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Water Investments
Pilot Study for a Water Fund in Kenya
Coaching Tutor: Dr. Jason Hauser, ZHAW Winterthur, May 28, 2008 Author: Alex Paur
Winterthur, 28.05.2008
Jason Hauser
Unter Herausgabe wird sowohl die Einsichtnahme im Hause wie auch die Ausleihe bzw. die Abgabe zu Selbstkostenpreisen verstanden.
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Management Summary
Water is the most precious good on our planet, any form of life depends on it. From the 1.4 billion km3 of water on earth, only about 1% is available for human consumption. These 14 million km3 of fresh-water could satisfy the need of todays population if they were evenly distributed in time and space. Instead, water shortage is an ever present problem in many areas on our planet. Apart from quantity, water quality is an equally important item. About 2 billion people do not have access to adequate sanitation. Due to population growth, every day more people compete for the same amount of fresh-water and the per capita water amount available declines continuously. Water is becoming the most critical natural resource. This capacity constraint can only be faced by improving water management. However, compared to crude oil, natural gas or gold, little attention is being paid to water as a raw material and investment opportunity. This is even more surprising since water is the only raw material which is absolutely essential for the survival of every human being. In cooperation with Swisscontact East Africa this pilot study is exploring the feasibility of developing a water fund as an innovative saving product for the microfinance sector in Kenya. The objective is to get an overview of the water sector in Kenya, to tackle possible bottlenecks and challenges in the water management and to find solutions and potential investment opportunities along the value chain of water management. Water funds are already a well established investing and saving product in Europe. Pictet Funds S.A. and SAM Group were first to enter the market in 2001. Applying this model to a developing country as Kenya seemed to be far from reality, but research revealed the opposite. Although Africa is well known as a predominantly dry continent, Kenya has developed only a small fraction of its available fresh-water resources. Most water is abstracted from surface water, but ground water is used too. In addition to population growth, climatic variability as well as deforestation, water pollution and mismanagement are leading to water scarcity. A lot has changed in the water management of Kenya since 2002 when the new Water Act gave the impulse for the liberalisation of the market. The ongoing reforms clearly define the duties for sector actors. Efficiency has been well enhanced by shifting responsibility from governmental to private ownership of water services and by the decentralisation of decision making authorities.
III
The project Water Fund Kenya will provide the Wananchi2 with a microfinance product linked to the life sustaining resource water. Investments in water management projects will accelerate economic growth as well as sustainable development, improve health and reduce poverty. The concerned parties are Swisscontact as project initiator, Equity Bank as fund manager and various companies in the water sector. The author travelled to Nairobi in April 2008 and met more than ten organisations from the water industry. He got an interesting insight into the water management of Kenyas capital Nairobi. It was surprising to see that a great number of private companies are involved in the water sector of Nairobi. Most of them heavily support the idea of the Water Fund. Nevertheless, investment opportunities were identified as major bottleneck for the project since none of those companies is listed on the stock exchange market. The finding of this study is that the project Water Fund Kenya is feasible. However, subsequent research must be executed for the implementation of the product. Another outcome of the various meetings in Nairobi is that Swisscontact organises a workshop with the visited agents. The objective is to bring together the many valuable, but often uncoordinated ideas of water projects in public schools around Kenya.
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List of content
Wahrheitserklrung (Statement of truth)................................................................. I Management Summary ............................................................................................ II List of content.......................................................................................................... IV List of acronyms ...................................................................................................... VI 1. Introduction ........................................................................................................ 1
1.1 1.2 1.3 1.4 Motivation.......................................................................................................... 1 Research methodology ..................................................................................... 2 Field study in Kenya .......................................................................................... 2 Scope and limits of this paper ........................................................................... 2
3. Investment ........................................................................................................ 10
VI
List of acronyms
ASAL CAAC EAWAG Arid and Semi-Arid Land Catchment Areas Advisory Committee Eidgenssische Anstalt fr Wasserversorgung, Abwasserreinigung und Gewsserschutz (Swiss Federal Institute of Aquatic Science and Technology) FDI FP GDP GWI IPO KES MDG MSCI MWRMD NCWSC NGO NSE OECD SAM SME UN UNDP WHO WRMA WRUA WSB WSP WSRB WSTF ZHAW Foreign Direct Investment Finance Promotion Gross Domestic Product Global Water Market Index Initial Public Offering Kenyan Schilling (1 CHF = ca. 60.80 KES) Millennium Development Goals Morgan Stanley Capital International Index Ministry of Water Resources Management and Development Nairobi City Water & Sewerage Company Non-Governmental Organisation Nairobi Stock Exchange Organization for Economic Cooperation and Development Sustainable Asset Management Small and Medium-sized Enterprises United Nations United Nations Development Programme World Health Organisation Water Resources Management Authority Water Resources User Associations Water Services Board Water Services Provider Water Services Regulatory Board Water Service Trust Fund Zrcher Hochschule fr Angewandte Wissenschaften (Zurich University for Applied Sciences)
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1. Introduction
The initial idea for a water fund project came from Swisscontact East Africa in Nairobi. This study is a first step towards the implementation of a new financial product in the Kenyan market. It was carried out to judge the feasibility of the project and to identify opportunities, challenges and bottlenecks. This thesis is structured as follow: Part A Water Investments A scarce resource Investments Part B Pilot Study for a Water Fund in Kenya Water Management in Kenya Project Water Fund Kenya After the introduction, the paper starts in Part A with an overview of the resource water in general. Both water quantity and quality play an important role. Investment issues are outlined by looking at the water sector. A brief description of two existing water fund products is also given in this part. In Part B the Kenyan water sector is being explored. Kenyas water resources and their limits are discussed before looking at the water management and legislation in chapter 4. Then the author focuses on the fundamental idea of the study, the Water Fund Kenya. Chapter 5 consists mostly of the lessons learned during the authors field research in Nairobi, Kenya. On the basis of this paper Swisscontact will decide whether and how to continue with the development of the Water Fund project. To assist Swisscontact in this decision, a feasibility analysis is presented in chapter 5. At the end, the author expresses his personal opinion and impressions from his trip to Africa. Chapter 6 summarises the findings and conclusions of the study.
1.1 Motivation
Rather than writing a purely theoretical report, the author desired to work on a subject with strong relation to a practical issue. In November 2007 a contact with Veronique Su from Swisscontact East Africa could be established through a personal relationship. Veronique Su came up with the idea of a Water Fund in Africa. Her intention was to create a new state-ofthe-art saving and investing product in Kenya. No investigation whatsoever had been done on this subject at that time. The main driver for the authors motivation to develop the Water Fund Kenya project is his belief in water being the most important limited and irreplaceable
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natural resource on earth. He accepted the assignment for his Bachelor thesis. The topic was finally approved on November 28th, 2007 by Dr. Stefan Koruna, Head Business Administration Program of the Zurich University of Applied Sciences.
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total fresh-water
UN World Water Development Report 2; 2006; p. V Nestl Waters: http://www.nestle-waters.com/en/Menu/Environment/PreciousResource/A+precious+resource.htm; 04.03.2008 UBS Investment Research; 2006; p. 3
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shortage of water supply. According to the water report from Nestl Waters fresh-water available per capita risks dropping from 7300 m3 to 5100 m3 by 2025.6 If the available freshwater was evenly distributed in space and time, todays resources would be greatly sufficient to provide water for all. Instead, disparities in water resource distribution are getting worse. Water stress is a world wide phenomenon with regional effects.7 Therefore an analysis of the water shortage problem must take into account the regional differences. With the exception of Antarctica, all continents show concerned regions. In Europe for instance, Cyprus, Italy, Malta and Spain are among the most affected countries.8 Marq de Villiers suggests accomplishing water preservation by price mechanisms or by a more efficient usage through modern technologies.9 Water shortage is also closely related with the acute food shortage the world is facing at the moment.10 The main limiting factor for increasing the global agricultural output to meet rising demand is nothing else than water.
