Financing Water and Sanitation for the Poor: The Role of Microfinance Institutions in Addressing the Water and Sanitation Gap

Demonstrating the viability and impact of water, sanitation, and hygiene microfinance

This learning note includes a portfolio analysis conducted in 2014 of one of the largest water and sanitation loan portfolio datasets available offering insights into the viability of water and sanitation lending. The analysis includes a sample of more than 245,000 loans in India, split roughly evenly between water and sanitation. The portfolio analysis, along with programmatic, independent evaluations and WSP analyses show that water and sanitation loans have strong social and economic benefits to low-income households and that partnerships with MFIs can help NGOs and governments better leverage investments.

  • USD 120 million in financial lending has resulted in more than 573,000 household sanitation loans reaching more than 2.4 million people.
  • Water and sanitation loans have risk profiles comparable to other loans. Approximately 80 percent of's WaterCredit borrowers earn less than USD 2.00 per day, but have repayment rates of more than 99 percent.
  • Household level sanitation lending stretches the impact of each philanthropic dollar invested by 10 times.
  • The Reserve Bank of India recently added sanitation infrastructure to the priority sector lending, which could release USD 40-50 billion into the sector.
  • Loan recipients enjoy social and economic benefits: 39 percent of borrowers reported increased safety and nearly 25 percent of women were able to increase incomes due to greater productivity.

About this Publication

By Ikeda, J. , Arney, H.