REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

Could this segment be developed and if so, how?
Potentially there is a significant demand given the number of latrines in existence that need
to be either upgraded, replaced or emptied on a regular basis. Strict enforcement of the
municipal by-laws in unplanned settlements would be a key trigger to stimulate the demand
for this kind of sanitation services, particularly in urban areas. Partnership between MFIs and
sanitation organisations or CBOs may develop the possibility of MFIs financing small
sanitation entrepreneurs both in urban and rural areas.
4. Recommendations on next steps
Although the potential market for sanitation microfinance appears to be large, there are only
a few isolated experiences that have tested the market for such products. To this date, no
formal sector-level dialogue has taken place on whether microfinance could play a role in
mobilising the substantial household and private sector investments required to deliver
sustainable sanitation services.
This section examines how the various institutions that have expressed an interest in
developing the sanitation microfinance sector in Tanzania could work collaboratively in order
to achieve such objectives. It sets out a series of steps that can be taken in order to foster
the development of sanitation microfinance and leverage private financing to achieve the
country’s ambitious goals for expanding access to improved and sustainable sanitation.
As a first step, we would recommend disseminating information to microfinance
institutions about opportunities in the sanitation sector. This can be done through
existing information channels. For example, TAMFI (the Tanzanian Association of
Microfinance Institutions, http://tamfi.com/) holds regular meetings at which they share
information on upcoming topics of common interest. They have shown a strong interest in
putting sanitation microfinance on the agenda for their next events, including a TAMFI
workshop in August on Social Performance measurement and their General Assembly in
September. The sanitation financing market could also be brought up and discussed during
meetings of the housing microfinance working group (see Box 7 above).
As a second step, a collaborative working group could be set up to move the agenda
forward. This could be done based on a model similar to the housing microfinance working
group set up in late 2009 (see Box 7 above). We would recommend that such a working
group remain relatively informal during an initial stage, until at least some institutions begin
extracting the lessons from pilot sanitation microfinancing schemes, either as stand-alone
products or combined with other objectives.
A sanitation-sector institution should take the lead for the establishment of such an informal
working group. We would suggest that WaterAid is particularly well-placed to do so, given its
interests in sanitation in general and in sanitation financing in particular.
The following tasks are to be undertaken by the working group leading institution:
Identify which institutions are interested in joining and what their level of prospective
involvement is likely to be – this can be done partly based on the present report;
Convey a meeting of interested institutions, including government officials, financial
institutions, NGOs and donors. The results of the present report could be presented and
discussed at such a meeting, followed by a presentation of existing microfinance
experiences in Tanzania in both market segments by the organisations that are leading
on this (including CCI, MAMADO, TAFSUS and WaterAid);
29