Fixing the balance sheet, unlocking billions: Lessons from Africa

Across Eastern and Southern Africa, countries are investing heavily to expand access to water supply and sanitation services. Yet achieving universal access will require significant investments — far exceeding what public budgets and development finance bring to the table — creating an urgent need to attract additional sources of capital. Private sector investment is therefore critical to accelerating access to water and sanitation services, but mobilizing capital for underperforming utilities remains difficult. This challenge sits at the heart of a multiphase program implemented in 12 Eastern and Southern African countries to expand access to safely managed water and sanitation services. The programmatic approach combines national investments with regional initiatives to strengthen governance and institutional capacity across participating countries. The goal is not only to build infrastructure, but also to create the conditions that allow the sector to mobilize more private capital and absorb greater levels of investment over time. Earning Creditworthiness One of the clearest lessons emerging from this work is the connection between private capital mobilization and utility performance. Investors and lenders look for utilities that can manage finances responsibly, recover costs, plan investments, and operate transparently. In other words, they look for creditworthy utilities. Creditworthiness is not simply about accessing loans. It is a signal that a utility has the governance, financial discipline, and operational capacity needed to sustain services and manage investment effectively. Building these capabilities is foundational to achieving the objectives of Water Forward, a multistakeholder coalition working to dramatically scale development impact through a stronger focus on institutions, performance, sustainability, and financing solutions. Private capital mobilization is a critical part of that vision. Every dollar of private capital mobilized can help stretch scarce public resources further, finance additional infrastructure, and support broader service expansion. But private investors do not finance utilities simply because projects exist. They finance utilities that demonstrate strong fundamentals. Strengthening creditworthiness is therefore one of the most practical pathways available to countries seeking to unlock new financing while improving sector performance. It is important to note, though, that the process of becoming creditworthy often delivers benefits long before any private financing is secured. It helps utilities improve efficiency, strengthen accountability, and provide more reliable services to customers. Recent work under the program highlights both the challenge and the opportunity. Preliminary creditworthiness assessments showed that only two of seven participating utilities reached the minimum creditworthiness threshold, and experience with commercial borrowing remained extremely limited. The findings suggest that the largest barrier to private capital mobilization is not the absence of financial instruments, but the limited readiness of utilities themselves. At the same time, the assessments provide a roadmap for action by identifying specific weaknesses in governance, financial management, operational performance, and regulatory frameworks that can be addressed over time. Cutting the Losses One area with particularly large potential is the reduction of non-revenue water—treated water that does not produce income for the utility because of leaks and other physical or commercial losses. Across many utilities, 40–70% of treated water is lost before generating revenue. Every loss reduces the utility's ability to cover costs, maintain assets, and invest in service improvements. Non-revenue water reduction is often one of the fastest and most practical ways to improve financial performance while delivering better service outcomes for customers. Building Transparency Reliable data is equally important. Investors, regulators, and governments all depend on credible information to assess performance and make decisions. Yet many utilities still lack consistent, audited, and publicly available financial and operational data. To address this challenge, participating regulators and ministries agreed to contribute utility information to a regional database that will support benchmarking, performance monitoring, and investment planning. Greater transparency helps utilities benchmark their performance and identify areas for improvement, gives governments stronger evidence for reforms, and provides investors with the information needed to evaluate potential opportunities. Sustaining Progress The importance of this agenda extends well beyond individual utilities. Creditworthy utilities are more likely to maintain infrastructure, improve efficiency, expand services, and attract additional financing.They can help create a virtuous cycle in which better performance attracts investment, and investment supports further improvements in service delivery. But utility-level improvements alone are not enough. Progress also depends on the broader policy, institutional, and regulatory enabling environment in which utilities operate. This is why the regional component of the program places such strong emphasis on governance, regulation, utility performance, and knowledge sharing. Building creditworthy utilities is not an end in itself. It is a means to mobilize more capital, accelerate progress toward universal access, and advance the broader goals of Water Forward across Eastern and Southern Africa.