ABIDJAN, Cote d'Ivoire (PAMACC News) - Credit access at affordable rates has availed water supply and sanitation services to hundreds of thousands of households in Kenya, Ethiopia and Uganda, the ongoing discourse on rural water supply, taking place in Abidjan, Cote d'Ivoire has been told.

In his presentation during a parallel session to discuss what the rural people want in regard to water supply and sanitation at the 7th Rural Water Supply Network Forum, Patrick Aluppe, the East African Director for Water.org told delegates that his organisation has used USD 3.6 Million sponsored by the MasterCard Foundation, to catalyse over $20 million in private capital deployment towards water and sanitation. This was done through provision of smart subsidy to financial service providers, to the benefit of over 400,000 households in the region.

“With the right physical product and financial product availability, a lot of gaps in access to water and sanitation can easily be addressed by private capital,” said Aluppe, also a water engineer.

However, he noted that the only way to succeed in such a business, it requires financial institutions that can do it at a reasonable scale simply because if it is done at smaller scale, it is usually never viable.

“There will never be enough charity in the world to solve the global water and sanitation crisis,” said Aluppe, adding that the sector needs fresh thinking and bold approaches to accelerate progress.

“We need market-based approaches that challenge the traditional aid system and help us achieve universal access to safe water and sanitation within our lifetime,” he told the forum, which brings together over 500 participants from governments, nongovernmental organisation, the private sector, the civil society and community representatives.

However, some of the limitations of the water credit model is that it can only work for people who can borrow and repay loans at market rates, and also works only for clients who can be reached by financial institutions.
 
It therefore means that WaterCredit model may not work with the clients who are considered high risk, or who are too far away from the bank branches. “This is where new innovations will be needed. Water.org is currently exploring the use of digital technology and targeted subsidies to extend access to segments considered high risk by the financial institutions,” said Aluppe.

So far, 748 million people or 10 % of global population remains without access to water and sanitation services even after Millennium Development Goals (MDGs).  

And yet, finance is still a big problem.  On average, investment over the period 2015 to 2030 to meet the Sustainable Development Goal of universal access to basic water and adequate sanitation is estimated at $ 49 billion, whereas current average annual overseas development assistance to the water and sanitation sector stands at approximately $12.7 billion, which is far short of what is needed to solve this crisis.

Today, there is a $12 billion demand globally among families at the base of the economic pyramid bop for access to finance to meet their water supply and sanitation needs.
However, noted Aluppe, waterCredit remains highly relevant in the context of developing countries where access to Water Supply and Sanitation (WSS) services is still low.
Governments can therefore benefit from such a microfinance model by actively encouraging financial service providers with an enabling environment in promoting WSS loans and encouraging the public-private partnerships in respective countries.