The objective of this study, commissioned by the Bill & Melinda Gates Foundation, is to assess the potential market for using microfinance in the water and sanitation sector, and to identify specific opportunities for potential learning, investment, and support. This report focuses on these opportunities and suggests measures that are needed for sustainable scaling up, which can be supported by the Bill & Melinda Gates Foundation and other development institutions.
- Microfinance opportunities for the WASH sector include increasing coverage to the urban poor in East and Southeast Asia, improving levels of service for urban and rural water supply in South Asia, increasing outreach for water supply in Sub-Saharan Africa through both basic and higher levels of services, developing urban sanitation linked to housing and slum upgradation activities in all three regions, and to achieve a significant increase in outreach for rural sanitation in all three regions.
- Trend-based projections of levels of services and resultant investments suggest a potentially large demand for microfinance of over USD 12 billion in loans over the next decade.
- Successful scaling of microfinance for WASH microfinance will depend on the status of the microfinance and banking sector in each country. Some countries, such as Sri Lanka, South Africa, Vietnam, Indonesia, Senegal, Togo, Bangladesh, Benin, Kenya, and Cameroon, seem to have a good balance between the size of potential demand and the size of the microfinance and wider financial sectors.
- Successful, sustainable scaling will require putting appropriate policies in place to create space for the use of microfinance in the water and sanitation sector.