1. Role of Microfinance in Sanitation in Bangladesh Babar Kabir, PhD Tanzeba Ambereen Huq

2. Introduction WSS coverage in Bangladesh Source: UNDP 2006, JMP 2006, SDNP 2005, UNICEF Bangladesh 2006 Coverage1990200020052006 Safe water 85.2%97%74% 74% 1 Sanitation21% 41% 2 39% 3 39% [1] reduced due to arsenic contamination [2] includes non water seal latrine [3] fixed defecation is considered by GOB as latrinization coverage which is 84% in 2006

3. Microfinance Micro-finance refers the micro-credit loan provided to the poor people without collateral to improve their economical condition and to bring them into the mainstream of development to achieve the MDG goals. Micro-finance refers the micro-credit loan provided to the poor people without collateral to improve their economical condition and to bring them into the mainstream of development to achieve the MDG goals. BRAC is one of the largest global providers of financial services for the poor by following credit plus approach. By December 2007, we were serving 7.37 million poor, landless and disadvantaged people, mostly women. so far BRAC has disbursed USD 4.6 billion with a 99.5% recovery rate.

4. Micro-Finance in sanitation Demand creation for services, hygiene promotion and education coupled with integrated water, sanitation and hygiene messages and motivation of communities are the primary objectives of WASH. Demand creation for services, hygiene promotion and education coupled with integrated water, sanitation and hygiene messages and motivation of communities are the primary objectives of WASH. WASH pioneered the provision of micro loans to private sector entrepreneurs in Bangladesh WASH pioneered the provision of micro loans to private sector entrepreneurs in Bangladesh WASH provides micro loans to enable the poor install safe water and sanitation facilities at their homes. WASH provides micro loans to enable the poor install safe water and sanitation facilities at their homes.

5. Context BRAC WASH is working in 150 sub-districts consisting of 1546 unions with an integrated approach to provide improved water and sanitation facilities with good hygienic practice to more than 38 million people. BRAC WASH is working in 150 sub-districts consisting of 1546 unions with an integrated approach to provide improved water and sanitation facilities with good hygienic practice to more than 38 million people. WASH provided micro loans to poor families to install latrines at their homes. Loan amount equivalent to US$ 1.45 million. WASH provided 122,356 micro loans to poor families to install latrines at their homes. Loan amount equivalent to US$ 1.45 million. WASH provided entrepreneurs to set up rural sanitation centers in 150 working sub- districts (Dec 2008). Loan amount is equivalent to US$ 0.25 million WASH provided 1714 entrepreneurs to set up rural sanitation centers in 150 working sub- districts (Dec 2008). Loan amount is equivalent to US$ 0.25 million

6. Loan to develop entrepreneurs

7. Aimed to ensure proper sanitation, Hygienic practice for the rural poor.

8. Demand creation in W & S Sector

9. Lessons learned No perceived return on taking loan for sanitation. Social mobilization is therefore a must. Transaction, interest rate is at times cumbersome. To provide subsidy and ensure safety nets would be one of the key challenges. There is no precise perception on the necessities of a sanitary latrine by the community. There is no tangible outcome to see. Water & sanitation does not provide an income, as such people are reluctant to invest by taking loans for services. Health benefits are difficult to explain to people for living on cents ; not even $1 /day.

10. If full recovery is to be made, it should include soft cost (social mobilization) then repayment becomes difficult. Hardware costs can be recovered fully. If full recovery is to be made, it should include soft cost (social mobilization) then repayment becomes difficult. Hardware costs can be recovered fully. High transaction costs for very small micro loans High transaction costs for very small micro loans Challenges Our experience indicates that it is not possible to recover entire loan costs for WS&H. e.g. if a loan of taka 1000 is provided, then the recovery of taka 1000+680)=1680 Tk with interest becomes difficult + 680 Tk for administrative cost (average/year) Loan (Irrespective of loan size) Recovery Loan + TK 680 + service charge

11. Thank you