 Okay, so thank you all so much for coming. Good afternoon to all of you Today we're going to be talking about blended finance and bankability in the water sector But before we get into the panel, I'd like to first of all thank all the panelists for coming today and speaking I'd also like to thank our host organization, which is IHEDELF Institute for Water Education and a special thanks to my supervisor Klaus Klaus Schwartz who has helped me organize this panel and also helped me with a course in my thesis to develop some of the research here So just a brief brief rundown of how it all go. I'll give a brief introduction on The financing gap in the water sector and a methodology to potentially bridge that financing gap Which is called blended finance and talk about this term bankability That's very important to this methodology of blended finance and how we can perhaps create more alignment around What a bankable water infrastructure project or business is? So without further ado, I'll go ahead and start with the financing gap in the water sector So the financing gap is traditionally understood to be the amount of money or the Investment needs that the water sector has that are lacking And there's many estimations as to how large the financing gap is but many estimates or many people would agree that it's Somewhere around over a hundred billion dollars annually And I think the best way to understand the financing gap is from the perspective of utility And in a typical water utility you have costs and you have revenues and many of the costs You can see on the left hand side of the screen Maintenance costs are operating costs things like these pretty basic costs And a lot of these costs can be met by revenues from the utility such as the water tariff or transfers from The Ministry of Finance in that country the traditional public forms of financing But when it comes to expanding The water infrastructure in terms of expanding coverage for rural water supply or rural sanitation you need Pretty significant amounts of money to expand this infrastructure in these areas And so that's represented by these investment costs here And that's really a large part of the financing gap. So the question Then is how do you bridge this financing gap and how do you get more money into the water sector? And so a methodology that we'll be discussing today is this methodology called blended finance and very simply blended finance is just the blending of different forms of capital in For a project or for a business so at its core you really have like two counterparts in blended finance you have your concessional investors and the market-based or commercially driven investors and financiers and it's really the concessional investors that drive a blended finance transaction and These investors are people like a government a donor a bilateral aid Organization an FMO like we have here today or another ministry for affairs And so these concessional investors take on greater risk and accept a lower rate of return Because a lot of times it's the mandate to do so and they want to catalyze investment into the water sector But what this concessional money is intended to do is to unlock or attract Additional financiers or investors that may traditionally not be so interested in investing in the water sector And these kind of investors might be a pension fund or an insurance company asset managers that have clear fiduciary responsibilities that are more hesitant to invest in the water sector because it's traditionally viewed to be as a more risky investment versus if you compared it to other sectors like IT or Telecoms things like this Well, what's really interesting when you're talking about blended finance in the water sector Is that there's a bit of a divergence between the theory and the practice? And what I mean by this is that there's a lot of literature about out there from World Bank Group or your OECD OECD is of the world talking about how what I was just explaining here how this donor capitals can mobilize and leverage and unlock This commercial capital and this will lead to these blended finance approaches and transactions that will therefore Help meet UN Sustainable Development Goal 6 which is the the basic or it's the act the right to clean water and sanitation So there's a lot of literature out there and a lot of theory about it, but there's not so many Practical examples or academically reviewed case studies of this really working on the ground So luckily today we have a we have a great panel of people who actually are working in this space and are Trying to contribute to understand how this methodology can be practically applied and understood Everyone many places in the world But another idea or something I want to discuss today is this this term bankability That's used in very much in common parlance when you're talking about blended finance I think some people would say that a Bankable water project or business is really like the vehicle under which blended finance Actually operates and what I mean by that is that the typical phrase from the OECD or your World Bank group papers Is that it's not a money problem? The problem is actually a lacking of these bankable water projects and businesses Meaning that there's trillions of euros and dollars floating out there in these capital markets and that money is all there It can be accessed if you have an investment ready or a bankable project or water project or business But what's interesting is you know people throw this term bankability out there all at all the time But it's not so often defined and I think a reason why it's hard to define it is because For I think hopefully as we'll see today depending on where you are as an investor or an actor in the water sector You may understand and you may define and have different criteria to understand Bankability very differently than the other investors that are active in the water sector so Briefly before I invite the panelists up on the stage. I just want to show you how We came to understand bankability in the water sector and this is just one interpretation and Maybe your first reaction is it looks a bit complicated because there's a lot of moving parts here and to be fair In a way it is like there are there's no sugar coating that to create a bankable water infrastructure project or business There's a lot of dynamics at play and a lot of risks that must be mitigated But I think the key takeaway is to understand that these water projects and businesses They're operating in a larger enabling environment and this environment consists of many factors including the political conditions The fiscal space the the capacity of the local institutions Whether it's at the national level or local levels and a myriad of other local conditions But coming into this enabling environment you have four key inputs that we've identified So the first being the investors the investor type how they invest i.e. what instrument they use What type of water infrastructure asset or business you're actually trying to invest in and what is the phase of the project lifecycle? So just to briefly walk you through these four The investor type is perhaps the most interesting one for us today because we have a great panel full of people who represent pretty holistically this range the spectrum of different investors that are active in the water sector all the way from on the Bottom you there you see a public investor like in the case Netherlands administrative foreign affairs All the way to the top a traditional investor What I mean by that would be someone who has fiduciary responsibility and will only accept Commercial like commercial rates of return like a pension fund for example, but then you have a wide middle in terms of Donors impact investors or responsible investors and we'll get into that. What's important to understand Sorry everybody online It's all good. Okay. Well, this this will this work for you Okay Once again apologies to those online what I was saying About the investors is that I think as the panel will elucidate shortly here Depending on what kind of investor you are in the water sector. You may have different criteria You may understand bankability differently. That's what we want to get at Just to briefly walk through the other inputs here the investors will invest typically with different kinds of financial instruments such as grants debt or equity and so that's on the Supply side, but if you see the right side of the graph, you'll see demand which When we talk about demand in this context I mean what type of water infrastructure asset or business in terms of is it a bull quarter supply project? Is it a rural sanitation project hydropower a riverine restoration project? There's all these different types of projects and businesses have different models and they have different rates or different rates of return different risks and Depending on what kind of investor you are you may be more willing or less willing More interested or less interested to be involved in those types of projects and businesses and The last factor to take note here is the face of the investment lifecycle Because if someone comes with a product like a water infrastructure project, but it's purely just an idea Obviously, that's pretty risky and there's not many people that will be willing to take on and put money into a project That's just at a concept with a high level of risk But as you go further down the project lifecycle through the development into the construction and through the operations Usually more and more Investors financiers funders will be willing to actually invest in the project but ultimately these four factors should come together within this enabling environment and Create a project modality or what I call here the project modality Which is just a structure a structure that can essentially mitigate the risks implicit from the enabling environment or from wherever the project is existing and Create a structure that is deemed to be bankable by the investors that choose or are going to be investing in the project So I'll reiterate one more time. This is just how I came to understand or one way of interpreting Some of the different factors that go into Understanding what a bankable water project is but I like to now call all the panelists up to the stage, please and We can talk about it a bit more So firstly once again a huge thank you to all the panelists for for going today, I really appreciate it I'd like to also apologize. I know it's hot time for a vacation season here So sorry to keep you away from the beach, but I would just like to ask No particular order or maybe we can start by your review this So please introduce yourself say which organization you're working for maybe your role there And if you could please give us what your operational and your practical understanding Bankability is or what bankability means to you in the context of what? My name is Edith Bellman the program lead of the Valley Water Initiatives, which is a program of the Netherlands Agriotexin from the Netherlands part of the Ministry of Sustainable Stress and Climate Policy And our program BWI is focused on the implementation of five principles Valley Water Principles established by the Hyde and Penal Water of the UN in the World Bank And those five principles are focused on better decision-making impact in water Making it more equitable inclusive and transparent and we do that through our multiple values And that's the link also to bankability. So what does bankable then mean to our program? It is yes, it is profit to success, but if you look at profit as being more holistic also if you're planning Total values into decision-making is to profit because if you look at the long-term you really have to look at the ecological, societal values as well as the economic values And so that's what bankability means to us and furthermore I also So we have that multiple value project. We also have the systemic change approach We want to look at water in its whole system So if you look at the water project link it to the rest of the system Link it to other sectors to other themes and not only focus on for example, water and utility companies. Yes, it's important Yes, it could be improved there as well, but also link it to other water uses in such a water business such as the farmers Such as the mining companies. So really try to link it to the whole system If you say so my name is Rick before I work as a senior associate at the Dutch Development Bank at Moe And I work in the blended finance team, but I specifically work on the Dutch Fund for Climate Development Which is a 160 million euro Dutch government fund that will be managed by the Dutch government and It's structured according to three different facilities One facility is a water facility. We actually don't directly manage that ourselves, but we just dedicated that to the climate fund managers At Moe's LEED partner and manages a land use facility, folks in agriculture and forestry investments And then there's also an origination facility managed by SMD and the World Wildlife Fund And the origination facility provides grants and technical assistance to health projects and to become bankable So that the water facility and the land use facility can invest in that And so I work on the overall consortium and also help manage the land use facility What's very important for us as an approach is that we as a consortium also try to take a landscape approach So whenever we do investments, we look at the landscape holistically Ensured that water issues are also taking into account when we do agricultural investments Specifically on bankability. I think it's very How I would define it is that there is enough certainty that a project will be Successful from a risk-per-journ perspective, but also from an impact perspective And I think it sounds a little bit appreciate but I think the most important indicator for that quite often is just track record of the business model But also the partners in full And so I think getting projects to bankability is ensuring As an industry to showcase that that track record to ensure that the track record is there Help support new initiatives or initiatives that seem to be working keep on supporting those That's my view Yes, I'm Rick Elmdorf finance manager for NWP, the Nellis Water Partnership and I'm Here as well as board member of KIPWAT, KIPWAT the Kenya Innovative Finance Society for Water and NWP is a It's a member organization, a member organization representing the Dutch water sector, and we represent the Dutch water sector online worldwide events and also in the execution of programs and projects And we try to connect the Dutch water sector with the stakeholders and enable them to pay more impact and to contribute to the SDGs. And as for KIPWAT, KIPWAT is a co-developer of water initiatives in Kenya and as a co-developer KIPWAT provides provides early stage financing to these initiatives and technical support to bridge the valley of debt and to get these initiatives to come to transition them to become a bankable project and What is a bankable project that? I think if you look at these two perspectives because NWP is a we represent the Dutch water sector So we have a really broad perspective and last year we did an overview of of the Financiers within the water sector and there you can see that there are many different financing where we have a lot of them here and They focus on different regions. They have different criteria. They have different Financial instruments, they have different focus on public or private, etc. So as from an NWP perspective Bankability is well it depends on who you ask If you look at more in depth one of the programs we are working on is the Investor Readiness program where we some means startups and early startups to attract private finance and we help them through master classes and coaching and we help them to pitch To pitch their business case to venture capital funds and impact investors, but there you see again, you can have a good idea. You can have a Good business case, but there has to be a match and you have to be able to sell it as well from Kiko perspective We have a set of criteria before Accepting a certain initiative and that is as a positive social impact and positive environmental impact The there has to be a good lead developer professional lead developer and