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FINANCING COOPERATIONSuccess story: BanuFor more than 20 years, Banu hasbeen living in her Bangladeshi slum ofBegunbari with her two daughters. Herhusband died 15 years ago. She nowworks as a housemaid.Because she did not have a water systemnear her home, Banu collected water fromher best option – a dirty pond 20 minutesaway. She had to make this 40 minuteround trip two or three times a day to collectwater for all of her family’s bathing, cleaningand other household needs.Today, things are different for Banuand her daughters. After receiving aWaterCredit loan from Water.org and DSK,a new deep tube well was completed inher community.“After the installation of the deeptube well, we are able to get safe watermuch more quickly,” said Banu. “Now Ihave enough water for all my householdpurposes. Before this well, my daughtersand I would suffer from diarrhoea,jaundice, dysentery and skin diseasesbecause of the dirty water from the pond.By the blessing of God, we don’t havethese water-borne diseases anymore.”Golbanu Begum cleans vessels at her home’s new water connection in Pallabi, BangladeshImage: Water.orgif they are given the opportunity to do so over time. This mightnaturally lead to a thriving market in which those living in the BOPare empowered to seek WASH improvements – however, access tofinancing for water or sanitation improvements (WASH finance)is rare. While the microfinance sector has made access to financemore accessible for self-improvement and agricultural loans, thismarket has yet to fully reach the water and sanitation sector. Withmore than two decades of field experience, research and analysis,Water.org has determined that supporting the expansion of WASHfinance for the world’s poor should be prioritized as a major solutionfor increasing water cooperation and ending the global waterand sanitation crisis.WaterCredit is a model premised on the idea that many people inthe developing world can finance their access to safe water and sanitationif they can pay for these services over time and have a voicein their development and operation. In addition, by bringing financialtools to the WASH sector, WaterCredit can generate economicopportunities for utilities, governments, suppliers and consumers.The initiative builds on existing systems of microfinance, the bankabilityof the poor and the innate desire to improve one’s life andhealth. Through WaterCredit, Water.org provides financial andtechnical assistance to carefully selected local financial institutions,including microfinance institutions, to build their capacity to offerWASH finance to customers at the BOP. These financial products aredesigned based on the analysis of local market demand, and allowcapital to be redeployed to finance multiple WASH investments overtime. Philanthropic resources are used to provide the up-front technicalassistance that financial institutions need to develop these newand innovative loan portfolios. By leveraging philanthropic capitalto reduce risk and initiate loan products rather than using it as loancapital, philanthropy becomes catalytic and powerful. These fundscan be leveraged for commercial capital to create a demand-drivenand market-based approach which is desperately needed to see theend of the global water crisis. As a result, low incomehouseholds gain access to a microcredit loan to pay forwater connections and toilets within their homes, andimprove the well-being of their families and children.One size does not fit allWASH finance is not for everyone. The poorest populationsin most countries, often defined as peopleearning less than US$1.25 per day, will continue torequire direct development assistance, such as subsidiesto pay connection fees from governments andother development agencies. Meanwhile, those on thehigher rung of the economic ladder already have accessto traditional streams of financing. A middle portionof the BOP, however, which we broadly assume toearn between US$1.25 and US$5.00 per day, can payfor WASH improvements themselves with the help ofinnovative financing that leverages local cash flows andapplies microfinance-styled approaches. In 2008, MeeraMehta projected a demand of up to US$ 12 billion forthese loans over a decade (2008-2018). If this promisingdemand for water and sanitation improvementscontinues to go unmet, it will result in market failureand subsidized aid will not be able to keep pace. Byencouraging promoters and financiers to focus onthis opportunity as a lever, the financial industry canempower the poor to participate in the global solutionwithout relying on a failing system.Through the WaterCredit initiative and other WASHfinancing models, organizations can channel anddirect financial resources more efficiently, enablinga large segment of the population to meet their ownwater and sanitation needs through demand-driven,[ 164 ]