Water and Microfinance

In many developed countries, easily available items are often taken for granted, such as water. But in developing countries safe water is a rare commodity, over a billion people suffer from lack of access to safe water. Approximately 5-7 million people (primarily in Sub-Saharan Africa and countries like India & Bangladesh) are dying annually - mainly children - due to water-born diseases. Furthermore, the costs incurred for rural communities to access safe water can be 10-15 times higher than costs for urban dwellers connected to cleaner water systems. These issues affect the health & economic productivity of rural communities.

An interesting approach, applying microfinance principles, was launched by the organization 'Water Partners international' with an initiative called the WaterCredit Initiative that we believe provides a hopeful unique model. By making small loans to communities and individuals who do not have access to traditional credit markets, WaterCredit helps finance the upfront cost of water and sanitation systems. Giving people the credit tools they need and allowing them to repay the loans over time empowers them to solve their own water supply needs now instead of having to wait for years for a grant that might never come.

A working example: in India, WaterPartners provided $105K in loans for safe drinking water and household toilet facilities for urban slum residents. Loans were disbursed by WaterPartners’ local implementing partner in India, Gramalaya. Gramalaya teamed up with BASIX, a local micro-finance institution, in order to develop the infrastructure they needed to make the loan distributions. BASIX educated Gramalaya on the qualifications for loan eligibility and helped them to develop financial systems to process the loans. Check out this interesting & successful case & another in Kenya.

Another promising water initiative was announced yesterday; the U.S. Agency for International Development (USAID) & The Coca-Cola Company announced a $7 million joint investment in 9 new water projects in Africa. It's pleasing to hear this news because these much needed collaborations between private sector & NGO-development organizations, beneficially team private funding & business best practices with local developing country knowledge & expertise.

The projects will be located in Angola, Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Ghana/Ivory Coast. These new projects (Coca Cola & USAID have been working together since November 2005, with activities in Bolivia, Mali, Indonesia, Malawi, Egypt, Thailand, Uganda and South Africa.) provide locally-driven solutions to address the global water crisis, growing the global partnership’s investments from $3 million to $10 million.