Investments aligned with this strategic goal aim to improve access to water and sanitation by financing the construction of household facilities to allow low-income families to access toilets, water connections, wells, water filters, and other products that improve the quantity and quality of their water and sanitation access.
The sections below include an overview of the strategy for achieving desired goals, supporting evidence, a starter kit of metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.
Investments aligned with this strategic goal aim to improve access to basic water and basic sanitation by financing household facilities. Inadequate access to safe water and sanitation underpins many of the challenges related to health and education faced by households in poverty. Moreover, families in the bottom income quintiles often spend more than 20% of their income on water, further exacerbating the cycle of poverty (1,2). Limited access to clean water and sanitation costs households worldwide USD 323 billion in coping costs, including time lost fetching water and finding sanitation facilities, water purchased from vendors, and the costs of additional health issues caused by unsafe water (3).
Through affordable household financing, low-income families can access toilets, water connections, wells, water filters, and other products that improve the quality and quantity of their water and sanitation. Low-income households, excluding those living in extreme poverty, are often limited by financial liquidity rather than the cost of these products. For this reason, access to credit for these products appears to encourage household investments in water and sanitation. In Vietnam, India, Bangladesh, Mozambique, Ecuador, and Senegal, where an innovative approach was tested in pilot districts, systematic introduction of products on credit led to stronger demand for sanitation (4).
Investments aligned with this strategic goal may:
According to the 2017 Joint Monitoring Reports from the World Health Organization (WHO) and United Nations Children's Fund (UNICEF), 785 million people lack access to basic water, and two billion people lack access to basic sanitation (5,6). The financing required to meet their needs is similarly lacking: to meet Sustainable Development Goal 6, the World Bank estimates that capital investments in water and sanitation infrastructure needed total USD 114 billion annually from 2016 to 2030. The capital investments required to achieve SDG 6.1 and 6.2 alone are triple the current estimated investment of USD 28.4 billion (7).
With such great capital need, solutions must extend beyond traditional philanthropy and official development assistance. A 2008 study estimated demand at USD 12 billion for microloans to finance improvements to water and sanitation among underserved communities, concentrated in India, Indonesia, and the Philippines where, collectively, 200 million people lack access to safe water and 280 million lack access to basic sanitation (8). A 2019 estimate, considering an additional 95 countries, revised this total demand to USD 18 billion (9).
Low-income households: Many households earning between USD 1.90 and 5.50 per day have enough income on average to repay an affordable loan for water and sanitation investments but lack savings to pay for facilities and services upfront. When these households are offered affordable financing, they often opt for long-term investments over short-term/daily and expensive solutions for their water and sanitation needs (2). According to the World Bank, 46% of the global population lives on less than USD 5.50 per day. The 10% of the global population in extreme poverty—living on less than USD 1.90 per day—cannot meet their water and sanitation needs through financing strategies and should be served through traditional philanthropic approaches (10).
Women and girls: Giving households access to safe water and sanitation can save women and girls time and increase their personal safety and dignity. Women and girls overwhelmingly bear primary responsibility for collecting water, doing so for 80% of all households worldwide with water off-premises (11). Altogether, women and girls spend 200 million hours every day collecting water, with an average roundtrip collection time greater than 30 minutes (12). Meanwhile, more than a third of women worldwide lack access to safe sanitation; as a result, 526 million of them practice open defecation. Every day, women and girls living without a toilet spend 266 million hours finding a place to go (13). Time spent collecting water or finding a toilet is time spent away from school, income-generating activities, caretaking, rest, or play.
Besides the time required, inadequate access to indoor sanitation and the need to travel to outdoor toilet facilities are major risk factors for gender-based violence (14). In fact, women who practice open defecation are twice as likely to experience non-partner sexual violence as women with a household toilet (15).
Children: Access to safe water and sanitation contributes to positive outcomes in children’s health and education. Investments can prevent childhood deaths due to diarrheal disease—one of the top three causes of childhood death—when they target areas where people have little access to basic water and sanitation, as most cases are linked to a lack of these services (16, 17). Diarrhea related to lack of water and sanitation is also linked to stunting and chronic malnutrition, which affect more than 160 million children worldwide (18). In terms of education, having a sanitation solution at home is associated with higher cognitive test scores, especially for girls and controlling for socioeconomic data and family size (19). Access to improved water at age one was associated with higher language scores at age five in a study of more than 7,000 children in Ethiopia, India, Peru, and Vietnam (20).
Investments with this strategic goal can impact not a specific geographic area but rather a specific income demographic: low-income households.
According to a 2019 study conducted by WaterEquity, demand for microfinance for water and sanitation totals approximately USD 18 billion, with the highest demand in sub-Saharan Africa and East Asia & the Pacific (9).
