News Release  No 2011/02

Contacts

In Washington:
Jacqueline Sibanda, tel. (+1) 202 458 2974
jsibanda@worldbank.org

In Nairobi:
Peter Warutere, tel. (+254) 20 322 6444
pwarutere@worldbank.org

Nairobi, October 31, 2011 – The World Bank, acting as administrator for the Global Partnership on Output-Based Aid (GPOBA), has approved a grant of US$5.24 million to increase access to electricity for low-income households in Kenya. The project will subsidize connections to the electricity grid for around 66,000 households (roughly 265,000 people) in Kenya’s largest slum, Kibera (Nairobi), and informal settlements in the Western, Central, and Coast Provinces.  The scheme will be implemented by Kenya Power and Lighting Company Ltd, a partially privately-owned company listed on the Nairobi Stock Exchange.

This project follows up on the Maji ni Maisha project that provides access to water for community groups.  A key difference is the important addition of sewerage services and sanitation facilities to informal settlements in the Nairobi area. The US$4.3 million grant agreement will help extend access to clean and safe water, and sewerage services to about 80,000 low-income residents (about 16,000 households) among previously unserved areas. The Nairobi City Water and Sewerage Company (NCWSC) will implement the project, in collaboration with the Athi Water Services Board through a social connections program that champions the right of access to affordable water and sanitation services. The World Bank’s Water and Sanitation Program is providing technical support to the project, to be implemented over the next three-and-a-half years through June 30, 2017. Through this social connections program, the grant will subsidize up to 70 percent of sewerage connections, and up to 40 percent of connection for water supply. The remaining connection costs will be funded by household deposits and a five-year loan from NCWSC to eligible households. NCWSC will pre-finance all capital costs estimated at US$7,200,000.

Photo: St. Aloysius Gonzaga High School Journalism Club via Flickr (CC by 2.0)

Nairobi, December 11, 2014  – The World Bank, acting as administrator for the Global Partnership on Output-Based Aid (GPOBA), has signed a grant agreement with the Republic of Kenya approving funding of US$11.8 million to help expand access to water and sanitation in low-income urban areas.  This innovative, coordinated program is projected to reach 30,000 low-income urban households – or 150,000 residents – and builds on lessons from a Kenya community-managed water pilot program which extended access to water to 190,000 beneficiaries.
 
 “This is a significant step toward bringing more water and sanitation services to the poor, and demonstrates the Kenyan government’s confidence in the output-based approach, using resources from the public and private sectors,” said Diariétou Gaye, World Bank Country Director for Kenya.
 
The project is facilitated with funding from the Swedish International Development Cooperation Agency (Sida), and will be managed by the Water Services Trust Fund of Kenya (WSTF).  It will help water service providers access loan finance from commercial banks to invest in water and sanitation subprojects, with subsidies covering up to 60 percent of the cost of providing services to low-income households.
 
Output-based aid is an innovative approach to development financing, where payment is linked to performance.  Under the Kenya agreement, water service providers will not receive the subsidy until water and sanitation services are functional and reach the target group.
 
“This project will help water service providers access commercial credit to expand water and sanitation services to poor urban areas, reducing the connection fee and increasing access for poor urban households,” explained GPOBA Manager Carmen Nonay.
 
Kenya Vision 2030, the government’s development program, includes universal access to water and sanitation as one of its goals by the year 2030.  Rapid population growth and accelerating urbanization present growing challenges for developing countries in these sectors, where the cost of connecting to water and sanitation services is prohibitive for the poor. As previous grant agreements for water and sanitation have centered on the Nairobi areas, the capital city is not included under the terms of this project.
 
Ismail Fahmy Shaiye, CEO of the Water Services Trust Fund, stated: “We look forward to working with the World Bank and the Government of Sweden as development partners in this innovative financing scheme to bridge the public funding gap.  Together and within the framework of devolved structures in our counties we can work toward improving the lives of underserved communities and making Kenya Vision 2030 a reality.”

Image: Video Still from "Power for Kenya's Urban Poor"

In Nairobi, Kenya, roughly 2 million people live in informal settlements, many below the poverty line.  A key factor that has kept this population in poverty is a lack of electricity.
 
But now that’s all changing, thanks to a new program implemented by the Kenya Power and Light Corporation, with support from the World Bank, via the Global Partnership for Output-Based Aid (GPOBA) and the Energy Sector Management Assistance Program (ESMAP). In just one year, the project saw a thirty-fold increase in the number of safe, reliable, and affordable household connections to electricity.

 
The Challenge
 
Before the project started, markets had to close at dusk, limiting their business.  People lit their homes using shaky, smelly paraffin lamps that constantly and expensively needed refueling.  Residents could not recharge their phones, and children could not study at night.
 
The lack of electricity also created an unsafe atmosphere.  Residents complained that while walking down the unlit streets they could be robbed without seeing their assailant coming or going.  One man complained that his backpack containing his tools for work had been stolen. 
 
To obtain electricity, some residents hooked their households up to illegal power lines, strung up by cartels.  These unprofessional and costly connections resulted in several incidents of fires and electrocutions.
 
“I witnessed a friend of mine who got electrocuted trying to connect wires and died on the spot,” says Benta Anyango, a resident of the Mathare Settlement.  “Many young children have also died of electrocution by live wires on the ground.”
 
For several years, Kenya Power had been trying to bring safe and reliable power connections to neighborhoods like Mathare—but with little success.  “For two years, we struggled,” said Harun Mwangi, a former senior Kenya Power official and the leader of the program at the time.  “We realized we needed to find another way.”
 
From 2012 to 2014, the program had succeeded in connecting only 5,000 households.  A year later, that number spiked to over 150,000. 
 
Why?
 
The Solution
 
The successful strategy adopted by KPLC and its partners at GPOBA and ESMAP involved the following components: 

• Shared Knowledge.  The Energy Sector Management Program brought in experts from countries like Brazil, Colombia, and South Africa to share their experiences of connecting informal settlements to electricity.
• Community Involvement.  Rather than try to take down illegal connections, KPLC marketed the benefits of safe, reliable legal power to local communities, getting them to “buy in” and feel a sense of ownership about the program.
•  Affordability.  A grant from GPOBA subsidized the start-up cost of the connections, helping make them affordable for new customers.  Once the connection is installed, customers pay only for the electricity they use by buying pre-paid chits, available at any corner shop.  In fact, many of the former vendors of illegal electricity are now in the legal business of selling Kenya Power chits.

• Transparency.  The output-based aid approach, in which grant money is only disbursed once results have been achieved and independently verified, meant that communities could see firsthand that the program worked and could be trusted.  

“Compared to the illegal power, it has better and brighter light.  It’s as cheap as the illegal power and it’s safe, so we embrace it,” says Benta Anyango.
 
“Illegal electricity has many problems.  It makes you uneasy.  You always worry that your business will burn down,” agrees James Nadi, also a resident of the Mathare Settlement and a shopkeeper.  “Now I have a security light and a fridge which I use to make ice cream.  For me it has been good.” 
 
“People now come to us, asking us to light their communities,” says Dr. Ben Chumo, MD & CEO of Kenya Power and Light Corporation.  “This is no longer a Kenya Power project.  It’s their project.”

See also World Bank feature story "Bringing Electricity to Kenya's Slums: Hard Lessons Lead to Great Gains"