Microfinance for Water and Sanitation: An Example of Client-Focused Innovation

Did you know that more people in the world have a mobile phone than a toilet? Did you know that a third of humanity does not have access to adequate sanitation? Did you know that over a billion people do not have access to safe water? It’s hard to imagine how the world would look if fewer people had trouble securing their water supply. It would probably translate into a drastic global increase in productivity.

The prospect is tantalizing, the challenge colossal. Yet, satisfying results remain frustratingly elusive. Microfinance has often been seen has key to making a global difference by reaching people on an individual basis. Surprisingly, the microfinance world has long struggled to find an elegant solution to water supply challenges. Admittedly, numerous wells have been drilled but, more often than not, lack of funding for maintenance and skill training has entailed the short to medium term failure of the effort. Now, a new microfinance organization is taking a shot at a new model of delivering efficiently targeted funding to ensure long lasting results. Water.org has launched an initiative called WaterCredit that plans on tackling the problem of water access by focusing on the related bottleneck that is access to water.

What‘s interesting, and innovative with the WaterCredit model is that Water.org doesn’t simply handout one-shot grants but builds a portfolio of initiatives. These initiatives are funded provided they result in a simultaneous increase in infrastructure, local know-how and overall capacity. The model is having tremendous success and now boasts over 57,000 loans distributed by 24 WaterCredit partners in four countries in Asia and Africa. The WaterCredit model is actually lighting the path to a new idea of microfinance, instilled with ideas of eco-sustainability that may very well be the future.

Sustainable Finance: The Indian Way

Modern finance is often seen as a cold, heartless and faceless machine, manipulating billions with complex formulas, as if they were only abstract numbers and, overall, caring little about the very real consequences that the ups and downs of the financial markets can have on the rest of the economy. Similarly, when the corporate giants of finance are mentioned, India is generally not the first place that comes to mind. However, finance in India is a thriving sector that may have much to teach the rest of the world.

In a recent article, Financial Times correspondent David Gait explores the many faces and idiosyncrasies of Indian finance. He distinguishes three defining features special to the country’s financial culture, which could probably benefit the rest of the world. The first one is Dharma, the idea that man is responsible for maintaining the regulatory order of the universe. Dharma may be interpreted as ‘duty’, a concept arguably rare in other financial cultures. Secondly, David Gait identifies how corporate governance has become integral to financial culture in India. Whether in companies with poor governance, such as Satyam Computer, or in companies that take good governance to heart, Indian business leaders have a very clear idea of the importance of social, environmental responsibility and governance for business. According to Gait, the most financially successful Indian firms are the ones that have embraced sustainable developments by systematically innovating to provide affordable, efficient and environmentally friendly products.

All in all, David Gait’s insight into India’s financial culture shows how religious and philosophical ideas have come to mesh with real-world business sense and practical realities to form a very peculiar brand of financial culture. In a fascinating way, the best and worst of India’s industry have helped build a culture that is intent on succeeding as well as respectful of others. India’s financial sector demonstrates a culture of consensus and sustainability that is showing promising results in a world dominated by the pressure for short-term results at any cost. Let’s hope it makes more converts across the world.