Since 2015, AFD has been supporting the Water Resources Development Fund (WRDF) in the implementation of a mechanism to replenish the fund (aka ‘revolving fund’), which is used to improve water and sanitation in Ethiopian secondary cities.

Though mainly rural, Ethiopia counts 10 cities with over 100,000 inhabitants and 115 urban centers with over 20,000 inhabitants. The country is also experiencing a high urban population growth rate. The issues of water and sanitation are at the very heart of national priorities. Major investments have been made in recent years, allowing a good coverage in drinking water, especially in urban areas (97% of the urban population). However, the amount of water used daily remains low, mainly because of the dilapidated state and lack of maintenance of the distribution networks. The municipal water authorities (Town Water Utilities, TWUs), in charge of the maintenance of equipment and networks, water distribution and of the billing and collection system, also continue to have a low level of equipment: defective maintenance of facilities and existing networks, lack of investment planning and business plans, obsolete or non-existent billing system, lack of asset management, etc. The Water Resources Development Fund (WRDF) was set up by the Government in 2002 to implement its urban policy. It aims to mobilize resources for loans to finance the irrigation, drinking water and sanitation sectors in secondary cities and reinforce their autonomy on the technical and financial aspects. The repayment of the loans granted to the TWUs allows the revolving fund to be replenished and a new cycle of investments for new cities to be financed.


The program aims to improve the living conditions of the Ethiopian population by sustainably increasing access to drinking water in secondary cities via support to an endogenous and permanent financing mechanism. It will contribute to: Strengthening water production and distribution; Building the capacities of WRDF as the main tool for the implementation of the national urban water policy; Building the management capacities and improving the financial sustainability of TWUs. The EUR 81.4m program is cofinanced by the European Investment Bank (EIB – EUR 41.9m), Italian Cooperation (IDC – EUR 18.5m), and Agence Française de Développement (AFD – EUR 21m).


The program will contribute to improving the financial sustainability of TWUs, which will  sustainably increase water service provision; A functional water service will contribute to local economic development, as well as to improving living conditions for populations; The loan repayments will be used to replenish the fund and will thus offer sustainable financing solutions to a large number of Ethiopian secondary cities.

project start date
21 000 000
amount of the program
Water Resources Development Fund