The African Development Bank (AfDB) is discussing opportunities for private sector financing in water and sanitation.

To date, the AfDB has focussed its lending exclusively on public sector entities. However, AfDB head of water Mohamed El Azizi told Global Water Intelligence (GWI) that the bank is keen to increase its exposure to projects which involve private sector participation.

These projects will be funded under that bank’s Private Sector Window. To be eligible for funding, the project sponsor must be incorporated in an African country, and is expected to take a minimum 30% equity stake in any project SPV.

According to GWI, water supply and sanitation have only become a priority for the bank over the last decade and a half. The majority of AfDB’s lending has always gone to infrastructure, but between 2000 and 2010 the bank committed $340 million per year to drinking water and sanitation initiatives, with lending in this area peaking at $700 million in 2010.

There has also been a change in the focus of the bank’s activities. Initially, lending focused on urban projects. However, the bank’s support for rural projects increased from less than 15% of the water supply and sanitation portfolio to 42% by 2012, following the launch of the Rural Water Supply and Sanitation Initiative (RWSSI) in 2003.

El Azizi says most water supply and sanitation projects in Africa are technically feasible but are not bankable. “This is a challenge that we are taking on and are working on increasing both feasible and bankable projects in the sector,” he concludes.