Co-op Bank wins water finance award as sector faces KSh466bn funding gap

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Co-operative Bank of Kenya has been recognised for its lending to water utilities and households, even as the sector it finances faces a funding shortfall estimated at KSh466bn.

The lender received the Leadership in Water Infrastructure and Finance Award at the Africa WaterCredits Forum 2026, held in Nairobi on Friday, October 16. Vedika Bhandarkar, president and chief operating officer of the US non-profit Water.org, presented the award to Ben Muriuki, Co-op Bank’s head of investor relations and strategy.

The forum brought together banks, water utilities and development partners to look at ways of drawing more commercial money into water and sanitation across Africa. Much of the discussion centred on water credits, tradable instruments similar in concept to carbon credits that represent verified water savings or gains in access.

What Co-op A Maji finances

The award recognises Co-op A Maji, the bank’s dedicated water lending product. It gives water companies, small businesses and households loans for storage tanks, solar-powered pumps, boreholes, meters, pipe connections, and water and sewage tanker trucks. Its lending also covers latrine and septic tank emptying services, metering and sanitation projects in cities, their outskirts and rural areas.

“Access to reliable water and sanitation remains one of Kenya’s most pressing development priorities, and innovative financing is essential to turn infrastructure ambitions into delivered services,” Group Managing Director Gideon Muriuki said after the award. He added that the product reflects the bank’s focus on sectors that drive inclusive growth at community level.

The KSh500m utility loan programme

The award follows a partnership the bank signed in November 2024 with the Dutch impact fund Aqua for All, Water.org and the Water and Sanitation Providers Association (WASPA). Under the deal, Co-op Bank committed more than KSh500m in loans to finance at least 15 medium-sized projects by water service providers, with a target of reaching about 50,000 people in urban, peri-urban and rural areas by October 2027.

The projects focus on cutting non-revenue water, the supply lost to leaks, illegal connections and billing failures, as well as lowering energy bills by switching to green power and extending last-mile household connections.

WASPA’s call for proposals sets out the terms. Individual loans are capped below KSh50m, run for up to 60 months with a six-month grace period, and are priced at the bank’s base rate plus 2% a year. Utilities put in 10% to 20% of the loan amount as equity and pay a 1% appraisal fee on each tranche. Aqua for All offers a results-based grant or rebate of up to 25% of the loan once projects deliver, while Water.org funds consultants to help utilities prepare bankable proposals. Disbursements to approved utilities are scheduled to run from August 2026 to January 2027.

A sector short of money

Kenya’s water sector needs an estimated KSh995bn in investment but is likely to raise only about KSh529bn, leaving a KSh466bn gap, according to a water sector report by the Netherlands embassy. The Water Ministry estimates that about 44% of treated water never reaches a paying customer, costing utilities more than KSh10bn a year.

Access to basic drinking water stood at 68% in 2022/23, while sewerage coverage in urban areas was 32%. Each Kenyan has about 405 cubic metres of freshwater a year, well below the level considered water secure.

A market assessment by German development bank KfW listed Co-op Bank among a small group of lenders with conditional interest in water lending, noting that money is available but few projects are ready to absorb it. That is the gap the technical assistance in the WASPA programme is meant to close.

Large public projects such as the Thwake dam, now 94% complete, still rely mainly on government and development finance, while utilities’ losses show up in household water bills and metering disputes. Entrepreneurs eyeing the sector can read our guide on starting a water bottling business. Co-op Bank’s earnings outlook was covered in our look at the top bank stock picks for 2026.