the lead developer has skin So they have to be really involved within the within the project We also look at the governance whether it's sound or not because these are all the ingredients eventually to take this towards bankability but in the end if we provide financing provide technical assistance and We come to the phase of reaching financial close then Bankability is still in the eye of the order and bankability is Is Reaching financial close at the end so it could be a match thinkability my opinion is a match between financier and project in terms of risk appetite in terms of focus in terms of the risk in risk appetite and focus and in terms of Let's see A tick size and impact so we turn on investment financially My name is Jim I recline fund managers Does the manager of the water facility that we can do to within that and an executive in our capital raising business development team where I mainly look at fundraising as donors for concessional financiers The way the water facility works or any of the funds that the time that come down to the seller is that there's a client finance structure where we have a development fund that provides the inverse of grants To projects that are in a development phase that this slides into the second one Where we basically ensure their own feasibility studies are done environmental social studies I'm very sure that a project in our eyes has a potential to be bankable And there's a construction equity fund. It does the equities and equity part Construction and then there's a refinancing fund where the project would get depth again together more healthy financial leverage The way we would look at bankability I would say is very much the same as what Rick alluded to force the people in the same construction But it's it's from a financial perspective So very straight forward a binary is you know, would we make the return that our investors would like us to see on this project But I think even more than that. It's some of whether it from a sustainability point of view makes sense to do and This is especially true in the water sector where you could imagine this is often quite complicated If the access to water in the local municipality for example is provided the tax funding or concessional funding and prices at X What would happen if a private sector thing will see her like ourselves come in While during the actual construction phase parable still in charge You know, we're going to quite sure that the price or access wouldn't be worse for anybody's municipality because we're in charge but what happens after and These are things you really need to look at before we can say it for them to stay so I think it's two things It's financially, but there's more than that doesn't make sense on impact point of view and then from the long term even after we Thank you. Thanks a lot also for the writing I'm thrilled to be here because I've been involved in a lot of the things that we have been discussing I've heard of NWP. My name is Jules Holt-Reichs. We started here And currently I'm working for Cardano Development and Cardano Development is in an incubator for development finance initiatives and I came to Cardano Development from the Maryland Water Partnership with with a certain initiative called the Water Finance Facility, which is now in-house And from that I'm setting up another fund now. So I've left temporarily the water sector. I'm setting up a gender fund now for gender Focused as a means in sub-Saharan Africa. So if you see this panel, we see the gender problem again And the Water Finance Facility I'm slightly involved in from the side at the moment because that is sort of a slow implementation rate at the moment because we got stuck in Kenya and it has a lot to do with everything we can discuss We've got good hopes that we can get it to float again and but at the moment it's slow as well because the Elections are coming up next week Yeah, so Maybe bankability, either way, I would like to define it and it's a bit maybe also to demonstrate an issue that I see. For me, bankability is defined by the depth-surface-covers ratio And then people might say and it's also to sort of highlight the loss-intervalation problem with the water sector and the finance sector. What is the depth-surface-covers ratio? That is the amount of cash flow you have available to surface your debt And it sounds very not so sustainable like etc. But I think that investors or debt investors Are mainly interested in that and obviously if you are in our sector, you would like to see Good ESG performance. You'd like to see all kinds of sustainability Green green lights etc. But at the end of the day the credit committee or the investment committee Will be mainly focused and rightfully so in my mind on whether the actual World is able to repay that and that is I think the most boiled down definition of Bankability then still I would don't agree with everything that every set of bills offer However, if you put a knife on my throat, we say in Dutch you have to You have to Define it in one simple line, and I would say a depth-surface-covers ratio of 1.3 Thank you I am not the finest manager What that means is I We are from the making what account program is a 14 million facility We basically divided into three pillars one pillar to support innovation One pillar to support the scaling of it right and third pillar is to support and try to get off the finance that's where I'm working on and we work with two Finances that's either local financial institutions. So banks or or to impact investors And the way we operate is that if we see that impact the investors wants to invest in markets We can offer for example technical assistance or also provide first ones These are benefits you need to speak to nature about I think from our perception Bankability doesn't defer too much from how they perceive bankability, which is as you described Positive cash flow or I need to pass it ever that But even more for instance, it's a proven business model with prune this model. I mean that it has a double impact So impact our net result but also shows social impact, and I think that that's how we evaluate our proposals And it's also how to impact investors But it is a challenge when it comes to water Some business models are positive in that sense that they're thankful or may offer only water So what they're for purely tariff though for us, even though they're bankable It doesn't mean that we would work with them unless if they have another revenue screen Operating for people of the bottom period and that's how we are trying to be additional So not only hearing from them fine, but also the impact in clients. So bankability that says for us on an MSME The SME level because that's that are you think there's been work with you don't work that much with marketing processors That's how we proceed Thanks My name is And There are business operations their financial operations and actually at the end their impact in their performance Over the last four five years we've started this joint program with waterworks Which is financed by the MSME for a fair And in respect to participate and help them Yeah, business processes and improvements But we also try to make a link and help them to attract the investment finance The idea is that in total you reach 10 million people by 2013 By both investments from our ends, but also by attracting investments That's basically also what I find very much interesting about this discussion I was also intrigued when you called You can look back to the bankability What creditworthiness because I have taken an engineering background and Being in this domain. I always try to try to understand but it's great working It's about the bankability, but now after your thesis, I know there is not a unified business Like you said, it's on the eye of the holder So I think you're doing this of an investment fund or finance this is quite nice This is actually what we also say If somebody wants to find as an investment coordinator That's actually maybe bankability Of the last year we have been developing throughout the entire discussion 43 investment proposals and when we wrote the proposal Basically, it wasn't very wide as we thought, okay By 2021 we'll probably have finance sufficient investment proposals to cover those 10 million people But so far we've really been the finest and that's a little bit of a challenge I see also in this whole endeavor that's very difficult actually And that's also why I find this very timely because I'd like to discuss it Thank you so much My name is Peter, Peter Van Necker Work with the Ministry of Foreign Affairs I'm not your financial expert So I won't say too much about bankability because my colleagues in the Ministry are way more involved in that And also they're formed with these guys So I'll leave that to you then But my role here is that I'm involved in organizing the UN content free water conference next year in New York Where finance is a big team obviously Background is in civil engineering, had one course in financial engineering So kind of know some of the things you're talking about But yeah, I'd like to share a little bit more about the conference Now you can see why it's so important to have finance there during the conference covered as well And also what is discussed here if you go up there So as you all know the gold standard is very elusive and we're still not on track Like we need to speed up four times our efforts to get on track So we're not even there yet to reach it in 2030 And so next year we have this conference The first UN water conference since 46 years So you might ask like why hasn't there been more UN water conferences Great question, I think it's because water is a very highly political theme And also it's very hard to discuss and get all countries on board But this is our chance So next year we have the chance to unify countries to come up with commitments Not only with countries but also with stakeholders With the private sector but also with all kinds of other sectors that need to be involved on the water And yeah, our purpose is first inclusivity We don't need another conference that the water sector is just echoing What they're telling all along this last conference in 1977 Was already good enough in that regard So we need to have more women people, more youth people Also indigenous people and the elderly community as well as the disabled Also it's super important to have a naked cross tutorial So the water sector should be connected to the energy sector To the health sector, to the food sector and also the climate sector If you could call it a sector And the most important thing, it needs to be action oriented If there's no action it should stop This is not supposed to be a talking show, there needs to be a real outcome on this conference And so that's what we're trying to organize, it's kind of a daunting task But also really fun to be involved in And in order to make this conference a watershed moment for the world as we call it We need to have a full committee And these commitments are gathered in what we call the water action agenda The water action agenda consists of voluntary commitments So everyone can go as fast as they want And in order to structure that we have to use the global acceleration framework As you might have heard of, the UN uses that framework Because it shows what accelerators are that will dramatically help Include the international community to support this water purposefully Or in country programs And these themes are optimized by finance obviously The second one, include data information I think that's something that we have not faced yet and maybe will in the future But it's important to have, if you want to have bankability Then it needs to be shared data and also transparency Fast development is one of these things And also innovation and good governance And I think if you talk about optimizing finance Then it needs to be really about coordination between donors And that's why I like that there is such a cross-donor panel here Because we really have to coordinate how we finance that We have to also improve our targeting that we can And the funds that are already flowing into the water sector We need to be using them more effectively and efficiently And as I said, we have to create those synergies between all these sectors Because as you might know, the water sector has this big financing gap But in other sectors like energy, there's so much finance already flowing And we need to create these synergies so we can use them also in our water sector And that's why I like what Theo said We just don't need to look at it from a utility perspective But a way bigger, broader perspective And then obviously we need to have additional domestic and international funding Yeah, and I can talk a little bit more about what type of commitments we want to have And also how we can build it together towards the company If you have any questions, please ask me and I can explain a little bit more about it Sure. Okay, yeah, thank you all so much for your introductions to yourselves Your organizations, your work, and how you come to understand blended finance and bankability in the water sector And I think if anything, like this highlights, unlike your guys' introduction to the subject highlights It's not so simple. I think the water sector, anyone from someone outside the water sector as well as people within will tell you that there's a lot of dynamics at play And it's really hard to balance this financial sustainability along with the environmental, the social, and the government sustainability And I think, like many of you were already talking about understanding that water operates within this larger nexus of food and energy, climate, overarching, all of it It's really important, so I think a large driver, a volition to get all of you here together today was because many of you come from different parts of the water sector or different kinds of organizations But obviously, Peter, as you were just saying, we need synergy and we need more alignment on how we can bridge this financing gap and whether blended finance is in fact the way to get there and whether or not we can create more alignment on understanding how bankability actually practically works and can operate in the water sector And so without further ado, I guess I would just like to pose the first question to the panel And by the way, I forgot to mention, I'll ask four questions to the panel And as even the audience keep notes, and if you'd like to answer or ask some questions towards the end it'll be time for that as well, so please The first question I'd like to pose to you all is So many actors, including actors like the Dutch government, World Bank, or OECD suggest that private investment is required to develop water services sector if SDGs are to be achieved, specifically SDG6 here But at the same time, this actual amount of private finance appears to be limited especially in countries or emerging markets that perhaps need it the most For you, what explains this low level of private investment and what are the challenges of investing in the water sector and what needs to be done to access this huge pool of private capital or these commercial capital markets that is out there but currently is very hard for entrepreneurs in many emerging markets to actually access that money So the floor is open to anyone who would like to give a response and then we can just go from there Yours, please Yeah, so maybe briefly to... Can I raise a little bit more on what the water finance system does and what we've learned and then I'll come to the question So the water finance system tries to mobilize capital market financing So in local countries, local capital markets So in this case, we started out with Kenya with the help of the Ministry of Foreign Affairs which have really been sort of a very audacious donor to start doing that because there were no other donors joining them in that... or in us, in that journey But we try to mobilize local capital market financing and we do that on the basis of a pool of water utility loans So in Kenya, there are about 14 utilities that are credit worthy, thinkable and on the basis of that pool we're about to issue the bond in the Kenya capital market in order to finance those products Now, the huge... and I'll come to the answer The huge challenge is that the Kenyan