A woman from a slum in Tiruchirpalli City, Tamil Nadu, who identifies herself simply as “Mrs. Manonmani,” could only go to a nearby public water standpost once every four days to collect water for her family. The family of four would use up its ration of water well before the next scheduled pick-up, and Manonmani would often have to ask her neighbors for their excess water — when they had any.
She would haul large pots of water to and from the standpost, and scavenge in her neighborhood when the family grew desperate. The hunt for water was all-consuming; she had little time to spare for her children and husband, or for holding down a job.
Then, last summer, some workers from an NGO came to a women’s self-help group, of which Manonmani was a member, to talk about a new concept called “water credit.” Under the scheme, a U.S.-based grant-writing organization called WaterPartners would give a partial loan to help a community or a family build sanitation facilities and a connection to the municipal water supply. The program was designed for rural and urban slum dwellers who could afford the monthly fees for a water system, but not the large initial expenditure required to build one. Recipients of the water credits repay the loan, with interest, over a period of several years.
Manonmani explained the concept of water credit to her husband, and soon after, the family applied for and received their loan from Gramalaya, a water and sanitation non-profit group that was developing microfinance compatibilities with the help of WaterPartners. She now spends more time taking care of her children and home, she reported to WaterPartners. She has also started working as a tailor, which has created a steady flow of income for her family. Manonmani sells her surplus water to her neighbors, using the money earned to repay her water credit loan.
Nearly 600 low income families across India, and hundreds more in Kenya and Bangladesh have signed up for the loans, Sait Damodaran, India’s regional director for WaterPartners, told India-West. Water credits offer a compelling alternative to the “water mafia,” which many urban slum dwellers are forced to rely upon for their water. “Many people rely on this water, which has been stolen or contaminated,” he explained. “They really don’t know what they’re getting.”
Residents of urban slums often spend 25 percent or more of their income on water that is contaminated, WaterPartners communications director Steve Byers told India-West. They also often pay five to 10 times more for water from private vendors than middle-class residents who have access to municipal water supply systems.
Byers also noted that, because slum dwellers are not uniformly poor, the usual, grant-driven water projects often result in those with greater resources not sharing in the capital costs of projects. What ends up happening is that many communities that can afford to pay for projects get them for free, while millions of extremely poor people go unserved.
“We have a unique condition where these typical poor laborers, who make USD 100 a month, are spending more than the rich on their water,” Damodaran told India-West. “Individual families need to connect to the system, and that costs USD 200 to 300. The poor can’t afford it. In Bangalore, people hook up illegally to the water system — if the government finds out, they’ll be disconnected.”
Those who choose other channels for their water must navigate a sea of loan sharks and dubious water salesmen. “We have heard horror stories of people who have been charged as much as 60 percent interest for their loans,” Damodaran told India-West. “It showed us how great the need was. Through water credit, these same people could get loans with 18 percent interest.”
The government does provide some free water connections for slum dwellers, but it can’t do it for everybody, Damodaran said. Local municipal water and waste systems usually welcome water credit programs into their areas because they stand to gain income from the monthly usage fees each new family would have to pay. “They can’t provide free connection to everyone,” he told India-West. “So they are very receptive to our program. It’s better for people to become paying customers than non-paying.”
WaterPartners workers with eight partner non-profit groups, including two microfinance institutions, to provide water and sanitation in rural and urban communities in Andhra Pradesh, Karnataka, Madhya Pradesh, Orissa, Tamil Nadu and in Delhi. It launched the water credit program by distributing $1 million, donated by the Michael and Susan Dell Foundation, to its partner organizations.
“Applying microfinance to the water and sanitation sector is a revolutionary concept,” Damodaran told India-West. “We started doing this three years ago, and the overall repayment rate has been 80 percent, and Gramalaya has a repayment rate of 100 percent. It’s still small-scale right now, but we’re trying to refine it, and trying to determine what factors affect repayment rates.”