Investment Financing Facility (IFF)
Currently, most of Tanzanias urban water supply and sanitation associations (UWASAs) are grant-funded. However, more UWASAs are steadily improving their performance by increasing their revenue generation. In addition, the regulator, EWURA, is approving tariff increases, and with increased cost recovery and financial sustainability, more utilities would be eligible to access commercial loans for their investments. To this end, the Ministry of Water (MoW) and KfW have agreed to establish an Investment Financing Facility (IFF) of up to EUR 12 million to support UWASAs in accessing commercial loans and to incentivize local banks to provide the necessary financing. The aim is for UWASAs to finance their investments through commercial financing from local financial institutions and to achieve successful implementation. Based on the achievement of agreed output-based targets (OBA) and compliance with defined standards, the UWASAs will be rewarded with bonus payments from the IFF/OBA window. The main objectives of the project are:
- 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.