context although it's one of the better contexts out there in the developing world is still extremely changing in terms of governance So the answer is group governance In my mind, that's the main challenge So if you look at the Netherlands, for example the water utilities and the water authorities there are... and that's basically the model where the water financing is also faithful to a certain extent are being financed for a large part by the Dutch water authorities then the N.W.B is only able to do that by virtue of this excellence governance of the Dutch context as a whole It's the water authorities who are allowed to raise taxes and on the basis of that, on their right they have a AAA rating The Dutch government has a AAA rating So the Dutch water authority bank has a AAA rating and is for that reason able to mobilize huge amounts of private finance for social goods like housing, because I think 70% of them are focused on housing but it starts off with water So that's governance That's a governance context which is extremely conducive for mobilizing private finance Maybe then we start with a more general comment on availability of private sector finance and blended finance in that respect and give a bit of insight as to how we mobilize private finance and then maybe we stick it on the water sector but in general I think the statement saying that there is not private finance available with all these kind of finance vehicles to help the water sector or the energy sector or the food sector in the emerging communities is a false one I think there's very large commitments of donors and your commission for example just launched in the United States that's 70 billion I guarantee a program between climate problems, a big problem with the Paris Agreement saying 100 billion in finance will be mobilized every year and it all sounds very nice but in practice it's not working it's not being employed and I think a very large reason for that I've worked with the finance for my full career is that it's really complex to get this funding to get this funding from donors and the donor came before announced to me so basically what they would do is one of them was actually being disbursed and it's the FMOs and the climate problem and the new results that are getting this funding but I would be very certain that any very little percentage of those large numbers being before this actually means that but why is it, according to the organizers? Because I think a part of it I think a very large part of it is the complexities of getting this funding and the rules the game that these donors have basically the Dutch government is a really good example for the government and doesn't do it and that's quite easy and flexible and sort of wants to allow private sector investments but the European Commission or the European Climate Center it's so complex that it doesn't hardly work Perhaps to illustrate the point I mean, Jim, for the climate fund managers to get funding from the Green Climate Fund or GCF how many pages was the funding proposal? We submitted more than 1400 pages to 12 different languages almost including Maldivian in the end we couldn't tell them that it does not need it Before it was in 3rd language? No, no, it's 4th language It's one document that has to be translated to all languages and there's a hard reality of it is that it's a large belief fund that are able to do that of the smaller projects that probably need it more So I think that's in general that I think it sounds very nice but a lot of it has to change before it really works effectively then maybe to give insight as to how we do it So we have this development fund for the donors of the Dutch Government the European Commission, the GCF, USA they provide the inverse programs in principle in the end of our 20 year program they would get their proceeds back but this is a very concessional thing I think it's a long investment then we have a construction equity fund which is basically a PE fund and it's structured for 3 layers first one being donors it's a first cost branch 20% then the impact investor is 40% and then pension funds for 40% and this is really what you want to try to do if you want to move the pension funds and institutional investors to go to places they normally wouldn't So I think in practice that's a very nice one out of four leverage of a one dollar donor fund you get four private sector finance then again if you see how the GCF would receive reports they take an average of 17 we wonder who's doing that and how they got to that number and then speaking to these pension funds and that's more specific to the water sector is that what you see is they are getting sort of used to renewable energy and how those revenue models work and the risks of that and how the PPA works and you know they have some comfort or get their money back and then they have these different traits under them that sort of provide capital buffer but for the water sector it's just very scary for them because these are revenue models that are not really proven yet and there's a lot of hope enabling environment it's very risky and they are afraid that they wouldn't get their money back so within this benefit I would say the water sector is probably the most risky one for commercial institutional investors Thanks John So what you're saying is from a donor perspective it's complex and it's risky and what you're saying to us is it's also in the country itself it's also really complex it is complex to get closer to each other and to get to financial close with me So a big thing for us it doesn't go nice between the donors and the commercial investors in the fund is that none of these pension funds would ever invest in our fund if we were to only focus on one or two countries because then they would see too many systemic risks and one government doesn't want to work through it so it's spread out over the whole world in different sectors, different countries and then combined with the final structure they might feel like okay, we'll do a bit but then the donor of course would say well let's just go and say that to you and invest a full amount of that So if I could add to this because I'm quite intrigued by what you're saying but I would like to give you a different perspective also regarding what you mentioned is now the financial journey in which we look at water as a risk and the risk of investment and we're trying to move the capital market accordingly so if you look at the water sector I think a lot of investments are already made into the water sector to look at it as a risk but I think that a lot of investments are already made but maybe investors are not aware of the risk the water risk that's underlying their investments so we are trying to now also educate and raise awareness among investors on water risk and also at the same time another track within the financial journey is we focus on disclosure of data of corporates trying to get data out there, trying to benchmark it and also try to combine the corporates and the investors together trust is built and that investments can be made, moved and I think that's we're trying to move investors towards certain opportunities I think it's also important to highlight that certain investments should be moved away from water risk investments to get the perspective out there as well I mean I certainly agree with the point of showcasing how it works that's what's been done has been done with renewable energy and now investors are more okay with that as soon as you start showing that this little water model works and you can copy it earlier investors would be less hesitant to do it next slide that's also what we're working on with KIPLA and there you see also the intricacies of working in this case Kenya it takes a really long time to get to a bankable project because of the circumstances on the ground in the certain country and it's hard work in that sense hard work to get to to prove the concept but I agree once it's proven several times in different contexts then the concept will grow and will be copyable towards different countries maybe to shed another light because I see this is more on the utility size and again in commercial investments my experience is more in water enterprises and looking at local banks for example because we give us portfolios of local banks that will MSMEs watch watch SMEs there you see also that there's appetite for them to lend to these enterprises but many of them lack collateral for example so even if they apply for a loan they won't get through the credit community so they need a digital risk game to either guarantee or the first most and for that you need a guarantor to do that but they also need to understand the sector and the risk so there's also a lot of work on that understanding the water is the same as they do now for example energy businesses etc so I think of that finding a pipeline of solid SMEs that's also an issue and if I take it to the impact investors we work with several so they focus purely on watch water and as you said that globally in order to crowd in capital so the investors they will do an assessment of the funds before they step in and they will see okay so how do you pipeline and finding that pipeline like investable companies it's a challenge even if you set up a fund between 20 to 50 million let's say a big exact 3 million per enterprise and finding that in a way that you can promise that return to the investors it's a challenge they find that along the way for example they find that they have to do some pre-technical systems for one or two enterprises and take the iteration of it so I think there is private capital but you know you cannot change the way the investment works right so yeah I think covering this knowledge gap also having for example investment managers understand the water sector understand the risk we can reach that cash flow for example I think we need to be a bit on that level because the model is different compared to the enterprise for example you just said you can't change the way the financial sector works right I dare to leave and I hope so because I believe there is a huge sort of assignment to the world is that the capital market financial markets start looking differently to investment projects and I think that is already ongoing however there is also sometimes for example ESG environmental social governance risks and performance last week's economists had a very good piece I think on unpacking ESG and what makes sense what does not make sense but in a great few things I guess you see a trend towards more sustainability investments right and one of the daughter companies of Karan Development or one of the companies that Karan Development has integrated is IEWICS Integland Exchange they have been able to crowd in 100 billion now for the Dutch patient funds to invest in development finance loans right so development finance institutions issue loans those are often syndicated loans and now IEWICS sits in between Dutch pension funds and those loans to refinance and or finance those loans and that is a great thing that is a great development and the only reason that I come back to the earlier point a system like that which is well-governed and a robust system makes it a predictable investment and predictability is everything and that is often a very weak well, weak characteristic of the context that we tend to work with I couldn't agree at that point my wording was a bit wrong I think what I would like to rephrase too is that the finance they need to embrace these new direct instruments but on a like model we cannot really change it return if return they also need to learn to raise this model IEWICS is a good example I think it is also direct but that is the funny outcome of IEWICS it is then in the sense that the English government the Dutch government has put in seed money in order to keep the machine to make operations, so to speak but now it is pretty un-buried so I think also I hear you saying that there are already good examples of leaders that go towards more sustainable investment and I also want to point out to the UN Water Conference coming up and the Action Agenda I think we need to showcase those leaders more and the UN Water Conference is a good stage to do so and also for others to look at those examples to follow so if you have any other examples I hear that and several already I think it would be good so I would talk to Peter to really find those champions and stage them and try to make investments more sustainable and more agenda In the ESG community there is one person who issues an annual letter and tries to be an opinion leader in the field that is everything in the CEO of DECRO and everything is the dark side compared to where we sit and I would say everything is great and put them on the spot and let them disclose how much is water exposure it's probably not so much so it's really well try to bring the world together but I think we all agree with that do you think that is enough go for the cap great initiatives obviously you know so for me it might be a bit it's a contrast to each other but in work you have a transformational story you have a transformational story in your introduction and I had a very transactional story a very focused on the transaction they said Donald Trump is a transactional president and we need the transformational president in transactions and I think that the contradiction there it's end to end because in the transaction itself you learn and from those lessons you need to facilitate the transformation but at the end of the day the headache is in the detail is in the transaction so you get on the level of transformation no water should not be privatized no water should etc but if you look into the details you will often not see that people think it's privatized but it's not it's like very very efficacious public ownership private operations operate privately and that could be financed privately but it could also be financed publicly and operated publicly so there are different flavors and it's extremely nuanced so in the transactions that is really being unpacked and reviewed so it's often a very almost value driven discussion while it is a matter of detail in transaction which informs the bigger transformations if you want one glimmering thing that I also last years saw that take the challenge that I and councillors of international finance used to get financed and it's very difficult but in some cases like Wikipedia was a very nice case where in that there are local mechanisms started to develop to finance sector and I just came across it by incident that was one of our project managers who was talking about it in the Oremia meeting they are supporting a number of activities but they also have an association they jointly went to the Oremia cooperative bank and they have jointly signed an MOU hoping to have that materialized to get access to finance locally these are really the which I see if you place more like in Indonesia the new ones funds what serves to trust them in Kenya is also interesting and therefore where there is more and more local initiatives and local funds to cater for investments in this case of course and sometimes I think we are a little bit too much focused on our big transactions in international finance institutions but somehow I think actually this could be a better endeavour to start embracing those initiatives and funding like in Kenya what serves to trust them is a great fund with many donors with that funding and would manage locally with small grants to cater for this case but they didn't manage to crowd in large private sites but other on your mind because perhaps on this panel one of the closest people to the physical water projects with waterworks program what is separating the initiatives in Ethiopia and Kenya that you are just discussing versus some of the other countries that you are working in in terms of why those areas you have traction you have more momentum in some places you don't see it in terms of these kinds of risks that are inhibiting more investment to flow into these markets I don't have the full answer that's okay but I think that the more developed when a country is growing in income like in Vietnam as well in Kenya by the way I think there is more stability in the institutional and financial system which makes these risks less I think that's a different problem