Nestl Waters: http://www.nestle-waters.com/en/Menu/Environment/PreciousResource/A+precious+resource.htm; 04.03.2008 World Water Council (a): http://www.worldwatercouncil.org/index.php?id=5&L=0target%3D_blank; 06.03.2008 European Environment Agency; 2005; p. 114 9 Wasser, die weltweite Krise um das blaue Gold; 2000; p. 420 10 Media Analytics; 2008; p. 5 11 Presseportal: http://www.presseportal.ch/de/pm/100014749/100557318/stockholm_international_water_institute; 19.03.2008 12 World Water Council (a): http://www.worldwatercouncil.org/index.php?id=866&L=0; 03.04.2008
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sanitation, and the trend is rising.13 It is in the interest not only of developing countries but also the industrialized countries to find a solution to this problem.
2.3.1 Sustainability
It is a fact that the total amount of water on earth cannot be augmented, which means that today there is still the same mass of water than thousands of years ago. However, nowadays much more water is being tapped. Manhood depends on water and the worlds population is growing continually, increasing the demand for water rapidly. The way water is managed today is not sustainable as the groundwater table is sinking in most places and water quality is often insufficient.16 In the future, the industry will have to widen its focus and start thinking in terms of sustainable provision of water services.
13 14
SAM Study; Precious Blue; 2008; p. 4 Procontra; 2007; p. 65 15 USAID; 1998; p. 6 16 SAM Study; Precious Blue; 2008; p. 13
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17 18
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UN; Economic and Social Council; 2003; p. 2 UBS Investment Research; 2006; p. 19 Wild, D.; Interview; 2008; Addendum 1 22 UNDP: http://www.undp.org/mdg/goallist.shtml; 05.04.2008 23 UN-Habitat; 2006; p. 8 24 UN-Habitat; 2006; p. 10
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water starts to climb steeply 25. A higher valuation of water does not automatically result in a higher price for water services if there is no market to balance competing demands. However, it leads to conflicts, headlines, and higher priority on the political agenda. Those bad outcomes have at least the good side effect that investors interest in the sector will continue to grow, and public attitude towards water will continue to change.
25 26
Media Analytics; 2008; p. 5 Wild, D.; Interview; 2008; Addendum 1 27 Exchange rate CHF/USD per 09.05.2008 28 Wild, D.; Interview; 2008; Addendum 1 29 USAID; p. 26
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There are many agencies with interests in the water management but virtually no coordination of policies between sectors of the economy is established. Issues like water quality and health are often omitted because they do not fit within the mandate of any single government agency. Institutions charged with managing water supplies often lack technical competence. At the same time, there is little stakeholder involvement and community participation in setting water policies and regulating the use of water, so projects often do not meet people's needs. Many heavy users of water, such as farmers, receive subsidies from the government and in effect are encouraged to waste water that they otherwise probably would not waste. Most governments have found it politically more successful to develop new water supplies than to charge heavy users the full costs of water. In most cases water is viewed as an unlimited resource to be pumped around and used as often and as much as needed for any purpose. Without adequate consideration of water's key role in human and environmental health, it is no surprise that water resources are degraded nearly everywhere.
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3. Investment
Water is a scarce and therefore precious good. One important goal of this paper is to find out how investments into water can be made. Worldwide 400 to 500 billion USD are spent every year on the granting, conditioning and purification of water.30 In order to exploit all possibility of investment one should think about putting money into companies offering products and services along the entire value chain of water. Speaking about the value chains the following areas should be looked at in particular: Urban water management (e.g. cooling water) Agriculture (e.g. process water) Industry (e.g. energy production) Promising investments are often found not only at the level of the core product water but also up- and downstream the value chain. So-called enabling technologies and products are often particularly attractive, for instance household fittings, sanitary equipment and pipes.31 Companies may emerge as potential investment opportunities which at first sight do not seem to have any connection to water, but subsequently turn out to be indirectly related to the water sector. Examples are producers of more efficient irrigation systems, water treatment technologies, desalination technologies, pumps and pipes, water meter technologies to control usage and to track water quality.32 The WHO calculated that every dollar spent on water supply, sanitation and water resource management is an investment with a solid return.33 Investments in water can be an engine for accelerated economic growth, sustainable development, improved health and reduced poverty. Poor countries with access to improved water and sanitation services enjoyed annual average growth of 3.7% GDP, those without grew at just 0.1%.
30 31
SAM Studie; Zukunftsmarkt Wasser; 2007; S. 4 SAM Study; Precious Blue; 2008; p. 14 32 UBS Investment Research; 2006; p. 14 33 WHO; 2007; p. 1 34 World Water Council (a): http://www.worldwatercouncil.org/index.php?id=5&L=0target%3D_blank; 06.03.2008
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Demographic changes, Ageing infrastructure Increasing health awareness Controversy over the liberalisation of the water market These impacts will have consequences for the supply of a sufficient quantity of water to provide the service required, to assure adequate water quality for the service in question and to set up an appropriate infrastructure to transport water.35
35 36
SAM Study, Precious Blue; 2008; p. 6 Procontra; 2007; p. 63 37 SAM Study, Precious Blue; 2008; p. 11 38 SAM Study, Precious Blue; 2008; p. 12
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water initial public offerings (IPOs).39 Daniel Wild says that investment into water is a low risk investment compared to energy or information technology. As water funds follow a topic approach they do not fit into the traditional classification of funds such as industry, commodity, technology or nourishment investment.40 Water funds typically invest along the value chain of water and across many different sectors. Investment into water is lasting because there is no substitute which could replace water. Infrastructures, for instance water pipes, have a lifetime of up to one hundred years. The water sector is a stable, relatively slowly changing sector. Nevertheless, water funds can not resist the ups and downs of the stock markets in the short-term.
39 40
Media Analytics; 2008; p. 8 Wild, D.; Interview; 2008; Addendum 1 41 Media Analytics; 2008; p. 8 42 Wild, D.; Interview; 2008; Addendum 1
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the launch and has always exceeded the benchmark (MSCI World Index). Since inception in autumn 2001, the fund has gained 53.23%43 in value. Table 3 shows the ten largest positions in the portfolio.
Table 3: The 10 biggest companies in the SAM Water Fund Portfolio
1. Veolia Environment (France) 2. ITT (USA) 3. Danaher (USA) 4. Suez (France) 5. Geberit (Switzerland) 6. Chaoda Modern Agriculture (Hong Kong) 7. Pall (USA) 8. Roper Industries (USA) 9. Wavin (Netherlands) 10. Thermo Fisher Scientific (USA)
Source: SAM Sustainable Water Fund, 2008
43 44
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the perspective of the fund.45 The long term performance of both funds has been good and the fluctuations relatively low. In comparison, the water funds of Swisscanto and UBS were launched only a few months ago. Because of the mortgage crisis in the USA no sustainable performance has been achieved yet. Water funds are not yet prevalent as investment opportunity, but the given examples prove that the concept is successful. Further water-related finance product will enter the market in the years to come. In table 4 the annual performance of the two above described water funds and the MSCI World is depicted. In 2001 the SAM Water fund had not yet been launched. It can be seen that both funds always outperformed the benchmark MSCI World with the exception of the peak year 2005. Over all, the SAM Water Fund performed slightly better than the Pictet Water Fund.
Table 4: Performance of Pictet and SAM water funds versus MSCI World
2002
2003
2004
2005
2006
Source: Own design Data source Pictet and MSCI Wold: http://www.pictetfunds.com/public/folfundperformancechart.html?ci=122; 06.05.2008 Data source SAM: http://www.sam-group.com/htmld/products/water/performance.cfm; 06.05.2008
45
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The author will first give an overview of Kenya and its water resources. He than looks closer at the water fund idea and presents the result of the field study in Nairobi. At the end, a feasibility analysis including suggestions for further proceeding is carried out.
