The Kenya government, businesses, conservation groups and utilities have launched Africa’s first water fund, designed to provide a sustained water supply and to generate $21.5m long-term benefits to Kenyan citizens including farmers and businesses.

This landmark initiative will cut costs for hydropower and clean water, while addressing water flow and soil erosion issues in the Upper Tana River basin in Kenya.

Fred Kihara, The Nature Conservancy’s Nairobi Water Fund Lead, said that the fund arrives at a “critical time for millions of farmers, businesses and communities whose livelihoods are directly tied to the health of Kenya’s largest river and its lifeblood”.

“Secure, clean water is critical for businesses and farmers to survive, and for the 60% of Nairobi residents that already lack adequate water supplies,” he said.

The Nairobi Water Fund will establish a revolving fund and a public-private partnership endowment, including stakeholders like Pentair, Coca-Cola, East African Breweries and utility companies like KenGen, to support land-conservation measures upstream.

Key strategies include reducing sedimentation, improving dry season water flows, increasing the efficiency of water used in agriculture, reforestation and other economic and social benefits for communities, farmers and businesses.

Fund financial supporters have already funded a two-year pilot phase, which is enabling 5,000 farmers to adopt conservation measures.

“Investing in the Fund means weighing up trade-offs and making smart investment decisions,” said Matthews Murgor, Catchments Manager at KenGen.

The utility company expects savings of $6m in avoided interruption and increased water yield.

“Ultimately, that means better infrastructure and lower bills for consumers,” he added.

The fund’s steering committee comprise of The Nature Conservancy, Nairobi City Water and Sewerage Company, Kenya Electricity Generating Company, International Center for Tropical Agriculture, Tana and Athi Rivers Development Authority, Water Resources Management Agency, as well as the water technology company Pentair, East Africa Breweries, Coca-Cola and Frigoken Horticulture.

Water is one of the most valuable and scarce resources in Africa.

The focal point of the Nairobi Water Fund is the upper reaches of Kenya’s Tana River.

Soil erosion and low water supplies impact businesses, farmers and communities, increasing costs and limiting access to this essential resource.

The Tana provides 95% of Nairobi’s water and half of Kenya’s hydropower-generated electricity.

The Tana is also vital to Kenya’s food security as it supplies water to a million farms in one of Kenya’s most productive and economically important regions.

“Nairobi has seen growth in water demand grow tremendously over the past years. We are planning a major investment in expanding our water supply where we are working with neighboring counties. At least 30% more water is needed,” said Philip Gichuki, CEO of Nairobi City Water & Sewerage Company, who also chairs Nairobi Water Fund.

The Nairobi Water Fund’s Business Case, created by The Nature Conservancy and its scientific partners Future Water and The Natural Capital Project, shows that investing at least $10m in on-the-ground environmental management efforts for the Upper Tana River over a decade will reduce sediment concentration in rivers by over 50% (varying by watershed and time of year), decrease annual sedimentation in the Masinga hydropower reservoir by 18% and increase annual water yields across the priority watersheds by 4%, increasing to 15% during the dry season in some locations.

The business case also shows that over a 30-year period the improvements will return more than twice that much, providing $2 in benefits for every $1 invested.

The success of the Fund will depend on expanding public and private financial support to capitalize a $15m endowment that will enable soil and water saving interventions to continue in the long-term and over an expanded area.

“This is a chance for Kenya to lead the way in Africa – to spearhead a program where benefits for ecosystem services bring major benefits for all,” Kihara said.