WATER SUPPLY FROM THE PRIVATE SECTOR PERSPECTIVE

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1 WATER SUPPLY FROM THE PRIVATE SECTOR PERSPECTIVE EFFLUENT & WASTE WATER MANAGEMENT INTERNATIONAL CONFERENCE - EWMC 2014 BY WAFULA NABUTOLA, M.SC. NOVEMBER 25, 2014: AT LAICO REGENCY HOTEL 1

2 WATER IS EVERYTHING!! 2

3 WATER SHORTAGE IN AFRICA 3

4 GAME PLAN KEPSA Kenya Private Sector Alliance Self Water Consumption Global Water Crisis A Balance Society Const. of Kenya 2010 Articles 10, 22, 43, 56, 204 Water Sector Value Chain Ways to Invest World s most Valuable Resource Investment in Water PPP Public Private Partnerships Principles of Modern Concession Laws Public Sector vs. Private Sector = On the same side? Q and A 4

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8 KEPSA SECURITY SECTOR BOARD (KEPSA) KEPSA is a Private sector initiative to engage Government at policy making, and law making processes (legislation) Seeks to engage, Parliament (N/A and Senate) MSF Ministerial Stakeholder Forum *12/Year PMRT PM came and participate in discussions*4/year PRT Presidential Roundtable*2/Year The voice the private sector. The Kenya Private Sector Alliance (KEPSA) is a limited liability membership organization 8

9 WORK EXPERIENCE Labourer Kenya Seed; Teacher: Kitale High Min of Public Works, Roads and Housing Airnetics Mechanical Inc, Ottawa, Canada Kenya Re Corporation Standard Chartered Bank Kenya Wildlife Service Jubilee Insurance Director Muthaiga Gardens; Maji na Ufanisi; Water and Sanitation for Africa Ouagadougou, BF; Athi Water Services Board; Kenya Private Sector Alliance; Nairobi Central Business District Association (NCBDA); SMAT Holdings; RC Muthaiga Consultant in Chief MyRita Consultants W. NABUTOLA: MyRita Consultants, Inc,

10 MYRITA CONSULTANTS, INC Wafula NABUTOLA MSc Carleton University, Ottawa, Canada, 1989 MSc University of Reading, Berks, UK, 1984 B.L.E University of Nairobi, 1980 Chairman, NCBDA Chairman, SMAT HOLDINGS Director, AWSB Chairman, AWSB Audit Committee Alt. Chairman, Sister-Cities International Founded MyRita Consultants, Inc Chair, FIG Commission Hobbies Basketball Dog Rearing/Breeding Sharing Knowledge Rotarian RC Muthaiga W. NABUTOLA: MyRita Consultants, Inc,

11 WATER CONSUMPTION Water is consumed through Irrigation (70%), Farming and industrial (22%), Domestic use (8%) Global water use has quadrupled in the past century. This trend is NOT abating.

12 Table 2: Sectoral share in Kenyan GDPGDP at factor cost (constant 1995 prices) 1980, US$Mln $4, $5, $6, $7, $8, $8, Agriculture 36.7% 35.7% 34.5% 31.1% 30.1% 30.1% Industry 17.2% 16.6% 16.6% 16.0% 15.5% 15.4% Services 46.0% 47.8% 48.9% 52.8% 54.4% 54.5%

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14 GLOBAL WATER CRISIS WILL SHAKE US TO OUR CORE 1.6 billion people live in regions with absolute water scarcity and by 2025 two-thirds of the world's population could be living under water stressed conditions. And it's just getting worse. Late energy analyst Matthew Simmons warned this was scarier than peak oil: "As global population grows, water usage has to rise for sanitation, food production and modern energy creation. It is unclear whether this can happen. Kenya is a Water Scarce nation. In Kenya communities fight over water Kibera or in Marsabit, or Hola

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16 THE CONSTITUTION OF KENYA 2010: 43. (1) EVERY PERSON HAS THE RIGHT (a) to the highest attainable standard of health, which includes the right to health care services, including reproductive health care; (b) to accessible and adequate housing, and to reasonable standards of sanitation; (c) to be free from hunger, and to have adequate food of acceptable quality; (d) to clean and safe water in adequate quantities; (e) to social security; and (f) to education. (2) A person shall not be denied emergency medical treatment. (3) The State shall provide appropriate social security to persons who are unable to support themselves and their dependants.

17 THE CONSTITUTION OF KENYA The State shall put in place affirmative action programmes designed to ensure that minorities and marginalised groups (a) participate and are represented in governance and other spheres of life; (b) are provided special opportunities in educational and economic fields; (c) are provided special opportunities for access to employment; (d) develop their cultural values, languages and practices; and (e) have reasonable access to water, health services and infrastructure.

18 THE CONSTITUTION OF KENYA Protection of the environment and natural resources with a view to establishing a durable and sustainable system of development, including, in particular (a) fishing, hunting and gathering; (b) protection of animals and wildlife; (c) water protection, securing sufficient residual water, hydraulic engineering and the safety of dams; and

19 THE CONSTITUTION OF KENYA (1) There is established an Equalisation Fund into which shall be paid one half per cent of all the revenue collected by the national government each year calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly. (2) The national government shall use the Equalisation Fund only to provide basic services including water, roads, health facilities and electricity to marginalised areas to the extent necessary to bring the quality of those services in those areas to the level generally enjoyed by the rest of the nation, so far as possible.

