Unlocking Capital for the WASH Sector at Scale

This blog, originally published by MSC, builds on several years of work by the e-MFP WASH Action Group to strengthen impact measurement in WASH finance. Led by e-MFP and Aqua for All, the Action Group has worked with MSC since 2024 to test, refine and operationalise a harmonised WASH Impact Indicator Framework, including through pilots with financial service providers in Asia and Africa.

In the blog, MSC’s Rasika Chopra, Mansi Sharma and Sanika Sayali Talekar consider this work through the lens of a wider challenge for the sector: how to unlock private capital for WASH at scale. They argue that fragmented reporting, inconsistent indicators and limited evidence on investment performance and outcomes continue to constrain investor confidence.

Drawing on the Action Group’s work, they set out how a common, practical approach to impact measurement can reduce reporting burdens, improve comparability and provide investors with better evidence on where capital goes, how it performs and the outcomes it delivers. We’re pleased to be able to re-publish this excellent piece, and for the important partnership we continue to have with MSC.

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Unlocking Capital for the WASH Sector at Scale

Access to safe water, sanitation, and hygiene (WASH) remains one of the world's most persistent development challenges. According to the WHO–UNICEF Joint Monitoring Program (2025), 2.1 billion people still lack access to safe drinking water, 3.4 billion lack basic sanitation, and 1.7 billion lack basic hygiene. Closing these gaps by 2030 will require nearly tripling current investment, an additional USD 100 billion annually that public budgets cannot provide.

The shortfall is structural. Developing countries spend nearly USD 165 billion annually on water infrastructure. Of this, public finance accounts for 91%, private investment for less than 2%, and the remainder comes from tariffs, taxes, and transfers, including Official Development Assistance. Scaling up public expenditure is constrained by fiscal priorities, high debt, and the long payback cycles of WASH. Even within climate finance, WASH lags behind. Of the USD 1.9 trillion tracked in 2023, only USD 49 billion went to water and wastewater management. Mobilising private capital is therefore a necessity, not a convenience.

The sector stands at an inflection point. Impact investment in WASH grew 33% between 2015 and 2019, the fastest-growing sector tracked by the Global Impact Investing Network, and Development Finance Institutions such as International Finance Corporation (IFC), FMO, and DEG are co-investing with private partners across Asia and Africa. Yet capital flows remain modest. The constraint is not in appetite but in the evidence generated.

The Evidence Gap: How Fragmented Reporting is Holding WASH Investments Back

Credible impact measurement is essential for private capital to scale in WASH. Investors and development finance institutions rely on standardised metrics to assess portfolio performance, compare investments, and demonstrate results to their stakeholders.

The absence of a harmonised measurement framework means financial service providers (FSPs) face fragmented reporting requirements, leading to duplicated effort, reporting fatigue, and limited comparability across portfolios and geographies. While WASH benefits from well-established frameworks for service access and public expenditure, these were not designed to meet investor needs or assess investment performance. A review of existing monitoring tools identified four critical gaps that continue to constrain private capital mobilisation in the WASH sector:

• Track service-level and policy indicators, but capture limited data on private finance flows and loan performance to be useful for capital allocation decisions

• Require FSPs to track and report on indicators that sit outside their existing MIS systems, creating a reporting burden

• Measure outputs at the institutional or portfolio level but lack the granularity to attribute health, income, or service outcomes to individual clients or loans

• Leave each investor or framework to define their own indicators and methodology, leaving no common measurement language for comparing investments across portfolios and sectors.

  
  

Other sectors show what becomes possible when this is resolved. The Green Bond Principles helped grow the green finance market from under USD 1 billion in 2012 to over USD 500 billion annually within a decade, and harmonised reporting did the same for microfinance. WASH needs the same foundation – a common measurement language that gives investors confidence to commit capital at the scale the sector requires.

