Keep the Taps Flowing During and After COVID-19
Situation: Provision of clean water, proper hygiene, and sanitation are essential lines of defense for COVID-19 and keeping our communities healthy by preventing spread of disease.
With serving over 12M Kenyans concentrated in urban areas, Water Service Providers (WSPs) are key lines of defense and strategically positioned to support behavior change in their communities. They also have the opportunity to expand their coverage to all 20M Kenyans living within their service area.
Note: Water Service Providers do not receive funds from the national treasury for the operations and maintenance of their services. Operation and maintenance costs are covered by water bills.
Key Impacts of COVID-19 on WSPs:
● Revenue collection rates fell from 95 to 30% from March to April, impacting the ability of WSPs to cover expenses and keep providing water and sanitation services. Each month WSPs are now accruing 1.1B KES per month in debt.
● WSPs have incurred additional non-budgeted expenses from staffing and provision of handwashing stations, fuel for water bowsers, personal protection equipment, soap, and sanitizers.
● Slow down in exports from China and India has lowered chlorine stockpile; thus, risking ability for proper water disinfection.
Risks: Taps Stop Flowing Due to Cashflow Issues or Staff Getting Sick
Opportunities: Build Stronger Utilities With Greater Trust and Service Provision
Depending on the actions taken, COVID-19 related debt for WSPs is projected to be 4.5B KES-10.3B KES.
There are three categories of support needed:
1. Immediate smart WSP subsidies and policy to lower accumulating debt and ensure water stays flowing
2. Immediate COVID-19 response by WSPs to extend services, reduce COVID-19 transmission, and improve communications to help stabilize revenue collection
3. Debt-forgiveness programs and building back better
1. Immediate Smart Subsidies and Policies
The total debt figure of 10.3B KES assumes 6 months of revenue collection reduction from 95% to 30% and that it takes 12 months for revenue collection rates to rebalance to 98%.
“We have enhanced quality water services accessibility to all the people, regardless of their ability to pay. We have also partnered with matatu & boda boda operators to provide all stages and sheds with hand washing points.”
2. Immediate COVID-19 Response and Strategic Communication
“More sensitization of customers is required through print and electronic media on the need to pay bills to enable the company to deliver water and also to avoid ballooning debt, which will lead to mass disconnection post COVID-19.”
2. Debt reduction of 30% from increased response assumes actions lowers the length of the COVID-19 crisis from 6 to 2 months. 3. Debt reduction by 25% of strategic communication assumes actions improve repayment rates stabilization from 12 months post-crisis to 6 months.
“Fueling water bowsers is a challenge because they are consuming a lot of fuel in order to serve
the informal settlements.”
3. Debt-forgiveness Program and Building Back Better
A loan-forgiveness program should be structured to provide forgivable loans to WSPs based on building back better. The loan forgiveness could target improving revenue collection, prepaid water ATMs and improving WSPs hygiene and sanitation capabilities to prevent the next outbreak. The loan forgiveness program structured at 50% grant, 50% loan at 4% interest with a first lost guarantee for banks to on lend at concessional rates, would need $20M to reduce the debt of utilities by 40%.