Water.org is a key player in microfinance for sanitation. the US-based NGO has been championining an approach built on "smart subsidies" whereby financial institutions are trained and capacitated to provide loans for sanitation (and water).

1. East Africa Workshop on Microfinance for Sanitation
Ledger Bahari Beach Hotel
May, 16, 2014
Patrick Alubbe
Regional Director
Water.org – E.A.

2. Water.org
 Non-profit organization founded in 1990 to address water and
sanitation crisis (by a former UNC graduate)
 Re-launched as Water.org with Matt Damon in 2009
 Active in South Asia, East and West Africa, and Central America
 Work with local implementing partners to execute effective,
sustainable programs
 Offer mix of financing models, including WaterCredit
Vision
Water.org envisions the day when everyone in the world can take a
safe drink of water and experience the dignity of a toilet.

3. WO Programs
• Ethiopia and Ghana– Direct Impact – WC
being introduced
• Kenya, Uganda, Bangladesh, South India–
Direct Impact + WC
• Peru and Indonesia – WC

4. Why Microfinance + WASH?

5. Why microfinance + WASH
• Market segmentation within base of the
pyramid
• Not enough subsidies to solve water and
sanitation access
• Investments leveraged, more people reached
• Beneficiaries to customers who can choose
their own solutions
• Income enhancing and sometimes income
generating

6. WaterCredit Model

7. WaterCredit Model

8. WaterCredit Globally

9. Elements of WaterCredit
• Market Assessment
• Product Development
• Monitoring and
Evaluation

10. Market assessment

11. Market Assessment
Why assess the market?
• Discover needs and demands of clients to
develop appropriate products
• Determine target audience for WASH products
• Set price, terms (interest, repayment)
• Identify other stakeholders in WASH space
• Collect baseline conditions to measure impact
• Ensure market is not saturated

12. Product Development

13. Renovated Community toilet with Eco-friendly Filter
bed Septic tank at Malayappapuram
Inner view of the Toilet
Before After repairingrepairing
Septic tank Filter bed septic tank

14. Product Development
• A specific phase to develop and test out new loan
products for WASH sector
• Data from market assessment to tangible products
• Develop and test technologies- rainwater harvesting
systems or toilets
• Must fit JMP description for improved access
• Price and features acceptable to clients?
• Pilot test in handful of branches/communities
• Monitor and revise as needed

15. Monitoring and Evaluation

16. Monitoring and Evaluation
• Provides feedback to product development
• Portfolio quality
– Repayments, portfolio at risk, loan amounts,
product types
– Completeness and functionality of product
– Borrower profile (branch/site, income, gender,
birth year)
• Impact
– Time saved, increased earnings, health
– Anecdotes, personal stories of borrowers

17. Monitoring and Evaluation
Activities
• Partner reports (monthly + quarterly)
• Field audits- regional + US staff
• Financial audits by third party
• Baseline/end evaluation studies
• Impact research by third party
• WaterCredit Forum to share challenges and
knowledge

18. Monitoring and Evaluation
Tools
• Standardized reporting by all partners
• WaterPortal
– Internal database system
for program information
– Online interface for
global access
– Partners upload data
for review

19. Challenges faced and solutions
• Community-based models have not fared as well as self-help group models
 Partner capacity to execute pilot WaterCredit models
 NGOs: Financial management
 MFIs: Limited water/sanitation exposure
 Seasonal income flows require advance plans for repayments
 Political involvement in decisions regarding system connections and
management
 Resistance among groups controlling existing services (i.e. “water mafias”)
 Sanitation programs often involve both demand assessment and demand
generation.
 Perception of water as free gift or right that must be subsidized

20. Current MFI Implementation challenges and
way forward
1. WASH Loans are behind target
-Initial targets set by all FSPs not met.
WF: Program extensions
2. Low WASH budget utilization
-Slow burn rates by FSPs.
WF: -FSPs encouraged to implement as per workplans on time.
3. WASH Product mix unbalanced
-Water harvesting the predominant product. How about other WASH
products e.g. sanitation, wells & boreholes, etc.?
WF: -Sanitation products needs to be supported through collaboration
with NGOs, public health depts. and CLTS programs

21. 3. Implementation challenges and way forward
Cont’d
4. Inadequate monitoring of WASH loans
-Danger of counting non-WASH loans – fund diversions.
-Need to confirm proper installation, proper usage, no. of
beneficiaries?
WF: - FSPs to ensure only WASH loans are reported.
-WO to schedule frequent field monitoring visits (by staff/consultants)
5. Capacity gaps on WASH
- FSPs still lack in-house technical skills to effectively appraise borehole
and sanitation loans.
WF: Water.org provide necessary links – Technical NGOs, Governement

22. WaterCredit Globally
Impact to date
• Over 253,000 loans allowing more than 1.2 million
people to gain access to water and sanitation
• 41 partners in four countries (India, Bangladesh,
Indonesia, Kenya, Uganda and Peru)
• $8.6 M in subsidies leveraged $48 M in commercial
capital and Social capital
• Women clients 93%
• 99% repayment rate ( Since 2003)
• $147 average loan amount

23. Progress to-date
• Program activities
-Market demand studies, product development, staff and
borrower trainings and pilot testing activities done by FSPs
in KE.
-WASH Products (mostly water related) rolled out in KE.
Sanitation products still under pilot in some FSPs.
• No of loans
-Disbursed 17,000 loans to date- 47% of the program target
(36,000).
• Loan Portfolio
- FSPs have disbursed USD 9.8 Million (KES 835.8 Million) to date.

24. Some Lessons Learned to Date
 Watsan loans differ from core MFI loan products (income-
enhancing vs. income-generating).
 Appreciate demand and supply sides of market
 Work in areas with microfinance track record
 Develop partnerships with effective, appropriate institutions
(NGOs, MFIs, govt., private sector, etc.)
 Set terms according to what market will bear, not solely on prior
experiences
 Ensure groups are sufficiently trained to manage loans and new
services
 Prepare to subsidize non-financial program aspects, at least in the
short run

25. Conclusions
 Evidence that substantial numbers of poor households are
willing to take out and repay loans to receive water
connections and toilets
 Micro-credit programs can work effectively in the water
and sanitation sector.
 WaterCredit has improved people’s health, economic
livelihoods, and overall well-being.
 WaterCredit has also empowered women by enabling
them to access loan capital and improve their dignity.
 WaterCredit will benefit more people by recycling loan
repayments and leveraging commercial capital.