New Report: Small-scale finance for water and sanitation

Published jointly by:

the SHARE research consortium and the EU Water Initiative EUWI – Finance Working Group.

“This report identifies ways in which governments and External Support Agencies can increase access to finance for small-scale (SSF) WATSAN providers, by channelling public funding to support the market and leverage private sector financing. Sophie discusses her research findings and gives example of successful small-scale finance initiatives across the globe.”

Author /Contributors / Acknowledgements

“This report has been written by Sophie Trémolet (Trémolet Consulting Limited, London). The report incorporates contributions and comments from Alan Hall (Chair of the EUWI-FWG) and James Winpenny (Wychwood Economic Consulting Ltd).”

“The paper was reviewed by Meera Mehta (Professor Emeritus at CEPT University, Ahmedabad, India), April Rinne (Director of the WaterCredit programme at Water.org) and members of the FWG, who also responded to a survey of European Union (EU) donors on their current practices relative to small-scale finance.”

“Background research and drafting support were contributed by Sophie Ayling, Aarti Daryanani and Candice Lanoix. Much of the original material was gathered in the context of research in India and Tanzania funded by DFID through the SHARE research consortium as well as WaterAid Tanzania. The case studies were carried out jointly by Sophie Trémolet and members of the MicroSave team, including T.V.S. Ravi Kumar and Ravi Kant in India and George Muruka and George Mugweru in Kenya and Tanzania.”

Topics

(extracted from the report)

Executive summary
Key findings
What more could external support agencies do?
Which concerted actions could be initiated?
1. Introduction
1.1 Report objectives
1.2 Background to the report
1.3 Methodology
1.4 Report structure
2. Understanding the market
2.1 Who are small-scale service providers in the WATSAN sector?
2.2 What are their financing needs?
3. What type of repayable financing is available to SSF recipients?
3.1 Microfinance for households
3.2 Mesofinance for WATSAN service providers
4. How can public funds be used to increase finance to SSF recipients?
4.1 Should public sector support be provided to leverage SSF?
4.2 What experience do EU donors currently have in this area?
5. Potential financial instruments to support SSF
5.1 Grant funding
5.2 Concessional loans
5.3 Guarantees
5.4 Equity investments
6. The ‘channelling’ challenge: getting funds from A to B
6.1 The ‘straight line approach’ (through domestic financial institutions)
6.2 The ‘Apex approach’
6.3 The ‘funnel approach’
Annex A – Overview of the small-scale finance market in Kenya
Annex B – Glossary: financial terms relative to small-scale finance
Annex C – Useful resources

TABLES
Table 1. Types of small-scale WATSAN providers and their financing needs
Table 2. Microcredit for WATSAN: the case for and against
Table 3. Role of public funding to support SSF services to WATSAN
FIGURES
Figure 1. The overall ‘financing equation’ for WATSAN providers
Figure 2. Access to finance: the uncovered segments
Figure 3. Alternative channels to get funds from A to B

DOC details

• 72 pages  PDF
• pub date “April 2012″

It is a great report  and  even makes  attempts to address both pros  and cons.  As an example for  For “governments and external support agencies” the following  list for WATSAN financing :

Pros:

“Efficient use of funds and high leverage ratios (i.e. the amount of private funding leveraged for each USD of public funding provided): this may, therefore, help free up scarce public resources to target the poorest”

Cons

“Pro-poor targeting: microfinance (microcredit) may not lift affordability constraints for the poorest: it may only be applicable to a segment of the population (which would vary in size depending on the country) and is not the only means of increasing access”

This shall be a great  document to start /extend the conversation on SSF  with key NGOs, Government agencies, and other Financial type organizations.  (we look forward to the conference that does  just that)

Related articles

• Sophie Tremolet on Small Scale Finance for Sanitation and Water, July 2012
• SHARE – Small-scale finance for water and sanitation (sanitationupdates.wordpress.com)
• WSP – What Does It Take to Scale Up Rural Sanitation? (sanitationupdates.wordpress.com)
• Five microcredit programs innovate to break the cycle of poverty (csmonitor.com)
• ETHIOPIA: Safe water – a glass half full (irinnews.org)
• Microfinance for Water and Sanitation: An Example of Client-Focused Innovation (microfinance.cgap.org)

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