“IDENTIFYING FINANCIAL NEEDS AND CONSTRAINTS IN THE WATER SECTOR”

PRESENTED DURING THE WORKSHOP ON:

“INNOVATIVE WATER SECTOR FINANCING”

AT SAI ROCK HOTEL, MOMBASA 7TH – 11TH NOVEMBER 2011

ByHellen k. MusyokiThe Kenya Water Sector Funding Needs

THE WATER SECTORTHE WATER SECTOR

The sector has many players:According to “The WSSP 2010-2015” these are

actors in IWRM for long term developmentCoordination/cooperation to stop the

destruction of the environment (forests, wetlands e.t.c.)

Water availability/water storage developmentWater for production (irrigation and industry)Disaster risk reduction and preparedness due

to climate change, e.t.cWater and Sanitation Sector – Vision 2030Environment, Water and Irrigation Sector - MTEF

2 The Kenya Water Sector Funding Needs

The Ministry’s Objectives

Include:• to boost socioeconomic development by

improving water availability throughout the year for domestic and productive activities;

• enhancing food and other crop production; and

• strengthening partnerships with all water stakeholders to ensure adoption of sustainable practices in the extraction and utilization of water resources.

3 The Kenya Water Sector Funding Needs

MoWI SP 2009-2015

• The Plan projected that Kshs 221.49 billion will be required to finance the Plan activities between 2009 and 2012. While the source of the bulk of these funds will be from the Government, it is expected that a substantial proportion will be provided by the development partners. It is also expected that increasing amounts of Appropriations in Aid will be raised, while the Ministry will also seek to realize savings through developing innovative cost reductions and more efficient utilization of available funds.

4 The Kenya Water Sector Funding Needs

The NWSS & NWRMSrecognizes the importance of strategies that

advocate:the achievement of full cost recovery

(including depreciation and financing costs) private sector participation, enhanced local private sector participation

in water schemes (including those operated by communities) and

the creation of pro-poor business opportunities through small-scale independent water providers

5 The Kenya Water Sector Funding Needs

Role of Ministry in support of Vision 2030

• Infrastructural Rehabilitation and Expansion to provide adequate water and sewerage services for the country to support the Economic, Social and Political Pillars.

The strategic direction identified included:• To provide more resources to the poor and

other vulnerable sections of society;• To mobilize adequate funding for investment

on water infrastructure (water, sewerage and storage) in order to increase coverage; and to attain and maintain institutional financial adequacy and sustainability.

6 The Kenya Water Sector Funding Needs

THE BUDGET PROCESS Budget Process for the County Governments(article 224) County governments to prepare and adopt their own budgets

and appropriation National Government water Functions1. The use of international waters and water resources.2. Protection of the environment and natural resources with a

view to establishing a durable and sustainable system of development, including, in particular— water protection, securing sufficient residual water, hydraulic engineering and the safety of dams;

County Functions 1. Implementation of specific national government policies on

natural resources and environmental conservation, including—(a) soil and water conservation; and

2. County public works and services, including—(a) storm water management systems in built-up areas; and(b) water and sanitation services.

County assembly Approve plans and policies of county governments

7 The Kenya Water Sector Funding Needs

Budgeting: Planning Stage

Under the National Vision 2030-National plans- MTP 2008-2012

19 sectors - Water and sanitation sectorWater Resources ManagementWater and sanitation Services Irrigation Drainage and Land Reclamation

The ministry of water and other implementing agencies develop their strategic plans based on the national MTP

Exercise coordinated by the ministry of planning to coordinate the planning process

8 The Kenya Water Sector Funding Needs

Budgeting: Formulation Stage

Development of sector budget proposalWater Sector Working Group embark on

developing sector budget proposal in line with the policies set out in the budget outlook paper

Mainly through consultations with line ministries and public participation

All sub units under a line ministry should participate.

Development of and approval of Allocation Bills

The BPS will include draft bills indicating the proposed allocation of revenue between the levels of Government and the allocation among county governments

9 The Kenya Water Sector Funding Needs

Budgeting: Formulation StageDevelopment of Ceiling at Accounting

Unit Level. The National Treasury will develop

ceilings for the accounting units based on the approved ceilings while the county Treasury will develop ceilings to the country accounting units.

Preparation of Budget EstimatesThe accounting units will embark on

preparation of itemized/program budgets based on the ceilings provided.

Preparation of Budget EstimatesThe accounting units will embark on

preparation of itemized/program budgets based on the ceilings provided.

10 The Kenya Water Sector Funding Needs

The Water Sector ReformsAimed at providing the basis for a long

term, economically, financially, environmentally and socially sustainable impact on poverty reduction and economic growth by employing a positive pricing policy for the water regime and redefining the capacities of the water sector institutions.

11 The Kenya Water Sector Funding Needs

V.

Water Sector Funding Sources Water Sector Funding Sources

Revenues and user contributions GOK Development and Recurrent budgets Development partners (DPs) Local Authorities Transfer Fund (LATF) Constituency Development Fund (CDF) The NGO and Off-budget donor support SIP 2009

12 The Kenya Water Sector Funding Needs

Total Sector Funding By Source – SIP 2009

2011/12 2014/15 2026-30 (Average) %

WS revenue & user contribution 10,490

15,811 34,929 *25

Sanitation revenue & user investment

23,859

27,022 19,715 33

Non-water sector San invest. 6,103

6,702 6,676 8

WRM fees/ water user charges 413

848 2,274 1

ID&LR private invest. And users 3,448

3,630 3,559 5

GOK Recurrent 3,445

3,445 3,445 5

GOK Development 7,884

7,884 7,884 11

DP Commitments 11,225

11,225 11,225 16

Estimated NGO funding 2,255

2,255 2,255 3

CDF funding 2,693

2,693 2,693 4

LATF funding 376

457 863 1

TOTAL 72,191

81,972 95,518 100

13 The Kenya Water Sector Funding Needs

The Ministry’s budgetFinancial Year 2005/6

(Kshs. Million)2006/7(Kshs. Million)

2007/8(Kshs. Million)

2008/9(Kshs. Million)

2009/10(Kshs. Million)

2010/11(Kshs. Million)

GOK Reccurrent 2,189 2,928 3,574 4,171 3,361.6 3,779.9

GOK Development

3,999 5,318 4,950 9,041 10,730.6 12,016.2

Donor Development

2,118 2,234 4,377 6,375 12,522.3 20,513.5

Total 8,301 10,482 12,901 19,587

26,614.5 36,309.6

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A Case of GOK funding

Dam Name Project Cost 2008/09 2009/10 2010/11 2011/12 Total

Maruba - Machkos 386 250 136 - - 386

Umaa -Kitui District 879 250 223 516 - 989

chemususu - Baringo District 5,032 200 676 857 1,380 3,113

Badassa - Marsabit District 2,472 250 124 900 1,550 2,824

Kiserian - Kajiado District 1,062 250 395 450 - 1,095

15 The Kenya Water Sector Funding Needs