Effects of blended finance on achievement of sustainable development goal number six on water, sanitation, and hygiene in Kenya

Abstract

The development and expansion of economies depend heavily on developments in Water, Sanitation, and Hygiene (WASH). This is the reason developing economies embrace blended finance models to promote the achievement of sustainable development goal (SDG) number six. The growth of the blended finance market has given rise to significant momentum in the development of sustainable infrastructure, allowing the private sector to participate and overcome the financial gap to achieve SDG No. 6. However, not much information has been published regarding the efficacy of blended finance on the execution of WASH projects in Kenya. The lack of information about blended financing motivated the study to establish the effects of blended finance on achievement of SDG in Kenya. Particularly, the study determined the effect of guarantee on the achievement of SDG No. 6 in Kenya; assessed the effect of technical assistance on the achievement of SDG No. 6; established the effect of private sector financing on the achievement of SDG No. 6; assessed the effect of concessional loans on the achievement of SDG No. 6; and established the moderating effect of governance on the relationship between blended finance and achievement of SDG No. 6. The study targeted the nine counties undertaking KIWASH projects (Kitui, Siaya, Makueni, Nairobi, Kakamega, Kisumu, Migori, Busia, and Homa Bay). A target population of 20 employees from each county under WASH section were selected leading to a total of 180 employees from the counties. A sample of 12 employees was then purposively selected from each county. The study used a positivist research philosophy and explanatory research design. A questionnaire was used to collect data. Both research instrument’s validity and reliability were tested. Both descriptive statistics and multiple regression were utilized during data analysis. Various diagnostic tests were used to ascertain assumptions of the model. The study found that guarantee, concessional, and technical assistance had a positive significant relationship with achievement of SDG NO. 6. However, private sector financing had a negative but significant relationship with SDG NO. 6. It was also found that governance as a moderator had an interactive effects on the relationship between blended finance and achievement of SDG No. 6. On guarantee financing, it concludes that financiers were strict on the funds’ security, counties financial standing, and credit history. In regard to technical assistance, it concludes that WASH county employees were not subjected to ongoing training and development via workshops, inductions, and seminars. In relations to private sector financing, the study concludes that private funds towards WASH projects were not adequate and this was attributed to the fact that WASH projects have not attracted increased financing by credit providers. On concessional loans, the research concludes that there was adequate grace periods, flexible repayment schedules, and lower maturity of concessional loans. On governance, it concluded that the counties lacked effective mechanisms that provided adequate checks and balances on SDG No 6 funds. The study concluded that SDG No. 6 has led to increased access to basic sanitation, safe drinking water, low cost water, and increased water and sanitation quality. The study recommends that WASH county employees should be exposed to incessant training and development to improve their skills, knowledge and competency. It recommends that the counties should improve their financial rating by putting in place risk management mechanisms to attract funding from the private sectors. The research recommends that counties should give priority to concessional loans because it was found to be affordable insofar as serviceability is concerned.

Key words: Blended finance, guarantee finance, concessional loans, private sector finance, and technical assistance, governance, SDG NO. 6