Closing the Evidence Gap: The e-MFP WASH Action Group impact Indicator Framework

The e-MFP WASH Action Group impact indicator framework was developed to address the gaps identified above. It is practical, grounded in global standards, and built for institutions in resource-constrained environments, with three goals:

• Reducing reporting burdens on FSPs

• Improving data comparability across portfolios

• Strengthening the link between finance deployed and outcomes generated

Grounded in internationally recognised standards, including the WHO/UNICEF Joint Monitoring Program, the UNICEF Global Framework for Urban Water, Sanitation and Hygiene, and WHO guidance on Water, Sanitation and Hygiene, the framework provides a consistent basis for measuring WASH investments across geographies.

The framework comprises eleven core indicators across four dimensions: financial, social, climate, and service levels. Financial metrics show how capital performed, while the remaining three reveal what that capital has changed on the ground. Together, they build the holistic evidence base that responsible investors need.

Each indicator is supported by sub-indicators, enabling disaggregation by borrower segment, enterprise size, gender, geography, WASH subsector, loan characteristics, climate contribution, and service levels. This level of granularity allows financial institutions to understand not only how much capital has been deployed, but also who it reaches, how it performs, and the outcomes it generates.

From Design to Reality: Pilot Testing and Operationalisation

The framework was developed in three phases. In Phase 1 (2022–2023), e-MFP and Aqua for All commissioned the financial advisory firm Rebel to develop the WASH Handbook and a draft indicator framework, establishing the conceptual foundation for standardised WASH impact measurement. In Phase 2 (2024), MSC evaluated the draft framework with asset managers, financial institutions, and WASH SMEs to assess its practicality and alignment with existing measurement practices.

Phase 3 focused on refining and operationalising the framework based on these findings. The framework was piloted with financial service providers (FSPs) across Asia and Africa and with data platforms to assess whether it could be embedded within existing institutional systems without creating an unsustainable reporting burden. The process involved mapping existing institutional data, reviewing MIS systems, and assessing data granularity to identify reporting capacity and gaps in WASH-related information.

Rather than creating parallel reporting structures, the pilot integrated missing data fields into existing MIS wherever feasible. Where FSPs lacked WASH or climate classifications, it explored tagging mechanisms and targeted system modifications that could be incorporated into routine reporting.

Figure 1: Classification of indicators by reporting effort and data collection method

The pilot also refined the original 16-indicator framework to 11 core indicators by retaining, redefining, merging, and dropping indicators based on operational feasibility and analytical relevance. To facilitate implementation, the framework is translated into a suite of practical tools, including an operational manual with standardised indicator definitions and reporting guidance, standardised MIS reporting templates for capturing portfolio and financial indicators consistently across institutions, and structured survey instruments with digital data collection tools for outcome indicators that are not captured through MIS. Indicators are classified as MIS-based or survey-based and further categorised by reporting effort as low (MIS-derived), moderate (survey-based), and high (requiring retrospective classification), enabling phased adoption based on institutional readiness. Together, these tools support integrating the framework into existing reporting systems while promoting consistent, comparable, and practical reporting of WASH outcomes across institutions.

Figure 2: Phases in the development of the WASH AG framework

The Road Ahead: From Framework to Ecosystem Adoption

The e-MFP WASH Action Group has built data architecture, tools, and guidance to make WASH impact measurement credible, comparable, and decision-useful. The pilot reinforced the critical lesson that impact measurement delivers value only when built into investment decision-making, not treated as a compliance afterthought.

Figure 3: Scaling adoption of the framework

The next step is ecosystem-wide adoption, with investors, financial service providers (FSPs), asset managers, and data platforms converging on a common reporting approach. Implementation should follow a phased pathway, integrating indicators into existing MIS while progressively expanding to survey-based outcome measurement. Establishing baseline values for social, climate, and service-level indicators will enable meaningful impact assessment over time. Periodic evaluations and framework reviews can further strengthen comparability, improve investment decisions, and mobilise greater private capital for the WASH sector.

With the framework now ready, what lies ahead is ecosystem-wide adoption, bringing investors, FSPs, and other stakeholders together around a common approach, and refining it continuously as field experience accumulates. The investment community holds the most leverage here, and with it, the responsibility to lead. Converging on shared impact metrics is a collective action that can reduce fragmentation, strengthen the sector’s evidence base, and unlock private capital at the scale required by the global water and sanitation crisis. The framework is ready, and so is the opportunity for the sector to move together and put it to work.