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Who is Paying for Water and Sanitation Services in Kenya?

On Friday October 8, 2021, the Ministry of Water, Sanitation and Irrigation (MWSI) invited stakeholders from the private sector to participate in a virtual presentation of Kenya’s WASH Accounts study report. The study was conducted in conjunction with Water, Sanitation and Hygiene Finance (WASH-FIN), a global initiative financed by USAID.

This was the third such study being conducted in the country and it indicated that without significant additional funding for the sub-sector, the country will not reach its targets on water and sanitation by 2030. The results showed that expenditure is still short on the country’s roadmap in terms of investment. For instance, expenditure on water and sanitation is a mere 0.5 percent of GDP, and this percentage has been declining over time.

The objective of the study was to answer the following questions:

  • What is the total expenditure in the sector in Kenya
  • How are the funds distributed between the different WASH services and expenditure types, such as capital expenditure, operating and maintenance expenditure and cost of capital? 
  • Who pays for WASH services in Kenya
  • Which entities are the main channels of funding for WASH and what is their share of total spending?
  • What do the trends mean for budgeting or investing in the sector?

Increasingly, Kenya’s private sector has been more deliberate in their investments towards various WASH initiatives geared towards providing access to affordable safe water and sanitation for all. This has been done through PPPs with government entities as well as integration of innovations aimed at reducing consumption and waste. Case in point is Kenya Breweries Limited (KBL) which recycles one billion litres of water out of the 1.8 billion litres consumed annually for general purpose activities. Owing to incredible commitment and levels of investments over time, the company has experienced a 33% reduction in water usage since 2012, attributed to water recycling and they aim to increase this by another 30% by 2030.

Commitment by corporates such as KBL is in congruence with Kenya’s prioritization of WASH in general which is included in the national development plan —Vision 2030 and Kenya’s National Water Strategy which partly aims to support private sector participation and commercialization to finance and manage the provision of water supply and sanitation (WSS).

Thus, as companies and other stakeholders continue to play their role and support government efforts to implement its development plan, it is important that they are aware of which entities are investing in what and where the current gaps exist.

Highlights from the report

In summary, the report indicated that there has been a general increase in water expenditure services over the past three years. In total, expenditure for water and sanitation as well as support services activities was KShs. 46,894.51 million (US$ 467.21 million) in 2017/18, KShs. 60,747.31 million (US$ 606.53 million) in 2018/19 and KShs. 67,996.75 million (US$ 675.30 million) in 2019/20.

As would be expected, both domestic and non-domestic users were the main sources of expenditure in the WASH sector. The users contributed KShs. 18,678.82 million (US$ 186.10 million) (40%) in 2017/18, KShs. 18,921.01 million (US$188.92 million) (31%) in 2018/19 and KShs. 21,240.78 million (US$210.95 million) (31%) in 2019/20.

The multilateral and bilateral partner sources, accounted for the second largest share of expenditure, being 6,729.59 million (US$ 67.05 million) (14%) in 2017/18 and KES 10,909.06 million (US$ 108.92 million) (15%) in 2018/19, and a significant increase to KES 18,670.00 million (US$ 185.42 million) (26%) in 2019/20.

County Governments’ contribution to the WASH sector was slightly higher compared to the National Government over the three years with a percentage of 18.20 to that of 17.25 by the National Government. The NGOs/CBOs as a financing unit, was as follows: 2017/18 (5%), 2018/19 (16%) and 2019/20 (6%).

The corporate network providers, consisting of the Water Service Providers (WSPs) that reported to the Water Services Regulatory Board (WASREB) through the WARIS System, accounted for the largest expenditure in each year as compared to the other types of providers. The County Governments as service providers took the second-largest share, with the expenditure covering both recurrent and development for the departments responsible for water and sanitation. NGOs and CBOs accounted for 15 percent of expenditure as providers of WASH services in the three years, being the third largest contributor. National Government agencies consisting of the Ministry of Water and Sanitation, Water Works Development Agencies (WWDAs), WASREB and Water Sector Trust Fund (WSTF) accounted for 11 percent of the expenditure, mainly in terms of support service they provided to the WASH sector.

Domestic public transfers and tariffs play a very important role in the financing of WASH services in the country. In the three years, domestic public transfers accounted for the largest (40%, 33.5%, 34.3%) share of the total expenditure, followed by tariff (39.8%, 31.1%, 31.2%) and repayable financing (loans borrowed by the National Government) (8%, 13.3%, 15.4%). Repayable financing being the third largest in its contribution to the total expenditure, showed an increase in percentage throughout the three years. Voluntary contributions, mainly from international NGOs, took 16.4 percent of the expenditure in 2018/19, a significant increase compared to 2017/18 (4.8%) and 2019/20 (6%). Contribution from providers of services, mainly large network providers, reflected a relatively constant amount over the period.

Recommendations from the report

  1.   There is a need for MoWs to design a robust framework for monitoring expenditure on WASH within which Tracking Financing (TrackFin) is implemented.
  2.   There is also a need to bring onboard other entities in the implementation of TrackFin, such as KNBS, National Treasury, COG, MOH, MOE and development parties.
  3.   In the framework, counties should submit data directly for TrackFin so as to reduce reliance on the National Treasury. The National Treasury data is not derailed for the requirements of TrackFin.
  4.   The collection of data directly from development partners in the next phases of TrackFin is highly recommended.
  5.   The future TrackFin needs to consider incrementally including other components not yet in this and previous TrackFin. The components are hygiene, investment in WASH by the households and WASH activities undertaken by the private-for-profit sector.

Source: Kenya WASH Accounts FY 2017/18, 2018/19 AND 2019/20 by the Ministry of Water and Sanitation

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