Water as Wealth: African Leaders Back New Financial Architecture to Close $70bn Water Gap

As African leaders gather in Addis Ababa for the 39th African Union Summit, the narrative is shifting decisively—from what holds Africa back to what will propel it forward.

Under the 2026 Summit theme, "Assuring sustainable water availability and safe sanitation systems to achieve the goals of Agenda 2063," water is being redefined not only as a basic necessity, but as a strategic pillar of Africa's economic future: a driver of prosperity, a cornerstone of public health, and a shield for climate resilience.

By elevating water and sanitation to the highest political level, the African Union is calling for bold leadership to unlock economic opportunity, safeguard communal well-being, and fortify Africa's long-term development.

Yet the challenge remains immense: more than 400 million Africans still lack access to safe drinking water, and the continent faces an estimated $70 billion annual financing gap in the sector.

The African Development Bank Group (AfDB) says the moment demands more than ambition—it requires a new financial paradigm to turn the AU-led Africa Water Vision 2063 from blueprint into reality.

NAFA: A New Financial Architecture for Water Sovereignty

At the core of this shift is the New African Financial Architecture (NAFA), championed by AfDB President Dr Sidi Ould Tah as a cornerstone of Africa's financial sovereignty and resource mobilisation strategy.

Anchored in his Four Cardinal Points, NAFA is designed to transform how Africa finances critical infrastructure—especially water.

The strategy focuses on:

1. Mobilising Capital at Scale

NAFA aims to transform water into a high-value, bankable asset class, enabling Africa to close the $70 billion per year financing gap needed to meet water and sanitation goals.

Rather than treating water infrastructure as a purely public cost, NAFA frames it as a long-term economic investment with measurable returns.

2. Reforming Africa's Financial Architecture

The AfDB is expanding tools that can unlock investment, including:

• Strengthening the African Water Facility, a key accelerator for project preparation

• Leveraging the Bank's AAA credit rating

• Deploying green bonds and sustainable development bonds

• De-risking private capital through blended finance

These mechanisms aim to attract private-sector participation into a sector long viewed as government-only.

3. Harnessing Africa's Demographic Dividend

With Africa's population projected to reach 2.5 billion by 2050, NAFA seeks to convert water scarcity's hidden economic burden—especially "time poverty"—into productivity.

Access to reliable water systems frees women and youth from hours spent collecting water, enabling entrepreneurship, education, and labour participation.

4. Building Resilient Infrastructure Through the Water–Food–Energy Nexus

NAFA prioritises infrastructure that delivers multiple development gains at once, aligned with the Water–Food–Energy–Ecosystem nexus.

A single investment can simultaneously:

• power industry

• expand irrigation across Africa's largely rain-fed farmland

• secure safe drinking water

• strengthen ecological resilience

An Innovative Solution: Multi-Purpose Dams

Through NAFA, the African Development Bank Group is positioning multi-purpose dam projects as essential infrastructure to address Africa's water crisis at scale.

These projects integrate water supply, irrigation, hydropower generation and climate resilience—making them economically viable and socially transformative.

"Multi-purpose dam projects enable equitable sharing of water resources for diverse needs… integrating the water-food-energy-ecosystem nexus and creating resilient systems where joint public and private sector participation can drive sustainable growth," said Mtchera Johannes Chirwa, Director of the Bank's Water Development and Sanitation Department.

Multi-purpose dams generate efficiency gains by pooling infrastructure use:

• Water used for electricity can be reused downstream for irrigation

• Energy and irrigation revenues help cover maintenance costs

• Domestic water tariffs alone are no longer the only funding base

Kenya's Thwake Dam: Flagship Transformation for 1.3 Million People

One leading example is the Thwake Dam project in Kenya, supported by the AfDB.

Key project facts:

• Located at the confluence of the Athi and Thwake rivers

• 80.5 metres high

• Capacity: 688 million m³

• Total cost: ~$635 million

• Completion expected: July 2027

Projected benefits:

• Drinking water for 1.3 million people

• Hydropower generation of 20 MW

• Irrigation for 40,000 hectares of farmland

• Job creation and drought resilience in a semi-arid region

A flagship under Kenya's Vision 2030, Thwake demonstrates how water infrastructure can unlock food security and industrial growth simultaneously.

Rwanda's Muvumba Program: Climate Resilience Through Water Storage

The AfDB-supported Muvumba Multipurpose Water Resources Development Program in Rwanda also illustrates the approach.

Approved in October 2020 with €121.5 million in financing, the program includes:

• A 39-metre dam on the Muvumba River

• Storage capacity: 55 million m³

• Completion expected: October 2026 (currently 36.6% complete)

Expected outcomes:

• 50,000 m³ of drinking water daily

• Irrigation for 10,000 hectares

• 1 MW of hydropower

• Climate resilience through catchment protection and forest management

• Benefits for ~800,000 people, supporting fisheries and livestock

Hydropower revenues will contribute to long-term operation and maintenance sustainability.

Hydropower's Advantage: Low-Cost Renewable Energy

According to the International Renewable Energy Agency (IRENA), electricity from new hydropower projects remains among the lowest-cost renewable energy sources—underscoring the economic attractiveness of multi-purpose dam infrastructure.

Burundi: Reliable Power Saving Lives

In Burundi, the AfDB-backed Rusumo Falls dam project, commissioned in 2024, has transformed electricity stability nationwide.

At Gitega Regional Hospital, improved power supply has directly strengthened healthcare delivery.

"One of our patients was a mother who gave birth to premature triplets… If we hadn't had new incubators connected to electricity 24 hours a day, we couldn't have taken proper care of these babies," said Dr Arnaud Ndorukwigira, Deputy Director of the hospital.

The project received:

• $107.11 million from the AfDB Group

  • $97.31m from the African Development Fund

  • $9.8m from the Nigeria Trust Fund

• Additional financing from the World Bank and EU

Financing the Future: Africa's Water Sector Open for Investment

Commitment to water development aligns directly with Cardinal Point 4 of President Ould Tah's vision: building resilient, high-value infrastructure that generates opportunity for youth and women.

To mobilise private capital, the AfDB is rolling out innovative financing tools, including:

• Green and sustainable development bonds

• Blended finance platforms

• Strategic partnerships leveraging the Bank's AAA rating

With rapid population growth, ecological pressures and infrastructure deficits intensifying Africa's water challenges, the African Development Bank Group is positioning multi-purpose dams and NAFA as the foundation for a more water-secure, resilient and prosperous continent.