The African Water Facility: Boosting the Water Sector through Sustained Collaboration
The low rate of investments in the water sector has been a major obstacle to accelerate the development and improved management of water resources critically needed to help meet Africa’s growing water demand.
It is estimated that over US $50 billion a year will be required for the next 20 years for the sector to keep up with exponential population growth and the increasing needs of water-dependent industries in sectors such as food and beverages, chemicals, energy, paper, tourism and wood.
Intended as a multi-stakeholder response to this challenge, the African Water Facility (AWF) was initiated by the African Ministers’ Council on Water (AMCOW) in 2004 and launched in 2006 by the African Development Bank to attract the financial resources necessary to turn the tides.
Preparing bankable national, regional and trans-boundary water projects became the core focus of the AWF, achieved mainly by providing financial and technical assistance to undertake investment plans, feasibility studies, designs, and by setting up structured public-private partnership operations – necessary to mobilize donors and to ensure a project’s sustainability.
And so far, AWF efforts to attract investments have paid off.
Most AWF project preparation activities have effectively led to securing large investments from a wide range of financial institutions such as the African Development Bank, the Arab Bank for Economic Development in Africa, the European Investment Bank, the Fonds Français pour l’Environnement Mondial, the French Development Agency, the Global Environment Facility, the World Bank, and private financiers, among others.
On average, AWF has been able to attract €20 for every euro invested – and this exceptional leverage effect has made of AWF one the most successful water project preparation funds on the continent. As a matter of fact, as at 2012, AWF had successfully mobilized over €532 million in follow-up investments since 2006.
AWF projects have helped deliver more benefits to citizens, including access to drinking water, sanitation and hygiene, better agricultural water management for farmers, electricity production from hydropower, as well as access to water for industry, transportation, urban development, tourism and environmental management.
Case Study: Mobilizing €60 Million to Increase Water Security in the Seychelles
Attracting millions of euros to finance an ambitious plan designed to secure water supply to meet the water needs of an entire island nation is not simple. Yet in September 2011, the AWF supported the Seychelles Government to succeed in achieving just that.
In April 2008, the AWF responded to a funding request by the Seychelles authorities for the development of a long-term water supply master plan to avert the country’s water crisis, by offering them a grant of €955,000.
This master plan was developed to address recurrent water shortages that had progressively worsened since 1998 as a result of climate change, a rapidly deteriorating situation aggravated by a water demand increasing at a rate of about eight per cent annually.
The Government considered crucial to urgently implement solutions to meet the long-term water needs of the people living on the Seychelles’ three main islands of Mahe, Praslin and La Digue, as well as of its industry and tourism.
The measures were meant to put an end to frequent interruptions of water supply, which were adversely affecting the lives of the islanders and crippling the country’s economic development.
The AWF team supported the Public Utilities Corporation (PUC) over a period of three years to develop the country’s Water Supply Development Plan 2008-2030.
This long-term collaboration culminated in a donor roundtable that took place in the capital city of Victoria on September 2011, which was attended by over 50 stakeholders representing various local and international government agencies, bilaterals, multilaterals and commercial banks.
In the end, a total of about €60 million in pledges were announced by various agencies to cover nearly 80 per cent of the total investments and measures planed in the next five years, including:
- €25 million from the European Investment Bank and the French Development Agency for various investments and measures; in addition to €15 million for sewerage investments linked to the protection of water resources;
- €10 million from the African Development Bank; and
- €10 million from the Arab Bank for Economic Development in Africa.
The Seychelles project is a typical example of how AWF works with its grant beneficiaries to achieve their goals and to secure investment funding. And why it will continue boosting its project preparation portfolio, given how effective it has been in advancing the water sector in Africa.