1. MINISTRY OF WATER AND IRRIGATION REVIEW OF FINANCIAL FLOWS TO WATER SECTOR BY ENG. P. MANGITI DIRECTOR LAND RECLAMATION/HEAD DONOR COORDINATION UNIT

2. CONTENTS INTRODUCTION FINANCIAL TRENDS FACTORS AFFECTING FINANCIAL FLOW CONSTRAINTS AFFECTING FINANCE OVERCOMING THE CONSTRAINTS

3. INTRODUCTION The mobilization of funds for the water sector was guided by the need to address three basic issues;  poverty  Illiteracy and;  disease) Therefore, for effective development of Kenya, the Government prioritized and committed itself to ;  the provision of enough water for agriculture  industrial development and ;  domestic use. The result expected was ;  Improvement of peoples incomes  Reduction of poverty  Improved health

4. INTRODUCTION CONT... Under vision 2030, the Ministry’s flagship projects that would help drive the economy towards attainment of a middle level income country are;  Development and implementation of effective water resources management programmes  Construction of water storage structures  Increasing total area under irrigation  Rehabilitation and expansion of existing irrigation infrastructure  Rehabilitation and expansion of existing urban water and sewerage schemes  Develop Rural water supply

5. FINANCIAL TRENDS Clear financial trends can be traced back to 1993 when the Government brought the various sub-sectors under one Ministry of Water Development. Since the year 2003 when reforms commenced in the sector, development funding to the sector has increases more than tenfold, from just under KShs.4billion in 2002/2003 to KShs.37billion in the current financial year 2011/2012.

6. FINANCIAL TRENDS CONT... DEVELOPMENT EXPENDITURE (BKsh)

7. Total Funding of sub-sectors (approved estimates) (million Ksh.)

8. Funds available for Water Services Institutions (million Kshs)

9. FACTORS AFFECTING FINANCIAL FLOW TO THE SECTOR Water Sector Reforms  The National Water policy of 1999 and the Water Act of 2002 laid the groundwork for water sector reforms over the last decade.  The reforms are focused on significantly contributing towards accelerating the social and economic development of the country.  It is set on international standards, and almost ten years later the reforms show visible improvements in the sector.

10. FACTORS AFFECTING FINANCIAL FLOW TO THE SECTOR CONT...  However the new constitution is pausing major challenges as it is not yet very clear what direction the sector will take under full implementation of the constitution.  For the water sector therefore, to continue being competitive to the investors, it must clearly show how it will re-align itself with the constitution while safeguarding the gains relized over the last decade of reform.

11. FACTORS AFFECTING FINANCIAL FLOW TO THE SECTOR CONT... Ring-fencing of water sector revenues Governance issues  Organizational Competence  Financial Management  Budgetary discipline

12. CONSTRAINTS AFFECTING FINANCE Financial flow to the water sector has been influenced negatively by the following factors;  Slow absorption of funds by projects  Failure of services providers (consultants, contractors, suppliers), to strictly adhere to the program of works  Slow disbursement of funds by both Donors and the Ministry due to internal bureaucratic processes  Lack of observing timeliness in progress reporting

13. CONSTRAINTS CONT...  Staff and Assets Transfer Plan  Inadequate budgeting skills by institutions as indicated by underestimation of project expenditures  Lack of efficient coordination among the numerous financiers in the sector  Weak Organizational and budgetary discipline among sector institutions

14. OVERCOMING THE CONSTRAINT Whereas the constraints and challenges to attracting investors are many, the following actions should be taken;  Put measures in place to ensure timely release of funds.  Harmonization of disbursement of funds by Development Partners to ensure timeliness.  Full harmonization of procurement procedures by Development Partners and Government to ensure efficiency.  Complete the transfer of assets and staff to the sector institutions and ensure that the staff salaries are paid from these institutions’ budget (a recommendation repeated since 2006).

15. OVERCOMING THE CONSTRAINT CONT...  Sensitization and capacity building at the individual and institutional level on the budgeting and public expenditure concepts.  Strengthen budget monitoring of all activities, projects and programs.  Financial data collection from activities, projects and programs should be strengthened.

16. OVERCOMING THE CONSTRAINT CONT...  The sector should fast track the development of the Water Sector Investment Program, which will help in capturing investment contributions into the sector, including those by the NGOs. CSOs and private sector  In this regard donors providing funding to NGOs need to inform the MWI.  The sector should develop a mechanism for ensuring NGOs in the water sector document their spending and impact annually to the sector and the public

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