February 9th SVMN speaker Event photos and recap written by Elena Pons-Conforto:
Water Credit
“When a slum receives water, their lives change overnight” Gary White
SVMN’s event on Feb. 9, 2010 featured guest speakers Gary White (Executive Director and Co-Founder, Water.org) and April Rinne (Director of WaterCredit at Water.org), who discussed the numerous benefits of partnering with microfinance institutions (MFIs) in the developing world to provide access to clean water and sanitation to their existing clientele.
Gary began by providing background on Water.org and the landscape of the water supply in the developing world. Gary explained that with 890 milion people lacking access to water and 2.5 billion lacking access to adequate sanitation, the water supply to those at the bottom of the pyramid has been mostly grant/subsidy driven. Water.org realized that philanthropy was not enough to provide water and sanitation to those in dire need. Gary spoke about the need to look for innovation and more scalable options to solve the water crisis for the total population. Through the WaterCredit program, microloans (aimed at securing access to safe water) empower the poor to address their own water needs, on their own timetable.
On average, the poor pay 12x more per liter of water than those connected to water utilities. Water.org has found that there are 300-400 million people that are willing to pay for water services, if they are giving the tools.
With the creation of WaterCredit the concept of partnering with local NGOs has been expanded to the MFIs, providing “smart subsidy” grants for start-up, product, and capacity development cost. The Impact of WaterCredit is obvious :
- Efficiently leveraged investments
- No need for loan sharks or water mafia
- Monthly outlays for water decrease
- Improved health of benefits
- Secondary spin-offs & “ripple effects”
A more efficient and economical water and sanitation environment leads to more time for productive (income-generating) activities.
April illustrated how the mission of WaterCredit is to bridge the gap between the local water and sanitation NGOs and the MFIs, graduating MFIs with water and sanitation expertise and connections. April discussed the different water and sanitation needs for those living in urban environments vs. rural areas and the creation of different WaterCredit products to fulfill those needs.
She explained the process of building relationships with the MFIs. Some of the reasons why microfinance institutions might be hesitant to adapt this new concept are the historical 50% failure rate of the water projects; the fact that the financed product does not generate any income, and the possible competition with the government. WaterCredit, though, has seen a global repayment of 98% in the past 2 years, and 93% since inception and thus far has garnered excellent results.
“Smart subsidies” are not intended to finance the infrastructure, but to reach those at the bottom of the pyramid. Likewise, Water.org is not a bank, just the catalytic support and water expertise for MFIs. By providing small water loans to the creditworthy, WaterCredit manages to free up some of the philanthropic capital to reach the very bottom of the pyramid.
Since inception, WaterCredit has delivered $1.6 million in smart subsidies. The average loan size is about of $150 with a two year repayment schedule. WaterCredit is currently active in India, Bangladesh, Kenya and Uganda. In addition to expanding deeper in India, the organization plans to develop in Southeast Asia, West and East Africa and Latin America.
Although WaterCredit is a new concept, it has a proven track record. Water.org will continue working toward promoting new partnerships, creating innovative financial tools and encouraging a broader cross-sector engagement.
