The European Investment Bank, the world’s largest multilateral bank, has announced details of two separate initiatives aimed at further strengthening support for African water sector investment.

At the Third International Conference on Finance for Development currently being held in the Ethiopian capital Addis Ababa, three leading European development finance institutions today confirmed more than EUR 81 million of support for the upgrading programme to improve water services around the country by the Ministry of Water, Irrigation and Energy.

More than 120,000 households across Ethiopia are expected to benefit from the significant new investment in water, wastewater and sanitation infrastructure from the EIB, the French Agency for Development (AFD – Agence Française de Developpement) and the Italian Ministry of Foreign Affairs and International Cooperation

This includes EUR 40 million from the European Investment Bank, EUR 20 million from AFD and EUR 15 million from Italian development cooperation a further EUR 6,4 million in grant funding from the three partners will complement the loans.

The new programme, which will include both technical assistance during its implementation and long-term loans, will provide new water and sanitation infrastructure as well as rehabilitate existing services in small and medium towns across Ethiopia. Expected to directly benefit more than 120,000 households, the scheme will be supported by the Water Resources Development Fund’s (WRDF), and technical assistance will also be provided to regional water authorities.

The EIB  has also separately signed a Memorandum of Understanding (MoU) during the conference with the Dutch government to create a framework for future cooperation between the Bank and the Dutch authorities to leverage knowledge, capacity and additional financing in support of more and better investment projects in the water and sanitation sector.

The main geographical focus of the collaboration will be developing countries, with a special focus on Africa, although it may extend to EU countries or neighbouring states as well.

Pim van Ballekom, Vice-President of the EIB, commented:

“This new partnership will strengthen support for water investment in our partner countries. Combining our lending with Dutch grants and knowledge allows us to do things better, to explore innovative financing structures and to leverage much-needed investments from the public and private sector. This signing is a great step in supporting concrete projects that make real impact on the ground.”

Much of the importance of the document lies in the direct effects that this type of cooperation can have on a local level, as was demonstrated recently in Malawi. Here, the EIB’s financing leveraged initiatives of the national government, a local water board, a leading Dutch water company and a local NGO, which financed a project run by the local population to provide clean water for more than 750,000 people.

Within the scope of the new agreement, the Dutch government has confirmed its intention to provide EUR 2 million in support of the Bank’s activities in the water and sanitation sector. Discussions are also underway with other potential bilateral contributors with the view of pooling resources to achieve critical mass and economies of scale. The partnership can help to improve project design and implementation, while offering sustainable financial solutions to critical investments.

Last year the European Investment Bank provided more than EUR 2.5 billion for long-term investment in energy, water, transport and education projects, as well as supporting private sector investment, in Africa.