Microfinance Institutions (MFIs) are central to the growth and success of WaterCredit. Water, sanitation, and hygiene (WASH) are fundamentally important to the lives and livelihoods of MFI clients. Those individuals with access to clean water and safe sanitation are healthier, more productive, and – simply stated – make better clients.

Many MFIs are already lending for WASH-related purposes. One example would be a combination loan, in which a borrower uses a portion of the loan to pay for a toilet. However, few MFIs actively track this type of lending, and even fewer are focused on building a dedicated WASH loan portfolio. WaterCredit seeks to change that.

With an estimated $12 billion in demand[1] for WASH financing at the individual and household level, there is a business case for WASH and microfinance linkages. MFIs that understand this and can scale WSH lending activities stand to benefit alongside their clients.

To date, most WASH microloans have been considered non-working capital loans. Although core WaterCredit loan products to date are not directly income-generating, WaterCredit loan products are highly income-enhancing in the following ways:

• Water and sanitation access frees up time to be used productively (rather than spent walking or waiting for water)
  • Adults can engage in productive business or care for family
  • Children can attend school
• Clean water and safe sanitation promote better health, so that more time and resources can be spent more productively
  • Reduction in water-borne disease
  • Reduction in healthcare-related expenses
• Average cost (time + money) spent on water and sanitation procurement decreases, often resulting in net increase in disposable income

MFIs and the WaterCredit Initiative
WaterCredit MFI partners are engaged as true collaborators with Water.org. Water.org’s MFI partners work closely with Water.org and other strategic partners to develop microloan portfolios dedicated to the WASH needs of its clients. This typically involves undertaking an organizational-level demand assessment and carefully structuring products suitable for a given geography and/or clientele. These activities are funded by “smart subsidies” from Water.org.

In addition, Water.org facilitates the provision of necessary WASH technical assistance and related capacity building. This allows MFIs to focus on what they do best – developing and deploying loans (and where possible, savings products). In this way, Water.org builds an efficient network of partners and funding sources which enables WaterCredit to scale sustainably – both within partner MFIs and globally – over time.