Revolutionising Urban Sanitation: Fresh Life's Results-Based Financing Initiative in Nairobi
Photo by Fresh Life - Sanergy Collaborative
We have partnered with Fresh Life to design an innovative Results-Based Financing (RBF) framework, aimed at transforming sanitation in Nairobi's informal settlements. This partnership leverages Fresh Life's expertise in providing sustainable sanitation solutions and Social Finance International's experience in structuring innovative finance for impact-driven initiatives. In this article, we summarise why this approach marks a new era for urban sanitation in Kenya, highlighting its potential to deliver measurable impact, enhance accountability, and attract future investments.
By Chloe Eddlestone and Fresh Life’s Louise Couder
The Challenge
Providing adequate sanitation in densely populated urban areas, especially in informal settlements, remains a significant challenge in many developing countries. Traditional sewer systems are often impractical or too expensive, leaving millions without access to safe, dignified sanitation facilities. This issue is particularly acute in Nairobi, where over 60% of the population lives in informal settlements with largely non-existent sewer systems. The latest National Water and Sanitation Investment Plan indicated a $4.7 billion financing gap which, unless filled, will prevent Kenya from achieving SDG 6 (water and sanitation for all) by 2030. To fund this gap, new and innovative financing models are needed. The introduction of Results-Based Financing (RBF) for urban non-sewered sanitation marks a significant step towards bridging this gap.
Fresh Life's Innovative Approach
Fresh Life a leading expert and provider of non-sewered sanitation, has been tackling this issue head-on with its network of 7,300 container based toilets across Nairobi, Kisumu, and Eldoret, Kenya and Lusaka, Zambia; and 3 pit waste management stations called Mtaa Fresh. Their circular economy approach not only provides cost-effective and eco-friendly sanitation products but also ensures that waste is safely managed and treated.
Scaling Impact Through Results-Based Financing
To scale-up this innovative approach, Fresh Life has recently launched a new Results Based Financing (RBF) mechanism, where payments are based on achievement of predefined results. Funded by Grand Challenges Canada and Osprey Foundation, Fresh Life’s RBF model is based on three pre-agreed outcomes, where funding is disbursed on a quarterly basis and calculated based on:
The RBF mechanism brings 3 key innovations for Fresh Life:
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Fresh Life’s ultimate goal is to secure a contract with Nairobi’s public utility to achieve greater citywide inclusive sanitation, and they recently signed a Memorandum of Understanding with Nairobi City Water & Sewerage Company. Under the RBF mechanism, Fresh Life will be paid once impact is delivered, which more closely aligns with a government contract than traditional input-based funding. RBF will be used to create transparency around the cost of a non-sewered sanitation platform, and will engage key government counterparts throughout, acting as a bridge towards a fully government-funded model.
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Initial funding has been secured from Grand Challenges Canada (GCC) and Osprey Foundation, but the funding platform itself has been designed to enable future funders to come on board at any point in time. All governance bodies, targets and metrics have been designed to be adjusted as new funding is secured, facilitating a move away from project-by-project funding, towards a more sustainable, longer-term approach.
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Outcome payments have been designed to reward Fresh Life for reducing their cost, but only if their impact is maintained, creating an incentive to scale, but not at the cost of impact.
Fresh Life's innovative Results-Based Financing mechanism marks a significant milestone in the pursuit of sustainable sanitation solutions for Nairobi's low-income communities. By tying payments to tangible results, such as the number of additional toilets installed, the total number of operational toilets and the amount of pit latrine waste received at the Mtaa Fresh stations, Fresh Life is setting a new standard for accountability and impact in the sanitation sector. This initiative not only paves the way for future government engagement and potential citywide implementation, but also creates a flexible funding platform that can attract new investments over time and could serve as a model for other impact-focused enterprises.
For more information, check out this video:
Video by Fresh Life - Sanergy Collaborative
Key Funders
