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Private sector financing of WASH sector critical

By: Ama Amankwah Baafi
Category:
Public Private Partnerships helps to provide WASH infrastructure to improve livelihoods.

 

Private sector participation in financing the Sanitation and Hygiene (WASH) sector has been identified as one of the ways to solve challenges in the sector. 

Experts say although the sector has a number of challenges, it also presents many opportunities which require all stakeholders to work together and not leave all on government alone. 

“The space is quite big, and we can all fit in while we attempt to address some of these challenges in our own small way. Creating the enabling environment for the private sector to invest or stimulate the private sector to work demands that we remove the key innovative hurdles,” the WASH Focal Person at SNV, Ms Agatha Quayson, said.  

Using some successful private sector interventions as basis, she said those projects had shown that social problems could be solved through commercially viable innovative ways. 

One of such projects, dubbed ‘P2P: Catalysing WASH from Possible to Profitable,’ is currently helping to address some of the financial needs of players in the sector and is yielding fruits. 

It is intended to scale-up access to finance and technical assistance for households and micro, small and medium enterprises (MSMEs) in Ghana.

The project, being funded by the Netherlands government to the tune of €4 million, is being implemented by the Netherlands Development Organisation (SNV) in collaboration with Fidelity Bank for six years (2020). 

She said the project came about after deliberations on how to move Ghana forward beyond aid by improving access to financing and enhance the capacity of WASH. 

She noted that Ghana had received a lot of funding when it came to WASH but still there was a lot to be done, and that the programme was currently in nine regions except the Upper West where they are making an intervention. 

“This project was to use purely private sector approach so it is not a project that somebody will put a list together to say that you qualify. Funding goes to Fidelity through to other non-bank financial institutions (29) and then to the households and smaller businesses,” she stated at a National Private Sector Engagement Forum on sustainable WASH for all. 

It was organised by the SNV Voice for Change Partnership Programme (V4C) on the theme: “Creating an Enabling Environment for Private Sector Participation in Sanitation Service Delivery.” 

WASH facts

Globally, about 36 per cent of the world’s population lack improved sanitation facilities, about 1.1 billion people have no access to good source of drinking water source and 1.6 million people die annually from diarrhoea diseases, including cholera. 

Fund performance    

Ms Quayson, who is also the Project Manager, P2P, said an amount of €2.6 million had been received, out of which of €1.8 million had been used and of €1.2 million recycled. 

In effect, a total of €3 million has been disbursed.                        

Data from the partner bank show that credit turnover is €16 million, collection rate at 93 per cent and they have just delays or non-performing of seven per cent. Portfolio quality is also very good. 

According to Ms Quayson, this indicates that the right thing is done by doing the right assessment and engaging stakeholders in the right way an investment in WASH can be very profitable because the sector is liquid.

“If you look at waste collectors, if you look at those who do toilet seat they hardly will come to the bank and say give me money to go and buy this, unlike other sectors they always receive money,” she explained. 

Meanwhile, 47 per cent of the €3 million have gone into sanitation, 14 per cent in health and 38 per cent in water. 

Lessons learned 

She said the above did not just happen, but they had to really make business cases to the financing chain and engaged the players. 

Also, it was difficult for several WASH businesses to make their businesses bankable to the banks, so a key component was to build their capacity and do regular sensitisation. 

“The posture of some financial assets sometimes overrides the social orientation of the project – sometimes when you go commercially viable solely, you also lose the developmental side, and so we should learn to blend,” she stated. 

Ms Quayson noted that enhancing capacity of SMEs had helped a lot, likewise identifying and forging strategic partnership. 

“In some cases, another project generates the demand and then we go in to fund. It is not only possible to invest in WASH, but it can also be profitable,” she added.   

Why invest in WASH                                                   

The Country Programme Coordinator of SNV, Mr Eric Banye, stated the need to address sanitation as a business, but not only a social one and that business must also be profitable for all the key actors along the value chain, and must be affordable and-accessible to all the people the services are being provided for.

He said the WASH component of the SNV V4C programme sought to bring an improvement in the responsiveness of duty bearers and the private sector to the demands of the communities. 

“Government alone cannot do it, neither the private sector. We want sanitation to be considered as a priority for all the assemblies and be able to create an enabling sector for all the private sector players to be able to participate fully,” he said. — GB