36'913721 (est.)
Source: CIA Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html; 08.05.2008 and Kenya Official: http://www.kenya.go.ke/index.php?option=com_content&task=view&id=11&Itemid=1; 13.05.2008
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countries, namely Sudan, Somalia, Ethiopia, Uganda and Tanzania. 42 ethnic groups live together in the country which consists of diverse physical features: the low laying arid and semi-arid lands, the coastal belt, the plateau, the highlands and the lake basin around Lake Victoria.46
46 47
Kenya Official: http://www.kenya.go.ke/index.php?option=com_content&task=view&id=11&Itemid=1; 13.05.2008 GIGA; 2008 48 U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/2962.htm; 17.05.2008 49 UN-Water; 2006; p. 138
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follow: There is no contradiction in the country being simultaneously water-scarce and able to safely exploit many times the current water usage. It simply means that not only does Kenya receive one of the worlds lowest per capita water replenishment rates each year, but that it has also not developed the limited amount of water available50. Many reasons can be found why the groundwater is not exploited more. Among them are the low levels of funding for assessment, uncoordinated efforts on development and lack of skilled people for monitoring and evaluation.
Table 6: Annual renewable fresh-water supplies
= = =
The renewable water availability can be divided into two sources: Surface and groundwater resources. In Kenya, there is about ten times more surface water available than groundwater. Obviously, more groundwater is used in the arid and semi-arid lands (ASALs), where only little surface water is available. In contrast, in the cities the huge demand of water is covered by surface water, because the recharge rates of groundwater are limited. Nevertheless, groundwater is an important source of urban drinking water.51 The advantage of ground water is its cleanness. On the other hand, surface water is easier to collect but it has to be treated before it can be used. In Kenya, the morbidity disease pattern shows that over 60% of the diseases are waterborne or related to water. Most often is Malaria, followed by the respiratory system skin diseases, diarrhoea and intestinal worms.52
50
World Bank Working Paper No. 69; 2005; p. 8 World Bank Working Paper No. 69; 2005; p. 56 52 UN-Water; 2006; p. 30 53 UN-Water; 2006; p. 27
51
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has a volume of 3744 million m3 thereof 15.9% is being abstracted.54 The water map in addendum 3 shows the water basins of Kenya.
Surface and ground water abstraction in Kenya Million cubic meters per day 20 15 10 5 0 Surface water Ground water Actual abstraction Safe yield
Source: Own design (adapted from World Bank Working Paper No. 69; 2005; p. 10) Data Source: World Bank Working Paper No. 69; 2005; p. 8 9)
UN-Water; 2006; p. 10 World Bank Working Paper No. 69; 2005; p. 8 UN-Water; 2006; p. 36
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60'000'000
50'000'000 population
40'000'000 500 30'000'000 400 300 1999 2010 year population per capita water availability 2020
20'000'000
57
UN-Water; 2006; p. 32
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4.3.3 Deforestation
Forests are very important for the supply of water. Despite their economic and environmental importance, forests in Kenya continue to be destroyed. Groundwater loss increases because forests are the main absorption for rainwater. Replacing forest with annual crops will lead to a long-term increase in flows and more water will evaporate. There is evidence that after clearance of large parts of water catchments, dry season flows have decreased significantly. Forest clearance generally results in greater investment in infrastructure to achieve the same level of water storage. Furthermore, deforestation leads to increased erosion of the land.59 Big industrial users of water in Kenya, such as Coca Cola and Breweries, are involved in tree-planting projects. For the future development of the water resources in Kenya such commitments are important.
58 59
UN-Water; 2006; p. 12 World Bank Working Paper No. 69; 2005; p. 91 60 World Bank Working Paper No. 69; 2005; p. 58 61 World Bank Working Paper No. 69; 2005; p. 60
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waters as well as the ground water. As a result, lakes suffer from invasive weeds and end up in a lack of oxygen.
62 63 64
UN-Water; 2006; p. 7 World Bank Working Paper No. 69; 2005; p. 58 UBS Investment Research; 2006; p. 7 65 World Water Council (b): http://www.worldwatercouncil.org/index.php?id=25; 27.04.2008 66 SBA Consulting; 2008; p. 5 67 World Bank Working Paper No. 69; 2005; p. 44
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become a limiting factor in some regions of Kenya for development activities. In the meanwhile, the management and protection of water resources to ensure that water is available for equitable allocation for all demands, including water for domestic and public use, industry, agriculture, energy, livestock, wildlife, tourism and ecosystems, has become a high priority.68 In 1997, the Ministry of Water and Irrigation started with major water sector reforms by putting in place provisions for service delivery as well as better management of water resources and services.69 In 1999, after two years of negotiating, Kenya adopted a new water policy introducing several important innovations: The policy takes an integrative approach, involving all relevant ministries in dialogues on water issues. The Ministry of Water is no longer a direct service agency but carries a coordinating and supporting function. Decision-making has been decentralised, and the concerns of local communities, as well as those of women, are consistently taken account of. The objective is to achieve a development in water resources that is ecologically sustainable and contributes to reducing poverty. Understanding the process the country has gone through in the past ten years implies to remember the times when Kenya was a British colony. Mahboub M., engineer and Permanent Secretary of the Kenyan Ministry of Water and Irrigation says: During colonial times all resources were at free disposal to the colonial authorities. When Kenya became independent, we had the impression that now all the resources should also be free available to the Kenyan people70. The attitude towards water of this people had to be changed before a new water policy process could have been started. It took two year to work out a new water policy. The main point was the changed role of the government from direct service provision to regulatory and enabling functions. There was also a consensus that appropriate tariffs were needed in order to raise the money needed for investments in further development of the waster sector. In so far, the user-and-polluter-pays principle was one of the most important steps. The involvement of other ministries was significant for the success.71 The Water Act was accepted in the year 2002 and stands for a marked shift in water delivery in Kenya.
UN-Water; 2006; p. 7 Ministry of Water and Irrigation; 2007; p. 7 70 InfoResources; 2007; p. 1 71 InfoResources; 2007; p. 2
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if the government should change.72 The water Act defines the roles for sector actors clearly. The establishment of these institutions would allow for decentralisation, participation and sustainability in the management of water resources.73 Through the swift from governmental to private ownership of water services and the decentralisation of decisions-making authority, the efficiency has been enhanced. Even if in many areas less water is available than required, water availability has generally augmented due to water loss reduction. In conclusion, through the reform the water services and management have been improved significantly and the water sector is much more interesting for investors nowadays.
Name
Ministry of Water Resources Management and Development (MWRMD) Water Resources Management Authority (WRMA) Water Services Regulatory Board (WSRB) Catchment Areas Advisory Committees (CAACs) Water Services Boards (WSBs) Water Resources User Associations (WRUAs) Water Services Providers (WSPs)
Source: Own design (adapted from NCWSC; 2007; p. 5)
Level
National level National level National level Regional level Regional level Local level Local level
Task / Responsibility
Policy formulation Regulation Regulation Regulation Service Provision Service Provision: Water Resources Management Service Provision: Water and Sewerage Service
72 73
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4.5 Challenges
Currently, accessibility to water remains a major problem in rural Kenya and among the countrys poor urban dwellers 76 - Wanja Njuguna-Githinji, winner of the CNN African Journalist of the Year Award 2008 Even if the water supply has been improved, there is still a lot to do. Statistics show that over 50% of the rural population and more than 25% of the urban population have no access to clean water. In many areas of Africa the collection of water is still a task only carried out by women. As the demand for water and therefore its price increases, the poorest part of the population is the first one to suffer. The irony is that families living in poor informal settlements are paying much more for water compared to residents who are connected to the city council water meters. They also have to walk long distances and spend many hours
74 75 76
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hauling water. Another problem is the poor quality of tap water. Many people in Kenya boil or treat the water before consuming it because of fear of water borne diseases.
