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inancing

ooperation

end of the global water crisis. As a result, low income

households gain access to a microcredit loan to pay for

water connections and toilets within their homes, and

improve the well-being of their families and children.

One size does not fit all

WASH finance is not for everyone. The poorest popu-

lations in most countries, often defined as people

earning less than US$1.25 per day, will continue to

require direct development assistance, such as subsi-

dies to pay connection fees from governments and

other development agencies. Meanwhile, those on the

higher rung of the economic ladder already have access

to traditional streams of financing. A middle portion

of the BOP, however, which we broadly assume to

earn between US$1.25 and US$5.00 per day, can pay

for WASH improvements themselves with the help of

innovative financing that leverages local cash flows and

applies microfinance-styled approaches. In 2008, Meera

Mehta projected a demand of up to US$ 12 billion for

these loans over a decade (2008-2018). If this prom-

ising demand for water and sanitation improvements

continues to go unmet, it will result in market failure

and subsidized aid will not be able to keep pace. By

encouraging promoters and financiers to focus on

this opportunity as a lever, the financial industry can

empower the poor to participate in the global solution

without relying on a failing system.

Through the WaterCredit initiative and other WASH

financing models, organizations can channel and

direct financial resources more efficiently, enabling

a large segment of the population to meet their own

water and sanitation needs through demand-driven,

if they are given the opportunity to do so over time. This might

naturally lead to a thriving market in which those living in the BOP

are empowered to seek WASH improvements – however, access to

financing for water or sanitation improvements (WASH finance)

is rare. While the microfinance sector has made access to finance

more accessible for self-improvement and agricultural loans, this

market has yet to fully reach the water and sanitation sector. With

more than two decades of field experience, research and analysis,

Water.org

has determined that supporting the expansion of WASH

finance for the world’s poor should be prioritized as a major solu-

tion for increasing water cooperation and ending the global water

and sanitation crisis.

WaterCredit is a model premised on the idea that many people in

the developing world can finance their access to safe water and sani-

tation if they can pay for these services over time and have a voice

in their development and operation. In addition, by bringing finan-

cial tools to the WASH sector, WaterCredit can generate economic

opportunities for utilities, governments, suppliers and consumers.

The initiative builds on existing systems of microfinance, the bank-

ability of the poor and the innate desire to improve one’s life and

health. Through WaterCredit,

Water.org

provides financial and

technical assistance to carefully selected local financial institutions,

including microfinance institutions, to build their capacity to offer

WASH finance to customers at the BOP. These financial products are

designed based on the analysis of local market demand, and allow

capital to be redeployed to finance multiple WASH investments over

time. Philanthropic resources are used to provide the up-front tech-

nical assistance that financial institutions need to develop these new

and innovative loan portfolios. By leveraging philanthropic capital

to reduce risk and initiate loan products rather than using it as loan

capital, philanthropy becomes catalytic and powerful. These funds

can be leveraged for commercial capital to create a demand-driven

and market-based approach which is desperately needed to see the

Success story: Banu

For more than 20 years, Banu has

been living in her Bangladeshi slum of

Begunbari with her two daughters. Her

husband died 15 years ago. She now

works as a housemaid.

Because she did not have a water system

near her home, Banu collected water from

her best option – a dirty pond 20 minutes

away. She had to make this 40 minute

round trip two or three times a day to collect

water for all of her family’s bathing, cleaning

and other household needs.

Today, things are different for Banu

and her daughters. After receiving a

WaterCredit loan from

Water.org

and DSK,

a new deep tube well was completed in

her community.

“After the installation of the deep

tube well, we are able to get safe water

much more quickly,” said Banu. “Now I

have enough water for all my household

purposes. Before this well, my daughters

and I would suffer from diarrhoea,

jaundice, dysentery and skin diseases

because of the dirty water from the pond.

By the blessing of God, we don’t have

these water-borne diseases anymore.”

Golbanu Begum cleans vessels at her home’s new water connection in Pallabi, Bangladesh

Image: Water.org