Africa Growing Together Fund provides $39.4 million loan for Sustainable Water Supply and Sanitation Program (Linked to Project ID#36104)

On May 22, 2014, African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Project ID#36104). The purpose of this $2 billion loan facility was to finance mega projects in Africa over the following decade (2014-2024). The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on November 29, 2017, AGTF signed a $39.442 million loan agreement (ID#5050200000151) with the Government of Rwanda for the Rwanda Sustainable Water Supply and Sanitation Program. On the same day, the African Development Bank’s African Development Fund (ADF) issued a $85.964 million loan (ID#2000200001851) to the Government of Rwanda for the Rwanda Sustainable Water Supply and Sanitation Program. The European Investment Bank (EIB) also contributed EUR 45 million and the Government of Rwanda provided counterpart financing for 15.51% of the total project cost. The borrowing terms of the AGTF, which entered into force on January 22, 2018, are as follows: an 25-year maturity, a 8-year grace period, an interest rate of 6-month LIBOR plus a 1% margin, a 0% default (penalty) interest rate, a 0.25% commitment fee, and a 0.25% upfront (management) fee. The first AGTF loan disbursement took place on July 16, 2018. As of July 2021, the AGTF loan had achieved a 67.1% disbursement rate ($23,549,472 out of $39,442,000). The Rwanda Sustainable Water Supply and Sanitation Program (RSWSSP-IF) supports infrastructure investments as well as institutional capacity development. It involves multiple water supply and sanitation sub-projects or interventions to be implemented in the City of Kigali and in the satellite cities of Rubavu, Rusizi, Nyagatare, Muhanga, Huye, Musanze and Karongi. The program focuses on the urban water and sanitation subsector to promote development in the identified key satellite cities and in the city of Kigali. Its expected benefits include: (a) improved reliability and sustainability of the water supply and sanitation services; (b) overall improvement of the public health situation in the target cities and their surrounding areas, as a result of more reliable improved water supply and sanitation services, and (c) an enhanced operation & maintenance (O&M) capacity of Water & Sanitation Corporation Limited (WASAC). The project’s subcomponents include rehabilitation, upgrading and extension of water supply network in Kigali City and of the peri-urban areas including forwarding infrastructure for Kanzenze water treatment plant; construction and upgrading of Nzove Water Treatment Plant with additional 55,000 m3 /day for Kigali City; construction of Gihira II Water Treatment Plant Capacity 15,000 m3 /day and rehabilitation of existing Gihira Water Treatment Plant capacity 8,000 m3 /day; rehabilitation and extension of water supply distribution networks in the 6 satellite cities of Musanze, Rubavu, Muhanga, Nyagatare, Huye and Rusizi; studies for future investments (Muhanga, Karongi and Ngoma water treatment plants); rehabilitation and upgrading of semi-centralized sewerage systems in Kigali estates including related studies; construction of Kigali centralized sewerage system and installation of sewers to the existing buildings in the areas concerned; construction of 4 Faecal Sludge Treatment Plants and 4 modern Solid Waste Management Landfills in the Satellite Cities of Rusizi, Karongi, Musanze and Rubavu; provision of latrines for schools; capacity development on O&M of infrastructure and service delivery; construction of water & wastewater testing central laboratories and training center for WASAC, including related studies; program management support (audit, operating expenses etc.); and land compensation. WASAC is responsible for the implementation of RSWSSP-IF. Works began in January 2018 and were originally expected to end in June 2024. As of July 2021, 5 of 8 projects under the RSWSSP-IF were complete, one was expected to reach completion in the third quarter of 2021, and the other two were expected to reach completion in quarter 4 of 2021 and quarter 1 of 2022. Project implementation challenges have included COVID-19 lockdowns and travel restrictions, which restricted the supply of equipment and reduced on-site manpower. Other challenges have included a lack of cement & timber on the local market and delays in processing tender documents and in handling complaints

Additional details

1. The AfDB project identification number is P-RW-E00-011. 2. The project’s economic rate of return is estimated at 22.82%. 3. The all-in interest rate (2.626%) was calculated by adding a 1% margin to the average 6-month LIBOR rate in November 2017 (1.626%). 4. The margin of 1% is calculated by adding the Funding Cost Margin (unknown) to the Lending Margin (0.8%%) and the Maturity Premium (0.2%). 5. The AGTF loan agreement can be accessed in its entirety via https://www.dropbox.com/s/wp3hhv68a2vkgf1/AGTF%20LOAN%20AGREEMENT%20FOR%20RWANDA%20SUSTAINABLE%20WATER%20SUPPLY%20AND%20SANITATION%20PROGRAM%2029%20NOVEMBER%202017.pdf?dl=0. 6. The RSWSSP-IF is being implemented through the Water and Sanitation Corporation, WASAC, a utility which carries out significant development activities including projects aimed at increasing the capacity, expanding and maintaining water infrastructures, as well as developing the sanitation infrastructures to ensure effective water and sanitation services. WASAC is a state-owned company, owned 100% by the Government of Rwanda. The Ministry of Finance signed a subsidiary program implementation agreement with WASAC, mandating them to implement the program on behalf of the Government of Rwanda. 1. Under WASAC Structure, the program is implemented through the Single Implementation Unit (SPIU). As of July 2021. SPIU had 30 staff on board as 9 staff had resigned.

Number of official sources

9

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9