1. Blended Finance Experiences with Bangladesh OBA Sanitation Microfinance Program

2. Bangladesh access to sanitation
Access to sanitation has improved dramatically in the last 30 years
1% open defecation
Source: WHO/UNICEF Joint Monitoring Programme

3. Challenges
…However, reaching the next level of coverage and meeting the SDG 6 target requires a significant increase in efforts and a more ambitious strategy
Households with access to hygienic sanitation
37%
Households relying on shared latrines
26%
Annual growth rate for improved sanitation (2.5% needed to reach SDGs) 1%
Many existing toilets are poorly constructed, risking contamination to the environment and the user

4. Moving households up the sanitation ladder
…To here?
How can Bangladesh move from here…

5. World Bank (WSP) initiative
Test and roll-out of a new model in rural Bangladesh that brings together the domestic private sector, financial institutions (MFIs) and households to support bottom-up sanitation mobility of rural households
Specialized loan products
New sanitation technologies considering consumer preferences
Business loans + training for local construction firms
Demand creation + market promotion

6. Sanitation microfinance model
HOUSEHOLDS
CONSTRUCTION FIRMS
MICROFINANCE INSTITUTIONS

7. Introducing Output-Based Aid (OBA) to the model
How to improve household affordability and leverage MFI participation?
$3 million OBA grant 
21 Partner Organizations (MFIs)
$22 million in MFI lending for sanitation
32 districts
170,000 households

8. How it works Financing terms: Households: Interest: 12.5% (fixed rate)3
Sanitation loan
Loan repayment
PKSF
Hygienic Latrines for poor households
World Bank 4
Payment (latrine construction)
Partner Organizations
Wholesale
lending
OBA subsidy 2 7
Local construction firms
Bangladesh Ministry of Finance
OBA subsidy and implementation support grant 6 5
Grant
Independent Verification Agent (IVA)
Fees for services 8 1
Repayment 9
Financing terms:
Households:
Interest: 12.5% (fixed rate)
Loan size: US$45 – 128
Tenure: 12 months

9. Achievements (to date)
21 MFIs working in 32 districts
16,500 loans disbursed and hygienic toilets installed ($2.1 million in lending)
100% household repayment rate
Over $391,000 in SME loans for construction firms
Clients benefitting from competitive market price, payments in installments, and OBA subsidy
New MFI investments in the sector

10. Potential national scale-up: Bangladesh WASH Program
Ministry of Finance has requested WBG financing
to expand project in support of SDG 6
Potential Components
Inclusive sanitation in select areas
Exclusive focus on improved sanitation in 64 sub-districts, combining subsidy (for extreme poor) with household loans for sanitation
Nationwide lending for water and sanitation
Household loans for water and sanitation scaled nationwide, targeting both credit group members and non-members
Market development
Expanding work on financing and capacity building of local private sector to support development of a sustainable supply chain for rural sanitation (with additional pilots on water) 1 2 3

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