Urban water fund as catalyst for resilient utilities
Germany and the Netherlands have joined forces to develop an innovative financing mechanism to support urban water utility turnarounds in the Global South. The Urban Water Catalyst Fund (UWCF) is an initiative of Dutch utility partnership programme WaterWorX, German based KFW development bank and GIZ, Deutsche Gesellschaft für Internationale Zusammenarbeit.
The three partners joined forces to assess the feasibility of a facility that would support urban water utilities in acquiring public and commercial finance and strengthening their resilience. The UWCF aims at supporting urban water utilities that have demonstrated willingness to improve their operations. Participating service providers would benefit from tailored technical assistance combined with demand-driven, short-term operational investments to improve the efficiency of their assets and business processes.
The goal of these interventions is to enhance the creditworthiness of utilities, and thus to prepare them for loan-financed infrastructure investments, especially from domestic financiers.
Leverage financial efforts
Inadequate capacity at many of these utilities, as well as chronic financing gaps in the water sector, are causing massive service deficiencies and undermining progress towards achieving the Sustainable Development Goals. WaterWorX, KfW and GIZ all have ongoing utility support programmes and consider their collaboration a unique opportunity to leverage each other’s efforts and pool utility know-how, infrastructure finance, and technical assistance.
WaterWorX is a utility partnership programme funded and implemented by a consortium of all ten Dutch water utilities and the Dutch Ministry for Foreign Trade and Development Cooperation (DGIS). The programme aims to improve the performance of 39 urban water utilities in 15 low- and lower-middle-income countries by 2030, and ultimately to provide 10 million people with improved water services.
KfW is one of the leading investors in development cooperation in the water sector worldwide. Together with GIZ, it is developing the UWCF on behalf of the German Federal Ministry for Economic Cooperation and Development, BMZ. GIZ, an enterprise owned by the Federal Republic of Germany, provides services worldwide in the field of international cooperation for sustainable development and international education. This includes global policy advice on water sector development and financing, as well as the promotion of peer-to-peer partnerships between water operators (WOPs) via its Utility Platform programme.