Affordable housing

Innovative lending product improves access to water and sanitation in Nairobi’s Mukuru informal settlement

May 26th, 2023

FSD Kenya’s affordable housing program integrates access to utilities and infrastructure as a key component for better financial inclusion, health and educational outcomes.

FSD Kenya identified a unique opportunity to support access to water and sanitation in Mukuru, an informal settlement in Nairobi, in partnership with Akiba Mashinani Trust, the financial arm of Muungano wa Wanavijiji, a social movement of ‘slum’ residents and urban poor people in Kenya.

Muungano wa Wanavijiji has deep relationships with area residents and public sector bodies and drove the process of creation of a special planning area covering 689 acres in Mukuru since 2017. The special planning area designation allows the Nairobi City County Government to engage with the area better.

This was very fortuitous because at the height of the Covid-19 pandemic, Nairobi City County Government via Nairobi Metropolitan Services (NMS) invested quickly and heavily in laying of roads, large water lines, trunk sewers in the area. NMS also laid some lateral sewers (which connect to the trunk sewer), and some prepaid water dispensers.

During the same time period, Akiba Mashinani Trust, Nairobi City County and Water and Urban Sanitation for the Urban Poor (WSUP), a British NGO, piloted the engineering for an innovative ‘simplified sewage system’. The ‘simplified sewage system’ has a narrower pipe and lower gradient and can ‘spaghetti wrap’ around the narrow passages in informal settlements. The testing of the system was fully subsidised by Water and Urban Sanitation for the Urban Poor (WSUP) and the Nairobi City Water and Sewerage Company in Kosovo village of Mukuru. FSD Kenya’s intervention was to design and test a lending product to allow more toilets to be built and connected to the sewer. The geographical area for this loan product was defined as the Rurie and Simba Col villages of Mukuru.

A baseline survey conducted by Akiba Mashinani Trust showed that the area had a total of 5,690 occupied residential structures, being served by a total of 183 toilets (comprising pit latrines, franchise toilets and community toilets). This was a ratio of 1 toilet of variable quality serving 31 households or an estimated 93 people.

Engineering designs were drawn to allow connections to be made. FSD Kenya and Akiba Mashinani Trust both contributed to the laying of additional lateral sewer lines and installation of pre-paid water dispensers. A loan product was designed as follows: a maximum loan amount was set at KShs 50,000 to build the toilet and pay the connection fee of KShs 5,000 to Nairobi City Water and Sewerage Company, at an interest rate of 12% for a term of 1 year. Akiba Mashinani Trust was then tasked to assist borrowers by connecting them to hardware suppliers and trained artisans. Lending started in January 2023.

By February 2023, Akiba Mashinani Trust had disbursed a total of 95 loans with an average loan size of KShs. 17,400. 28% of borrowers were female and several were first time borrowers. Borrowers typically ‘owned’ the structure they lived in and rented 1 or more rooms to other Mukuru residents, while also running dierent small enterprises (operating small kiosks, providing a delivery service, providing manual labour etc).

FSD Kenya’s contribution to the intervention is KShs 13 million as part returnable and part non-returnable grant capital to Akiba Mashinani Trust to undertake baseline research, complete engineering designs, build 700 metres of lateral sewers to connect to the trunk sewers laid by the Nairobi City County Government, install 8 prepaid water dispensers and create a revolving loan fund.

FSD Kenya’s grant leveraged the deep experience of aligned partners and significant public investment in infrastructure. Anecdotally, it is estimated that Nairobi City County Government through the Nairobi Metropolitan Services invested more than KShs. 250 million in sewage infrastructure alone in Mukuru.

The success of this intervention clearly shows that such innovative lending products can only be successful after proper demonstration of the technical engineering solution and after establishing the willingness to pay by the structure owners. FSD Kenya also chose not to insist on clean land collateral / proper titles which is a key barrier to engaging in informal settlement improvements and took a view that the special planning area designation of the target area provided a strong legal standing on which to invest in the area.

By having toilets within the shared compound (plot), as opposed to communal toilets, another big advantage of safety is provided, particularly as women and children do not need to walk at night to access toilets. As of February 2023, Akiba Mashinani Trust had estimated the demand for additional lateral sewer lines, pre-paid water dispensers and loan financing at over KShs 30 million for Kosovo, Diamond, Railway, Feed the Children and Kariobangi villages in Mukuru. FSD Kenya hopes to attract funding to scale this project from other partners by demonstrating the financial viability of this product.




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