but at least people feel more comfortable investing in Vietnam so I think that's definitely a point and I think especially Kenya investing a lot in institutional structure of the sector it's much more transparent sector than many other countries The flagship water deal in Sub-Saharan Africa still I guess Kigali wastewater treatment then and that's not close to anything in Rwanda where a lot of things are wrong in Rwanda in terms of human rights etc but it's predictable a pretty predictable context and for that reason I think it was possible to get a consortium organized with a developer from the Middle East all kinds of different finance institutions gathered including the Rwanda who used it by virtue of the guarantee and made it bankable for the finance Does everybody else have any other thoughts on this question or should we move on to the next I think one thing that I also if I look at what I've seen in the private sector involvement or later finance say the packaging the elements like if you go into investments for water institutions water utilities fuzzy huge investments at the same time because you're directly investing in a water utility but if a water treatment is set aside it's a reinforced entity that has much more interest in finance there are many institutes that support contracts also in Philippines where it's on the lower side of the income I think that's where this is an interesting fine line in terms of when you talk about the bankability of a water project or an SME or business you have some projects like if you call a hydropower project a water sector project you have a very clear a power purchase agreement in terms stream of cash or revenue and for many financiers they would do this as a lot easier to invest in versus trying to create the commercial case for a river restoration project where there's no clear cash flow so when you have training towards bankability on a hydropower project from a financial perspective but maybe not as much in some ways from a social or environmental governance perspective versus on the other side of that a river restoration project that's much more impactful and bankable in that sense but not as much on the commercial side and I think that's why it's just hard to find this match of these risk this risk in return that you see in the water sector so thank you all for highlighting Rick would you like to add please maybe one more point maybe also going to your point it's also are we valuing water or not maybe I appreciate one project that comes to mind right now is a project in the capital that's super outflow and what we see and what we see is that right now the super farm, the outflow is that they are increasing water stress and the power utility is not always providing power which means that the pumps sometimes don't work sometimes there's not enough water and in combination with right now increased fertilizer prices you see that drip irrigation is becoming more and more interesting and water conservation is more and more valued so I think just ensuring that there is enough value to water it is I think that's an easy part of the equation and actually I think for the next question I think if okay with you I think you would be a great person to maybe open up on it because you have experience with FMO and DFCD and working in these investor consortiums and so the question is in the water sector different types of investors exist so maybe more traditional investors like we talked about earlier which seek acceptable rates of return on their investment financially speaking but other investors have a stronger emphasis on these environmental, social or governance factors so what are your experiences working with other types of investors and what are the challenges and positive aspects of working in an investor consortium so I'd like to open it up to Rick first because I think he has some good insight but then please anybody else yeah I think just regardless of working in the DFCD but I think FMO working with the right partners is extremely important and the moment you work with an investor that has expertise in that specific sector for example and it really helps if you're a due diligence it helps reduce the overall risk of the project you really build upon the other investor in your consortium in that way and we also see that the moment FMO right now FMO is one of the larger development banks out there has quite a long track record over 50 years the moment we support the project it's also easier for other parties to come on board or do the communications previously mentioned where we take financing from other financiers but as a working at conversion for the DFCDs is really a new innovation but at the same time very important for FMO as well so work expertise is really brought by climate food managers what is unique about it is the DFCD and WWF that have all the ground people that really help source projects but also help monitor projects and through that there is more of an understanding of the different issues and risks also related to water in a region and you can much more early on see potential risks that are out there with the community water table levels that FMO otherwise would only see after maybe consulting was hired and were quite far into the project so for us that is we think the model that should be re-skilled and used with other financiers as well there are good rates between the projects being originating by the origination facility passing on to the let's say the main run financing instrument I think that is the main challenge we are working on right now I mean we've seen some projects that are now supported but the scope of the project still need to get financed what was already alluded to before it is hard to reach that that financial cost Is there any origination facility incentive to be to see it passing the main run financing model not the financial incentive I would say I would say this indirectly as well right because you want to skill this project we are chatting with the Ministry of Foreign Affairs and we want to expand it and if this whole model is not working then the Ministry of Foreign Affairs at some point will say well that's not so I do think there is some sort of it's not that they get a bonus or something but this is an indicator because I'm checking the discussion because I think it's illustrative for whether a consortium works in this case is this an indicator how many projects from the origination to the there are it's the main KPI in the contract but it's something we work on collectively so you say it remains a challenge but if you were not a consortium then it will be even a bigger challenge every week almost every day we talk with S&P and WWF on the project and ensure that we collectively select the right projects you should also look at GIF as well I think in general from what we see going on should be improved I think there are very different definitions of the S&P and WWF as an entity right so there wouldn't be a revenue stream yet and they'd already think or not even want to follow up and they'd think well this is something they might be interested in while we would really want to have this revenue stream then another thing is it's completely operational but it's so intensively we have smaller friends and then our development starts at technically 500,000 more than millions so there's also a bit of that and I guess there seems to be co-organization by some internal complexity gender asset organization that are different so it's definitely a difficult if you're bringing very different parts together I wanted to highlight Rick and the DFCD consortium because it is an innovative consortium those of you who aren't so familiar it's two NGOs that are supposed to originate these early stage water projects all over the world and then ultimately for the water facility it's supposed to graduate to a private equity fund that's climate fund managers so you have a marriage and then there's also FMO which heads DFCD which is a DFI so there's not so many investor consortiums that operate and are structured in this way that's why I wanted to highlight it because it really elicits and it kind of speaks to some of the challenges that comes with creating these investor consortiums and that's why I just want to bring it back to when my original slides about talking about there's blended finance in theory then there's blended finance in practice so now we're like DFCD I think it's one of the better examples of really trying to take the theory and put it into practice but when you do that as the discussion I think is showing also how bankability is understood and that's why it's important to come together I appreciate what I'm talking about maybe on the construction level but on the private equity fund level so we're trying to raise a billion dollar fund we've done that for climate investor run which was a renewable energy fund which has the exact same structure and there's 14 different investors there ranging from donors to commercial investors and they all have very different mandates and especially donors and commercial investors, they might say we're okay with your Latin America exposure or your ASAC exposure but we want to be excuse the investor for Africa and we're not partaking there but you can imagine that if all those 14 different investors have a whole list of where they want to be excused this whole thing becomes uncontrollable and that's the reality we're really facing and some investors are there for really under-deploy like we can't spend their money so many rules we don't know anymore and yeah, I guess it's showcasing how difficult it is to bring together a pension fund to a UN organization that's my question then regarding that I think the confidence in New York could be an opportunity to actually address it to make clear what we need to ask in terms of how can we better how can we improve this so that people can actually be not excused you know what needs to happen in each country so what do these countries need to commit to so what things do they need to abandon and also what things should be created I'd love to hear more about that but then that's maybe another conversation really important point actually when I was I did part of my thesis which is on blended finance in the water sector I was working with Kenya Innovative Finance facility for water so I was interviewing as many people as I could when I was in Kenya and something that came up repeatedly is something you're alluding to right now we can call it market distortion and a lot of that comes from what I perceive to be misalignment amongst donor priorities and water finance facilities try to launch a bond in Kenya if you have CEDA or like the Swedish aid coming in and giving a grant to a water utility with no streams attached even if this water utility for example is credible, credit worthy and can accept and has the capacity to take on financing from a domestic capital market like a local Kenyan pension fund for example there's really no incentive to do that if there's a bilateral aid organization coming in and giving them grant money even though they don't necessarily need it and there's many other Kenyan utilities that really do need that concessional money so I think that's I think it's really important I think something at the conference coming up donor alignment in my mind is something that's pretty near the top of priority list I don't know if you have any thoughts on that Doris I agree and I guess I don't at the end of the day it's about the right price and well now I didn't even know that I might be coming now, I agree yeah it is so the external entities of all the stuff that we're talking about if it's not priced in then it will also not be addressed but having said that then you are putting the market very high up in the higher order of things which I tend to be fed off as long as the right price is being paid but you're just giving me thoughts on that well no and then I would say yes so what is what's the value of what you're giving that what I like about what you're doing now is that yes you align donors but you're also in both donors in a very early stage so that you could also align to the projects to the donors and I think that's also in itself already intuitive to put that out there but I've been working for the private sector for a long time before and that's not being done that much in the engineering sector and so like that I want to say that that's a really good start I agree on that and you're working with Axiom they're setting up a simulation and water indexes again, investing in financial institutions that are having large portfolio setting up large portfolio and the fund is still only development but they're one of the funders we're dealing in an interest rate this comes to a price when they receive specific target so it's kind of a financial compensation but it lowers their interest rate so they have an exposure of that to Axiom for example but it lowers it but it gives them an incentive to lens to wash and I think it's very important that you're on the early stage involved with Axiom because at the end they're an estimate manager they don't have to confess to understand the watershed or the way we do the same with another consortium partner that's finished in the hall that's more a sanitation focused partner we don't have the knowledge that they have they provide TA on the level that they can help at level 7.5 in technical designs like sanitation infrastructure etc because you want to provide good quality if you want to measure bottom line good level bottom line you can also wash facility or sanitation facility and find good quality and that's not something investors can do on its own so it's easier to read that alignment and that's also a good thing that you can have in fact capital so it's very important to do that for us as well Can I have a little bit of this again please I find one of the coolest projects around and I'm proud to be having the boss in this when I work with Amore for Elf & Joe and then to make it extremely sort of plastic-slated is the reason why finish in my mind is a very very successful conversion is because the CEO of Acne Impact Investing Theo is a very good friend of the CEO of Finish or the guy working the way is Valentin they simply love each other and they make this work and they are extremely aligned in their vision so that makes them very complimentary and Valentin focuses on the facility and the part and they'll focus on the investors and on the financial engineering part etc and it works but it would have been a nightmare if they would have liked each other it's a simple example I think finance is well it's very deep in the numbers in a lot of ways relationship based I think that's something I've learned over the past couple months there are so many thoughts on market analysis together with FMO and there I think it's good to see that you are now in the market analysis one of the conclusions was that the market was too fragmented everybody has different criteria and now you are in the middle of the consortium it was a call for structure financing and now you are experiencing the challenges as well and I think what I have also said is if you within Kiva we also see the hydro power plant you mentioned earlier there it's been a long road towards financial close but the investor that eventually will provide us financial close is already involved in every state and we just have to wait for a power purchase agreement and we already know it will come to a financial close because it has been involved already otherwise you get a power purchase agreement and then you have to find an investor and then you start from there and that slows everything down and if you look at the market analysis well you see all these phases all lining up to each other if there was a line and that is something we should all together make sure that we are able to do this we are required to do this maybe just to close off this question I would like to ask Rick or Jim one more time because the BFC is really an interesting example of the investor consortium we have highlighted a lot of the challenges but I was curious about maybe in your eyes what are some of the benefits or what are some of the positives that have come out of BFCD when it comes to working together with this consortium to get water projects from origination to constructions and