water for people's experience with microfinance for sanitation in malawi
DESCRIPTION
Presentation given by Gordon Mumbo at the East Africa region workshop on microfinance for sanitation. Water for People has initiated and implemented a microfinance project in Blantyre as part of their Sanitation as Business programme. The experience was built on a partnership with Opportunity Bank. The presentation shares the lessons for this experience.TRANSCRIPT
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CATALYZING A MARKET FOR SANITATION MICROFINANCE IN PERI-URBAN BLANTYRE
BY WATER FOR PEOPLE MALAWI
PRESENTED BY GORDON MUMBO
AT Water Aid East Africa Regional Workshop in
Dar Es SalaamTanzania
May 16 ,2014
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Some of the challenges before MFI
• Slow progress on scaling up Sanitation
• Poor latrine Quality• Entrepreneurs would
find customers start work but not completed due to lack of cash
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Malawi DataMap of Malawi showing Water For People EF districts and Thematic District WASH DATA
• Total Population : >16,800,000• Urban Population: : 15.7%• National Urbanization Rate:4.2%
• Per capita Income : US$ 900/year
• National Water Coverage :83%
• National Sanitation Coverage: 51%
• Hygiene coverage : 37%
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Population 16.8 million
GNI per capita $360
Loans $33.2m
Active borrowers 148,705
Deposits $39.4m
Depositors 488,881
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BLANTYRE URBANISATION CONTEXT
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• Pop ≈ 723 000
• Urbanization rate of 2.08%
per annum (≈ 2 people/hr)
• 70% live in high density,
unplanned slum dwellings
• 36000 households in need
of improved toilets
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Required Resources for the 36,000 house holds ???
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• 36,000 latrines x MWK 100,000 =
• MWK 3,600,000, 000.00
• USD 9, 000, 000.00
• € 6,923,076.92
• GBP 6,000,000.00
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Methodology
• Market assessment
• Partnered with Opportunity Bank in 2011
• Microcredit lending to low income households
• Used social group loan model – trust is the collateral
• 2%-5% default rate
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• Loan guarantee was offered to minimize default losses to the value USD 20, 000.00
• Interest rate kept at 2% per month
• 20% of the loan deposited with bank as collateral
• Group formation was also used as collateral
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Methodology: roles and responsibilities
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W4P OIBMMobilize communities into social loan groups X Conduct training of loan groups in group dynamics, loan repayment and leadership
X X
Issue the loans to households XFollow-up of loan payments XVerification of constructed latrines X
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SUCCESSES
• Small Scale Sanitation Entrepreneurs now able to sustain themselves without W4P support
• One Entrepreneur got an enterprise loan to boost His sanitation businesses
• 210 household sanitation loans were disbursed and latrines constructed
• Total loan amount = US$43,600• Loan guarantee to
OIBM=USD20,000• Please note that OIBM matched
with US$20,000
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SUCCESSES
Outside MFI Loans• 21 SANITATION Business
established• 1000 latrines emptied
by Sanitation Entrepreneurs
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Challenges/lessons
• One of the sanitation loans did not turned out to a latrine
• OIBM not willing to continue with the Program without the guarantee
• NGO (W4P) involvement contributed to defaults
• Limited technology options
• Cost to form and manage new lending groups should not be under estimated
• Local partner buy in is crucial
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Way Forward
• Explore New lending institutions TEECs MFI
• Savings and Credit Cooperative Organizations (SACCOs)
• Match Sanitation Products and Services with Technology Development.
• Lending institution should run the show.
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How will TEECS work differently
FunctionsCurrent Future
Who does? Who pays? Who will do? Who will pay?
Sanitation financing promotion Hygiene Village W4P TEECs TEECsFacilitate the formation of lending groups including documentation Hygiene Village W4P HHs / TEECs HHs / TEECs
Broker deal between bank & borrowers Hygiene Village W4P N/A N/A
Conduct loan group training Hygiene Village & OIBM W4P TEECs TEECs
Provide guarantee for sanitation loans W4P W4P Market-
drivenMarket-driven
Issue the loans to households OIBM OIBM TEECs TEECsManage household to builder payment Hygiene Village W4P Market-
drivenMarket-driven
Follow-up of loan payments OIBM OIBM TEECs TEECsVerification of constructed latrines W4P W4P TEECs TEECs
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Thank you for listening
• Please watch this video https://www.youtube.com/watch?v=DCH0FaVsu_c and(https://www.youtube.com/watch?v=lrIAnj5E-Yk)