Sidian Bank And Partners Role Out A Ksh 1 Billion Loan Facility

Sidian Bank, Oikocredit, and Aqua for All have launched a blended finance program that will integrate climate action and gender inclusion in (Water, Sanitation, and Hygiene) WASH Financing.

The key focus of the program is on WASH lending, which will support small-scale, private, and public water services providers, households, and enterprises with a strong emphasis on climate-resilient infrastructure and women-owned businesses. The initiative aims to leverage KES 1 billion in commercial financing initiatives towards WASH infrastructure projects.

This partnership aims to support Water Utilities through technical assistance and performance-based grants to build capacity for commercial borrowing through enhanced revenues due to mitigated physical and commercial water losses.

In a statement from Chege Thumbi, Sidian Bank CEO  “As a bank, we are committed to supporting Sustainable Development Goal 6 by improving access to WASH financing. This includes enabling growth in access to clean, safe drinking water, enhancing sanitation and hygiene conditions, and developing effective water resource management systems. Today, we are pleased to launch Phase III of WASH Financing in partnership with Aqua for All and Oikocredit. This program aims to catalyze access to WASH financing and provide resources to improve water and sanitation services in Kenya.

Our blended finance three-year program integrates climate action and gender inclusion into WASH financing. Blended financing models, which combine revenue-based credit appraisal with individual risk-based methodology and de-risking instruments like portfolio guarantees, have proven to be financially viable. These models support viable projects even when traditional collaterals are insufficient. Our partnership aims to support SMEs and WSPs through targeted lending, technical assistance, and performance-based incentives to enhance water infrastructure, and climate-resilient infrastructure, promote sustainable practices, and improve gender equity in access to finance.

We expect to reach 3 million people through this program, targeting the issuance of loans to at least 480 MSMEs. In support of gender inclusion and climate focus, we aim to allocate 40% of the credit facilities to women-led businesses and 60% climate-proof infrastructure facilities to WASH SMEs and Water Service Providers.” He ended.

Phase III of the tripartite collaboration between Sidian Bank Limited, Oikocredit, and  Aqua for All is set to commence in June 2024 and run through May 2027. The facility will provide financing solutions that align with the revenue streams of small-scale water providers. This initiative will unlock the potential for growth, efficiency, and sustainability in the water sector. Ultimately, it will contribute to increasing access to clean and reliable water supply for the majority of Kenyan citizens, particularly those residing in peri-urban and rural areas.

Over the past two years, Sidian Bank has successfully implemented the Covid-19 WASH Loan Facility,  a €4 million loan initiative launched in August 2020 aimed at supporting micro, small, and medium-sized enterprises (MSMEs) and small-scale WSPs in Kenya amidst the challenges and opportunities presented by the pandemic. Its primary goal was to safeguard continued access to essential water and sanitation services during the crisis and recovery phases. In its first two years, the program has benefited approximately 1.39 million individuals, created 3,266 jobs, and supported 627 enterprises, including financing for six WSPs. The investments, totaling €5 million, have facilitated minor infrastructure and pipeline rehabilitations, solar pumping system installations, and the procurement of essential WASH assets and supplies.

Building on this success, Sidian Bank, in collaboration with Aqua for All, has established the Challenge Fund, a three-year initiative starting January 2023, to enhance access to safe drinking water further. This fund provides loans ranging from KES 300,000 to 10,000,000, covering up to 80% of project costs, with subsidies and technical support to ensure project sustainability. With an initial focus on regions including Kajiado, Kiambu, Machakos, Makueni, Nairobi, and Nakuru, the Challenge Fund targets small-scale piped water providers serving at least 300 households.

Sidian Bank will roll out a new revenue-based financing model to provide financing for SSWPs based on cashflows. This means that the SSWPs will be able to pay back the loans using the revenue generated from their water services. This innovative approach tackles the lack of traditional collateral, a significant obstacle in the water sector.

“At Aqua for All, climate action and gender inclusion are integral aspects of our partnerships with financial institutions and investors. We are excited about the launch of this new program with Sidian Bank, building on our collaboration to increase access to WASH financing in Kenya since 2020. We are equally delighted to have Oikocredit as a partner in our mission to catalyze impact-first investments in the Kenyan WASH sector. Recognizing the critical role of private funds in achieving universal access to water and sanitation, we will continue to support the Government of Kenya in attracting more private sector investments. I look forward to implementing this financing program, which will contribute to a climate resilient and equitable access to safe water and sanitation for all in Kenya,” said Josien Sluijs, Managing Director of Aqua for All.

Mirjam ‘t Lam, Managing Director at Oikocredit, said: “We are delighted to be launching, together with our Kenyan inclusive finance partner Sidian Bank and our global foundation strategic partner Aqua for All, a new program to provide additional access to water and sanitation financing for low-income communities. Our new joint initiative promoting affordable and climate-resilient WASH services for Kenyans is an exciting development arising from  two of our most valued partnerships.”

Sidian Bank is intentional about supporting the Government to address Sustainable Development Goal 6  through the Sidian WASH Program to ensure access to clean water and sanitation for all Kenyans.

Read Also: Sidian Bank Honored At The Think Business Bank Awards 2024