Water, Microfinance, and Innovation

When I met Gary White, Executive Director and Co-Founder of Water.org, at the Clinton Global Initiative last year, he was a man on a mission. In 2009, together with Matt Damon, he co-founded Water.org, which envisions a day when everyone has access to clean water.

About 60 percent of the population in Sub-Saharan Africa lacks access to clean water, and 30 percent to sanitation. Annually, this gap results in 800,000 deaths due to diarrheal diseases, 88 million missed days of school, and $20 million in lost time collecting water.  Sub-Saharan Africa loses nearly 5 percent of its GDP each year due to the water crisis—the value which exceeds all foreign assistance in the region.

The irony is that the poor in many developing countries already pay 12 to 15 times more for access to clean water than higher-income people in the same city. In some cases, poor households spend up to 25 percent of their income towards water and sanitation needs. It is not unusual for them to borrow from moneylenders to address this basic need. 

Although the market demand exists, there have not been sustainable ways to finance basic water needs. That is, until Water.org introduced WaterCredit in South Asia. This market-driven and sustainable approach facilitates the collaboration between microfinance institutions and NGOs in order to provide financial products to communities living in poverty so they can access clean water and sanitation. 

The results have been remarkable: to date, WaterCredit loans have benefited more than 200,000 people who have gained access to safe water and sanitation.  Loan repayment rates globally have been high, nearly 99 percent. These loans are income-enhancing, enabling women to monetize their time that would have otherwise been spent walking long distances or standing in queues to collect water. Sometimes households use their new water access to sell water to neighbors, thus generating income. There are other multiplier benefits as well. In one community in India which had access to such loans, diarrheal diseases fell from 86 percent to 21 percent.

Since our meeting at CGI, our Foundation and Water.org have partnered to expand the WaterCredit model in Africa. We will create and test a WaterSavings model as well to help families acquire other assets such as water tanks, latrines and pipes.  We will share what we learn with the microfinance and development communities.

Innovation in development occurs through the collaboration between different sectors and when it is derived from the needs of the poor.  Water.org exemplifies this type of innovation—a demand-driven, bottom-up approach that enables people living in poverty to take care of basic needs, and at the same time, empowers them to build their financial capacities.

Read more stories by Reeta Roy.