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Financing options

Published on: 30/10/2012

At local level both small providers and consumers need access to financing mechanisms and information to make an informed choice.

Reported financing options are, amongst others:

  • loans from relatives
  • micro-credit from social development banks and/or commercial banks
  • various types of credit and payment-in-instalments from enterprises
  • savings and group loans by local (women) groups
  • as above, but converting savings into group-bought materials to reduce cost of inflation
  • groups buying materials and installing toilets in bulk with discounts
  • NGO or women’s programme takes a loan to lends money on to local groups
  • price reductions on other materials when buying a basic package/packages
  • local government subsidises poor after other households have installed toilets
  • local government gives vouchers for materials/mason services to poor households with public accountability
  • Neighbours assist
  • neighbours assist poor households to achieve full neighbourhood coverage
  • communities organize fund raising activities such as rallies and fairs to collect funds for poorest households
  • local governments doubles/tops up local fund raising for toilets for poor to achieve total coverage

In Peru access to micro credit for consumers and micro/meso credit for providers is part of the sanitation services approach of the national programme APSS.

 

In Vietnam and Nepal rural providers themselves also give various forms of credit to local customers – the relationship is one of mutual acquaintance and trust.

 

The NGO Gramalaya in South India reports how a sanitation (and water) loan fund deployed through a network of women’s self-help groups reduced barriers to credit from formal lending institutions and increased investment in sanitation (and water). Different financing options were also a topic of the D (discussion) group on Sanitation and Hygiene in Asia. Two case studies and preliminary data from two sanitation marketing project give an overview of options and implications of various forms of sanitation financing in Cambodia.

The Thematic Overview Paper (TOP) gives data on financing non-sewered sanitation and the earlier mentioned case study in Vietnam show that low-income households use a range of financing services. It is thus important to give local women and men also an informed choice on financing modalities.  Presenting a range of financing options with pro‘s and con’s for informed choice is less accepted than for technology and design choices.

In India, the Indian private sector (TATA-AIG), the Indian philanthropic organisation Bharat Integrated Social Welfare Agency (BISWA), a Dutch commercial bank (SNS-REAAL) and the knowledge centres WASTE (an NGO in the Netherlands) and UNU-MERIT, a joint research and training institute of the United Nations University (UNU) and Maastricht University (UM) work together in the “Financial Inclusion Improves Sanitation and Health” programme (FINISH). FINISH tests if the use of microfinance for rural sanitation can be implemented at scale. Papers are currently available on training, the baseline study in three states (MP, Orissa and Tamil Nadu) and the development of questionable practices by micro-credit programmes under pressure to become self-sustainable in a short period.

At the WASH Conference 2011 in Brisbane some presentations on financing were given which are available on IRC’s WASH finance blog.

Links to materials referred to in the article providing more background information:
  • In Peru access to micro credit for consumers and micro/meso credit for providers is part of the sanitation services approach of the national programme APSS.
  • The NGO Gramalaya in South India reports on how a sanitation (and water) loan fund was deployed.
  • Different financing options were also a topic of the D (discussion) group on Sanitation and Hygiene in Asia (download below).
  • Two case studies and preliminary data from two sanitation marketing project give an overview of options and implications of various forms of sanitation financing in Cambodia.
  • The Thematic Overview Paper (TOP) gives data on financing non-sewered sanitation.
  • the “Financial Inclusion Improves Sanitation and Health” programme (FINISH).
  • At the WASH Conference 2011 in Brisbane some presentations on financing were given which are available here.

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