Investing in clean water

Drinking water polluted with human faeces takes a heartbreaking toll, but can be avoided.
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Besides facilitating people to solve their own water and sanitation needs, using finance effectively stretches aid dollars to reach people living in absolute poverty.
99 per cent: repayment rate on loans for household water and sanitation.

There are women we work with who wait for hours to answer the call of nature. They can "go" on the edge of their village, on the river, or on the train tracks. Open defecation leads to all kinds of problems. Think of the health impacts of not defecating all day when you need to, and the safety issues of going out at night. Think of the potential for contamination.

Globally 2.3 billion people lack access to a toilet. At a time when technology can instantly connect people across the globe, when more people have cellphones than toilets, we have nearly a billion people defecating in the open. Flies breeding on faeces deliver infectious organisms back to humans by contaminating food and water.

The health toll is enormous and heart-breaking. Nearly 1 million people die every year from a water, sanitation, and hygiene-related disease. Diarrhoea is one of the top three leading causes of child death. Those that survive have compromised digestive systems that fail properly to absorb nutrients, causing permanent stunting. In India alone, 39 per cent of children under the age of 5 were stunted in 2016: some 10-year-old children are the size of the average 3-year-old.

Lack of sanitation is a large factor in the lack of safe drinking water. Water polluted by human and animal waste is often the only source available for people living in urban slums or rural communities far from infrastructure that isolates drinking water from contaminants. Currently 884 million people live without access to safely managed water. It is difficult to comprehend, given that we have known how to solve water and sanitation pollution issues like this for over 100 years.

So, what is in the way? For many people, like those living under $4 a day, it is simple economics. They cannot afford the upfront costs to construct a toilet, tap into a water line, or build a rainwater harvesting and storage unit. People pay for their water daily through purchasing from vendors, walking to water sources of dubious quality, waiting in long lines for water at a community tap that may or may not turn on. They pay in direct medical costs for treatment of disease caused by drinking unsafe water. These costs are enormous, but are paid a little at a time; eating away at the resources of a family and keeping them trapped in a cycle of poverty.

There is a solution and it is found at the center of the problem. For the past 14 years, – the organization we co-founded – has executed a financial innovation called WaterCredit with great success. Working with 79 active partners in 10 developing countries, we have reached 8.4 million people with safe water and sanitation solutions. The upfront cost, an average of $311, is given in the form of a microloan and payments are made through recaptured costs and, sometimes, through an increase in income – the time saved from collecting water or finding a place to defecate is turned into time to earn money. We have issued 1.9 million loans to date – with a 99 per cent repayment rate.

WaterCredit is proven, it is scalable, and we are actively sharing our practices with others to encourage further mobilization of capital for clean water and sanitation.
Besides facilitating people to solve their own water and sanitation needs, using finance effectively stretches charity and aid dollars to reach those people living in absolute poverty (under $1 a day).

The needs of some 565 million people could be met in this way and we have chosen to lead in mobilizing the capital needed. WaterEquity – a social impact investment fund and a innovation – unlocks affordable social investment capital to help finance institutions and other enterprises to scale up their water and sanitation efforts to meet this market demand. It provides subsidies and technical assistance to finance institutions to help them launch loan portfolios. The loans enable the world’s poor to pay for a connection to a water source or install a toilet in their homes.

There is a global perception that the water and sanitation crisis can only be solved through charities digging wells and installing toilets. But there is simply not enough charity and aid to meet the need. If we change the perception of the poor being a problem that can only be solved through charity, we can tap into the power of finance to solve this water and sanitation crisis by 2030.