Financial institutions (FIs) are central to the growth and success of WASH microfinance. Water, sanitation, and hygiene are fundamentally important to the lives and livelihoods of financial institution’s clients. Individuals with access to safe water and improved sanitation are healthier, more productive, and are able to be better clients as a result.
Some FIs are already lending for WASH-related purposes. One example is a combination loan. A borrower uses a portion of the loan to pay for a toilet and the remaining balance for something else. However, few FIs actively track this type of lending, and even fewer are focused on building a dedicated WASH loan portfolio. The goal for programs like WaterCredit is to change that.
With an estimated $12 billion in demand for WASH financing at the individual and household level, there is a business case for WASH and microfinance linkages. FIs that understand this and can scale WASH lending activities stand to benefit alongside their clients.
To date, most WASH microloans have been considered non-working capital loans. Although core WASH microfinance loan products are typically not directly income-generating, these 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) allowing adults to engage in business activities or caring for family, while children can attend school.
- Safe water and improved sanitation promote better health, which results in a reduction in both water-borne disease and healthcare-related expenses.
- Average cost (time & money) spent on water and sanitation procurement decreases, often resulting in net increase in disposable income.
 Assessing Microfinance for Water and Sanitation