Microfinance adapted to water and sanitation access

Jessica Jacobson, Senior Manager, Financial Institutions, Water.org y Yanina Rumiche, Senior Program Manager, Latin America, Water.org

According to the water and sanitation program run jointly by the World Health Organization (WHO) and UNICEF, 50 million people in Latin America and the Caribbean (9% of the population) still lack access to a potable drinking-water supply, while 125 million (23%) have no access to an adequate basic sanitation system. Water.org was set up to address this need, to encourage more financial institutions to get involved in water and sanitation-related lending, highlighting not only the enormous social impact this kind of financial product has among borrowers, but also the financial returns such loans have achieved in Latin America, partly as a result of their high repayment rates.

"Water.org has demonstrated that microloans can help narrow the water and sanitation access gap."

Worldwide, we have established partnerships with over 175 financial institutions to date. These partner financial institutions have disbursed 6.8 million loans for water and sanitation, to over 31 million people across 13 different countries. Of these, 2.9 million clients are in Latin America, accounting for 798,285 loans disbursed.

The partnership between Water.org and Financiera Confianza began in 2017. The objective was to help the population served by BBVA Microfinance Foundation’s entity in Peru who live in the  regions with the greatest difficulty accessing water and sanitation. The partnership has made it possible to develop high-quality products focusing on the financial demands of households with these basic needs. It has designed marketing strategies that showcase the advantages of these financial products both to Financiera Confianza’s internal audiences (loan officers) and to the clients of these products.  This concerted effort has helped 86,622 people to finance water and sanitation systems through 33,796 loans.  The number of people benefiting from improved water and sanitation from access to this financing continues to grow every month.

We know that women and girls are disproportionately affected by water shortages and the lack of adequate sanitation systems. It is customarily women who responsible for bringing water into the home. When family members become ill from drinking contaminated water, it is normally women who have to stop their other activities to provide care. This responsibility entails a high opportunity cost for women in jobs, education, leisure and hours of sleep. Lastly, the lack of access to clean, private toilets leaves women at greater risk of infections and illnesses, as well as increasing the possibilities of suffering sexual violence.

During our ten years’ experience, we have learned many lessons that we hope to carry on sharing through our partnership with BBVA Microfinance Foundation. Some of these learnings are briefly summarized below:


Jessica Jacobson, Senior Manager, Financial Institutions, Water.org y Yanina Rumiche, Senior Program Manager, Latin America, Water.org

  • You do not need to be, or to hire, experts in water and sanitation to successfully develop and sell a product.
  • It is important to integrate this kind of loan into the institution’s overall product offerings.  Instead of pigeon-holing such lending, it is best to integrate it into the  institution’s portfolio, procedures and operations. Full backing from senior management is vital.
  • The most effective results come from working alongside local leaders in areas lacking proper water and sanitation and identifying other stakeholders who may be interested in sharing such messages within the community.
  • It is important to ensure the marketing strategy incorporates messages that resonate with the population.

Financiera Confianza has two key advantages that enabled it to roll out its WaterCredit product more swiftly: on the one hand, a large proportion of its branches are located in places other financial institutions cannot easily access, principally rural area. This allows it  to reach a population segment with less than 30% of its water and sanitation needs currently being met. The second advantage is the institution’s geolocation system for its clients addresses, which means it can make home visits to finetune the financial product according to recommendations from the clients.

We know that many financial institutions are deeply committed to providing funding for parts of society that have long been ignored by the banking industry.  Some have specialized in developing high-quality products tailored to the financial demands of these populations. Water.org has demonstrated over the last 10 years that microloans with for water and sanitation can help narrow the gap that prevents many clients from gaining access to quality drinking water and a decent bathroom in their homes. Furthermore, it can bring other benefits to the institution, including the ability to expand the number of new borrowers, increase the level of satisfaction and retention of their loan officers, and boost clients’ loyalty to the institution.