March 16, 2023
Through a new fund Norfund will contribute to giving 30 million people access to clean drinking water in Africa and Asia.
Today, 2 billion people lack access to clean drinking water. Climate change, population growth, and urbanization mean massive investments are needed to reach UN Sustainable Development Goal 6 of access to safe water, sanitation and hygiene, but it has been challenging to mobilize capital to the sector.
Together with six private and public investors, Norfund is entering the first investment fund directly aimed at investments in clean drinking water in Africa and Asia. Norfund is contributing 5 million EUR (55 million NOK) to the Water Access Acceleration Fund (W2AF).
“We are seeing a growing number of companies developing solutions to offer reasonably priced, clean drinking water. Through this fund we can help these kinds of companies get the capital they need to grow and help meet the large and growing need for more water”Delphine Gilbert, Investment Manager in Norfund
According to the World Bank, developing countries lose around 260 billion USD annually due to poor water supply. It’s estimated that each dollar invested in clean water yields a four dollar reduction in health costs.
Norfund sees huge potential to make a difference through water investments and has explored the sector in recent years. In 2021 Norfund invested in TransAfrica Water Systems, a company that delivers water pump solutions, water treatment, and solutions for waste management in Kenya and Tanzania. However, it has been difficult to find projects that are commercially sustainable.
“Various challenges and different types of risk mean that many promising projects fall apart before it is possible to make an investment decision. We have unfortunately looked at a number of possible projects that have not come to fruition,” says Gilbert.
The W2AF fund is the first of its kind, with a combination of commercial private capital, development finance institutions, and aid money to relieve some of the risk – so-called blended finance.
“The goal is that the new fund, by taking higher risks, can show that the business models can deliver, and thus also show the way for other investors in the water sector, so that even more people can have access to affordable and clean water,” says Gilbert.
The fund initially aims to commit 35 million USD, with the intention of later doubling that amount. The investments aim to provide 20 billion liters of water to 30 million people who currently lack access in Africa and Asia.