World Bank provides Sh10 billion grant for improvement of water supply

Dar es Salaam. The Tanzania government has signed an agreement for a grant with the World Bank amounting to $4.5 million (equivalent to Sh10.35 billion) to improve water supply through improved solar pumping systems.

The project, under Global Partnership for Results-Based Approaches (GPRBA), will be implemented in 165 villages.

Speaking during the signing of the grant agreement on September 24, the Permanent Secretary to the ministry of water Dr Kitila Mkumbo said the introduction of solar water pumping systems is expected to significantly reduce operation and maintenance costs for Community Based Water Supply Organizations (CBWSOs).

It will also provide CBWSOs with financial resources as well as to lower the price of water to users and expand service to presently unserved communities.

These new systems will help decarbonize off-grid water pumping system in rural Tanzania and significantly reduce the cost of water extraction for at least 500,000 beneficiaries.

“The project opens up new resources of available funding to help close the vast investment gap for rural water supply in Tanzania and shift the focus to mobilizing private sector financing consistent with the World Bank's Maximizing Finance for Development (MFD) approach,” said Ms Zaruhi Tokhmakhian, Acting Head, GPRBA.

“With this project, we are seeking to introduce new technologies at scale to better facilitate private sector financing and sustainable rural water supply…” said Bella Bird, World Bank Country Director.

According to a statement released to the media the World Bank’s long-term engagement in the water sector will now include a large pilot on “Solar Water Pumping via Innovative Financing” which will support the Government of Tanzania in moving from dated and inefficient diesel-powered pumps with clean and climate-friendly solar pumping systems.

The statement added that to supplement GPRBA’s grant and to diversify sources of funding, the project uses a blended finance approach, combining debt finance and output-based subsidies.

GPRBA funds will facilitate a 60 percent subsidy against loans for CBWSOs to replace their diesel generators with solar-powered pumping systems.

The debt finance will account for 40 percent of the investment and the CBWSOs will be able to repay the loan over a four-year period with additional money made available by eliminating the use of diesel fuel.

In addition, an innovative mobile-banking payment platform will be piloted to manage revenue collection from water sales and loan payments from participating CBWSOs.

The funding also includes a technical assistance component for training the CBWSOs to perform at a greater capacity for improved impact, and to encourage their practice of loan repayment.