00:00The African Development Bank says water investments on the continent have increased over the past decade from upstream preparation of
00:07projects to desalination efforts, service delivery and wastewater treatment plants.
00:12But Machera Chirwa, the bank's water and sanitation department director, says gaps within the sector won't just be resolved with
00:19more capital injection.
00:20A recent report from the African Union actually cited that about 80 percent of projects will find it difficult to
00:28secure financing.
00:29And this is really all because of the level of readiness or preparation.
00:33As you know, for investment to occur, you need well-prepared, technically prepared projects, but they must also demonstrate economic
00:41and financial impact.
00:42So one of the major challenges is the stock or availability of bankable projects in countries.
00:48I mean, almost all countries have got good plans and ideas, but when you look at the readiness of those
00:54projects, that's a major obstacle.
00:56And that is why the African Development Bank, through the African Water Facility, invests heavily in upstream preparation of projects
01:03to enable countries to have a large pool of investable projects.
01:07The second element that is an obstacle is the institutional and regulatory environment in most countries, which, you know, make
01:18it difficult for investment to happen in terms of definition of institutional responsibilities, but also how the sector itself is
01:26regulated.
01:27Tariff setting, quality assurance, improvement of service.
01:32These elements need to continue to be reformed and improved to attract more investment.
01:37Is there still friction when you look at some of the other financing projects that are happening across the continent
01:43with the bank and some of the individual countries?
01:46I wouldn't call it friction.
01:48The bank definitely is not in any sort of friction.
01:51I mean, at times, it's priorities.
01:54Countries have different priorities at the time.
01:56And at times, we feel like in the water sector, countries need to prioritize more the importance of investing in
02:03water as they prioritize their investments.
02:06But also, you know, if you look at Africa, a lot of water resources are shared between countries.
02:12And that could be a source of friction between countries because they're utilizing a resource that belongs to them or
02:19multiple countries.
02:20And we see this also as an opportunity for building peace and regional integration, ensuring that countries collaborate in the
02:28way they develop their water resources to avoid friction and potential conflict.
02:31We've also reported a bit on Bloomberg about water bonds that have been effective in some parts of the continent.
02:39Have you identified yet which instrument, excuse me, investment instrument is perhaps poised to really enhance and support the growth
02:49of this sector?
02:49I think we have to use every instrument available out there.
02:53Exactly as you say, bonds are being used.
02:56I think we've seen water bonds issued in countries like Tanzania.
03:00We've seen a sustainable bond.
03:02The bank itself actually also issued a sustainable bond a few years ago, which includes investments in water.
03:08So that's one aspect.
03:09But also when we talk about climate funds, I mean, if you look at almost all the water projects,
03:16they are either, you know, climate resilient or mitigating against climate change.
03:22And therefore, resources from climate funds are a key enabler for investments in water.
03:28And when you talk about blended financing, where also we bring concessional resources as well as, you know, commercial resources
03:36to blend and make it more sustainable and affordable.
03:40Of course, there are many instruments.
03:43I think we have to apply all of them that are available and can be attractive for the water sector
03:48to see the impact that we want to see.
03:49In terms of rates, it might take an amalgamation of different instruments to actually move, push the needle forward.
03:57Indeed. I mean, currently we still have about 400 million without access to clean water, 800 million without access to
04:03sanitation.
04:04So we need to invest more.
04:06I mean, governments also need to provide more resources within their national budgets.
04:10At the moment, most countries are investing less than 1% of their GDP for the water sector.
04:15And yet it's so transformative in many areas of the economy and human and social development.
04:20So countries as well need to invest more of their resources and make sure also we manage the assets that
04:26are already on the ground.
04:27Because it's not always new money, it's also managing what we have more effectively so that we can reduce waste,
04:33ensure more efficiency and make sure that we can provide, you know, services on a more sustainable manner going forward.
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