4.5.1 Privatisations
A new privatisation law was enacted in 2005 in Kenya. In the sequel the electricity generating company KenGen, Kenya Railways, Telkom Kenya and Kenya Re-Insurance have been privatized and in 2008, the government sold 25% of Safaricom.77 The shares were divided into very small pieces in order to give the poor population the opportunity to invest into the mobile company. Further privatisations in all sectors are anticipated. In a report written by Strategic Business Advisors it is said that finding the right structures to encourage private sector investments in the water sector became an imperative.78 Even organisations as the Kenya Association of Manufacturing became active in lobbying policy changes that envision a private sector solution in order to deal with the shortcoming of the public operator. Owners of real property, property developer and community based organisations have a huge incentive to invest in water services and sanitations. Property values are retained and enhanced by the availability of basic services. A number of private individuals are filling the gap in service provision by investing in boreholes, water tanks, standpipes and other systems.
77 78
U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/2962.htm; 17.05.2008 SBA Consulting; 2008; p. 1 79 Global Water Finance; 2007; p. 35 80 Wild, D.; Interview; 2008; Addendum 1 81 UBS Investment Research; 2006; p. 19
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majority stake in those companies.82 Local conditions in Kenya are different from community to community. Thats way technologies and water systems should be varied among communities. Local research and the domestic peoples knowledge should be used to find the most efficient ways to invest. Foreign companies must discuss and assess the activities with the local population because they know which solution fits best.
82
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5.1 Vision
Water can make a difference to Africas development if it is managed well and used wisely.83 UNEP and UN-Habitat, Africities Conference in Nairobi The authors vision is a water fund consisting of shares of different Kenyan companies along the value chain of water. There should be no restrictions to participating in the fund. The plain citizen in Kenya, the so called Wananchi in Kiswahili, will be able to invest his little savings in water and indirectly in his own future. Through the investments made by the fund, much more liquidity will be poured into the water sector of Kenya and companies will have the means to invest into water management and service. The result will be a win-win situation, both the investors and the companies will be better off. The overall goal of the Water Fund Kenya is to achieve economic development in the water sector and to improve the peoples standard of living in Kenya. Furthermore, it provides a saving product for the local, directly from water scarcity affected people.
83
UN-Habitat; 2006; p. 10
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As the research was made in a totally unknown and foreign environment to the author, local business culture and rules had to be considered. Confidence building was very important at the beginning of each meeting. The communication style was a mix of interview and discussion and notes were taken by the author. In most cases the met people were open minded, willing to provide information and very much interested in the idea of a water fund.
5.3 Swisscontact
Swisscontact is a non-profit organisation engaged in development cooperation. It was established in 1959 as a non-political foundation by a group of Swiss private businesses and universities. Its Head Office is located in Zurich, Switzerland. Swisscontact is currently implementing projects in 30 countries throughout Africa, Asia, Eastern Europe and Latin America. The organisation supports economic development by directly or indirectly influencing the living standards of target communities. Its goal is to promote sustainable private sector development in selected developing and transitional countries. The field of activities includes: Small and Medium enterprise (SME) promotions Financial services for SME and rural finance promotion (FP) Vocational education and training Reduction of urban environmental pollution Swisscontact promotes sustainable development according to their leading principle Helping others to help themselves84.
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developed for other areas in the country. In the following chapter the findings and results of the field research are evaluated and discussed by the author of the paper.
5.4.1 Nairobi
Nairobi is the capital of Kenya. Officially, the population of Nairobi is almost 3 million people86 whereas estimations are much higher because of the informal settlements. Despite the postelection crisis, Nairobi continues to be the primary communication and financial hub of East Africa. It enjoys the region's best transportation linkages, communications infrastructure, and trained personnel, although these advantages are less prominent than in past years.87
86 87 88
Cities of the World: http://www.city-data.com/world-cities/Nairobi.html; 15.05.2008 U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/2962.htm; 17.05.2008 Global Water Finance; 2007; page 37
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Greater Nairobi. Due to over extraction, the average well depth has increased from 60 to 84 meters89.
Table 10: Stakeholders in the Water Sector of Nairobi
Neighbouring Countries
General Public
International Organisations
Government
Water Sector
Investments Agencies Legislators
89
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Re-pollution
Purification
Loss by leakages
90
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force of gravity can be used to transport the water in the pipes, so no pumps are needed. The water extracted from Thika dam is not sufficient anymore. Thats the reason way studies are carried out in cooperation with the World Bank in order to find new way to extract more water. The construction of a new dam would be critical since it implicates the resettlement of people living in the concerned area as well as damaging the natural environment.
91 92 93
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detailed mechanism of a fund. However, the basic understanding of the product is important. Usually, a fund pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, or other securities.94 The capital gains of the companies, known as dividends in the case of listed shares, are passed along to the individual investors. Usually, the fund manager deducts the management fee from the dividends before forwarding them.
94 95
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Clients
Fund
Companies
Clients invest their money into the fund. They possess a small part of the fund accoring to their investments. The fund manager buys parts of companies. An ownership-certificate (stocks, bonds, shortterm money-market instruments or other securities) is handed over by the company. Companies make profits which are forwarded to the clients in proportion to their investment.
2 3
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Tropical Hydrosystems Tropical Hydrosystems is a small company with 10 employees which provides equipments, installation and service for boreholes, water treatment and swimming pools. The company is privately owned and has been founded in 1998. They where also interested in the Water Fund and believe that the market will grow very much in the next few years. Engineering Supplies Ltd Engineering Supplies Ltd. deals mainly with water pumps which are imported from Italy and China. The headquarters are in Mombassa and about 40 people are employed in Nairobi. Their clients are, among others, hotels, borehole owners and agricultural firms. The company is not listed at any stock exchange.
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consisting of two companies does already stand for a reduction of risk. In comparison, the water fund of SAM and Pictet, described in chapter 3.2, consists of about 70 different companies. The author suggests a minimal number of five companies for starting the fund. Later, more companies can be added. It must also be defined who belongs to the water sector of Kenya. The author counts all companies to the water sector which directly or indirectly act along the value chain of water. Therefore, if a companys turnover depends directly or indirectly on the demand and value of water, this company is interesting for the Water Fund Kenya. At the first sight one could think that there are only few, state-owned organisations dealing in the defined water sector. However, in only one week the author had the opportunity to meet nine different companies fitting in the above definition of the water sector. There are with no doubts many more companies which are worth to be considered too. Hence, there are definitely enough companies doing business in the water sector of Kenya.
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Are there enough companies in the water sector of Kenya? Are those companies available for investments by the Water Fund Kenya?
The research clearly shows that enough companies can be found in the water sector of Nairobi. Furthermore, there is a demand for such a financial saving and investing product. On the other hand, a challenge will be to find a way to invest in those companies since they are not listed at the NSE. At this point, the question, whether it is possible to invest in those companies or not, cannot be fully answered. Further studies about this topic are needed. Nevertheless, one possible way to tackle the challenge might be private equity investment.
5.8.6 Outlook
The present paper stands at the very beginning of the development of the Water Fund Kenya. The pilot survey of the water sector in Nairobi points out that the idea is realisable. Therefore, the author recommends progressing the project with the goal of launching the Water Fund Kenya in 2009. He also agreed to pass on the present report as well as additional information in a face-to-face meeting to the next person investigating in the project. The launch of the Water Fund Kenya, consisting of both finding companies to invest in and finding fund investors, will be the task of the fund manager at Equity Bank. Swisscontact East Africa can give support in this process.
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but it proved to be successful. In a rather young market as Kenya, things are still possible which would be unthinkable in our altitudes. It only needs an open mind and the readiness to think outside the box. Further unconventional ideas and solutions are needed for the ongoing development of the Water Fund Kenya.
