Adjusting conditions and attitudes: creditworthiness and debt emission eagerness in Kenya’s water sector
Author: Manuel Heckel (University of Cambridge)
Keywords: Private Development Finance, Urban Water and Sanitation, Donor Intervention, Kenya
Session 29: Private Finance in African Urban Development: Speculation, Value, Territories
Friday October 25, 10:45–12:15 & 13:45-15:15, Far West Studio, John Moffat Building
Adjusting Conditions and Attitudes: Creditworthiness and Debt Emission Eagerness in Kenya’s Water Sector
Abstract
Despite the decade-long promotion of private development finance by Development institutions, a gaping mismatch seems to exist between expectations and narratives on the one hand (e.g. ‘Billions to Trillions’ or ‘Maximizing Finance for Development’), and actual financial flows into development initiatives on the other. This mismatch is especially notable in basic services sectors, which are crucial to directly improving the lives of hundreds of millions. Despite plans to ’escort’ finance into sectors such as water supply and sanitation, for example, the so-called ‘Wall Street Consensus’ (Gabor 2021) has barely touched ground and private finance has remained ‘present-in-absence’ (Bernards 2023). Years of grooming by donors has created some potential borrowers (e.g. water utilities), but this hard-won ‘bankability’ has rarely led to sustained private investments. Kenya’s water sector exemplifies the limited private development finance flows. To improve coverage in the historically underfunded water and sanitation sector, a range of national sector organisations and international Development institutions have worked with the country’s most promising water utilities. This included de-risking and assistance to increase utilities’ creditworthiness and bankability of their projects. However, faced with the refusal of (near-)creditworthy utilities to borrow on commercial terms, donors and sector organisations have recently changed gear and aimed to align utilities’ valuation of private development finance with theirs. This rehash of ‘attitude adjustment’, I will argue, has been critical to establish utilities’ eagerness to emit debt and a steady private development finance flow to basic services sectors, transforming the natures of utilities, services delivery, and urban development.