Investment Financing Facility (IFF)
Currently, the financing of the Tanzanian urban water utilities (UWASAs) is mostly based on grants. However, more UWASAs are steadily improving their performance by increasing their revenue generation. Besides, the regulator EWURA is approving tariff increases and with increased cost coverage and financial sustainability, more utilities would be eligible to access commercial loans for their investments. Therefore, the Ministry of Water (MoW) and KfW agreed to establish an Investment Financing Facility (IFF) with a volume up to 12 million Eur for supporting UWASAs to access commercial loans as well as setting incentives to local banks to provide the necessary funds. The goal is that the UWASAs finance their related investments by commercial financing through local financial institutions and attain successful implementation. Based on the achievement of agreed performance targets (Output Based Approach – OBA) and adherence to defined standards the UWASAs will then be rewarded by bonus payments out of the IFF/OBA-window. The main project objectives are as follows:
- Attracting well performing UWASAs to participate in the IFF Program
- Assisting UWASAs in the adequate preparation and finalization of infrastructure investment project proposals
- Confirmation of eligibility and feasibility of UWASAs project proposals
- Assisting in the proper and dynamic implementation of commercially financed short-term infrastructure investment projects of Tanzanian UWASAs
- Evaluation and verification of each individual UWASA investment project implementation and achievement of agreed performance targets and adherence to standards
- Supporting MoW in luring participating Tanzanian commercial banks, to actively market and provide loan facilities to UWASAs
- Assist MoW in ensuring proper implementation of the Facility in line with the guidelines.
