID-19 in Nairobi. This announcement was followed by a series of drastic preventive actions to contain the outbreak. Partners and entrepreneurs’ agendas and priorities changed drastically. About six weeks after the outbreak, my work has evolved from unlocking investment finance for scaling up entrepreneurs to exploring opportunities to help entrepreneurs to survive.
The water and sanitation sector quickly switched from a vibrancy of enterprise and economic activity into a crisis mode. Discussions about partnerships changed from raising capital and spurring enterprise to supporting entrepreneurs and service providers to survive and continue providing access to safe water and sanitation.
The Innovate4Water conference in Naivasha, Kenya which was cancelled, was initially scheduled for the end of-March, and would have brought together policy makers and development partners to discuss strategies and opportunities for greater impact. It also aimed at match-making entrepreneurs with capital providers, which is Aqua for All’s key objective in Kenya.
Kenyan water and sanitation entrepreneurs need support urgently
Water and sanitation SMEs provide services to about thirty million people (70% of the population) in rural and peri-urban areas which are not served by public utilities. They supply innovative technologies, products, and services. Water SMEs have experienced unprecedented challenges due to the pandemic. Demand for water is high due to the need for improved hygiene to prevent the spread of the coronavirus. This imposes additional operational costs, especially for small scale providers. The water supply capacities of SMEs are stretched to near breaking point. Paradoxically, this increase in supply does not necessarily result in higher revenues. Most of the low-income people served by SMEs are out of a job and can no longer pay for water – but the SMEs are required by the government to continue delivery for free. If these SMEs fail, essential water service delivery to millions of people is at risk.
For many Kenyan water and sanitation SMEs, surviving the crisis is a necessity. The continuity of water services as part of the frontline work in the fight against COVID-19 is the real challenge. Adopting efficient technologies and improving operational systems will be their main investment areas.
Domestic financial institutions can be part of the solution
Kenya is one of the most financially inclusive economies in Sub-Saharan Africa – with about 90% of its adult population having access to formal financial services. Financial institutions play a vital role in driving local economies through a variety of products and services –ranging from micro savings and loans to structural equity and bond markets. The landscape is also one of the most diversified and with constant innovations in delivery channels.
To bridge the annual finance gap to achieve SDG 6 (around KES 65 billion), the government adopted a policy to supplement public funds with private capital. These public-private initiatives included results-based aid loans and infrastructure bonds for utilities. Local financial institutions also launched loan products for water and sanitation SMEs.
During the COVID-19 pandemic these institutions have been very responsive. The main beneficiaries are low income individuals and smaller entrepreneurs, comprising of mainly women, who form the majority of micro-lending and SME clients. Aqua for All is working with local banks; to share risks and extend financing of working capital to WASH entrepreneurs in rural and peri-urban areas to sustain operations during the crisis.
In the post COVID-19 era, handwashing and hygiene will become essential services for water and sanitation SMEs, either by legislation or as part of a value-added service delivery strategy. For many Kenyan water and sanitation SMEs, surviving the crisis is a necessity. The continuity of water services as part of the frontline work in the fight against COVID-19 is the real challenge. Adoption of efficient technologies and improvements of operational systems will no doubt become priority investment areas’.