5.9.2 Corruption
Corruption is by no doubt a problem in Africa and in many other areas around the world. Alone the fact that corruption is made a subject of discussion in Kenya showed me, that this issue is taken seriously and that people are willing to improve the situation. Almost all offices I visited were equipped with a notification of fighting against corruption. Discussions with different people in Nairobi, locals and foreigners, convinced me that business can be conducted in Kenya without corruption. For the future development of the country, it will be of utmost importance that corruption is also band from politics.
5.9.3 Future
I am convinced that the Kenyan market is doing well in the future. The unrests at the binning of this year have not changed the fact that Kenya has one of the strongest economies in Africa. It just slowed it down a bit. Reforms and political solutions are important for the country and I hope that the politicians in charge devote their work to the Wananchi97. The same applies to the many development aid organisations which sometimes seem to bring more harm than help. The principle of Swisscontact Helping Others to Help Themselves" through encouraging vocational training, promoting small and medium-sized enterprises and improving the possibilities for SMEs, is in my opinion the most promising and sustainable way to help. Even though this report contributes only a first step to the Water Fund Kenya, I am sure that it will be realised. Therefore, I am also highly motivated to forward all my experiences to the next person working on the project.
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and the workshop is planned for mid or end of June. From my point of view, this is a fantastic initiative and I am looking forward to its outcome.
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Conclusion
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the fund affordable for every Kenyan requires a fragmentation into very small pieces of not more than KES 1000 (= ca. CHF 17). The field study in and around Nairobi revealed that the conditions for launching a water fund in Kenya are given. The water sector of Kenyas capital consists of many organisations from water distributors to equipment suppliers and bottling companies. All of them agree that water management in Kenya needs to be improved. In the near future, more companies will enter the market. The visited companies seemed to be very interested in the project. As none of them is listed at the stock exchange market, the biggest challenge is to find ways to invest in those companies. The next research will have to tackle this issue. The overall result of the study is the recognition that the Water Fund Kenya is feasible and the project should be continued. Investments in the water sector of Nairobi make sense and the project is practicable. However, further investigation, especially in the area of equity investment, is required. The immediate result of the various meetings in Nairobi between Swisscontact, numerous organisations from the water sector and the author is that Swisscontact will initiate a workshop with those people in June 2008. The goal is to promote the various excellent ideas of water projects in public schools across the country and provide a platform to discuss different concepts.
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7. Bibliography
Internet
CIA Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html; 16.05.2008 Cities of the World: http://www.city-data.com/world-cities/Nairobi.html; 15.05.2008
ITT Industries: http://www.itt.com/WATERBOOK/Kenya.asp; 09.05.2008 Kenya Official: http://www.kenya.go.ke/index.php?option=com_content&task=view&id=11&Itemid=1; 16.05.2008 Nestl Waters: http://www.nestlewaters.com/en/Menu/Environment/PreciousResource/A+precious+resource .htm; 04.03.2008 Pictet: http://www.pictetfunds.com/public/folfundperformancechart.html?ci=122; 06.05.2008 Presseportal: http://www.presseportal.ch/de/pm/100014749/100557318/stockholm_international_water_ins titute; 19.03.2008 SAM: http://www.sam-group.com/htmld/products/water/performance.cfm; 06.05.2008 Swisscontact: http://www.swisscontact.ch/english/pages/UB/UB_Wn.php?navanchor=2110041; 11.05.2008 Swisscontact East Africa: http://www.swisscontact.co.ke/home.html; 18.05.2008
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UNDP: http://www.undp.org/mdg/goallist.shtml; 05.04.2008 UNEP: http://maps.grida.no/go/graphic/water_availability_in_africa; 20.05.2008 UNESCO: http://www.unesco.org/water/wwap/wwdr/wwdr2/case_studies/img/kenya_big.gif; 13.05.2008 U.S. Department of State: http://www.state.gov/r/pa/ei/bgn/2962.htm; 17.05.2008 U.S. Securities and Exchange Commission: http://www.sec.gov/answers/mutfund.htm; 12.05.2008 World Water Council (a): http://www.worldwatercouncil.org/index.php?id=5&L=0target%3D_blank; 06.03.2008 World Water Council (b): http://www.worldwatercouncil.org/index.php?id=25; 27.04.2008
Publications
European Environment Agency, the Europe environment State and outlook 2005: Freshwater, Copenhagen; 2005 Equity Bank, Celebrating our journey, Nairobi, Kenya; 2007 GIGA, Institute of Global and Area Studies, Institut fr Afrika-Studien Kenia: Wahlen und die Eskalation der Gewalt, Nummer 1, Hamburg; 2008 Global Water Finance, Assessment of the Funding Needed to Attain the Millennium Development Goals for Water and Sanitation, Hideyuki H., University of Pennsylvania; 2007
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Global Water Partnership, Technical Advisory Committee, Background papers No. 3, The Dublin Principles for Water, Solanes M. and Gonzalez F., Stockholm, Sweden; 06.1999 Helvetas, Wasser fr alle!, Die Herausforderung des 21. Jahrhunderts, Zrich; 11.2007 InfoResources, Water sector reform in Kenya: First experiences are positive, Interview with Engineer Mahboub Maalim, Permanent Secretary of Kenyan Ministry of Water and Irrigation, Bern; 2007 Media Analytics, Global Water Intelligence, Volume 9, Issue 1, Market Leading Analysis of the International Water Industry, Oxford, UK; 01.2008 Ministry of Water and Irrigation, the Water News, Volume 1, Nairobi, Kenya; 07.2007 NCWSC, Presentation at the Nairobi Water and Sewerage Institutional Restructuring Project, Milestones and Challenges, Nairobi; 04.05.2007 Procontra, Die Fachzeitschrift fr Finanzprofis, Wasser Zukunft Megachance, Wasser ist alles, Berlin; 04.2007 OECD, Water management performance and challenges in OECD countries, Paris; 1998 SAM Studie, Zukunftsmarkt Wasser, Zrich; 12.2007 SAM Sustainable Water Fund, Fact Sheet; 02. 2008 SAM Study, Precious Blue, Investment Opportunities in the Water Sector, 3rd edition, Zurich; 01.2006 SBA Consulting, A study of options for private sector participation in investment in secondary and tertiary water and sewerage infrastructure, Nairobi, Kenya; 2008 UBS Investment Research: Water scarcity: The defining crisis of the 21st century?, Knott S., New York, USA; 10.10.2006 UBS, Strategische Bedeutung von Private Equity, Nr. 3; 05.2006
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UN, Economic and Social Council, General Comment No. 15 (2002), Geneva; 20.01.2003 UN-Habitat, UNEP, Millennium Development Goal 7, Ensure Environmental Sustainability, Nairobi; 09.2006 UN-Water, Wold Water Assessment Programme, Kenya National Water Development Report, Kenya; 2006 USAID, Population Information Program, Solutions for a Water-Short World, Baltimore, Maryland, USA; 09.1998 Wasser, die weltweite Krise um das blaue Gold, De Villiers, M., Econ Ullstein List Verlag, Mnchen, Germany; 2000 WHO, Driving development by investing in water and sanitation, Five facts support the argument, Geneva; 05.2007 World Bank Working Paper No. 69, Climate Variability and Water Resources Degradation in Kenya, Improving Water Resources Development and Management, Washington, USA; 2005