Organizations investing in projects that improve access to WASH through affordable household financing can contribute toward solutions by:
Currently, 785 million people around the world lack access to basic water, and two billion lack access to basic sanitation (5,6).
The lack of proper sanitation costs an estimated USD 223 billion every year (3). Across the global economy, every dollar spent on water and sanitation returns at least four (21). Universal access to adequate water and sanitation would yield an estimated USD 18.5 billion in economic benefits per year as a result of deaths avoided, not counting other sources of potential economic benefit (21). In one example of impact from a project associated with this strategic goal, households in Bangladesh that took loans to improve their water facilities increased their household income by 10% compared to non-borrowers (22).
Impact risk factors identified by experts as material for this Strategic Goal include:
These risks could reduce the operational sustainability of invested financial institutions’ credit offerings for water and sanitation, decreasing their chances of continuing to offer household financing over time. Simply put, these risks may lead to organizations not reaching their intended impact objective.
MBK Ventura is a microfinance institution (MFI) regulated by the Indonesian Financial Services Authority (FSA), and licensed as a non-bank finance company. Using the Grameen Bank methodology, MBK provides working capital to low-income women in Java, Indonesia, to give them access to formal and cost-effective financial services and to reduce their vulnerability. Since launching its operations in 2003, MBK has now become one of the largest Grameen-style microfinance institutions in Indonesia, now serving more than 1.2 million unbanked women. To date, MBK Ventura has disbursed more than 33,000 loans for water and sanitation, reaching more than 147,000 people. MBK Ventura provides financing for household water and sanitation facilities. In 2019, WaterEquity invested in MBK Ventura to support the scale-up of its water and sanitation lending, while Water.org continued to provide technical support for the design of the water and sanitation programme and extensive capacity building of MBK Ventura staff in head office and the field.
Annapurna Finance Pvt. Ltd is a microfinance institution in India established in 2009 to serve the economically weaker sections of society, bringing them into the mainstream by providing need-based financial services at their doorstep. Annapurna offers households the SWASTH loan, sized between USD 140 and 350, for safe water and sanitation. To date, Annapurna has disbursed more than USD 12 million in water and sanitation loans, resulting in 48,000 water and sanitation improvements and reaching more than 227,500 people. Annapurna is currently supported by investments facilitated through WaterEquity and was previously supported by subsidies provided by Water.org.
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Tom Burgess, Carolynne Wheeler, Tim Brewer, Dan Jones, James Wicken, Helder Samo Gudo, Behailu Shiferaw, Basile Ouedraogo, Pragya Gupta, Nitya Jacob et al. Water: At What Cost? The State of the World’s Water. London: WaterAid, March 2016.
Christopher Gasson. New Model for Water Access: A Global Blueprint for Innovation. London: Global Water Leaders Group, 2017.
Peter J. Kolsky, Eddy Perez, and Sophie Cecile Marie Trémolet. “Financing On-Site Sanitation for the Poor: A Six Country Comparative Review and Analysis.” World Bank Water and Sanitation Program Working Paper 56943, Washington, DC, 2010.
World Health Organization. “Drinking-Water.” Fact sheet, June 14, 2019. https://www.who.int/news-room/fact-sheets/detail/drinking-water.
World Health Organization. “Sanitation.” Fact sheet, June 14, 2019. https://www.who.int/en/news-room/fact-sheets/detail/sanitation.
Guy Hutton and Mili Chachyamma Varughese. “The Costs of Meeting the 2030 Sustainable Development Goal Targets on Drinking Water, Sanitation, and Hygiene.” World Bank Water and Sanitation Program Technical Paper 103171, Washington, DC, January 2016.
Meera Mehta. “Assessing Microfinance For Water and Sanitation: Exploring Opportunities for Sustainable Scaling Up.” Study for the Bill & Melinda Gates Foundation, Ahmedabad, India, July 5, 2008.
