Gramalaya - Tiruchirappalli. Highlights of the Regional Workshop on Microfinance for Sanitation

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1 Gramalaya - Tiruchirappalli Highlights of the Regional Workshop on Microfinance for Sanitation New trends and Emerging Opportunities 22 24, January, Tiruchirappalli, South India Supported by the Ministry of Drinking Water and Sanitation, Government of India, New Delhi and co-sponsored by UNICEF, Chennai and Water.org, USA Gramalaya NGO with more than 25 years of experience in the sanitation sector, organized the Regional workshop on Microfinance for Sanitation during 22 nd - 24 th, January, 2013 at Tiruchirappalli City, Tamil Nadu. This workshop was organized with the financial support from the Ministry of Drinking Water and Sanitation, Government of India, New Delhi as a part of KRC programs by Gramalaya. UNICEF, Chennai and Water.org, USA co-sponsored this workshop through financial contributions. National-level, Water and Sanitation promoting NGOs like Arghyam, WSSCC India WASH Forum, Milaap, Guardian MFI and MFI national-level networking organizations like MFIN and consultancy organizations like Monitor Deloitte and MicroSave, Lucknow were part of the collaborating organizations. The workshop showcased various sanitation promotion models through loan funds implemented by the MFIs, NGOs and explored the possibilities of utilizing Nirmal Bharath Abhiyan Revolving Loan Funds, NABARD Revolving Loan Fund to increase the coverage and usage of latrines in the rural areas. Speakers from Government, leading Microfinance Institutions, NGOs working for sanitation who have experimented the sanitation loans as a viable model for replication and scaling up will shared their experiences in this workshop. The workshop has resulted in more insights and strategies to promote sanitation, thereby increasing the toilets coverage in the rural areas through microfinance as a means of solution and as an alternative model for subsidy-led promotion. Key highlights of the workshop and recommendations : Sanitation is a major global issue with over 1Bn people defecating in the open, and 2.7Mn dying annually due to lack of access to hygienic sanitation, including many children. The issue is acute in India - of all the people in the world who defecate in the open, a majority (600Mn) live in India; and of all the people who live in India, more than half 1

2 defecate in the open - 67% of rural Indian households (116Mn households) do not have toilets. The Government of India recognizes this issue and has approved funding of over INR 20,000 crores (USD 4 Bn), but less than 60% of these funds have been used. Contrary to popular belief, demand for toilets exists in rural India - 84% of households surveyed in Bihar indicated their desire for a toilet and 38% of these households had actually researched available product options. Safety of women, convenience, and privacy, and not health are key drivers - in fact less than 1% cited health as a key driver for wanting a toilet. Our research and the experience of various organizations indicate that it would be possible to construct and deliver quality, long-lasting leach pit toilet options at a price of INR 7,000-10,000 (USD 140 to 200), by making judicious design choices like twin leach-pit toilets with toilet alone and a bathroom attached toilet with little extra cost. However, availability of a more reasonably priced product by itself may not be sufficient to drive significant toilet penetration, due to low incomes and irregular income patterns in rural areas. Financing of 70% of the cost, through 18 to 24 month loans at 24% interest rates and monthly payments of INR 250 to 500, would enable 16 to 20% of households without a toilet to afford one. A further 40-45% would be able to afford a toilet if provided part subsidy (e.g., the current government NBA subsidy of INR 4,600 or USD 92). The remaining 35 to 40% would require a full subsidy (e.g., as provided by Government schemes such as NREGS). This could lead to a INR Bn (USD Bn) opportunity to deliver toilets, and an INR Bn (USD 6-9 Bn) opportunity for financing. The multiple business models to deliver such toilets can be broadly classified into a Do It Yourself (DIY) model and a Turnkey Solution Provider (TSP) model, each with its advantages. In both models, a central player or 'market maker' could help by conducting marketbuilding activities to get the models started, and create an enabling environment for growth; organizations such as NGOs, MFIs and cement companies can play this role. MFIs, in particular, can play a key role. Apart from customer financing, MFIs can act as enablers, helping raise awareness and drive demand for specific products (through pamphlets, etc.), and maybe even perform quality control and mason training, incubate new value chain players, etc. The Government is a key player and can facilitate development of the sanitation market by developing cost-effective standard designs, funding demand generation, ensuring efficient transfer of subsidy, and helping financing companies access lower-cost funds for on-lending. 2

3 Scale pilots are currently underway through PSI in Bihar, MFIs like Grameen Koota and Guardian, a sister organization of Gramalaya NGO in the south and players like Water.org enabling other organizations to give credit. The workshop recommended for NGO MFI Alliance for promoting Sanitation coverage in the rural areas. The NGO MFI alliance will enable more investments from social investors to deploy additional required funds to accelerate toilet coverage in India including the support of nationalized banks and quasi-government funds like NABARD, SIDBI and CSR funds of corporate. Further the workshop, recommended for forming a national-level network of NGOs, MFIs and financial institutions, donors and research organizations to achieve the sanitation target within a specified time period. The detailed report of the workshop is under preparation. More than 20 papers were presented at the workshop including a field visit on the third day organized to the successfully demonstrated toilet models constructed with 100% loans to the villages nearby Tiruchirappalli wherein 100% loan repayment was performed by the families. More than 93 participants all over India participated at the workshop including the Government officials from three Southern States like Karnataka, Andhra Pradesh and Tamil Nadu. Contact phone numbers : S.Damodaran, Founder, Gramalaya sdamodaran63@gmail.com M.Elangovan, Executie Director, Gramalaya gramalaya@hotmail.com Workshop website page : For details on Gramalaya : 3

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