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8. List of tables
Table 1: Water deposits on the planet earth .......................................................................... 3 Table 2: The Hydrological Cycle ............................................................................................ 6 Table 3: The 10 biggest companies in the SAM Water Fund Portfolio ..................................13 Table 4: Performance of Pictet and SAM water funds versus MSCI World ...........................14 Table 5: Figures about Kenya...............................................................................................16 Table 6: Annual renewable fresh-water supplies ..................................................................18 Table 7: Development of Kenyan water resources ...............................................................19 Table 8: Water availability compared to population growth ...................................................20 Table 9: Structure of Water Act 2002....................................................................................24 Table 10: Stakeholders in the Water Sector of Nairobi .........................................................31 Table 11: From the source to the consumer .........................................................................32 Table 12: Mechanism of the fund .........................................................................................35 Table 13: Suitability of companies for the Water Fund Kenya...............................................40
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9. Addendum
9.1 Interview with Daniel Wild
Interview mit Daniel Wild, Senior Water Analyst bei SAM Sustainable Asset Management AG Datum: 17. Mrz 2008 Ort: Seefeldstrasse 215, 8008 Zrich Die Grundlage unseres Gesprches war der Sustainable Water Fund von SAM sowie die SAM Studie Zukunftsmarkt Wasser. Herr Wild hat das Interview gegengelesen und am 2. April 2008 dieser Version zugestimmt. Was ist das Erfolgsrezept von SAM im Bereich Wasserfond? Ein Vorteil ist sicher, dass wir schon sehr frh angefangen haben und deshalb viel Erfahrung in diesem Beriech haben. Fr Investoren ist es wichtig zu sehen, dass wir etwas machen, von dem wir berzeugt sind. Erfahrung ist gerade in diesem Geschft sehr wichtig, denn es besteht immer noch ein grosses Risiko, da man ja nicht weiss, was die Zukunft bringt. Aber immerhin haben die Investoren die Gewissheit, dass hier Leute am Werk sind, die etwas vom Thema verstehen. Haben Sie mit Investitionen in Wasser im 2001 begonnen als Sie diesen Wasserfond lancierten oder gab es schon zuvor hnliche Projekte? Dies ist unser erster Fond im Wasserbereich. Im Herbst 2001 starteten wir mit dem Wasserfonds. Die Performance bis heute ist sehr attraktiv. Gemessen am Benchmark, dem MSCI World Index (Aktienindex, der die Entwicklung von weltweiten Aktien widerspiegelt), hat er sogar berdurchschnittliche Ertrge abgeworfen. Dies ist, insbesondere wenn man die Risikokennzahlen des Fonds bercksichtigt, sehr gut, da diese relativ tief sind. Im Gegensatz zum IT- oder Energiesektor, wo man nicht weiss wohin sich die Zukunft entwickelt, ist der Wassersektor stabiler und die Risiken sind deshalb tiefer. Die Technologien im Bereich Wasser sind grundstzlich bekannt und die Entwicklung ist trge, da die Lebensdauer der Technologien sehr lange ist. Dies erstaunt mich jetzt doch einwenig. Ich habe gedacht, das Risiko bei diesem Fonds werde als hoch eingestuft? Schauen wir uns einmal die Risikokennzahlen an. Ein Faktor ist die Standartabweichung, welche tiefer als diese vom Gesamtmarkt ist. Wenn Sie also die Schwankungen des Fonds anschauen, sind diese kleiner als jene der Gesamtbrse. Selbstverstndliche kommt es aber immer darauf an, mit was sie den Fonds vergleichen. Natrlich sind Bonds sicherer. Oder wenn Sie beispielsweise nur Aktien von traditionellen Anbietern, z.B. den Stadtzricher Wasserwerken kaufen, ist das Risiko auch sehr tief, da es sehr unwahrscheinlich ist, dass jemand mit einer anderen Technik diese bertrumpfen wird. Aber wie gesagt, zu den Hochrisikofonds werden IT bzw. Technologien im Allgemeinen und Energien
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gezhlt. Wasser gehrt da nicht dazu. Was das Risiko ebenfalls erhht ist, wenn sie kleine Firmen haben. Es liegt in der Natur der Sache, dass man im Wasserbereich viele kleine bis mittlere Anbieter hat, welche auch anflliger auf Strungen sind. Weiter spielt das Currency-Risk mit. Der Fonds ist in Euro, je nach dem wo der Investor ist, kann er profitieren oder aber verlieren. Amerikaner investieren indirekt in Euro, wenn sie in den Fonds investieren. Dies gilt aber fr alle Fonds. Ein gewisses Kursrisiko besteht natrlich auch bei Firmen, die weltweit ttig sind. Zuletzt wird noch der Management style beurteilt. Hier unterscheidet man zwischen Growth und ValueFirmen. Also Firmen, die interessant sind, weil sie sehr stark wachsen und die Gewinnaussichten in der Zukunft liegen, dies sind eher kleine Firmen, die z.B. neue Patente erwerben oder Mrkte erschliessen und die Value-Firmen, die bereits eine starke Stellung haben, wo man also auf ein regelmssiges Einkommen zhlt. Weil wir aber Themenfonds haben und oft querdurch investieren, kann man uns oft nicht in solche Schubladen einteilen. Wir haben aber tendenziell mehr Growth-Firmen in unserem Portfolio. Gab es auch Probleme bei der Lancierung des Fonds? Eines der Probleme war sicher, wie soeben angesprochen, dass die Leute mit einem solchen Themen-Approach nicht so komfortabel waren. Im letzten Herbst haben wir unsere Fonds in den USA lanciert und wenn man mit den Amerikaner redet, dann sind diese etwa soweit wie dir Europer vor 5 Jahren. Sie wollen wissen, ob es nun ein Value- oder ein Growth-Fond ist, oder ob es sich um ein Commodity- oder Industrialfond handelt. Hier gibt es sehr viele Missverstndnisse, weil wir nicht mehr in diese traditionellen Gefsse passen. Das Problem ist, dass die Amerikaner oft Vorgaben haben und die Fonds nach den erwhnten Kriterien einteilen mssen. Die meisten Kunden reagieren aber flexibel. Ist Wasser jetzt eine Commodity oder nicht? Das ist die Schwierigkeit dieses Themas. In der Finanzwelt wird Wasser oft als Commodity wie z.B: Gold oder Weizen betrachtet. Dies ist aber nicht korrekt, weil wir Wasser nicht auf der ganzen Welt herumschicken knnen. Es gibt keinen Marktpreis fr Wasser und es wird auch nie einen geben. Da mchte ich gleich Nachhacken. Was ist den der Preis von Wasser? Wie setzt sich dieser zusammen? Den Preis von Wasser gibt es nicht. Im besten Fall knnen Sie einen Preis von Wasser in einem Einzugsgebiet definieren. Da gibt es ein paar interessante Beispiele, z.B. hat Las Vegas angeboten, Meerentsalzungsanlagen in Kalifornien zu bauen mit der Idee, dass Kalifornien weniger Wasser dem Colorado River entnimmt und dann mehr fr Las Vegas brig bleibt. Wasser bekommt damit einen Wert, nmlich jener der Produktionskosten der Entsalzungsanlagen. So kann ein Wasserpreis zustande kommen. Oder in Gebieten von Australien, wo man eine Wasserbrsen eingefhrt hat. Auch da kommt ein Preis zustande. Nur ntzt dies Kenia wenig, wenn der Wasserpreis in Australien hoch ist, weil der Transport von Wasser nicht mglich bzw. zu teuer ist. Es gab verschiedene Versuche dieses Problem zu lsen, beispielsweise mit Eisbergen herumziehen. Diese sind aber alle an den Kosten gescheitert. Man kam auf ca. 1 CHF pro Liter, wobei der Wasserpreis sonst eher 0.5 CHF pro Kubikmeter entspricht, also 1000 bis 2000 Mal weniger.
