Sidian Bank launches Challenge Fund targeting Small Scale Water Service Providers

The Challenge Fund aims to bridge the financial gaps faced by water service providers and unlock their potential for growth, efficiency, and sustainability in the water sector.

The Fund is expected to offer financing solutions that align with the revenue streams of SSWPs, allowing them to repay the loans based on the revenue generated from their water services.

Speaking at the launch of the fund the Sidian Bank CEO Chege Thumbi highlighted that the Challenge Fund is specifically designed to enhance creditworthiness and attract investment finance for micro and small water infrastructure projects in Kenya.

"The Fund aims to expand and improve water services, thereby addressing the pressing issue of limited access to clean and reliable water supply for the majority of the population residing in peri-urban and rural areas,” said Thumbi.

With over 20,000 small piped water operators and point sources in the Kenyan market, including 7,000 community-based systems serving low-income populations, access to capital has been a persistent challenge.

Limited funds have restricted their ability to improve infrastructure, expand coverage, and provide reliable water services, particularly in peri-urban and rural areas.

Through the Challenge Fund, Sidian Bank aims to assist 150 SSWPs in raising Ksh.330 million (€2.7 million) in commercial finance for micro and small water infrastructure projects. This is expected to benefit endline users by providing safe, clean access to piped water, as well as improved sanitation and hygiene. The fund targets to reach 200,000 Kenyans.

The revenue-based financing model of the Challenge Fund offers an innovative approach tailored to the unique needs of water entrepreneurs.

By focusing on cash flows instead of traditional collateral, this financing model eliminates a significant barrier that has hindered the growth and development of the water sector in Kenya.