Programme to upgrade 50 year old Zambian water network gets EUR 75m EIB backing

Jan 10, 2014

The European Investment Bank, Europe's long-term lending institution has agreed to provide EUR 75 million for the rehabilitation and expansion of water and wastewater services of the Mulonga Water and Sewerage Company. Finance agreements were signed earlier today in Lusaka by the Hon. Alexander Chikwanda, Minister of Finance, Kanyembo Ndhlovu, acting CEO of the Mulonga Water and Sewerage Company and Carmello Cocuzza, Head of the European Investment Bank’s regional office for Southern Africa.

"Access to clean water and provision of adequate sewerage and sanitation is essential for human life and health. The European Investment Bank, as one of the larger lenders to the water sector worldwide, is committed to supporting long-term investment in water infrastructure both across Africa and around the world. We recognise the important investment needs of the Zambian water sector and are pleased to embark on a new investment programme with a new partner, the Mulonga Water and Sewerage Company. Increased access to clean water and improved water supply will improve living conditions in the Copperbelt in the years to come, improve resilience during the dry season and help Zambia achieve Millennium Development Goals. This engagement further demonstrates the benefits of blending EIB loans with European Commission funds to enhance preparation and financing of projects across Africa said Pim van Ballekom, European Investment Vice President for Africa.

"We are pleased to embark on a significant new investment programme to upgrade water and sanitation infrastructure in the towns of Mufulira, Chingola and Chililabombwe in the Copper Belt. The upgrade scheme will both increase supply of clean water and improve treatment of waste water in the region. We are pleased to have worked closely with the European Investment Bank, both when planning this programme, and to enable their long-term financial engagement." said Kanyembo Ndhlovu, acting CEO of the Mulonga Water and Sewerage Company.

"The European Union is committed to supporting investment in Zambia. This project is a flagship example that clearly demonstrates the efficient use of EU grants and European Investment Bank loans that have both improved project preparation and benefited from the EU Water Facility Pooling Mechanism. We look forward to building on this engagement with further projects, including in transport and energy sectors, in the years ahead." said Gilles Hervio, European Union Ambassador to Zambia.

This project represents the European Investment Bank's first engagement with the Mulonga Water and Sewerage Company and will ensure urgently needed improvement to water and sanitation infrastructure in the Copperbelt where most existing water infrastructure is more than 50 years old.   The existing system is struggling to meet growing demand and the investment, backed by a 20 year long-term EIB loan, will both improve existing infrastructure and expand provision of clean water and waste water services to previously unserved low-income areas. This project results from preparatory work carried out since 2010 using funds from the EU-EIB ACP Water Project Preparation Facility and the European Investment Bank.

Investment in rehabilitation and new water infrastructure will cover water treatment plants, water intakes, boreholes, pump stations and water reservoirs, as well as wastewater treatment.  The engagement will also examine ways to reduce dependence on water from the polluted Kafue River through use of a new groundwater based system.

The new water investment programme includes a specific focus on improving water and sanitation services in low-income areas and informal settlements. It is expected that 25,000 households will gain access to clean water for the first time under the programme. This will include working with local community groups and non-governmental bodies to provide water kiosks, new sanitation facilities and piped water connections. The initiative is expected to take 6 years to implement and generate significant local employment.

The Mulonga Water and Sewerage Company and Zambian State will also provide financial support for the project and the EUR 75 million loan from the European Investment Bank will represent just under half of the overall project costs with the French Development Agency, AFD also providing an additional EUR 50 million. Further EU Grant support totalling EUR 5 million will be provided by the ACP-EU Water Facility Pooling Mechanism. An interest rate subsidy and technical assistance grant will also be provided by the EIB under the Cotonou Subsidy Envelope.

Over the last five years the European Investment Bank has provided EUR 172 million in long-term loans in Zambia.  This has included support for investment in roads through upgrading the Great East Road, and in the power sector with the Itezhi Tezhi Hydropower and Transmission Line scheme and the Kafue Livingstone Transmission Line project. Small business investment has also been supported in cooperation with local partner banks.

Over the last 5 years the European Investment Bank has provided nearly EUR 22 billion for investment in water, sanitation and waste projects around the world. This has involved engagement with 8 schemes in Africa, including projects in Malawi, Senegal and around Lake Victoria, with long-term support of EUR 360 million alongside technical assistance to reinforce local implementation and share experience from similar projects elsewhere.

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