operations as one name for the start of today I think the main advantage that we are seeing is compared to earlier it's really being present so the WWF and SCP have local businesses and they know local projects way better than we would ever do which is really important to have something as sense with the public services like water another thing I would mention is that in a weird way like if FMO invests into something as a proof of standard approval for other investors oh they have found their due diligence we can come in as well which makes FMO not as a client to not be here I don't agree yeah and worth getting out of this but way less so it's really FMO well we can see a lot of donors speaking to them for our fund is that they really like WWF and SCP being there and they have a lot of trust in these organizations and they feel they are more part of the design of their environment yeah maybe to add to that I think it's really it's learning from each other it's that I'm sure that they know the right projects are selected but it's also for FMO also looking at for example water risk when it comes to potential agriculture investments we we stopped some projects that look so sustainable but if the water isn't tables aren't right then you should continue with that and I think that is that collective learning and quite easily having a local context that really knows a lot about the region I think it's great next to that I think it pushes towards more innovation innovative projects it's not the easiest projects that they bring forward and sometimes she also needs to do some more difficult projects I think and I can accept my experience that yes local context is important local context are often building trust in the project but I think the transparency and monitoring of data on water is also important and we haven't talked about that yet I think when you look at local context most in the Netherlands we know a lot about our ground and water that we have in other countries they don't and it's very difficult to monitor or maybe the electricity or to monitor and I think if we could also tackle that part because then I think we would also gain more trust within water investments to come forward that there isn't a risk of trust because investments is about minimizing risk and it's very difficult for farmers to be the first one to say I do not have enough water to water my plants so you have to build the trust so that they can come forward collectively and also with the other water users to say that there is a big risk if that water is not being monitored and it is not being looked at so I think placing water in a more systemic way we really have to build the trust within the local context for different stakeholders to come together and to talk about water investors and minimizing those water risks and minimizing so trying to focus on river irrigation and performance but also talk to the mining industry and making it more efficient but having the water better in view and not only one stakeholder view and not only based on one context in one local office I really think we should look at it in a more broader sense and I think that is part of the driver as to why we wanted to host the event here at IHG Delft Institute for Water Education because historically I think IHG is more its towards engineering programs this is a school full of very brilliant water supply engineers people who know water data science better than most people in the world but in terms of water economics and finance there is the classical divergence between the technical side of water resource management and like the world of investments and so I think it's important to have a panel like all of you here today to sort of bridge these gaps a bit more because I think a lot of people look at them in some ways with the jargon almost as two different languages but they really do need to come together and so without further ado if possible I'd like to introduce the third question so as I alluded to in the introduction there's a line in literature on water finance and something along the lines of developers and financiers insist that there's plenty of money but a scarcity of bankable water infrastructure projects but in your opinion how can more alignment be created between these different investors active in the water sector to develop more bankable water projects and businesses to actually access that money that is supposedly out there ready to be tapped into any initial thoughts I think one more question I think projects need to originate from the countries and regions themselves rather than from investors getting together so I think that was really critical in that sense I think empowering local entrepreneurs, local organizations is I think what should be the priority of solving this challenge in the investors to get it I think there's in general the basic question that is involved if expectation increases I think the expectation of finance is welcome big projects because the transaction costs are high while most projects in the field are rather small but I think what you do in the current development is I think that is one of the answers where you start being involved in a very early stage that means being involved in finance in the real estate but I'm also still wondering whether if we do that how many finances will actually stay it's not a very profitable sector it's the loans size small in many cases and on the other hand everybody needs water all so if it works it's extremely secure that is the reason why if the system works it's a very good investment and very good alternative to government bonds for example the world is changing now we will make money a little bit again but alternative to government bonds the water sector with long project life could be a very good alternative and I what I really like is the pretty recent development you are involved as well with FI and I but they sort of sit in between waterworks and water finance so they dedicate a lot of attention to the work so capacity strengthening at the utility level very much also focused on the CFO role for example very much on the CFO role within the utility making those utilities a better investment either from a technically more depth perspective positive what you are talking about is a two stage approach kind of a grand facility for making utilities from a business group to show their commitment to the whole program and then after that there is a facility in development with long financing that combination that's what you need but totally focused on your examples are way more complex so it's very good it's complex enough already but at least there are some examples of it working but if we really want to tackle what problem we have it's also more complex broader but I also want to say that I really knew as well that there is also a practical problem here because pension funds are being with millions and millions of dollars today and the bankable projects engineering consultancy firms that are talking about if not related to what utilities or a handle of the hydropower are basically up to a million or two so pension funds fees personnel there is not enough personnel to focus on those small projects on those small bankable projects they look at projects when it's about 5 million or so and when it's about in different countries for example you also said so there is this depth of knowledge I think as well I think for pension funds you would need to add a few zeroes yes yeah I mean if they would be investing in funds so at the airport you say the two words but that's a trust factor but if you look at a pension fund or insurance they if you look at water risk what you mentioned there is all their investments are related to water in the end so there is a need for all these huge investors to invest in water so I can think of a reason why they would not invest in water other than the reasons of them being made in the project being small but they want to invest in water so what is holding us back to align those large investors and then going smaller and smaller and in the end the projects are too small but if you collect them and you have funding there is enough trust in the fund or as from the market analysis as well a one stop shop as we called it in the analysis for projects and investors to come together and to be aligned what is yeah I can't figure out what's going on back of course there are a lot of reasons but still I think there should be a way and we also have to understand it like your question I think there is also an aspect that water is also part of all the other themes out there by the verse the ecosystem protection so we also at the water sector we compete with all the others I don't see this as competition but for maybe a corporate they have to provide data on all those different topics including water sometimes so we have to make it easier for them to want easier for investors to really try to combine those topics better and not only coming from the water sector but really try to make it to the other it's a discussion we get into a lot with our investors and our ICs in my investing investment committees they approve the deal if that water can also be seen as a business as usual kind of investment so our fund by the best fund staff investment the adaptation for mitigation but our team approved this before the ICs and often with water investments we could easily say well there is not a climate problem there is no infrastructure for it which is really sad but that's not our mandate and then the whole thing we thought already so in that sense I guess more aligned with the free investors and the management people we say there is also improvement on the the supply side of financing but more the demand side enterprises water enterprises that also need to work on their model to make it more commercially attractive and some seem to say it but that's also needed otherwise they won't be able to attract that much needed capital and I think there is also a role for all staff in 150A as a tax system side and I think you can leave that up maybe to local banks but it means that you also need and also understand that when for example other leaders that that improves their business model that would make it easier for them to lend to it so it improves the chance of repayment that they set up but I think there is a bit along that chain like with the whole supply and building chain of water I think that there is also need of improvement and then you make it more bankable for banks to target that movement and demand analogy a lot because we are talking about from the financier, from the supply side there is definitely work to be done and I think a lot of work is being done and there is momentum for the world of finance to more come to terms with accepting water as an investment that can have actually provide financial return to varying degrees but also on the demand side I think that's where also a lot of work needs to be done certainly as well as you are just illustrating but perhaps I don't need to work here could people from the room also ask questions? Yeah, absolutely go please I have one more question but go ahead and just ask now Thank you She's won my attention for a question Yeah, of course So I would like to react to what was just said is that the point is that as long as we continue to have this discourse that the water is a risky business that there are problems and all the things that we have that have been said till now are most indebted to this risk and these problems and I'm not saying that they are not there but as long as we are in this mindset we will not solve the problem Suppose, imagine that you can sell the water as an opportunity to this investor to just risk For example it was said water is part of all this SDG and our search is complex because it's everywhere but if you say, okay, water is there everywhere and it can't help you to solve all these problems so don't make it more complex solve the water and then it helps you solve the water So just think in a different way not putting those glasses and all the stuff that I'm saying but put it in a different context and it is all about change management it is about the leaders that is already mentioned it is about communication and mostly communication and I am a water engineer by myself so I know that engineers are not very good at communication but it is where I start if we can have good communication and explain people in a different way for example see water as an opportunity if not as a risk then it can open up a different way of looking at a sector and to solve issues that is the first comment I want to tell you about it here Thank you so much, I think you bring up a really interesting point in that economically speaking most people would agree that investment in the water sector is a huge multiplier in terms of if you have access to clean water if you have access to sanitation infrastructure for example your public health costs your hospital bills are going to go dramatically lower in most environments in the world so I think framing it as an opportunity rather than just a risk because people do talk about water risk a lot because I think from the financial side most people want to understand the risk so they can see what risk they are exposing them to but I like your perspective a lot this is the last question I'll ask and then I want to open it up to the audience members but the last question I have is given these challenges that we've discussed today on the difficult landscape incessant in making these bankable water projects and businesses in your mind what is the road forward what kind of change would you like to see made what action would you like to be taken and how can we have greater alignment to bridge some of these things that we've been discussing today let's open to anybody I think we've all just mentioned it in the question here before all these different elements I think to reach alignment there has to be work done there's work done on the project level there's work done on the financing level and I think a logical set would also be the UN conference to align all these parties because everybody knows it's relevant everybody knows that well the water is part of all SDGs and the water is the opportunity but to align them we have to put all these people at the table and make them commit to working together to bring this forward to bring these SDGs to reach the SDGs and to invest in water and to collaborate in that sense and to align I'm so I've made my point about governance but it's often outside of our control democracy at work and the development in middle class but apart from that which we can't control I'm a big fan increasingly in the works again which is also often government's lead is local development banks so we've got the FMOs of the world to have that those are institutions in developed nations but increasingly you see for example Indonesia has a very strong local development bank which we wanted to work with them if we would be able to scale up with the waterfines facility back in the day and in South Africa we've got the DBSA the development bank of South Africa and those units or those companies they combine the local knowledge with the capital and the financing industries so I think that local development banks although they are around and they're not always functioning well but if they function well it can be highly affected so that would be my blending way forward so it's all about local currency local capacity I really agree with that I think many let's say that's called early adapters developing economies for sectors such as agriculture and energy you see that that's the group that you want to get involved also in the water sector and then I'm talking about say a guarantor for example African guaranties they give many local banks but they have like this whole product setup for energy or agriculture what you want them to do is also understand the water sector come with a specific figure how much energy is needed for it and have a product team that can stock the bank when they come for them like you really need these players to also understand these benefines players you need them to understand the water sector and I think of convergence it was bigger on the benefines instruments I think only 6 to 8% so far have been used for the water sector so it is a instrument used across all sectors people