1. “IDENTIFYING FINANCIAL NEEDS AND CONSTRAINTS IN THE WATER SECTOR” PRESENTED DURING THE WORKSHOP ON: “INNOVATIVE WATER SECTOR FINANCING” AT SAI ROCK HOTEL, MOMBASA 7 TH – 11 TH NOVEMBER 2011 By Hellen k. Musyoki The Kenya Water Sector Funding Needs

2. THE WATER SECTOR The sector has many players: According to “The WSSP 2010-2015” these are actors in IWRM for long term development  Coordination/cooperation to stop the destruction of the environment (forests, wetlands e.t.c.)  Water availability/water storage development  Water for production (irrigation and industry)  Disaster risk reduction and preparedness due to climate change, e.t.c Water and Sanitation Sector – Vision 2030 Environment, Water and Irrigation Sector - MTEF 2 The Kenya Water Sector Funding Needs

3. 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

4. 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

5. The NWSS & NWRMS recognizes 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

6. 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

7. 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 Functions 1. 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

8. Budgeting: Planning Stage Under the National Vision 2030-National plans- MTP 2008- 2012 19 sectors - Water and sanitation sector Water Resources Management Water 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

9. Budgeting: Formulation Stage Development of sector budget proposal Water 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

10. Budgeting: Formulation Stage Development 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 Estimates The accounting units will embark on preparation of itemized/program budgets based on the ceilings provided. Preparation of Budget Estimates The accounting units will embark on preparation of itemized/program budgets based on the ceilings provided. 10 The Kenya Water Sector Funding Needs

11. The Water Sector Reforms Aimed 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

12. Water Sector Funding Sources V. 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

13. Total Sector Funding By Source – SIP 2009 2011/122014/152026-30 (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 5 GOK Development 7,884 11 DP Commitments 11,225 16 Estimated NGO funding 2,255 3 CDF funding 2,693 4 LATF funding 376 457 863 1 TOTAL 72,191 81,972 95,518 100 13 The Kenya Water Sector Funding Needs

14. The Ministry’s budget Financial Year2005/6 (Kshs. Million) 2006/7 (Kshs. Million) 2007/8 (Kshs. Million) 2008/9 (Kshs. Million) 2009/10 (Kshs. Million) 2010/11 (Kshs. Million) GOK Reccurrent2,1892,9283,5744,1713,361.63,779.9 GOK Development 3,9995,3184,9509,04110,730.612,016.2 Donor Development 2,1182,2344,3776,37512,522.320,513.5 Total8,30110,48212,90119,587 26,614.536,309.6 14 The Kenya Water Sector Funding Needs

15. A Case of GOK funding Dam NameProject Cost2008/092009/102010/11 2011/12Total 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