Globally, some 663 million people do not have access to improved drinking water sources, and approximately 2.4 billion people lack access to improved sanitation. While many households in the developing world have the ability and desire to pay for water and sanitation services, the high up-front costs of connecting to piped water supply or building a latrine are a deterrent to many households. Emerging evidence from the World Bank Water Global Practice’s Water and Sanitation Program (WSP) and Water.org is finding that water and sanitation micro-finance can be one solution to increase access and reach hundreds of millions at the bottom of the economic pyramid, by spreading these costs over time.
Water and sanitation loans have risk profiles comparable to other loans. It was estimated that approximately 80 per cent of borrowers earn less than $2 per day, but delinquencies and repayment rates for these clients are statistically indistinguishable from wealthier water and sanitation borrowers.
CreditAccess Grameen Limited (CAGL) is a leading Indian microfinance institution headquartered in Bangalore, focused on providing micro-loans to women customers predominantly in rural areas in India. It follows a strategy of contiguous district-based expansion across regions and covers 157 districts in eight states (Karnataka, Maharashtra, Tamil Nadu, Chhattisgarh, Madhya Pradesh, Odisha, Kerala, Goa) and one union territory (Puducherry) in India through 670 branches.
In a recent Water.org survey, 39 percent of sanitation loan recipients reported increased safety since they no longer needed to travel long distances in search of a place to defecate. CAGL’s women clients have stated that they were able to increase their incomes due to greater productivity, since they had more convenient access to water and sanitation and spent less time caring for sick family members. This allowed them to devote more time to their businesses. CAGL recently achieved an important milestone by becoming the only lender to cross 10 lakh water and sanitation loan, in which the average ticket size was Rs 15,000.