WaterEquity analysis. Mehta’s study analyzed data from the following 38 countries: Cambodia, China, Indonesia, the Philippines, Thailand, Vietnam, Bangladesh, India, Nepal, Pakistan, Sri Lanka, Benin, Burkina Faso, Cameroon, Congo, Côte dʹIvoire, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Kenya, Madagascar, Malawi, Mali, Mauritania, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Somalia, South Africa, Swaziland, Tanzania, Togo, Uganda, Zambia, and Zimbabwe. The updated WaterEquity study analyzes the following 132 countries: Afghanistan, Albania, Algeria, Angola, Armenia, Azerbaijan, Bangladesh, Belarus, Belize, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso, Burundi, Cabo Verde, Cambodia, Cameroon, Central African Republic, Chad, China, Colombia, Comoros, Costa Rica, Côte d’Ivoire, Cuba, Djibouti, Dominica, Dominican Republic, DPR Korea, the DRC, Ecuador, Egypt, El Salvador, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, India, Indonesia, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, Kyrgyzstan, Lao PDR, Lebanon, Lesotho, Liberia, Libya, Madagascar, Malawi, Malaysia, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Mexico, Micronesia, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nauru, Nepal, Nicaragua, Niger, Nigeria, North Macedonia, Pakistan, Papua New Guinea, Paraguay, Peru, the Philippines, Romania, Russia, Rwanda, Samoa, São Tomé and Príncipe, Senegal, Serbia, Sierra Leone, Solomon Islands, Somalia, South Africa, South Sudan, Sri Lanka, St. Lucia, St. Vincent and the Grenadines, Sudan, Suriname, Swaziland, Syria, Tajikistan, Tanzania, Thailand, Timor-Leste, Togo, Tonga, Tunisia, Turkey, Turkmenistan, Tuvalu, Uganda, Ukraine, Uzbekistan, Vanuatu, Venezuela, Vietnam, Yemen, Zambia, and Zimbabwe.
“Regional Aggregation Using 2011 PPP and $1.9/Day Poverty Line.” PovcalNet, World Bank. Accessed September 18, 2019. http://iresearch.worldbank.org/PovcalNet/povDuplicateWB.aspx.
UNICEF and WHO. Safely Managed Drinking Water Services: Thematic Report on Drinking Water. Geneva: World Health Organization, 2017. https://data.unicef.org/resources/safely-managed-drinking-water/
Jay P. Graham, Mitsuaki Hirai, and Seung-Sup Kim. “An Analysis of Water Collection Labor among Women and Children in 24 Sub-Saharan African Countries.” PLoS ONE 11, no. 6 (June 2, 2016): e0155981.
WaterAid. “1 in 3 Women Lack Access to Safe Toilets.” Briefing note, November 19, 2012, https://www.wateraid.org/us/media/1-in-3-women-lack-safe-toilets.
Gregg S. Gonsalves, Edward H. Kaplan, and A. David Paltiel. “Reducing Sexual Violence by Increasing the Supply of Toilets in Khayelitsha, South Africa: A Mathematical Model.” PLoS ONE 10, no. 4 (April 29, 2015): e0122244.
Apoorva Jadhav, Abigail Wetizman, and Emily Smith-Greenaway. “Household Sanitation Facilities and Women’s Risk of Non-Partner Sexual Violence in India.” BMC Public Health 16 (November 8, 2016): 1139.
World Bank. Reducing Inequalities in Water Supply, Sanitation, and Hygiene in the Era of the Sustainable Development Goals. Washington, DC: World Bank, August 2017.
World Health Organization. “Children: Reducing Mortality.” Fact sheet, updated September 19, 2019, https://www.who.int/news-room/fact-sheets/detail/children-reducing-mortality.
WHO and UNICEF Joint Monitoring Programme. Progress on Sanitation and Drinking Water: 2015 Update and MDG Assessment. New York: UNICEF, June 2015.
Jennifer Orgill. “Water, Sanitation, and Development: Household Preferences and Long-Term Impacts.” PhD dissertation, Duke University, 2017.
Kirk A. Dearden, Alana T. Brennan, Jere R. Behrman, Whitney Schott, Benjamin T. Crookston, Debbie L. Humphries, Mary E. Penny, and Lia C. H. Fernald. “Does Household Access to Improved Water and Sanitation in Infancy and Childhood Predict Better Vocabulary Test Performance in Ethiopian, Indian, Peruvian and Vietnamese Cohort Studies?” BMJ Open 7 (March 7, 2017): e013201.
Guy Hutton. Global Costs and Benefits of Drinking-Water Supply and Sanitation Interventions to Reach the MDG Target and Universal Coverage. Geneva: World Health Organization, May 2012.
Water.org. “WaterCredit: Catalyzing Access to Safe Drinking Water and Sanitation in Bangladesh.” Program evaluation, Water.org, Kansas City, February 2019.
Neil Buddy Shah, Stuart Shirrell, Andrew Fraker, Paul Wang, and Esther Wang. Understanding Willingness to Pay for Sanitary Latrines in Rural Cambodia. New Delhi: IDInsight, October 2013.
Meera Mehta. “Public Finance at Scale for Rural Sanitation: A Case of Swachh Bharat Mission, India.” Journal of Water Sanitation and Hygiene for Development 8, no. 3 (2018): 359–73.
This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.
Cook, Joseph, and Joseph Onjala. “Microfinance in the Water Supply and Sanitation Sector in Kenya.” Microfinance in the Water Supply and Sanitation Sector in Kenya, 2009.
