Over a 13-month period, the Water and Sanitation Program (WSP) worked with a number of partners, including the international non-profit Program for Appropriate Technology in Health (PATH) and International Development Enterprises (iDE), to pilot a sanitation financing program to address the challenge of reaching low-income households with improved sanitation solutions. This learning note presents the lessons from this pilot to promote scale-up in Cambodia and to inform similar efforts in other countries.
- There is demand for latrines even among poor households; a sanitation loan program offered by socially-oriented microfinance institutions (MFIs) helps to increase uptake of sanitation among the poor. A small loan size and a poorinclusive application process are essential to success.
- MFIs can increase the number of loans offered, reduce loan processing time, and increase a household's likelihood of committing to a sanitation loan by dedicating loan officers to the sanitation portfolio.
- Allowing borrowers to repay loans close to where they live increases the likelihood of interest in this loan product. Borrowers will hesitate if they have to travel long distances, especially for small loans.
- A close partnership between an MFI and a latrine business that has the motivation and capability to produce and deliver on time is needed to maximize commitments from customers and avoid losing latrine orders.
- A poor inclusive sanitation loan program is financially viable and sustainable given the right support, and if loans are managed carefully.