Chapter 15 - Tapping local capital markets for water and sanitation: the case of the Kenya Pooled Water Fund

Abstract

This chapter focuses on the establishment and operations of the Kenya Pooled Water Fund, a local capital market financing mechanism to mobilize water and sanitation infrastructure investments in Kenya. The mechanism can help bridge the financing gap for capital investments in water and sanitation and with that assist the achievement of SDG6. The strengths of the mechanism are longer tenor debt, investment in local currency, possibility of pooling loans into a single bond transaction that is attractive to local capital market parties, especially pension funds, and the potential for including the participation of small and medium-sized water companies that are demonstrably creditworthy. The chapter describes the background, the Kenyan context, the structure, and business approach of the Kenya Pooled Water Fund, and the challenges and lessons learned that could be applicable when engaging in similar work in other countries.