Aqueduct over a drain for irrigation water, Kenya - Photo credit: Arthur Bostvironnois, Water Alternatives
A tenth blog, a bigger question
Published on: 04/08/2025
This blog is written by Juste Nansi and Catarina Fonseca
This is blog number ten in a series that started a year ago discussing topics such as project preparation, development banks, efficiency strategies and climate finance, and has since evolved into a space where practitioners test ideas, share stories and occasionally battle dodgy internet connections and uninvited AI guests.
Last month, we unpacked the idea of de‑risking in the water sector. This month the group wanted to know what lies on the other side of that bridge. Juste Nansi, Director IRC Africa Hub, offered a crisp answer: if de‑risking soothes the symptoms of investor anxiety, then the cure lies deeper: financial credibility.
De‑risking is a bundle of tools that make investors feel safer. In our previous session, we grouped them loosely into policy fixes that tidy up the investment climate, financial instruments that cushion individual transactions, and quieter forms of technical assistance that prepare projects and guide borrowers through the maze.
Nobody questioned their usefulness. The sticking point was subsidies: so much of the de‑risking relies on subsidised capital. Is that inherently wrong? Not necessarily. When subsidies come from domestic taxes and budgets, they can be a legitimate way to redistribute resources, keep services affordable and stay aligned with national priorities. The problem arises when the drip feed is external—foreign aid, donor guarantees—helpful in the moment but volatile, prone to dependency and corrosive to domestic fiscal ownership. The message wasn’t “no subsidies,” it was “no endless external drip without building muscle at home.”
De-risking focuses on perceived risk, not the distrust and weak institutions that create that perception. It solves problems one deal at a time, demands continuous injections of concessional cash and rarely leaves a stronger system behind.
Treat de‑risking as a bridge, not the destination
Financial credibility flips the script: it is the confidence that ministries, regulators, utilities and operators inspire in all types of financiers—domestic or external, public or private. When credibility rises, money follows because risk falls and returns become clearer, or at least capital becomes cheaper.
One‑off, heavily de‑risked transactions, like the Tanga rural water bond in Tanzania, prove it’s possible to get money under tough conditions. But unless we change the underlying rules and capacity, they remain one‑offs. Replication is the real test.
Dr. Nansi’s working paper mentions four pillars:
Together these pillars create the systemic trust that unlocks large, long‑term capital—loans, bonds, guarantees—used effectively rather than dispersed transaction by transaction.
A framework without a yardstick is a slogan. The priority now is to agree on a concise set of “credibility indicators” that ministries, DFIs and utilities can all live with—and actually measure.
Several ideas were put forward: the Water Investment Scorecards piloted by AIP-PIDA to assess finance‑readiness; governance indicators such as timely tariff adjustments, published audits and capital flow data tracking the share of domestic versus external money; and performance measures—cost‑recovery ratios, non‑revenue water, service quality—closely tied to financial health.
From 13–17 July 2026, Kigali will host a symposium designed to launch Africa’s Transformation Agenda for Financial Credibility of Water and Sanitation. Timed with the birth of the new Africa Water Vision, the event—co‑convened by AMCOW and IRC—aims to be both political and technical. About five hundred delegates are expected: ministers, development finance institutions, regulators, operators and the technical assistance community, all focused on one goal—making national systems sustainably investable.
Kigali is also a waypoint in a longer arc: African Union Heads of State will adopt the vision in February 2026; Kigali will ignite the transformation agenda in July; Africa Water Week will deepen it in the second quarter; the UN Water Conference in December will carry the story globally.
The group’s plea is to organise Kigali differently—structure sessions around the four pillars, import examples from other sectors. Rwanda’s own success with rural electrification and its active development bank offer cross‑sector lessons. Outside the water sector, the UK’s regulatory tweak that unleashed rural broadband investment shows how a smart rule change can unlock private capital. Each of these examples speaks directly to the decision‑makers who control policy and purse strings.
Bridging the gap between sector reformers and financiers will take more than good intentions. Participants envisioned joint reform taskforces spanning finance ministries, WASH agencies and regulators, with clear mandates and deadlines; long‑term embedded technical assistance that builds capacity rather than leaving behind slide decks; peer‑to‑peer exchanges where utility CEOs learn from each other and treasury officials share insights; and policy experiments—such as tariff indexation or performance‑based transfers—are designed with built‑in evaluation loops.
Above all, echoing some of the messages from South Africa G20 presidency, wins must be shared. When public money de‑risks a deal and it succeeds, some of the upside should flow back to public coffers to seed the next wave, rather than privatising gains and socialising losses.
For decades we have talked about enabling environments, capacity building and systems strengthening. Recasting that work through the lens of financial credibility may be old wine in a new bottle—but this bottle is labelled for the people who move money.
De‑risking will not disappear, but if we get credibility right, it becomes a steppingstone rather than a crutch. Kigali 2026 is our chance to show that we can finance differently.
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