|Publisher||Council of Governors (CoG)|
|Year of Publication||2016|
The Constitution of Kenya ensures the provision of safe water in adequate quantitiesand access to sanitation as human right for the citizens. To achieve this goal, substantialinvestment in water supply and sanitation services infrastructure is required both forrehabilitation of existing infrastructure, as well as for expanding water supply and sewerconnections to unserved areas. Given the competing demands from different sectors ofthe economy, it is increasingly difficult for the available public sector resources, to matchinvestments required in the sector to meet the needs for growing population.Partnership with the private sector is critical in plugging the finance gap for infrastructuredevelopment. Water Services Providers (WSPs), operating above full cost coverageand under an effective regulatory environment, provide an opportunity for private sectorfinancing. This is also enhanced by the bankability of the subsector.In 2011, to further help facilitate commercial lending into the water sector of Kenya, theWater Services Regulatory Board (WASREB), in collaboration with the Water and Sanitation Programof the World Bank, facilitated shadow credit ratings of 43 Water Services Providers in Kenya. Theresults of this exercise were published in the report Financing Urban Water Services in Kenya: UtilityShadow Credit Ratings. The report identified 13 creditworthy WSPs. The publication of the UtilityShadow Credit Ratings report was a large step towards accessing commercial financing for thewater services subsector in Kenya. The report spurred interest in commercial lending to the sectoramong WSPs, commercial lenders and development partners. However, in spite of the advantages,the report could not easily be annually updated because of complexity around data collection andanalysis and cost required for the annual update.To resolve this problem and provide a timely and cost effective credit assessment tool, the WSPCreditworthiness Index was created. The Creditworthiness Index provides a simplified snap-shot ofthe financial and operational performance of WSPs in lieu of performing full shadow credit ratingsanalysis, which is more thorough but time consuming and expensive. The Creditworthiness Indexis automated and calculated from data collected by WASREB. Going forward, the CreditworthinessIndex will be incorporated into the annual Impact Reporting.The trade off of this automation is that qualitative analysis normally performed in detailed shadowcredit rating is omitted. However, there is a significant correlation between the CreditworthinessIndex scores and the recently performed shadow ratings.The Creditworthiness Index provides a useful starting point for screening the creditworthiness of theWSPs by the commercial lenders and becomes a management tool for the WSPs. It will also providethe public with insights about the capacity of the WSP to provide sustainable provision of waterservices and the basis for demanding a high degree of financial accountability.This report, together with the Impact Report, provides a snapshot of the financial and operationalperformance of the WSPs across the sector and insights into the sector wide trends. Together withthe commercial lending toolkits that have been developed, the report provides both the public andprivate sector with an insight of the sub-sector and the opportunities available.I wish to acknowledge the various parties who made this exercise a success. I thank the World Bankfor its partnership with the WASREB in the exercise, the WSPs for their cooperation in providinginformation, WASREBs staff for quality control and coordination of the exercise, and all the teamsinvolved in the drafting and editing of this report.
|Tags||kenya, water, service, provider, creditworthiness, index, report, november, 2015, Kenya Water Service Provider Creditworthiness Index Report November 2015, Counties / General|