This presentation by Fred Smiet of the Netherlands Ministry of Foreign Affairs, discusses the preliminary findings from a micro-finance project aimed to boost water, sanitation and hygiene (WASH) services for households and institutions in Ghana. It was presented at the IRC WASH Debate "Blended finance: Is it all in a mix?" jointly organised with NWP on 4 December 2018 in The Hague, the Netherlands. The five-year project, which started in 2015, is funded by the Netherlands Embassy in Ghana and implemented by SNV and the Fidelity Bank. The main financial instrument is subsidy on interest, lowering rates from 30% to 10-17%, reducing risks for lenders and borrowers. So far a 93% repayment rate has been achieved.

1. Catalyzing WASH: From
Possible to Profitable;
An Overview
By Fred Smiet IGG/Ministry of Foreign
Affairs, The Hague
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2. Introduction
• P2P: The five year project commenced in 2015 with funding from
EKN and implemented by SNV in partnership with the Ghanaian
Fidelity Bank;
• Fits DGIS “WASH Strategy 2016 –2030”;
• Budget of 6 million Euro; 4 for the fund, 2 for technical assistance;
• The project aims to increase access to WASH services by providing
loans and technical assistance to financial institutions, MSME’s and
households; to accelerate private sector involvement in WASH;
• Main financial instrument is Subsidy on Interest, lowering rates from
30 to 10 – 17%: reduced risks for lenders and borrowers;
• Main approach is to use routine lending procedures;
• Financial risks of NPL’s and exchange rate borne by SNV/Fidelity.
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3. Objectives of the Project
Develop innovative lending
products for households and
MSMEs in the WASH Sector.
Establish and manage a revolving
fund to sustain loan options.
Collaborate with other WASH
stakeholders, e.g. UNICEF.
Improve sustainability and
viability of WASH service
delivery.
₵
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4. Financing Model
Micro Finance Institutions
Clients: Households &
institutionsMicro businesses
Small & Medium Sized Businesses
10% 10%
17%
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5. Financing Model & Products
Dealer Financing
General WASH Loan
Institutional WASH Financing
For Household latrine construction
For WASH services and products, including waste
For Educational & Health Institutions
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6. 576
Households
233
MSMEs
12
Health/Educational
Inst.
Progress to date.
EUR 3M (GHC 17.2 M) disbursed across the country since 2016
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7. Progress to date..
132
businesses now equipped with
vital financial & managerial skills
429
Staff of partner financial institutions
trained on WASH financing
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8. Loan Disbursements
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PORTFOLIO HIGHLIGHTS
AVG LOAN SIZE Ghs130k
BORROWERS 92
AVG TENURE 19 months
AVG INT RATE 10% p.a.
PROGRESS CHART GHS EUR
ITD APPROVED 18,168 3,255
ITD DISBURSED
REPAYMENT
17,212
8,907
3,083
1,596
PIPELINE DEALS 6,801 1,218
TOTAL FUNDS PROVIDED: Eur 2.6m
EXCHANGE RATE: 5.5820

9. Repayment Trend
Repayment Rate since start
93%

10. Non-Performing Loans
Business
failure
Weak
monitoring
structures
in some
MFIs
Cash flow
problems
Write off until present – GHS401K

11. Lessons Learnt
• Subsidy on interest is a simple and pragmatic tool to provide access to finance for MSME’s in
the WASH sector, enhancing private sector engagement in WASH service delivery; this
market develops rapidly in cities;
• Using routine financial assessment tools like due diligence and risk appraisal allows for a
minimum of non-performing loans;
• The role of SNV to provide advice, capacity building and demand creation for WASH services
is essential to get going: targeting bank and MFI staff, MSME’s and households;
• The ODA funding leveraged an in-kind contribution from Fidelity Bank, estimated at a value of
1.5 million Euro; incentives for the bank: lowering the risk to access a new and developing
market, ahead of the competition.
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