Assessing Microfinance for Water and Sanitation: Exploring Opportunities for Sustainable Scaling Up

This study assesses the potential market for using microfinance in the water and sanitation sector (WSS). It suggests measures for development institutions to support sustainable scaling up of water and sanitation services.

Recent reports and workshops have recognized the importance of microfinance in helping poor and low-income groups to access high-quality water and sanitation services. The study covers 38 countries in East and Southeast Asia, South Asia and Sub Saharan Africa. Analysis of trends in water supply and sanitation coverage presents different opportunities across regions for microfinance. Findings include:

• Successful scaling of microfinance for WSS will depend on the status of microfinance and banking in each country and will require putting appropriate policies in place;
• WSS and microfinance play a mutually reinforcing role;
• Few microfinance programs for WSS have achieved scale;
• Individual retail loans have the highest potential in WSS, followed by loans for small water investments;
• Highest potential portfolio for WSS is in South Asia, although all regions exhibit significant potential demand;
• Core activities that support sustainable scaling up of microfinance for WSS include market research and experience sharing.