April Rinne : Watercredit



WaterCredit applies principles of micro-finance to the water and sanitation sector. By making small loans to individuals and communities in developing countries who do not have access to credit, WaterCredit empowers people to address their own water challenges.

WaterCredit fosters collaboration between the microfinance community and the water and sanitation (watsan) sector to scale up access to credit and capital for individual- and household-based watsan needs. Today 1.1 billion people lack access to clean water and over 2.5 billion do not have access to safe sanitation. For those in rural areas, water sources are often distant and/or contaminated. Urban slum dwellers have been found to pay, on average, 12 times more for a liter of water than those connected to municipal water supply systems. This lack of water security places a heavy burden on households. According to a 2006 estimate by the UN Human Development Report, the global annual cost in terms of lost productivity and health care due to lack of clean water and sanitation totals $38 billion.


Many among the urban and rural poor are willing to pay for clean water and sanitation, but they simply do not have the upfront capital to make the needed investments (often ranging from just $90—$250). Because credit for water and sanitation improvements is often seen as too risky, and historically has not been viewed as income generating, conventional lenders have not responded to this market with debt financing. Thus, the current financing models that dominate the water supply and sanitation sector rely almost exclusively on philanthropy and subsidies, which are insufficient to meet global need, less efficient to deploy, and not scalable over time. It is estimated that watsan sector investment must grow between $10 and $30 billion annually to cut in half the number of people without access to watsan as defined by the Millennium Development Goals.


WaterPartners International (which became Water.org in July 2009) created its WaterCredit initiative in 2003 to address the problems associated with traditional methods of financing watsan needs for the world’s poor. WaterCredit promotes partnerships with MFIs and watsan NGOs to catalyze the provision of small loans to impoverished individuals and households in developing countries that need safe water and sanitation products and services, but do not have access to traditional credit markets. WaterCredit does not provide direct funding for loan portfolios or related watsan “hardware”, but rather capitalizes on local resources and accelerates natural market processes by providing smart subsidy (grant) capital to fund the “software” costs of loan product development (e.g., market assessments, community mobilization, loan product structuring and piloting, education, training, etc.). By more effectively targeting its smart subsidies at the junctures where grant funding is most needed, WaterCredit’s approach ultimately serves more people much more quickly than traditional grant funding and also attracts additional social- and commercially-oriented capital into the sector.

“Water.org represents the first organization of its kind that has both deep watsan and microfinance expertise in-house. We’re about being a bridge between the water and sanitation sector and the financial and microfinancial sector. This is extremely exciting because these communities haven’t usually talked to each other—they speak different ‘languages’. Now that we’ve got them in the same room, we’re seeing that the potential power of their collaboration is tremendous. We’re finding that they can work together in very catalytic ways to empower people to address their own water needs.” —April Rinne, Director, WaterCredit
The average WaterCredit loan size is $148. For comparative purposes, in many places $100 can provide a water meter and hook-up, and $90 can provide a home with a toilet. To date, $1.8 million in WaterCredit loans have been disbursed to end borrowers. Since 2007, loan repayments from borrowers have averaged 98 percent. Approximately 90 percent of all WaterCredit borrowers are women.


WaterCredit’s goal is to bring microfinance to the water and sanitation sector in a way that achieves the impact necessary to reach to hundreds of millions who still lack access to safe water.  By leveraging natural market processes, they see this as a means for not only meeting global demands for safe water and proper sanitation, but also for lifting people out of poverty, improving health and productivity, and for empowering individuals and communities to take control of their own lives.

“We are growing WaterCredit globally in terms of breadth and depth of microfinance sector partners, countries, and financing models. A core WaterCredit objective is to launch programs in new countries in east and west Africa, Southeast Asia and Latin America in the coming years, and to expand our network of partner organizations and funding commitments accordingly.” —April Rinne, Director, WaterCredit
For this microlending model to be sustainable and scalable, WaterCredit must ultimately engage global capital markets to respond with scale-up and growth funding. In order to reach its goals for WaterCredit expansion, Water.org is attracting a blend of smart subsidy (grant) capital and leveraged social and commercial investment capital. The goal is to raise an additional $10 million in smart subsidy capital to enhance the more than $4 million already raised. They project that this combined $14 million could attract as much as $30 million in leveraged investment by the end of 2012 and a total of as much as $75 million by the end of 2014. As costs per beneficiary continue to decline, it is projected that this would enable over 7.5 million new WaterCredit beneficiaries to be reached.