The country needs an investment of approximately Sh1tr to achieve access to clean water Nairobi’s Majengo residents fetch water in jerrycans as shortage persists in different parts of the country /VICTOR IMBOTO Nairobi’s Majengo residents fetch water in jerrycans as shortage persists in different parts of the country /VICTOR IMBOTO Banks, development financiers and private investors should absorb the high upfront costs of water and sanitation projects to make them commercially viable over the long term, experts have told policy makers.
They argue that as Kenya seeks to bridge a persistent infrastructure financing gap while expanding access to essential public services, it is necessary to provide value for investors. Infrastructure experts argue that unlike sectors such as energy and telecommunications, water, sanitation and social good projects often struggle to attract commercial capital because tariffs remain subsidised and rarely reflect the true cost of supplying the service.
According to World Bank, to achieve universal access to clean water and sanitation by 2030, Kenya requires a total investment of approximately $7.7 billion (Sh1 trillion). However, with only Sh529 billion projected from traditional public allocations, the country faces a financing gap of Sh325.6 billion to Sh471 billion, prompting the government to aggressively court private investors and public-private partnerships (PPPs).
As a result, financiers are being urged to provide patient capital, first-loss financing and blended finance structures that reduce investment risk until projects mature. The proposal comes as Kenya intensifies efforts to mobilise private capital into public infrastructure through Public-Private Partnerships (PPPs) and the recently established National Infrastructure Fund, which is expected to support commercially viable projects while financing infrastructure with strong social benefits.
According to PwC, Kenya's water sector requires a different financing model because water is both an economic asset and a public good. "WASH (Water, Sanitation and Hygiene) sector investments potentially require blended finance structures, given water is a social good with subsidised tariffs that are often not cost reflective.
Patient and first-loss capital can play a catalytic role by providing viability gap funding," said PwC Kenya and East Africa director for government & public sector Benson Okundi.