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.

1. 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 Salaam
Tanzania
May 16 ,2014

3. 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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4. Malawi Data
Map 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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5. 5
Population 16.8 million
GNI per capita $360
Loans $33.2m
Active borrowers 148,705
Deposits $39.4m
Depositors 488,881

6. 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

7. 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

8. 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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9. 9
• 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

10. Methodology: roles and responsibilities
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W4P OIBM
Mobilize 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
X
Follow-up of loan payments
X
Verification of constructed latrines
X

11. 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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12. SUCCESSES
Outside MFI Loans
• 21 SANITATION Business
established
• 1000 latrines emptied
by Sanitation
Entrepreneurs
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13. 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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14. 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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15. How will TEECS work differently
Functions
Current Future
Who does? Who pays? Who will do? Who will
pay?
Sanitation financing promotion Hygiene Village W4P TEECs TEECs
Facilitate 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-
driven
Market-
driven
Issue the loans to households OIBM OIBM TEECs TEECs
Manage household to builder
payment
Hygiene Village W4P
Market-
driven
Market-
driven
Follow-up of loan payments OIBM OIBM TEECs TEECs
Verification of constructed latrines W4P W4P TEECs TEECs
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16. Thank you for listening
• Please watch this video https://www.youtube.com
/watch?v=DCH0FaVsu_c
and
(https://www.youtube.co
m/watch?v=lrIAnj5E-Yk)
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