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Sanitation markets The role of microfinance to support access to sanitation

Sanitation markets The role of microfinance to support access to sanitation Sophie Trémolet , DFID, 19 th November. Why focus on microfinance? Demand from practitioners How can access to sanitation be increased?

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Sanitation markets The role of microfinance to support access to sanitation

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  1. Sanitation markets • The role of microfinance to support access to sanitation • Sophie Trémolet, DFID, 19th November

  2. Why focus on microfinance? • Demand from practitioners • How can access to sanitation be increased? • Typical sanitation support programme focuses on software support but with no or limited support for access to finance • Gap in research: SHARE research consortium “Sanitation markets pathfinder” • Examines why sanitation markets work or fail alongside value chain • RCT finding in Indonesia: “access to credit” is key limiting factor

  3. SHARE research activities • Call A: Initial mapping • Is there demand and supply of sanitation microfinance services • Who are key players in the sector? • What do we currently know? • Call B: Case study research • India: evaluate existing experiences • Tanzania: experience review and evaluation of market potential • Tanzania research fund • Action research with selected institutions

  4. Key findings • Limited development overall but difficult to track due to lack of data • Growing market in India • 146,000 sanitation loans identified enabling 730,000 people to build toilets • Very high repayment rates (98%) • Most successful if developed by existing MFIs • Some NGOs successful at developing microfinance branch (Gramalaya / Guardian) with support from water.org or Dutch funding (FINISH project)

  5. Market potential (e.g. in Tanzania) • But MFIs / commercial banks not familiar with sanitation markets so not willing to take the risk

  6. Research into use • Donors have a key role to play • Incorporate microfinance as part of broader sanitation programmes • Channel support to MFIs (or NGOs) • Market evaluation, product and system development • Initial capital for revolving funds, potentially combined with subsidies to reduce initial borrowing costs • Interest for donors • Improved targeting of limited subsidies • Higher leveraging of their investment

  7. For more information • See: • http://www.shareresearch.org/Page/Detail/markets • http://www.tremolet.com/focus-area/266 (sanitation financing)

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