are aware of it so I think there's huge potential which is also to be able to bring along these sectors to package the story to set the audience to make it more compliant and then I think there are quite some opportunities and I think there should also be a budget for capacity to build it within the one organization that needs the person to reach in general I think for the water sector I think it's more general in institutional organization work with water but in general they're not very experienced they're making all of their investment plans and then chopping it down at the point and then realizing what it takes to be able to do that so I think it's the other side to also move towards how do I get these projects to run and we have seen a few very nice examples used in the Philippines where you work with water and through the capacity development we provided they have more better reputation also have a better they have more experience with the director with more comes to the front sector and through that step that they've taken they also are now able to access to new loads and they can develop themselves and also with a water source organization that is now a set of famous ecosystem services quite successfully in support of an audio program so I think that that's developed to after that I would say it's good point for us to retain those people that don't run out of the organization because they can get more money elsewhere and more job opportunities because then you're still back at this point also alignment I would really like to stress the point of transparency in the criteria that we have like what are the criteria that different financiers have when they want to invest in new projects so that people are more aware of what is required of them if they are developing these projects at the same time also bridge that knowledge to the demand side in the starting point you need to consider these criteria because otherwise we will not even utility you or if you're really focusing on this perspective maybe or agenda in your project then you should really focus on these type of financial I think that would help to strengthen that but I think to summarize the transparency in the criteria also just like to emphasize an interesting point and not to put you on the spot but the Netherlands Ministry of Foreign Affairs I think most nearly all of the organizations on the panel here today receive funding in some form or another from the Netherlands Ministry of Foreign Affairs and something that came up in my thesis about a lot of additionality and I just think that's something especially with the conference coming up in 2023 given the leverage and the power you have with the voice of the Netherlands Ministry of Foreign Affairs given that plays a very catalytic role in the global water sector I myself and all my colleagues came and moved to the Netherlands to learn Dutch water expertise that's why we're all here and it's a really interesting opportunity and it's a great stage to create alignment not only within the Dutch actors which we have a good consortium and example of here today but also to be a leader in this space as well so I think it's a great opportunity that you have coming up and I hope this discussion will continue in the future I just wanted to say that I think I think also the investment has been improved with just the return program there's also other instruments and there's more impact so that you can give a reward for certain impact I think that's also a very relevant tool especially for water because you want to target DOP so you don't want it to be renewed and you do want to focus on how to reach them without interfering in this model of enterprise between investing and thinking I think in the water sector besides the traditional land finance thinking is also a relevant a relevant solution Thanks, yeah Do you have any questions? Is there still time for questions? Yeah, absolutely Because it's what I'm most interested in Yeah, there's an hour actually Oh, okay So if anybody has any last thoughts on this I'll turn it up right now if you'd like to The small last comment I would make and I started with as well I would agree in those comments I said this but I would agree with more local banks for local parties getting involved and I think a big would really help with that would be the accessibility of donor finance for smaller institutions so the gap between three or four districts has to be well in Netherlands but some of the larger players what happens in the ranking is only 500 million euro programs for which it's worth to even go to that process Yeah Thank you all so much So now I'd like to open it up to any questions from the audience Would you like to start? Yes, thank you Do I need to introduce myself? Sure, if you don't mind Yeah, why not Sophia Larosa and we see this by-law a value water initiative from the Dutch government and I wanted to ask you if you all agree that bankability is desirable if you see that something positive because I think we start from the assumption that it is so I wanted to challenge that if you all agree this is a good starting point do you see other alternatives to tackle this funding gap in water? Are there other ways in which we can get this? Because I also was thinking about the risk of making water more bankable We've seen it with many commodities making more scarce and especially with as a disputed resource of water it is a very delicate issue to do make it commodity then we start getting onto more delicate scarcity or abundance or not on accessing the resource That's a great question I will turn it over to the panel if anybody has any questions Adriaan I think we need more in this case at least I do if there is something innovation within our organization that helps with the process as a business case itself I think in any case you are able to rethink that separate entity that might be bankable I would think if we directly connect low-financing reflectability then we will lose a lot of business cases I think I do see a risk there in one of the initiatives in different programs we have a water provider that provides water throughout Kenya and in different areas he has a different business case so in the more high income areas he will charge a high rate for tap water and in lower income areas he will lose some of his profit obviously but his intention is he has double intentions he wants to make a profit he wants to have a good business case throughout Kenya so there is a risk there if you just go for profit then I do see a risk there if you go to poorer areas that it is a commodity and not every other country of course I thought it was an excellent point I think you seem to hint to the knowledge to view everything through the lens of bankability or a business case the public goods are public goods and you rely on governance in order to allocate the use of those public goods in an equitable way and I don't think markets which I now would sort of seem in the business case are always the best mechanism to do that however if you want to get private finance crowd in private finance you need to structure it in a way that it becomes attractive to those private financiers to step in and that could be a component of a larger story so the larger story is exactly like I think you said that that a dollar invested in sanitation has a societal benefit of times 8 or something nobody can calculate it by the way but that has to be calculated on certain point by people who want to make their point on the issue and I find it a good point because you saw it in I think it was Dr. Sammelweis in Vienna in 18 so much who started to make the link between the ladies giving birth and dying right after that and hygiene now there has been public health so the biggest big success in human history in hygiene right so and that has nothing to do with the business case so I I agree I need to add to that what I think is a risk is that we especially with private finance is that we make things too complex so the lower fees are can be very high I mean very very if you want to bring private finance through a perfect utility thing you are under risk of all complexity I think you should always make an assessment that doesn't make sense that you bring the private sector in there I got two reading tips one is that the first 5000 years that's a very good book which takes a different perspective on the whole concept of that and now one is the deficit meeting which is about one another is an alternative alternative economic theory I'm not a big fan of it because I think there are lots of risk involved but it does change the perspective of what money is and why and how money relates to markets right sometimes you get the impression that money is the leading concept rather than human well-crafted well-being or something like that I think that's a good question would you like to respond to any of the points or what do you think regarding the second part of the questions do you see any alternatives within the financial sector to incentivize perhaps more investment that are not making water bankable once again I think this is a good question because the first slide was about here's the financing gap it's open to how this gap is blended finance that's what the topic of my thesis was and that's what I'm trying to understand because these people are experienced on it but you're completely right and there's plenty of methodologies and approaches that can be used to get there so if anybody has any thoughts on that please speak if we value the human value or the human good and the price on that stuff then that could help make the business case maybe with carbon credits for example it could feel like a minor bit in some of the projects to be able to make it more more bankable, feasible so yeah in that term I think there are different ways but I think it's also very complex and it all depends on how much time and money are you willing to spend on the impact case but I think it's possible so we should definitely be looking for more of that I think it's a difficult one because we have a so-called impact link fund and that's really targeting rewarding impact but still one of the requirements is that it's a proven business model that's generating certain revenue that's able to attract available investments and even though we for example reward them with social impact payments so it just is an example that multiple tariffs will only get more expensive that's why this model works but then research communities it rewards in a way that the enterprise is compensated so that they don't have to people who are able to take a lot of it but still the underlying model of the enterprise still has to be of certain solidity and they need to be able to speak with all the investors or banks so I think that that's just how it works in that sense otherwise it's really a social enterprise you're referring to or NGO but that is not the entity that will set in so there are two different ways there's definitely plenty of room for research in this space so that is a great question any other questions from the audience Sajib I'm Sajib, I'm a student I'm doing masters in water governance here so my question is actually you are from Epochrom so we see that maybe we talked about a lot of pension funds coming in big projects what I see in India is that ATM has leveraged some pension funds in microfinance institutes in India which is like personal loans like customers themselves for sanitation projects or to enterprises but what I see the challenge is that these microfinance institutes as you already mentioned they don't have a certain portfolio for water and sanitation so it's very difficult to convince microfinance institutes as you also deteriorated the fact that it's important to have local players in the game but the local players the game is more attractive to them to make these loans very to develop their portfolio is difficult because we get some, I think that the gap between working with local NGOs to fill that gap so what are your views on that because you work a lot with that's a great question and I think technical systems again would be a good solution for that need to improve for them capacity building in a sense they need to be developed product that's later to household lending I think you're referring to for a watch and same as we agree a watch loan product even for MFI has some characteristics sort of tender and I think need to understand that as an MFI and understanding that is of money the amenities to be etc have loan officers trades need to understand the business models and I think that MFI and also the investment not on the rest of the company if they want to set up a new portfolio consisting of MFI for a watch that's also part of their work otherwise you risk having MFI or MFI that will use the investment of the investors and just lend it for completely different sectors because they have to pay back the interest and you want to protect it again, the double line of interest you want them to do that investment but you also want them to reset the investment I think technical assistance for that for example, Amrith even I work with local consultants etc I think they have very strong watch teams they can really help support MFI to set up a watch that costs most of the money from the owner but then it does happen like an FMO to provide a loan to a local bank in India for their watch portfolio which is a small part of the portfolio but also what you see is that the DFI that provides this loan against a more concessional rate then the bank will get some other things and then there are clauses in their contract that can only be used for their watch portfolio it gets more complicated with the end beneficiaries so the households here do you also give them a cheaper rate which is often not doable because then you get people saying oh they get a rate of YX and YGLI for Y that's complicated but there are financial incentives but then for house of the night it's important to look at the whole service chain as one because if you start investing in small businesses like shops that sell soaps you get a rate of return then it gets easier for you to recover the loan from these enterprises but they're disconnected giving them different enterprise loans or house of loans they don't give the whole service chain as one that's completely right I think that's the whole issue or something called that that you should still get in different cities and other cities and households it's a discussion you would have just had a very very interesting discussion so my name is Diolards and I have worked for 20 years with World Bank in both the financing so this is a subject close to my heart one thing that struck me the first comment is a very simple practical one and it is that when it comes to bankability it's about good housekeeping so I would recommend that very for example spend ample attention to educate the water utility staff in having books that account that match the requirements of GAAP or the IFRS so internationally accepted standards in order to because that's the basis for any assessment and so there you see immediately if you have a type of proposal it will start buying I mean it's well done it means the organization has good governance has a cash flow it's stable so this is kind of a simple first comment and a very practical the second comment is about the situation that all of you talked about the fact that a financier needs knowledge about the sector so it's a major impediment to coming together and making the work, making the money flow and so and it's obvious it's normal because these financiers are very specialized in the retail services in real estate in chemicals so it's a very fragmented business so the water business is very fragmented between irrigation people they don't talk to each other but in the financial world it's even worse so they are so specialized so the challenge is how to come together in consortium where they complement each other and work together now what I observe is that so where we see progress is where we have some kind of an intermediary organization an example has been mentioned of the Dutch water bank it was a lack of bank which is a bank but sits between the water sector and the financial sector and they know everything about Bones and Frankfurt and the Seidhofs and the city they want to get capital and they know everything