10. Maximising the leveraging effect Sanitation financing model Source: Trémolet, Kolsky & Perez (2010) for WSP Sanitation revolving fund
11. How to get funds from A to B? A: Donor (source of funds) B: Small-scale Agents (SSA) Implausible? MFI / NGO (Microfinance Institution) Microfinance loan Repayment, savings Local commercial bank Commercial loan Repayment APEX (at national level) MIVs/ Multi-donor Trust Fund Donor flow: loan, equity, grant Private flow: loan, (occasional savings)
More on PSSPs - 1 st column: e.g. equipment suppliers, masons, small construction companies, private land & housing developers 2 nd column: NB in all cases, non financial constraints appear to be more pressing than financial ones e.g. legal constraints but can become addressed by financial efforts e.g. guarantees. Some issues need to be addressed from the national institutional level, such as in Kenya there was a change in the law to enable small scale private operators to operate legally thereby creating the opportunity for financial instruments to be used to fund WATSAN on a small scale. NB 2 It is easy to get confused here between the providers of the service at the infrastructural level and where the donor funding is being received, and what institutions are being used to channel the funding. E.g. an MFI will not implement a small scale WATSAN project but it may be used to channel the funding to whoever ultimately installs the pumps for example. In this typology we are mainly concerned with giving donors an idea of what small scale providers look like on the ground. Next we will move on to how donor funds might get there.
APEX organisations Réseaux d’organismes de microfinance : PlanetFinance, réseaux sur le web (mixmarket), réseaux régionaux (Africa microfinance network, http://afminetwork.org/ ).
1 2 GIZ strongly disagreed with funding SSF for water but agreed with funding it for sanitation – due to desire to stress the government ‘ s responsibility in utility and network provision 3 Regarding inerest rates -
Guidelines for EU donors: lists indicative areas where grant funding can be used at macro level (funding of research on policy/regulatory frameworks, training for regulators, TA on regulatory aspects), at meso level (design and setting up of credit bureaus, enhancement of rating practices, support to professional networks and trade associations to build member capacities, etc…) and at micro level (TA to MFI for development Mention about EU-ACP microfinance programme: Approach: building capacities of microfinance actors, supporting ratings and information systems and enhancing transparency and efficiency in microfinance market Mention that the European Investment Fund is also involved with microfinance but it is focused on Western Europe and Accession countries Extra Sophie A on DGIS Instruments used include loans to commercial banks and grants to MFIs and local public institutions. The main thing that is interesting about DGIS is their preference for channelling funds through NGOs. According to CGAP this also included channelling 80% of funds to MFIs through 4 Dutch NGOs. HOVIB, NOVIB, ICCO, BILANCE
APEX organisations Réseaux d ’organismes de microfinance : PlanetFinance, réseaux sur le web (mixmarket), réseaux régionaux (Africa microfinance network, http://afminetwork.org/ ).