African Water Facility plans $500m urban sanitation fund

The African Water Facility seeks to tap private investors to help create a $500 million urban-sanitation fund as it rolls out an expansion plan that includes beginning to lend to projects.

The facility, a unit of the African Development Bank, was created in 2004 in response to an increasing need for water and sanitation projects across the continent, said Mtchera Chirwa, the facility’s coordinator. To date, it has operated as solely a provider of grants but will now provide debt in some cases as donor funding dries up.

“We plan to scale up,” Chirwa said in an interview. The facility’s new sanitation fund will begin to lend “for longer term sustainability.”

The facility its trying to tackle a problem that the World Bank estimates needs $114 billion in global investment annually, of which Africa accounts for about half. A third of Africa’s about 1.3 billion people lack water supplies and a sixth don’t have access to basic hygiene services.

The Urban Sanitation Fund may take a decade to raise the full amount, which is expected to come from the AfDB, donors and private investors, according to Chirwa.

It aims to improve sewerage systems in African cities, provide sanitation services to areas that are not connected to sewer lines and fund projects that collect waste for use as fertilizer or in biomass-based energy plants.

Water projects, particularly in rural areas are likely to continue benefiting from grant funding, and those grants are expected to rise to between €50 million ($55 million) and €60 million annually within two years from €21 million currently. For each euro invested by the facility as much as €29 can come from other sources as the grants serve to reduce risk for other investors, Chirwa said.

The facility has, since formally starting operations in 2006, participated in 133 projects in 52 of Africa’s 54 countries, with Libya and Mauritius yet to benefit. It has sourced funding of €205 million.