Building a Framework to Measure the Impact of Lending for Water, Sanitation and Hygiene (WASH)

The WASH Action Group of e-MFP Is Testing Draft Indicators with 4 Financial Services Providers

As financial inclusion stakeholders work to expand access to loans for clean water, sanitation and hygiene (WASH), they need to show funders that their past efforts have yielded results. Since 2021, an e-MFP Action Group has been developing a framework to do just that. The group is now in the process of testing a set of 12 WASH indicators and 44 sub-indicators in partnership with four financial services providers (FSPs).

The initial results have confirmed the viability of some indicators, such as the number of WASH loans disbursed, the portion allocated to SMEs, and the portion allocated to climate adaptation and mitigation. Meanwhile, other indicators have been adjusted (e.g. the number of loans supported by blended finance) or dropped (e.g. the increase in amount of clean water produced, because it was too difficult to measure reliably). Among the challenges that remain are how to train staff and adjust core banking systems to make data collection more efficient and produce results that are more consistent and comparable among FSPs.

The team participating in the effort includes a range of institutions, a few of which are described below.

Negros Women for Tomorrow Foundation has lent households the equivalent of USD 80 million for sanitation systems since 2013. Over that time, WASH loans have grown to become the NGO’s second most commonly disbursed loan type. To market the product, specialized WASH officers give presentations to 30 to 50 clients at a time, encouraging them to ask their loan officers to submit applications on their behalf.

Sidian Bank funds community water projects through its 49 branches in Kenya. Among the goals for each loan is for the lender to make a profit while the borrowers are able repay the loan, experience lower rates of illness and expend less effort to access the water they need every day.

Incofin Investment Management operates a dedicated water fund that has two placements, one in a water filter company in Central Africa and another in a waste-water management firm in India. Its goal is to improve access to WASH for 30 million people by 2030.

This content was presented at IF25, which is hosted by the e-MFP which has about 120 members, each of which supports the provision of financial services in lower income countries.