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In Ihrer Wasserstudie habe ich von einem durchschnittlichen Wasserpreis von 2.2 Euro pro Kubikmeter gelesen. Wie setzt sich dieser zusammen? Man muss genau definieren, von welchem Preis man spricht. Hier reden wir vom Preis, welcher der Konsument zu Hause bezahlt. Dazu kommen hier die Kosten fr das ganze Wassermanagement inklusive fr die Abwasserreinigung. Aber der Rohwasserpreis ist natrlich viel tiefer, meist weniger als 50 Rappen pro Kubikmeter. Kann man grundstzlich sagen, dass Obenflchenwasser gnstiger ist als Grundwasser? Nein, dies kommt ganz drauf an. Obenflchenwasser muss man nicht mhsam rauspumpen, dafr muss es behandelt werden. Grundwasser kann man oft ohne Behandlung trinken. Manche Grundwasserleiter haben sogar eine Spannung, es muss also nicht einmal gepumpt werden, es spritzt einfach raus. Zurck aber zu unserem Wasserfonds. Dieser ist weniger daran interessiert, in eine Commodity zu investieren, sondern wir wollen in die gesamte Wertschpfungskette des Wassers investieren, also ins Wassermanagement auf allen Ebenen. Auch die Verbraucherebene ist sehr wichtig. Hier geht es vor allem um Effizienz. Oft kann man auf der Verbraucherseite sehr viel einsparen. Gerne wrde ich die genaue Zusammensetzung der Fonds anschauen. Wie viele Firmen deckt der Fonds ab? Im ganzen Fonds haben wir ungefhr 70 Firmen. Sind diese Firmen alle im Wassermanagement ttig? Dies ist unterschiedlich. Z.B. hat es Industrietitel wie ITT, die Equipment herstellt, vertreibt und verkauft. Dann gibt es eigentliche Wasserversorger, dazu gehren Veolia und Suez. Weiter gibt es Chaoda, welche nachhaltige Nahrungsmittelproduktion in China betreibt. Geberit wiederum steht dann mehr auf der Verwenderseite. Wavin ist ein Rohrhersteller und Thermo Fisher stellt analytische Gerte her, mit denen man die Wasserverschmutzung messen kann. Wir halten uns auch an ein Investment Cluster. Dort sehen Sie, dass der ganze Landwirtschaftbereich sehr wichtig ist, weil er 70% des Wasserverbrauchs ausmacht. Damit verbunden sind die biologische Nahrungsmittelproduktion sowie die effiziente Bewsserung. Wichtig sind auch Wasserzhler. Solange man nicht fr Wasser bezahlt, fehlen die Anreize zum sparsamen Umgang mit Wasser. Gibt es eine Definition, wie Wassernah ein Geschft sein muss, damit es in den Wasserfonds reinpasst? Grundstzliche muss eine Firma 20% des Umsatzes im Wasserbereich erwirtschaften, damit wir sie im Wasserfond aufnehmen knnen. Es gibt aber Ausnahmen, wenn eine Firma durch ihre Strke und Position ein sehr wichtiger Player ist, auch wenn sie weniger als 20% im Wasserbereich umsetzt. Ein Beispiel dafr ist Siemens, in welche wir investiert haben. Das Management von Siemens hat ein klares Commitment abgegeben, dass sie den Wasserbereich bei Siemens ausbauen wollen. GE hingegen haben wir nicht aufgenommen, weil sie nur 2% Umsatz im Wasserbereich hat. Ziel ist es
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schon, Firmen zu finden, die mglichst viel im Wasserbereich machen. Wenn man alle 69 Firmen im Portfolio betrachtet, erwirtschaften diese im Durchschnitt 50 bis 55% des Umsatzes im Wasserbereich. Mir ist aufgefallen, dass keine Getrnkehersteller im Fonds sind wie z.B. Nestl oder Coca -Cola. Was ist der Grund dafr? Wir haben Getrnkehersteller nicht ausgeschlossen. Die Diskussionen darber werden oft sehr kontrovers gefhrt. Wir haben zum Beispiel Danone, ein wichtiger Mineralwasserhersteller, drin. Wenn Sie aber unsere Studie lesen, dann sehen Sie, dass all die weltweiten Wasserprobleme nicht mit Flaschenwasser gelst werden knnen. Flaschenwasser ist viel zu teuer. Aber natrlich ist Trinkwasser das Wichtigste wenn es um Qualitt geht. In China besteht ein reisen Markt fr Flaschenwasser. Wir erwarten, dass der Konsum dort noch stark anwachsen wird. Unser Hahnenwasser in Europa ist eigentlich sehr gut, jedoch zeigen neue Studien aus Deutschland, dass unser Wasser doch nicht immer so sauber ist. Grundstzlich schliessen wir also Firmen nicht aus, die Wasser abfllen, wir achten aber darauf, dass wenn sie es schon machen, sie dies in bereinstimmung mit Sozialenund Umweltansprchen machen. Wasserrechte mssen bercksichtigt werden und natrlich darf die Natur nicht darunter leiden. Haben Sie Kenntnisse darber, wie das bei Nestl konkret aussieht? Nestl besitzt ja viele Flaschenwasserfirmen und kam deswegen auch schon unter Beschuss. Unterdessen hat Nestl aber Vorsichtsmassnahmen getroffen und arbeitet mit der lokalen Bevlkerung zusammen. Es ist aber gut, wenn die ffentlichkeit diese Ttigkeiten kritisch beobachtet. Nestl ist aber auch interessant, weil sie massgebend bei der Sustainable Water Initiative beteiligt ist. Hier geht es um den nachhaltigen Umgang mit Wasser im Landwirtschaftsbereich. Geographisch sind Europa, Amerika und Asien abgedeckt, in Afrika haben Sie jedoch keine Investitionen. Warum? Dies ist schwierig, weil wir nur in brsenkodierte Firmen investieren. Da haben Sie in Afrika leider nichts, abgesehen vielleicht von Nordafrika oder ein paar Bauunternehmen in Sdafrika, wobei der Wasserbezug sehr begrenzt ist. Deshalb bietet sich Afrika fr unsere Produkte nicht an. Wie sieht es aber mit Firmen aus, die in Afrika ttig sind? Man muss hier unterscheiden zwischen wo sind die Problem auf der Welt, hier ist Afrika natrlich ganz vorne dabei, und wo gibt es berhaupt Investitionsmglichkeiten. Wir sind kein Fond, der Projekte startet. Weiter sind wir Bottom-up getrieben, dies bedeutet, dass wir Trends und Entwicklungen beobachten und darin investieren. In Afrika gibt es da leider nicht viele Mglichkeiten. Um in Kenia etwas zu machen, sehe ich keine Mglichkeiten. Mir ist keine Firma in Kenia bekannt, welche an der Brse gelistet ist. Zudem ist ein Grossteil der Wasserversorgung verstaatlicht. In Kenia zu investieren ist zudem extrem risikoreich. Unsere Kunden sind teilweise Private oft aber auch Institutionen wie Pensionskassen, die ihr Geld mglichst sicher und gewinnbringend Anlegen mssen. Eine andere Mglichkeit wren Entwicklungsprojekte, wobei diese keinen Return generieren. Sie werden aber
