Water Microfinance

The New Door to Wealth in the Microfinance Community

Written by Brian Hicks
Posted June 23, 2010 at 8:00PM

What do Matt Damon and Bill Clinton have in common?

Founders of the non-profit organization Water.org, Damon and Clinton have fought to provide clean water for people all over the world. But they'll also be the first to admit that grants and charity offerings alone provide insufficient financial capital for solving their identified challenges.

That’s why Water.org recently created a subsidiary, WaterCredit, that uses microfinance loans to support water and sanitation (watsan) projects.

Stress on world water supplies — especially those in developing countries — is mounting at a rapid rate, implicating the challenge for regional and national governments.

It shouldn’t come as a surprise, however, that water and energy are intricately linked...

As long as fossil fuels maintain their artificially competitive edge within the energy industry, they will continue to exacerbate water scarcity through the inefficient consumption of our limited water supplies.

Although watsan organizations are not new, the use of micro-credit loans for watsan projects is — proving to be one of the new burgeoning developments in the international marketplace.

Lending nearly $1.6 million in Kenya, Bangladesh, and India, WaterCredit is proving not only its financial strength, but also the truth of its business model: create venues for impoverished people to create sustainable environments on their own.

More importantly, WaterCredit and businesses like it represent the ongoing development and growth of the microfinance sector.

And watsan projects are merely one of the lucrative directions that the microfinance industry is taking.

According to a comprehensive study by IRC International Water and Sanitation Centre, the water credit lending industry is poised for significant growth due to the growing demand for microfinance loans.

Microfinance is a particularly attractive option for impoverished individuals because the interest rates offered by firms like WaterCredit are significantly less than the terms offered by local loan sharks.

To get a concrete explanation of why microfinance loans are preferred, click here.