Microfinance for Water and Sanitation in West Africa

This paper focuses on the challenge of financing the expansion and maintenance of water and sanitation services in poor rural areas. The paper states that:

• In the water and sanitation sectors, governments, development agencies and non-government organizations (NGOs) are struggling with the need to expand service coverage into rural areas and recover costs;
• Funding limitations and inadequate cost-recovery rank as top future constraints to development;
• Innovative financing mechanisms can increase flows of local finance;
• These mechanisms need to be accessible to those who most need them;
• There is a need to identify capacities and support at the local level that can create the optimal conditions to implement these financing mechanisms;
• Microfinance is effective in this situation.

The paper describes studies that CREPA (Centre Régional pour lEau Potable et lAssainissement à faible coût) undertook in eight countries in West Africa to document experiences where microfinance was used for water and sanitation projects.

The studies focused on:

• The institutional, technical and socio-economic aspects of microfinance;
• Successes and threats of its use in the water and sanitation sector;
• Impacts of microfinance on the beneficiaries.

The paper concludes by listing the following lessons from the study:

• Microfinance mechanisms can increase and sustain water supply and sanitation to the poorest populations;
• Informed national policy on the incentives and regulatory environment can encourage increase in flows of local finance;
• Local stakeholders can play critical roles in influencing, adapting and using these mechanisms.