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keinen Investor finden, der auf sein Geld freiwillig verzichtet. Ein anderer Ansatz ist es, wenn Sie Spender suchen. Knnen Sie noch etwas zu der erwhnten Fondstrategie sagen, wo neue Projekte aufgebaut werden? Dies ist eine ganz andere Strategie. Z.B. knnen Sie einen Start-Up Fond bilden, wobei dies sehr langfristige Investitionen sind. Oft ist es das Ziel, diese Firmen an die Brse zu bringen und so das Geld wieder reinzuholen. Eine andere Mglichkeit sind Venture Capital Fonds, wobei es hier um Hochrisikofonds geht, die sehr viel Geld und eine sehr grosse Risikobereitschaft voraussetzten. Projektfinanzierungsfonds gibt es auch noch, welche z.B. eine Wasserversorgung in China aufbauen. Hier besteht mehr das politische Risiko wie z.B. momentan in gewissen Lndern in Lateinamerika, wo Regierungen private Firmen verstaatlichen. Sie sind also ein Verfechter der Privatisierung der Wasserversorgung? Da bin ich weder dafr noch dagegen, es gibt Argument fr beides und es gibt gute und schlechte Beispiele. Am Ende zhlt, ob die Wasserversorgung gut gehandhabt ist oder nicht. Wenn der Staat fhig ist, dies selber zu machen, dann ist das okay. Es zeigt sich einfach, dass gerade in Schwellenund Entwicklungslndern der Staat dies nicht kann. Oft kommen Private gnstiger zu Geld, sprich du Darlehen, als der Staat. Diese berlegung vergessen die Gegner der Privatisierung oft. Ein weiteres Problem ist oft das Management- und Finanzwissen, besonders in Entwicklungslndern. Private knnten dies aus dem Ausland importieren, beim Staat fehlt es. Wichtig ist auch der Werterhalt der Installationen, was Staaten oft nicht machen, wie das Beispiel England zeigt, wo ein Drittel der Leitungen ber 150 Jahre alt sind. Die Tarife mssen Kostendeckend sein, darum sind diese bei Privaten oft hher. Der Staat nimmt einfach Steuergelder wenn die Kosten nicht gedeckt werden knnen. Was halten Sie von der Zweipreisstrategie in Entwicklungslndern. Ein Preis fr die Basic-Needs und einen hheren fr Luxury? Das ist ein weiterer Punkt, den ich erwhnen wollte: Wie geht man mit der armen Bevlkerung um? Wasser ist ein Menschenrecht, aber es ist nicht gratis. Jemand muss es bezahlen und die Frage ist, wer das macht. Es gibt so genannte smarte Tarifsysteme, welche in Schwellenlndern immer populrer werden. Diese erzeugen, dass die ersten z.B. 20 Liter pro Tag sehr billig oder gratis sind, danach steigt der Preis aber massiv an. Leute die ihr Auto waschen oder den Garten bewssern wollen, werden somit zur Kasse gebeten. Persnlich finde ich ganz gratis nicht so gut, weil das Bewusstsein in die falsche Richtung geleitet wird. Ein minimaler Betrag reicht um zu zeigen, dass Wasser eben etwas Wert ist. Das Problem bei den ganz Armen ist aber, dass sie oft fr Wassertrger viel mehr bezahlen, als diese minimale Gebhr. Darum sollte sichergestellt werden, dass alle Zugang zu einer Wasserversorgung haben. Ob Staatlich oder Privat kommt nicht drauf an. Sehen Sie Mglichkeiten, unsere Technologien gewinnbringend nach Afrika zu transferieren? Sie haben das Dilemma, dass die Leute dort kein Geld haben. Unsere Technologien sind nicht geeignet, um im grossen Stiel aufzuholen, was ja Afrika tun sollte. Unser System ist auch nicht so toll,
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dass es einfach bernommen werden sollte. Die Frage ist, ob es nicht viel schlauere Lsungen gibt, wie z.B. ein dezentrales Abwasserreinigungssystem. Auch die EAWAG hat gute Projekte, nur sind die fr uns Investoren nicht interessant. Wie sieht es mit Entsalzungsanlagen aus? Die Kosten fr Entsalzungsanlagen kommen zwar runter, aber sie sind immer noch viel zu hoch. Im Nahen Osten mag dies gehen, weil es dort sehr gnstige Energien gibt. In vielen Fllen wrde es aber mehr bringen, auf der Effizienzseite etwas zu machen. Fr Afrika wrde ich keine Entsalzungsanlagen vorschlagen. Oft bieten sich auch traditionelle Methoden an, wie z.B. Tauwassersammlung. Ist Wasser wirklich das Gold von morgen? Ich mchte es nicht dramatisieren, aber Wasser spielt schon seit 2000 Jahren eine wichtige Rolle bei Auseinandersetzungen und Kriegen. Wenn Sie den Nahostkonflikt anschauen, dann hat Wasser einen extrem starken Einfluss und das ist in anderen Gebieten nicht anders. Ihre These ist also, dass die im Fond vorhandene Firmen davon profitieren werden, dass der Wert von Wasser steigt? Genau, ich sage aber lieber statt das Wasser wird teurer, das Management von Wasser muss besser werden und zwar entlang der gesamten Wertschpfungskette. Unserer Firmen werden davon profitieren, weil sie einen Teil zur Wertschpfungskette beitragen. Die gute Nachricht ist, dass unser Umgang mit Wasser so ineffizient ist, dass es ein riesiges Potential gibt, besser zu werden. Ein hherer Wasserwert ist positiv, weil man dann die Mittel hat, die Effizient auch wirklich zu steigern. Das Problem ist, dass Wasser an vielen Orten stark subventioniert ist. Z.B. zahlen die Bauern nichts bis fast nichts fr Wasser. Sehen Sie eine Mglichkeit, die 1:1 Korrelation zwischen Wasserpreis und Fond zu erreichen? Die Frage ist, wer von steigenden Wasserpreisen profitiert, also welche Firmen dann hhere Einkommen erzielen. Dies kann irgendeine Firma in der Wasserwertschpfungskette sein. Es knnten auch Firmen, die Land- oder Wasserrechten besitzen, sein. Die ist aber ein kritisches Thema. Es macht sicher Sinn, Wasserrecht mit Lizenzen an Private zu geben, jedoch mssen genaue Bestimmungen daran geknpfte werden. Es gibt durchaus Firmen, die Land aufkaufen mit der Hoffnung, spter einmal durch den Anstieg des Wasserpreises zu verdienen. Wir empfehlen die Risiken mglichst zu streuen, sowohl in den Aktivitten wie auch Geographisch. Ich kann mir aber vorstellen, dass es in Kenia keine Mglichkeiten gibt, solche Investitionen zu machen oder dann nur sehr risikoreiche. Vielleicht wrde ein Afrika-Fond mehr Sinn machen, aber auch da ist das Risiko noch gross. Investieren in Afrika ist fr sie also nicht interessant? So grundstzlich wrde ich es nicht sagen, aber ich wrde andere Anstze suchen. Persnlich sehr interessant finde ich das Thema Mikrokredite. Warum nicht damit arbeiten, damit sich die Leute eigene kleine Klranlagen kaufen knnen? Oder zum Beispiel Wasserdesinfektion durch UV-Licht?
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Meiner Meinung nach sollte eine Investition in Wasser sehr nachhaltig sein und daher nicht so sensible die Brsenschwankungen wie z.B. die Kreditkrise reagieren. Wie sieht das konkret beim Wasserfond aus? Der Fonds ist stabil, denn sie haben keine Ausweichmglichkeiten, es gibt kein Substitut fr Wasser. Trotzdem regiert auch dieser Fonds aber auf die Krisen. Der Wasserfonds ist bei der Kreditkrise in etwa mit der Brse mitgegangen. Man muss hier aber einen langfristigen Horizont behalten. Was zurzeit an der Brse passiert, ist sowieso nicht rational. Wir sind aber sehr zufrieden mit den Investitionen in unseren Fond. Wir hatten praktisch keine Abflsse. Dies bedeutet, dass unsere Investoren verstanden haben, um was es geht, nmlich dass es sich um eine langfristige Story handelt, an die wir glauben. Herr Wild, vielen Dank fr dieses Gesprch.
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14th April 08
Nairobi City Water & Sewerage Company Water Resources Management Authority Runda Water
15th April 08
Ministry of Water
Mr. Nyaoro Mr. Maina, Managing Director & Mr. Machibi, Finance Manager Mr. S. Karanja
Trojan UV
Aquavit
16th April 08
17th April 08
Ms. W. Kathurima, General Manager Mr. Kimani, Project Coordinator Mr. J. Kamau Mr. K. Trimgi Mr. Gatende, Managing Director & Ms. Busolo, Water treatment Engineer Mr. Tchouambe, General Manager & Mr. Mutiso, Head of Communication
18th April 08
21st April 08
12.00 a.m.
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Part of the Swisscontact Team in Nairobi. From left to right: Veronique Su, Esther Wainaina, John Njoroge, Evan Mwangi, Alice Hiribae
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Ms. Su and Mr. Edalia from the Water Resources Management Authority
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Alex Paur, author of this thesis and Mr. Karanja, Thika Dam Coordinator