20 THE CONSTITUTION OF KENYA Implementation of specific national government policies on natural resources and environmental conservation, including (a) soil and water conservation; and (b) forestry. 11. County public works and services, including (a) storm water management systems in built-up areas; (b) water and sanitation services.

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27 WAYS TO INVEST IN THE WORLD'S MOST VALUABLE RESOURCE - WATER As much as we love our smartphones they are unnecessary for survival. On the other hand, we cannot do without water. Plus, as the world population continues to grow, so too will water consumption. Looking at these facts from an investment point of view, there must be a good way to take advantage as an investor. Let's take a look at investment options to attack this low-risk industry which benefits from an excellent economic moat and will continue to grow along with world population.

28 INVESTMENT IN WATER Kenya s social and economic wellbeing is directly tied to water availability, reliability, and strategies for sustainable use. Water has the unique ability to connect upstream and downstream interests. Water policies are often a combination of local, county, regional and sometimes national approaches that encompass technological, economic, and regulatory tools. Exploring stable and sustainable sources of funding for water projects at various scales is a key component to long-term solutions. One such is the Private Sector Risk Appetite; Technological Advancement; Governance; Capital (Human and otherwise)

29 THE PRIVATE SECTOR The private sector is usually composed of organizations that are privately owned and not part of the government. These usually includes corporations (both profit and nonprofit), partnerships, and charities. An easier way to think of the private sector is by thinking of organizations that are not owned or operated by the government. For example, retail stores, credit unions, and local businesses will operate in the private sector. Businesses and organizations that are not part of the public sector are part of the private sector. The private sector is composed of the business sector, which is intended to earn a profit for the owners of the enterprise, and the voluntary sector, which includes charitable organizations.

30 PUBLIC PRIVATE PARTERSHIPS Public-private partnerships are evolving. In order for such partnership to be beneficial to the public, the terms and conditions, as well as risk allocation needs to be structured carefully (LAO 2012). If set up fairly and properly, private sector participation can expedite a development project, reduce costs, provide access to new source of funding, and create a risk-sharing opportunity (Hanak and Reed 2009, Valderrama et al. 2013).

31 PUBLIC PRIVATE PARTERSHIPS (PPP) The success of PPP s very much depends on how the partnership is structured and the risk is allocated. Project scale, scope, and the possible revenue streams can affect the way PPPs are structured. Designing a framework that would assist agencies and utilities of various scales, especially the smaller ones with limited capacity, on how to engage with and attract private investors and how to set up these partnerships to guarantee a desired outcome for both public and private partners, is an essential next step.

32 PUBLIC PRIVATE PARTNERSHIPS ACT (NO 15 OF 2013) JANUARY AN ACT of Parliament to provide for the participation of the private sector in the financing, construction, development, operation, or maintenance of infrastructure or development projects of the Government through concession or other contractual arrangements; The establishment of the institutions to regulate, monitor and supervise the implementation of project agreements on infrastructure or development projects and for connected purposes.

33 THE PPP ACT 2013 Management contract where a private party is responsible for the management and performance of a specified obligation, within well-defined specifications for a specified period of time not exceeding ten years, and the contracting authority retains ownership and control of all facilities and capital assets and properties.

34 THE PPP ACT 2013 PART II ESTABLISHMENT OF THE PUBLIC PRIVATE PARTNERSHIP COMMITTEE PART III ESTABLISHMENT OF THE PUBLIC PRIVATE PARTNERSHIP UNIT PART IV ESTABLISHMENT OF PUBLIC PRIVATE PARTNERSHIP NODES

35 CONTRACTING AUTHORITY -contracting authority," means a State department, agency, state corporation or county government which intends to have a function undertaken by it performed by a private party; Assessment of contracting authority's technical expertise to procure services. There ought to be concerted Capacity Building Information Communication Education

36 PRINCIPLES OF MODERN CONCESSION LAWS Modern Concession Laws should be based on a clear policy for Private Sector Participation. Modern Concession Laws should be consistent with the country s legal system and particular laws. Modern Concession Laws should create a sound legislative foundation for concession. Modern Concession Laws should provide clarity of rules. Modern Concession Laws should provide a stable and predictable concession legal framework. Modern Concession Laws should promote fairness, transparency and accessibility of concession rules and procedures.

37 PRINCIPLES OF MODERN CONCESSION LAWS Modern Concession Laws should allow for negotiability of concession agreements. Modern Concession Laws should allow for enforceable court or arbitral determinations. Modern Concession Laws should allow for state undertakings and guarantees. Modern Concession Laws should accommodate security interests. Modern Concession Laws should provide for the availability of reliable security

38 ANOTHER WAY TO INVEST IN THE WORLD'S MOST PRECIOUS NATURAL RESOURCE The most precious resource in the history of the world isn't gold or oil. In fact, it s more valuable than both of them. Combined. And here s the crazy part: one emerging company already has the market cornered and stands to make in-the-know investors boatloads of cash.

39 WATER STOCKS: HOW TO INVEST IN WATER IN KENYA? Global trends, from population growth to urbanization to climate change to fracking, suggest big profits ahead for water-related stocks. The Water Boards The WSP s However these are mainly public sector oriented

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41 CONTACTS Phone: and

42 Q AND A THANK YOU, QUESTIONS, ANSWERS, CRITICISM AND COMMENTS 42