Commercial Finance and Drinking Water

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Happy 2014! I will start blogging on this topic for the coming months, because this is a hot needle topic but controversial. Water is a human right and people can not be exploited paying too much for water, on the other hand good drinking water is a scarcity and can be seen as an economic good. What I'm saying is: Commercial Finance and Drinking Water is not an obvious topic, it is not a 'no brainer'.

In Kenya, MWF is working with Vitens Evides International in developing a pro poor strategy for the Mombasa Water Company: MOWASCO. Part of the strategy will be investing the opportunities to combine commercial and public funding to finance the extension of drinking water services in the so called low income areas.

From the perspective of a commercial financier, the credit rating of MOWASCO is poor, in fact MOWASCO does not have a credit rating at all. In such a case, commercial financiers will require a ring fenced structure, in this case MOWASCO should share the vision of seperately structuring the new water services in a so called special purpose vehicle. From the perspective of the water service provider this is not business as usual.

Sharing the same starting points, fundamentals and vision is the first and most important step to take when combining commercial and public funding. This step includes important strategic decisions. 


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