also about the water sector so what kind of demands needs exist in the water companies and 20 water boards in the in Germany they review which is a very similar type of organization these are local very specialized and you actually have the U.S. Environmental Protection Agency which acts as an intermediary so they go to the department and go to the capital market brings in money and then that money is given as a co-finance to the counties for their base water treatment, sewers dives etc and gift rights it's also in the sense they know how to combining the financial expertise local markets guarantees and the water sector in Indonesia you do have a very effective financial vehicle but it's not necessarily very specialized on water so they prefer to give them money to transportation energy things that come from the local government so whereas water is still perceived as being inculcitated precisely because they don't have to acknowledge so I'm wondering whether going forward to New York next year we should not make a case and say we have to hear a recommendation to call upon nations countries and governments to set up some kind of a mechanism there can be many fights in the language of here the nails of there for the beauty you have in Italy which is not such an entity a few years ago now they have a special purpose vehicle which is an institution it's not a formal institution like a bank but it does fulfill these functions so you could have many modalities governments can find out what works best for their particular situation and in addition if you have something that acts like a bank you also overcome the other problem and that is too small scale as we have mentioned it water supply companies or irrigation districts they talk about 500,000 dollars a million dollars that's already big that's you know financiers don't like that they want 50 million dollars and in the last to syndicate to pool and to ensure that transaction costs could get reduced partly because of the scale that they can manage and partly because of the know-how F in half I think maybe that's I don't know if I'm saying something that you say well this is to you know out of bounds and you're missing or you say yeah maybe that's something where you should go I don't agree with you give us a nice book about it I agree or sorry I would just like to say that once again it's like in my mind I just see this divergence between the theory and the practice almost all of the examples of where this is working well about the Netherlands, Germany or the US that's where these are very developed markets and you have very credible water utilities as you mentioned known as the water bank it's a triple A rated bond or like the highest possible rating that any investor would be willing to take an investment on because there's no risk but when it comes to setting up these kinds of institutions countries, developing countries that we're talking about it's just a whole nother beast and I think it's sometimes I just get you know in academia in this space it's easy to talk about these things but I think that's why it's a good opportunity to talk about what are some action items and what can we practically do now to actually create these institutions Shanghai, yes so there are very good examples so there's no I would say that there's an opportunity to scale those examples yes I can do that in a sense it's against the interest of most of you based on the Netherlands and you want to do good things but at the end of the day you operate from from Amsterdam and the goal is to set it up locally so the purpose is to eventually push everything there that would be, that's ideal and I both would take up such an initiative together with the Minister of Foreign Affairs I think ultimately I think you need more needs to be done done locally I agree I agree completely with that especially when it comes to I think especially when it comes to more equity investments I think it's especially important that it's more handled but it comes to that it can be I think internationally like large debt transactions it might make sense if you bring onward international equity but for smaller debt projects especially equity I think local presence is vital it also comes down to leadership and projects development yeah, I think it's very important thank you for the comment I think I saw a hand please thank you I forgot to introduce myself my name is Darlis here I used to work for IT long ago and now I am consulting the field of law and crime I would like to make one comment and one question the comment is related to my experience in the room with finance and they launched last year what they call the SPG dual bond to attract funding to fund the SPG within the country they make a clear plan of what they want to finance with it and water is a huge part because they want to achieve this in 2006 by 2025 and they have been very successful so maybe it's interesting to look at this experience and I mention it because it's still in Africa and often people are not well aware what is happening in Africa because it's reported in fraction of the media so when it works for you to have a look if you need more information I can share that with you the question I have is more related also to what we have mentioned about the logins that you have in the systems and organization that are making the scope moving and why I am mentioning that I am working at moment from the study from the Global Central Adaptation about mainstream water climate adaptation in the country and one of the things is coming out of it that's sort of the mainstream is not always working because of this so now I am making the problem with the climate sector I mean many of the things that have been said now I mean we have already said 20 years ago so it is really a need to change and do these things differently so somewhere there are logins and blocks reasoning systems that are making that is not working so my question to the panelists and the people around us not only looking at what the authors are not doing well but what are the things within our own organization that are blocking the evolution of the system that we do not see and we know what we know but we don't know what we don't know so where are these lines and this is what also he was saying we are a whole idea to help and we want to be redundant at some point but what is making that we are not with anything and maybe there will be a way forward to help to help finance the water sector because we are able to identify within our organization within ourselves and not only looking at the authors just a question I hope it was clear what are the results a whole hand fruit thing it's a big question but if I will reflect because that's what you specifically asked for my own organization we are incubator development finance initiative so you would say that we learn a lot from each other and hope we do but that could be tremendously improved so and also to there's never money really for or sometimes there is but for a focus around what we learn together within the organization and that could be that might be beginning to the answer but a bigger I think a bigger trend it's time but it's a real big answer to the question and again outside at least the sphere of control of my organization is a bit under under scrutiny at the moment and I think right for yourself so I hope that will open up new dialogues as well about how finance and how money works and how to help you change the narrative because of this but it takes a lot of collaboration and joint journey and real dialogue about the together I've been I've been working with a lot of what you did with the record of the last 10 years what I've seen is that there is a group of people that are interested in the organization coming forward with another group they are very creative and they are very motivated and I think what I've learned and that's also what we've been born more is that we know the social and ethical because I agree with the local creativity and the local power to change but I've seen also that people with different means they are able to improve their organizations and if I get to get more money and get better in the organization but that's the motivation that we used to get to use before and the people who are going with 25% you just need 20-25% of the people in the organization have like a sponsor and the first one is the CEO and I'd like to add here also through the drawing what we used to be we had an activity focused on what the supply which we think was complete to empower local employers but not at the CEO or CFO level from the bottom up to really reflect on themselves why are they doing what they're doing what is their value working there and it's an empowering program to really motivate the most motivated to grow into their own company and into their own communities but reflecting as well on our CEO what can we do better I think yes I talked about the same 20 years ago but much has been done as well we are now involved with different financial partners trying to disclose data of corporate and trying to help them accountable and I think we can do much more in that sense we can do much more in raising awareness on what are really different investors or two different investors we can do this only with a small start but so I would like to do more on that side thank you for your thoughts Zora, I think you saw it Hi, I'm Romy and I'm working for within OMRAP we're trying to make our projects less dependent on donor financing so we're going to do the ideal goal one point I think less dependent is already a step forward for us and we've been talking about bankability quite a lot and we now try to implement a project in Kenya where we are aiming to set up a rule for supply businesses and I was just wondering are there any examples that you've come across of projects that are actually bankable and not just less donor dependent for what to supply in more rural areas in areas where the utilities don't reach are there any examples of what are then their success factors well yes sir I appreciate Kenya but for example in Senegal you have Swish Press Water they have this print size model it's a local water vendors it's an interesting model and we also have Jibu for example that actually that's the one I think they'll look at it all in other areas so I think that that Kiosk model could be a decentralized water system that's a bit more complex because they need a lot of data but I just want to point out that there is appetite because of the large compact footprint and usually this model is allowed to sell for example two types of products I want a better treated water and a higher print I want a less treated one so I think there are several examples I think we share a few and also thanks thanks I worked with a pipeline for example Kenya I think nearby Nairobi you have they're not even water utility but they're private water supplies actually you have a water tower in the finance sector but we also have their own council connection and the nice thing about these models is that they generate revenue and once they have clients themselves and once you have water resources you always will pay for it because it's a luxury and you want to give up using it so it's a solid business model that also protects so it's definitely local water supply in Kenya as well the one I mentioned in Kenya as well the one I mentioned with the diversified price throughout the region there's a multiple phase business case the first business case was in a region with a higher income and the second business case is to expand towards other regions diversifying new price and also the product so focus on different customer groups so they can balance that thank you for these examples Inak, did you have a question? oh yeah, thank you very much I work with the ocean I've listened and one thing I can choose with focus on water supply I'm already established migration then goes to focus on a startup hypothetically of a startup I think it's not generically water supply but it's still in it as a broad project exploration for the country and some of these facilities a startup exploration because the requirements are quite order and a startup would require a consortium but then in case of a consortium remember because a consortium can be trusted which is also a critical thing to do my question then is what are what are the how would you make it easy that's a good question if you remember the framework at the beginning you're talking about the phase of the investment so what you're talking about is a concept so at the conceptual phase where it's very risky as I think you're describing that's where it's hardest to get the money so I think if anyone has any thoughts about investment phase risks and what are you supposed to do as a water entrepreneur at the earliest phase because as Inak has said it's very difficult you've kind of answered the question by itself already like a partnership is typically the best way forward so if you have a very innovative idea ensure that there is a good sponsor an organization with a track record that you can work with and then can help you and then together you can check finance the sponsor also supports you early on maybe provide some activity finance for example I mean through that you can apply the definition that I think is the best way at least to get financing from an EFI of course there are different programs out there I think there are a lot of incubator venture capital programs these days that provide problems and earlier stage finance we as a small we do that indirectly within NWP we also have the investor readiness program and that is for Dutch startups and there we provide know-how we provide masterclasses we provide coaching for startups and early scale jobs and eventually match them to financiers to pitch their business case so we help them build a business case we help them pitch a business case and eventually hopefully come to personational investment also accelerator accelerator programs locally maybe I think they help you to cover costs to structure your organization maybe find foundations that can support you on a grand basis to make sure your entity we try to continue for example and stay away from big financing at the start first of all you're going to have interest rates all the time maybe you don't want to offer shop loads foundation or available grounds so that they see that you're able to generate operating profit so you have to think already from the start as what an investor would like to see and I think that's important they use the three F's of family friends and fools in the start it's always so risky that you that's not necessarily who you but at the same time it's totally I mean it's the engine of these core startups I would say and they always rely in a few years on family friends and fools the fools are the any venture capital so that those are the private equity investors in various states all venture capital investors all their strategies they can talk very nicely but it's actually shooting a hundred times and hitting two times and if those two times go 100x then 98 don't recount anymore because they've made the profit in the case of those 98 they've been fools this interest is of the final the impact of special plan in its real way charging based on the market if you look at most of the engine we're trying to base issues such as for a very spaced out but if you're looking at making those of higher work in some of these countries you can also call them communities that are faster together you ought to be able to make decisions about these so if you look at also the SDGs most of the gap is in communities in these areas they're much aligned so if it requires to make decisions to make sure with access to these particular communities you've actually got the most money so in your experience how can we address the profit given in some of these issues because the challenge is really another different area in communities where in the class they are in the outskirts so I'm just interested in people that have done projects that have been active in some of these regions in the country and also the solutions that are specifically being able to sort of understand it That's a good question I find this the big the big problem I mean I think how we also use it and I work for Amref and also working in Kajara for example it's a very