Having access to a private bathroom with indoor plumbing is something most of us in the developed world don’t give a second thought to. But across the globe, women like Jayamma, a widowed mother of four in India, spend hours each day retrieving water or looking for a safe place to relieve themselves.
Before Jayamma obtained a loan to install a tap and toilet in her home, she and her daughters, along with other women in their village, used to have to defecate out in the open, often in fields where men working nearby would see them. They found the experience so humiliating and stressful, they would skip meals for up to three days, just to avoid relieving themselves in public. Finally, determined to improve her family’s life, Jayamma and several other women in her community joined forces and secured a microfinance loan through a water credit program developed by Water.org, a nonprofit founded by Gary White and actor Matt Damon that has been pioneering market-driven financial solutions to the global water crisis for more than 25 years.
To expand the reach of such loans, Water.org last year created WaterEquity, a social impact investment manager that in April launched a $50 million water credit investment fund, which aims to raise money from accredited investors in the U.S. The seven-year fund has a $500,000 minimum investment and a targeted pre-tax return of 3.5 percent. WaterEquity hopes to raise the $50 million by the end of this year and will deploy the capital over 18 months, says Alix Lebec, Water.org's director of business development and investor relations.
The fund will invest largely in local microfinance organizations (with 5 percent to 10 percent going to water and sanitation businesses) in India, Indonesia, Cambodia and the Philippines. This will enable them to serve at least 4.6 million people by providing small loans—the average size is roughly $230—to mostly women, who make up 93 percent of the borrowers. It builds on WaterEquity’s inaugural $11 million fund, which has already helped more than 100,000 people. Despite the fact that these families often earn only a few dollars a day, the loans have a stunning 99 percent repayment rate.
Women and girls are disproportionately affected by water scarcity, with the hours they spend fetching water and looking for safe places to serve as bathrooms replacing time that could be spent at work or school, not to mention other activities. “That time saved makes it possible for them to participate in income-generating opportunities so they are able to repay the loan,” says Lebec, who recently met Jayamma and conveyed her story to Private Wealth. “What we often hear from kids is now they have time to play.”
The global water crisis is huge, with 663 million people without safe drinking water and 2.4 billion without access to proper sanitation, according to the World Heath Organization and UNICEF. Impact investment proponents argue that, while charity remains critical, problems of this scale go beyond the capabilities of philanthropy. Moreover, Water.org is not the only organization that has found that a market-based approach to sanitation works better than giving toilets away for free. Sanitation NGO WaterSHED also requires payment for the latrines it provides.
“With a water credit loan, a household has made a decision that this is something important to them, this is something they need,” Lebec says. “They’re financially invested in getting a solution so it’s demand driven, not supply driven. We’ve found there is a $12 billion demand among these kinds of households for access to affordable loans to meet their water and sanitation needs.”
More information about Water.org and the fund is available at www.water.org and www.waterequity.org.