UN Sustainable Development Goal (SDG) 6 is fully dedicated to ensuring access to water and sanitation for all. Globally, 2.1 billion people lack access to safe drinking water, while 4.5 billion people lack access to adequate sanitation. Besides a large negative impact on health, inadequate water supply results in large economic losses estimated at USD260 billion annually. Investing in WASH (Water, Sanitation and Hygiene) can also have important environmental impacts, reducing water pollution and waste production and, by improving access to clean water and providing better sanitation and hygiene for poor and marginalised populations, the projects can contribute to strengthen these populations' resilience to the adverse effects of climate change.
Despite opportunities for financial, social, and environmental return, the sector is still mainly supported by public funds, which are insufficient to meet its high and increasing demand. According to research of the Global Impact Investing Network (GIIN), only 7% of the USD 239 billion impact assets under management globally in 2020 were allocated to the WASH sector.
Many investors find it difficult to grow their WASH portfolio, because they lack clarity about the sector, how it works, and what they can get out of it. The e-MFP WASH Action Group was created in May 2021 to address key information/knowledge gaps in the water and sanitation sector, and to map and define water and sanitation indicators that can be widely used by different stakeholders in the financial inclusion sector, particularly by the investors in their decisions.
During 2021, the AG implemented a research study led by consultant Sachin Kumar aiming to build a shared understanding of water and sanitation value chains, terminology and best practices, to identify different types of WASH SME's and respective business models, and also identify pre-conceptions and barriers around water investments and counterarguments to tackle them. The results of this research have been shared through 3 publications launched in September 2022 – The Handbook on WASH for Impact Investors’ published in 2 parts and ‘A Brief Introduction to WASH for Impact Investors’ that summarises the main ideas and messages from the research and the Handbook (see Resources below).
Following the completion of the research, consultant Jeroen Trimpe Burger from the Rebel Group was recruited to support the WASH AG in in the development of a WASH indicators framework that can be used by social investors in their decisions and other stakeholders. In this process, both AG members and external stakeholders have been involved, and Jeroen has collected and analysed existing information to develop a list of initial indicators that can be found in the Resources section below.
Publication: WASH and Financial Inclusion: A Set of Indicators to Guide the Activities of Impact Investors in the WASH Sector, March 2023
EMW 2022 Panel session: Thinking out of the box: Blended finance solutions to promote WASH lending in Cambodia (presentation), (recording) , November 2022
Publication: A Brief Introduction to WASH for Impact Investors, September 2022
Publication: A Handbook on WASH for Impact Investors - Part I, September 2022
Publication: A Handbook on WASH for Impact Investors - Part II, September 2022
EMW 2021 Workshop session: WASH and financial inclusion (summary and recording) November 2021
EMW 2021 Case study session: Progress on WASH lending (summary and recording), November 2021
AG preparatory sessions:
EMW 2020 Panel session “Investing in Water and Sanitation”, November 2020
EMW 2020 Working session “Developing Indicators for water and Sanitation”, November 2020
Action Group Head
Alvaro Ma is the Impact Finance Manager at Aqua for All. He previously worked as Head of Credit Analysis at Oikocredit between 2016 and 2019, and as a Credit Officer and then Head of Planning at Prymera, a microfinance institution in Lima, Peru.
Alvaro is a Peruvian/Dutch national. He holds an MBA & MSc in Financial Management from the Rotterdam School of Management, Erasmus University.
Photo: Liz Martin via Unsplash