Supporting Safe and Clean Water with Microcredit Markets in India

Water.org

From 2006-2009, The PepsiCo Foundation committed $4.1 million to support Water.org’s MicroCredit Initiative in India. Through this program, PepsiCo Foundation seeks a market-based approach to the global water crisis by expanding the micro-loan market to individuals and families in India’s poorest urban slums.

Project objectives

  • Two-pronged approach to improve access to water and sanitation — reach 60,000 individuals through traditional WASH grants that support infrastructure projects; and reach an additional 60,000 people through micro-loans that allow individuals to take ownership over water and sanitation sources
  • Grow the commercial market for WASH microcredit loans and establish a revolving loan fund of more than $1 million for future WASH projects

Successes

  • Pilot projects for MicroCredit loans originated in India’s poorest urban slums in 2004; repayment rates have been successful and a new cycle of lending has begun
  • 7,000 micro loans have been made and over 90,000 individuals have benefitted from the market-based MicroCredit Initiative
  • Water and sanitation systems have been installed in more than 20,000 households

Challenges

  • Water infrastructure such as rainwater harvesting systems and boreholes are highly expensive, and even the implementation of metered water to a household can be costly. This makes water loans much bigger and more difficult to attain than traditional micro-loans
  • Borrowers need more time to repay loan and they are at higher risk of defaulting

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