Financing water sector in Kenya

/Financing water sector in Kenya
Financing water sector in Kenya2019-05-22T10:16:14+03:00

Overview of water sector financing

The water sector is mandated to protect, conserve, manage and increase access to clean and safe water for socio-economic development. However increasing human population and the associated demands for water resources for socio-economic development and climate change have led to the scarcity of water resources hence undermining the availability and access to clean and safe water. Sustainable utilization, development and management of water resources fundamentally underpin the achievement of long-term socio economic goals.  Hence the Government is fully committed to improving the management and protection of water resources to ensure that water is available for equitable allocation for all the demands in the country.

Spending on water sub sector is principally made up of capital expenditure, which accounts for 75% of the total. Water supply contribution to GDP was 0.7% in 2017 whilst total public spending on water has remained small (about 2% of total national budget).

Water sector is heavily donor dependent with approximately 70% of annual capital investment coming from the donor community with the Government providing the bulk balance and private sector playing negligible role. This illustrates the vulnerability of the sector and emphasizes the need to find ways of mobilizing domestic private funds.

Funding framework

  1. Medium Term Expenditure Framework (MTEF)

The three-year rolling Medium Term Expenditure Framework (MTEF) is the key mechanism utilized in the funding framework of the sector. The water sector is funded by national government, counties, development partners, civil society organizations and funds which are internally generated. However, the major share of funding for the sector comes from national government and development partners.

Table 1: Vertical distribution of Expenditure Analysis 2013/14 – 2017/18 (in Ksh. B)

  2013/14 2014/15 2015/16 2016/17 2017/18
Water sector Approved Estimates 26.0 28.92 32.92 40.289 32.84
Total Gov’t budget 1,057.27 1,130.47 1,531,46 1,677,687 2,287.9
% share of Total Gov’t budget 2.5  2.6 2.1 2.4 1.4
Water services, sewerage Contribution to GDP 0.9 0.8 0.7 0.7 0.7

% allocation of total Government budget to Water sector

Fig.1 Average budget allocation per sub programme

Resource requirements SDG 6

Universal access to water and sanitation will progressively be achieved during the period of the SDGs, of which about 200,000 new water connections and 350,000 new sewer connections (for about 3.2 million people) will be required annually in urban areas for universal water access to be reached by 2030. Last mile connectivity will be undertaken in rural areas to ensure all projects have water and sanitation connections to households.

To ensure the full realization of the right to water and sanitation and that every Kenyan is reached, weighty investments must be committed into the Water and Sanitation Sector. The budget provision required for universal access to water and sanitation by 2030 is Ksh1.764 trillion, which translates into annual requirements of Ksh100 billion, of which only about Ksh40 billion is availed. In this regard, the financing gap is very wide and has to be bridged through innovative ways of funding, including Public Private Partnerships (PPPs), ring fencing revenues, commercial financing, and ODA support.