Smets, Susanna, Bansi Malde, Sara Giunti, Bet Caeyers, and Britta Augsburg. “Labelled Loans, Credit Constraints and Sanitation Investments,” July 2019. https://doi.org/10.1920/wp.ifs.2019.0919.
Jack, William, Michael Kremer, Joost De Laat, and Tavneet Suri. “Borrowing Requirements, Credit Access, and Adverse Selection: Evidence from Kenya,” 2016. https://doi.org/10.3386/w22686.
Augsburg, Britta, Bet Caeyers, and Bansi Khimji Malde. “ Can Micro-Credit Support Public Health Subsidy Programs ?” Can Micro-Credit Support Public Health Subsidy Programs ? Washington, DC: World Bank Group, n.d.
Balasubramanya, Soumya, Barbara Evans, Richard Hardy, Rizwan Ahmed, Ahasan Habib, N. S. M. Asad, Mominur Rahman, et al. “Towards Sustainable Sanitation Management: Establishing the Costs and Willingness to Pay for Emptying and Transporting Sludge in Rural Districts with High Rates of Access to Latrines.” Plos One 12, no. 3 (2017). https://doi.org/10.1371/journal.pone.0171735.
Yishay, Ariel Ben, Andrew Fraker, Raymond Guiteras, Giordano Palloni, Neil Buddy Shah, Stuart Shirrell, and Paul Wang. “Microcredit and Willingness to Pay for Environmental Quality: Evidence from a Randomized-Controlled Trial of Finance for Sanitation in Rural Cambodia.” Journal of Environmental Economics and Management 86 (2017): 121–40. https://doi.org/10.1016/j.jeem.2016.11.004." Journal of Environmental Economics and Management.
Geissler, Kimberley H, Jeffrey Goldberg, and Sheila Leatherman. “Using Microfinance to Facilitate Household Investment in Sanitation in Rural Cambodia.” Health Policy and Planning 31, no. 9 (2016): 1193–99. https://doi.org/10.1093/heapol/czw051.
Chunga, Richard, M. W. Jenkins, Jeroen Ensink, and Joe Brown. “Moving up the Sanitation Ladder with the Help of Microfinance in Urban Malawi.” Journal of Water, Sanitation and Hygiene for Development 8, no. 1 (August 2017): 100–112. https://doi.org/10.2166/washdev.2017.186.
Garcia-Posada, Miguel. “Credit Constraints, Firm Investment and Growth: Evidence from Survey Data.” SSRN Electronic Journal, 2017. https://doi.org/10.2139/ssrn.2978017.
Afrane, Samuel K., and Bernard Adjei- Poku. “Expanding the Frontiers of Microfinance in the Service of the Poor: Experiment with Water and Sanitation.” International Journal of Academic Research in Business and Social Sciences 3, no. 8 (2013). https://doi.org/10.6007/ijarbss/v3-i8/124.
Kouassi-Komlan, E. and C. Fonseca (2004). Microfinance for water and sanitation in West Africa. 30th WEDC International Conference. Vientiane, Lao PDR.
Lensink, Robert, Tom Raster, and Angelique Timmer. “Liquidity Constraints and Willingness to Pay for Solar Lamps and Water Filters in Jakarta.” The European Journal of Development Research 30, no. 4 (October 2017): 577–87. https://doi.org/10.1057/s41287-017-0078-3.
Rahman, M. M. “Willingness to Pay for Improved Water Supply: A Policy Implications for Future Water Security.” American Journal of Environmental and Resource Economics 2, no. 4 (2017): 116–22.
Tremolet, S. Kuar, T.V.S.R. (2013): Evaluating the Potential of Microfinance for Sanitation in India. London: Sanitation and Hygiene Applied Research for Equity (SHARE)
Agbenorheri, M. and C. Fonesca (2005). “Local financing mechanisms for water supply.” Background paper for WELL.
Davis, Jenna, Gary White, Said Damodaron, and Rich Thorsten. “Improving Access to Water Supply and Sanitation in Urban India: Microfinance for Water and Sanitation Infrastructure Development.” Water Science and Technology 58, no. 4 (2008): 887–91. https://doi.org/10.2166/wst.2008.671.
Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.
Number of loans disbursed by the organization during the reporting period.
Organizations should footnote all assumptions used.
Average loan size disbursed by the organization during the reporting period.
Value of loans disbursed (PI5476) / Number of loan disbursed (PI8381)
Organizations should footnote all assumptions used.
Organizations should footnote all assumptions used.
(Percent of all residents who rank themselves “likely to recommend” product or service) – (Percent of all residents who rank themselves as “unlikely to recommend” product or service)
Number of unique low income individuals who were clients of the organization during the reporting period.
Value of all of the organization's loans outstanding at the end of the reporting period that have one or more installments of principal past due for more than 30 days.