Covering the Price of Water with Water-microfinance

Millions of people worldwide lack safe drinking water, an essential basic need. While billions come short of access to improved sanitation, there are more people in the world with a mobile phone than a toilet. How can water-microfinancing be used to counter these global problems?

The price of water

Creating and maintaining a clean water supply is both expensive and time-consuming, and as a result, some geographical areas around the world just don’t have sufficient water. This problem is caused by rapid urbanization, inadequate infrastructure, or, actually in some cases, the lack of urbanization. In some rural areas, people have to walk many kilometers before reaching a water source. Moreover, when there is no clean water, people use whatever is available, which causes them to bathe, launder, and clean in extremely polluted streams. As a result of the lack of sanitation, more than 600 million people still practice open defecation.

For low-income households (LMIs), investing in WASH1 infrastructure takes a back seat as they have more obvious needs such as education and health. For example, in some parts of Asia, investing in a toilet costs around $400, and pipes cost around $150, certainly not cheap. The World Bank estimates $1.7 trillion is needed to achieve the UN’s Sustainable Development Goal 6: ensuring availability and sustainable management of water and sanitation for all, by 2030. 

Who does this affect?

According to the World Health Organization, 1 out of 3 people worldwide do not have access to safe drinking water - a shockingly high number. What’s more, over half of the world does not have access to safe sanitation services2. 7 out of 10 of these people live in rural areas, and ⅓ lives in the least developed countries, with countries like Yemen, Pakistan, The Philippines, Ghana, India, Angola, Benin, carrying the highest burden.

Failure to deal with this issue means a continuation of diseases that should have been extinguished long ago: severe diarrhea, cholera, typhoid, hepatitis A and neglected tropical diseases including trachoma, intestinal worms, and schistosomiasis3. And what about diarrhea? For many of us, it’s annoying but certainly not life-threatening, while almost 300,000 children under the age of five die due to diarrhea every year. 

Introduction to water-microfinance

Millions of people could get access to safe drinking water with the help of affordable loans, and this is where water-microfinancing comes in. It is providing safe water and sanitation by focusing on overcoming a related yet critical bottleneck: access to finance4.

Microfinancing in the WASH sector poses difficulties as it is often seen as unattractive or difficult. Monetary Financial Institutions have been trying to make a difference regarding access to water and sanitation. WaterCredit, for example, helps bring small loans to those that need affordable financing and provide expert resourcing to make household water and toilet solutions a reality. Another example is, founded ten years ago by Matt Damon and Gary White, they’ve helped mobilize $2.5 billion in capital to support small loans, giving millions access to this basic need.

In countries such as Kenya, India, and Vietnam, micro and meso financing for the WASH sector is growing, with toilet and water tank loans being granted. Worldwide, MFIs provide credit ranging between $100 and $500, with a repayment period of six months, a year, or even longer. In Kenya, water or sanitation connections represent a barrier as the average cost is around $250, and in India $150. For an underprivileged family this is too expensive, but if attained, it can change their entire livelihoods. To think you can change an entire family’s life with only $200.

What needs to happen

Water-microfinance is not directly income generating, making it tough for low-income households to obtain loans for this purpose. On the other hand, it does create many benefits such as cost-effectiveness and a general good for society. Governments need to invest in their communities to bridge the economic and geographic divides to deliver this essential human right5

Gramalaya Urban And Rural Development Initiatives (GUARDIAN), is a microfinance institution and field partner of Milaap. They are based in India and exclusively provide micro-credit to build water and sanitation facilities, and so improve the rural lives of thousands. Furthermore, they give technical support for creating low-cost infrastructure and give loans to women so they can build water connections and toilets. Find out more about Lendahand’s projects with Milaap here.

We need to undertake this problem to guarantee our collective well-being in an increasingly globalized world. To help solve this problem, you can invest in water-microfinance or spread awareness on this important topic. 


1 Water, Sanitation, and Hygiene.
2 UNICEF, WHO 2019. 
3 Dr. Maria Neira, WHO Director, Department of Public Health.
4 CGAP, 2020.
5 Kelly Ann Naylor, Associate Director of Water, Sanitation and Hygiene, UNICEF.


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