rural area I can't even to be honest I that's where I went back to your question that's where I don't believe in this situation so I think it's a public it's a public community meaning that the government should step in and the government does not step in on a wrong basis than others might be able to step in and then you transform towards a situation where you indeed are organized in a way that the community skill can dig in but until that point I have I have a very bad feeling about private finance in Europe there are examples of course so you're saying that this is a good example but also there there's probably being you mentioned in the beginning also that the German society is able to attract finance but the German sector is 100% urban but also before we went into that space that that is possible there was a very big government finance injection and all the assets have been paid by the government and that's when you have to be situated so I find even development finance or the development world to be totally focused because that's the paradigm to keep institutions for business cases is simply not fair at least not the answer to the risk of that might be for the private finance perspective that is Do you want to talk about the question or do you want to talk about the question What I've heard now that investors are one good government good local currency good activity luxury but I was thinking about the countries who are dealing with hardware and bad governance but about those countries is there no hope for those countries to get investors like this or I mean most of them are developing or other for example the case of Lebanon and I was seeing how the hardware education is also affecting this but what about other countries dealing with hardware education which is also many countries so what do you do with those countries you don't work with them or if you do how you deal with them it's a good question actually so go ahead I think it comes back to the point that George when there is no private investment the public the public government shifts the train and I think there is a big responsibility of governments to reach with those companies together excited that we would reach those and I think the public sector should take the first leadership role in making sure that everybody has access to equity model and even I think when the public sector does such a step it already is a sign for the private sector to step in or not so I think that comes back to what George was explaining so maybe that's not the case of the big there is no business case there I've got three specific things actually for that program or it's a big thing that you would address but if you would so if the purchase of equipment they do know it's in a high-quality situation but if the equipment you need to work in a certain project is locally produced then that local currency problem is sort of mitigated another way to mitigate local currency problem is if you need hard currency you could insure it it's also in a high-quality situation with a company called TCX that's also in the Gerdan-Diedeming Group they basically have positions they trade in different country currencies worldwide so the West African friend as well while the when his pipe goes down they can take the risk because of the how do you call it? the action so it's not I might be this specific case that they want to step in but there are there are many reasons and that's what all this what we've been discussing about what we've been discussing today is about another example is guarantees so for example the most well most bankable projects don't need any de-risking a guarantee is that you put money available within them so it's all you need it's mostly put to work it's only put to work when a default situation occurs and that security crowds in other investors and that's that is in an individual country needed while in another context not needed so I would not say that it's hopeless if the situation is cooler, the context is cooler but that's what it says all the time let's be very honest in the case of Lebanon we sure have had this but they're extremely expensive and I don't think they fight not to use them because it was way too costly and in the case of Lebanon when a country is almost default and there's hyper-innovation the old credit department store organizations stop stop and it's not even our organization is also donors at the European Commission they have a very clear mandate to what kind of country you create and take and go and you stop yeah but the thing is the number of countries needing hyper-innovation is increasing it's not going to be about one or two so yeah we're going to talk about resistance here if we want to achieve SDG those countries are needing to so we're not going to look at those countries and if we want to achieve SDG we can actually I don't know in that yeah I think the solution probably you would want to solve for this it's a refresher proposal basically in then the finances used for example to take away the financial risks in the investment as far as I know the problem is investment wants stability right I don't know the current situation in Lebanon but I assume that there is also some talk now to restore it and eventually the situation will become stable again yeah it's not only Lebanon it's Sri Lanka yeah but what I find interesting and what's actually important about I think your question as well is that I think private investments also contribute too often in stability if they pull out their money out of the country when things go down I think especially having a long term perspective is very important with that and I think then the finance and also the development banks I guess can provide that I think that pedals are something to to keep in mind that we don't make the situation even worse with private finance and one more like the initial point of view is you get the cost of capital and then it costs a certain price and all the risk that you are mentioning they add to that soon so investors would like to have the maximum degree paid for that additional risk that you just mentioned and I think that that's always you know I don't know how I know for example what it doesn't mean for you if you see that the cost of capital is extremely high because of all these uncertainties doesn't mean that you don't do the investment or it doesn't mean for you like okay we just have it or we plan this to make the cost of capital go lower and you can share how you look at it I mean our purpose is market creation so eventually we want to first project that will afterwards once the model is completed we receive finance from the market so how we mostly do that is that we look at market risk these can be quite high and then we try to to take more risk in a way so go somewhere where the market doesn't go so go for a longer tenure or going to a center that's currently not receiving any market finance so we try to kind of keep this interest rate as a benchmark and we can go below that but then we do need to have a good story because I mean once the project is completed I really want to the development bank and the development you do want to refinance it you also want the model to work so that concessionality on the interest rate is something that we are careful with if it really brings added benefits to the underlying people then you can do that but it is showcased that the vision motivates itself it may not be strong enough to do that I think that's maybe this holistic approach I think that's more common to development finance because they know that the market is getting more uncertain than the very efficient market and here for example you don't have that flexibility the investor can always invest in A versus B and he just takes the moment and I think that the concept has to give impact you know you take a look at the models for which they are I love your remarks I think we need to address the conflict as well I think that I think that is often caught up by its ability as you mentioned and its ability is also often caught by by water related by farmers that don't have water anymore so they have to move to the urban area if they don't they get too crowded there is not enough water there and then things blow up that is addressed that will be addressed also at the conference but it's important to keep that in mind while trying to solve the private investment part of maybe more water supply but also these would come yeah yeah maybe we have time for one more question if anyone I think she was up with her hand Alan please sorry my name is Alan I graduated here and my thesis was a little bit on the other side looking to my friend questions so what I learned here and I'm extremely happy because this is a diversified panel that I would find anywhere maybe all together I see that you brought scale up business model financial interest and something like this and the idea is to maybe move this business case or scale up to some country but however I learned that also it's this bankability is highly selective so it's according to this enabling environment that you mentioned and as my thesis I question how operational management decision is made in a public water utility that start to commercialize water and I have now it's very problematic for me to see how we will solve because I think the overall objective is to give water access it's not other way around how to the risk or something like that is the water access and the distribution and it's very interesting to learn that there is many other options and bringing this business model my work somewhere and at the end of the day it brings to the question of how the government should step up and give people financial empowerment not just for water for other things and then it's really I found this opportunity really to bring us together to and the UN water is coming to think how generally we are giving people empowerment dignity not to not to focus how to the risk because this is not going to focus mainly focus to give people water access because again water access is linking to all other development in our society so I really like the sorry I don't remember the name but to change the narrative of our discussion because we will be here another 20 years and the Mar del Prata conference after 14-6 years is happening again why? It's not only because to mention it's because we need a vivid body to connect all these sectors together it's not it's not a water sector but to connect you know bring this water connector otherwise we will be discussing for a long time so it's my ambition that this will be the last water crisis because what we know by that's my personal like how to continue do you want to add anything? maybe it's all over no but I mean Alan I think you're touching on like the ultimate friction here it's like there would be no financing perhaps in the world in any sector water, energy whatever you name it if public governments were to meet their public service mandate and supply the infrastructure that meets these water service needs the people but the reality is a lot of governance in the world that the public funding is not there but that's why it's an area that clearly needs a lot more work a lot more research because blended finance is one methodology bankability is a term that can test and a lot of people really don't like actually and I think there's maybe a better maybe more creative ways to look at this but the question is how and where will that money come from and yeah maybe this is not the path forward but this is I think at least it's where there's a lot of you know a lot of discussions going on in this field so I guess hopefully the point or what I hope some of you got out of this was today that there is quite some momentum and there's action thinking going on in this space but that's why I wanted to bring it open to this public and have the kind of this panel and this forum you know see what the other you know the other side and the questions are raising exactly because that really is the core of the matter and you illustrate why why it's all very challenging so without with with that I think it's a great question to end on because there's no immediate answer or do you have a Yohan, do you have something? I will thank you very much for organizing this conference in the building of IIT in Delft congratulations my name is Yohan Verdeck I'm the part of the management board in the institute we're working on this water and finance agenda for quite some time we're developing this so I have one simple question maybe each panel member could give one or two keywords of what we should do in the area of education, research best development that would be hopefully also contributing to this very challenging situation that was posed a minute ago what should we do? one or two words a small person would work just bridge the engineering and finance knowledge gap I engineered my trade but I couldn't find real good chords in water finance I think you do it's like it's like this proactive approach being able to develop whatever this painful context but it's not like at that level maybe also focus on water entrepreneurship in the local context if you're an international student and they want to work with you I intend to do very much with what he said and that I think you also emphasize it so that there's sufficient attention within certain courses I don't know which one exactly but I'm going to see a follow-up of any water related adventure and the other thing I would like to but I'm not sure and among within IHG's IHG's mandate that's another point I needed to earlier is that you contribute to full leadership and that you have to get for the mission so make sure that yours I think IHG is one of the best organizations in the world with respect to water education so it would be very good if that quality is is also sort of transferred to the water finance issue something I would add to be very pragmatic in the self-centric but what would help us very much is that we can tap into the network even more and whenever there's opportunities better be students or professors in developing communities and put in the context I actually have much to add as you said here yeah I would look at cases I think that is important and link to that entrepreneurs I mean right now we go more to finance here the policy side of things but it's really the entrepreneurs where I think the true action happens so I think that is critical and they often have also very interesting stories to tell I'm not saying but I think in order to improve the decision making on water and finance so are we taking into account the multiple perspectives that there are I mean look at this panel right are there sufficient perspectives at place here that trying to be more inclusive try to be more transparent in our decision making so I think that's important and really trying to look at the value of water and play in the water in the bigger system yeah thank you for the start studio I will now start with your hand I would like to reflect from my former work at IG at that time we had a capacity building problem which was called water for african city we were training on the job for people in utilities and violence was not part of it but it should be part of it so if you have the chance to develop this capacity building program addressing all the dimensions and not only financing but also human behaviour we talked a little bit about social science because it has really seemed to me that it would be very nice and there are lots of opportunities to develop book training and it's something that needs to do why not good training focusing on financing and it's learning how to get funding and that you can develop in every single year really? yeah just to say maybe water government most of the time is at the police level so looking for the masterclass of targeted politicians so also talking to the issue of the multi-tasking approach to the department this is great all I want to say is thank you so much especially to the panelists but also for the wonderful questions from the audience and for all of you coming here on this beautiful sunny day because I know you didn't have to be here but it means a lot and yeah I think Aichi has an opportunity to explore further research in this space I think it's definitely much needed and a huge thank you to the panelists simply a round of applause for all of them