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European development finance to transform water supply for 2 million people in Kampala

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European development finance to transform water supply for 2 million people in Kampala

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  •  Release date: 28 April 2011
  •  Reference: 2011-058-EN

Access to safe drinking water and sanitation by more than 2 million people in Uganda’s capital Kampala is set to improve dramatically following key funding agreements signed today to support operations by the Ugandan National Water and Sewerage Corporation. Germany and France through their respective agencies KfW Entwicklungsbank (The German Development Bank) and Agence Française de Développement (AFD - The French Development Agency), alongside the European Investment Bank, the European Union’s long-term lending institution, as well as the EU-Africa Infrastructure Trust Fund, will provide UGX 605 bn (EUR 178m) for the UGX 720 bn (EUR 212m) project through a combination of loans and grants to the Republic of Uganda.

The project forms part of the Lake Victoria Water and Sanitation initiative and will increase both the supply of affordable drinking water in Kampala and reduce the risk of waterborne disease. The European financing agencies have agreed to harmonise financial arrangements to improve efficiency and reduce the administrative burden on the borrower. KfW is the Lead Finance Institution.

Dr. William T. Muhairwe, the Managing Director of the Project Executing Agency, National Water & Sewerage Corporation stated that, “This project will be an answered prayer to many a Ugandan especially in the water stressed areas. It will enable the corporation to fulfil her obligation to provide clean and safe water and sewerage services to the people of the Republic of Uganda.”

The Kampala Water Project includes supplying water to 20 informal settlements for the first time, rehabilitating nearly 1000 km of pipes in the city water network, upgrading the Gaba water treatment plant and construction of a new plant at Katosi. The project will improve water access for poor communities and increase coverage and reliability of clean and affordable water supply in the Ugandan capital. The investments aim at meeting the anticipated demand for water supply services until 2025 and are expected to improve health standards.

The development impact of the Kampala Water Project will be closely monitored and key development indicators such as waterborne disease, drinking water provision and reduced water losses will be measured until 2015. The project will also include technical assistance to improve delivery of water services to poor communities, better coordinate sanitation planning with expansion of water supply and enhance the operational capacity of the National Water and Sewerage Corporation.

Speaking at the signature ceremony in Kampala, Doris Köhn, KfW Senior Vice President for Africa and Middle East said “Today we have broken the ground for drastically improved hygienic and economically viable water supply services in metropolitan Kampala. Many poor dwellers of the Metropolis will benefit from an enormously improved healthier environment.”

H.E. Klaus Dieter Düxmann, Ambassador of the Federal Republic of Germany, added “With this project, the life of 2 million people in the metropolitan area will change to the better. Support to the water and sanitation sector in Uganda is a key priority in our German-Ugandan development cooperation. Since 2005 alone, Germany has committed grants worth more than UGX 180 billion for water and sanitation in Uganda, and we are planning to extend our engagement in the sector.”

Plutarchos Sakellaris, European Investment Bank Vice President for Africa said “The Kampala Water Project will make a crucial contribution to Uganda’s achievement of Millennium Development Goals by safeguarding and increasing access to safe drinking water and sanitation. The project will improve the health of poor communities in the Ugandan capital and help protect the environment and promote sustainable development in the Lake Victoria basin.  This initiative is a flagship example of European cooperation in Africa.”

While signing the joint agreement, H.E. Mrs Aline Kuster-Ménager, French Ambassador to Uganda underlined that “France is pleased to contribute through a soft loan of 75M€ - the 1st of its kind to Uganda government - to this key project for Kampala Water Supply. This project shows the growing commitment of Agence Française de Développement to support Uganda in the water and sanitation sector”. Over the past 15 years, AFD’s commitment to support Ugandan water, energy, health and private sectors reached 480M UGX. She added that “France sees also this project as a good example of cooperation between European development agencies to tackle one of the most ambitious development projects in Africa”.

Mr. Jean-Marc Gravellini, AFD Director for Sub-Saharan Africa explained that “this infrastructure project is promoting sustainable socio-economic transformations of Uganda. It also comes within the regional scope of protection of Lake Victoria: a problematic that is highly supported by AFD through its interventions in Uganda (Gaba and Jinja) as well in Kenya (Kisumu) and Tanzania (Bukoba and Musoma).

The proposed financing plan includes subsidised loans from European Investment Bank (UGX 255 bn = EUR 75m) and AFD (UGX 255 bn = EUR 75m), and grants from Germany through KfW (UGX 68 bn = EUR 20m) and the EU-Africa Infrastructure Trust Fund (UGX 27 bn = EUR 8m). Implementation of the Kampala Water Project is expected to take 60 months.

Notes for Editors:

  • German-Ugandan development cooperation focuses on water and sanitation, renewable energies and energy efficiency, as well as financial systems development. Between 2010 and 2012, Germany provides grants amounting to about UGX 400 bn (EUR 120 m) to the Government of Uganda, more than one third of which (UGX 156 bn = EUR 46 m) has been allocated to the water and sanitation sector. In this sector, besides co-funding the Kampala Water and Sanitation Supply and Sanitation project, Germany also plans a substantial grant to the Water and Sanitation Development Facility North and East in order to support water supply and sanitation in numerous provincial towns. German development cooperation in the sector includes technical cooperation with the Ministry for Water and Environment, with various local governments as well as with NWSC.
  • KfW Entwicklungsbank is a competent and strategic advisor on current development issues. Reducing poverty, securing peace, protecting natural resources and helping to shape globalization are the main priorities of KfW Entwicklungsbank. On behalf of the German Federal Government it finances reforms, infrastructure and financial systems for socially and ecologically compatible economic growth in more than 110 countries. As part of KFW Bankengruppe it is a worldwide financing partner, and it also employs funds of its own for development projects. KfW Entwicklungsbank knows about the potentials and problems in developing countries thanks to its close cooperation with local partners and target groups. It actively seeks to cooperate with German and International partners in order to further enhance the developmental effectiveness and efficiency of its activities.
  • The European Investment Bank is the world’s largest multinational financial institution and last year lent EUR 72 billion for 460 projects around the world.
  • The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union.  The task of the Bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States.  The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives.  The EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing. 
  • Agence Française de Développement – AFD, is a bi-lateral development institution that works on behalf of the French government. Its mission, started 70 years ago, is to finance development according to France’s Overseas Development Assistance policies. AFD’s activities are aimed at reducing poverty and inequalities, promoting sustainable economic growth, and protecting “Global Public Goods” of benefit to all humanity. AFD uses a wide range of financial instruments to underwrite its activities: grants, subsidies, guarantees, loans, equity shareholdings, co-financing and local bank intermediation. In 2009, AFD committed over €6.2 billion to more than 60 developing countries in Africa, Asia, the Mediterranean Basin, the Middle East, South America, and the French Overseas Territories. Its subsidiary Proparco, as an investment and promotions company for economic cooperation, finances operations which are economically viable, socially equitable, environmentally sustainable and financially profitable. 






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