Our CEO, Valentin Post, led an engaging session on blended finance for WASH at All Systems Connect on Wednesday, the 3rd of May. The session explored how to leverage public and development finance to harness commercial finance and scale-up sanitation service provision. It also focused on how blended finance fits in the overall financial landscape for sanitation and the key role played by intermediaries.
Valentin Post first presented some numbers on estimated demand for sanitation financing in 2030 and the corresponding market size. He touched on the difficulties in calculating market sizes in the absence of clear-cut estimates, but insisted that this problem could be mitigated by taking a more bottom-up approach. He also spoke about the barriers to finance for sanitation. While finance is indeed available, it is not necessarily flowing to the sanitation sector. Among the cited reasons is a lingering perception that sanitation is a risky sector, a need for further professionalisation of sanitation entrepreneurs and a lack of data. The current market for blended sanitation financing is still a small market of less than 10 million USD. If properly organised, this could grow to 1 billion USD.
Currently, most financing is coming from microfinance institutions, like Saccos, banks, government, grants etc. With such a huge potential for scaling and a need to bridge the gap between stakeholders, the role of intermediaries, like FINISH Mondial, USAID and similar organisations, will become increasingly important, as pointed out by our CEO.
The session also presented several case studies from Bangladesh by Simavi, initiatives in blended finance in East Africa by USAID, the sanitation impact bonds spearheaded by FINISH Mondial and several initiatives by Water for people in Rwanda. It also offered some context and showed how perceptions around sanitation had evolved over the years, notably in Africa where governments used to undervalue the benefits of on-site sanitation systems, preferring off-site systems supported by sewer connections, and how this has changed in recent years, with increased buy-in for on-site services. FINISH Mondial provided evidence from a pilot in India (evaluated by a third party) that clearly shows how impact financing becomes a viable option when committed partners come together and are supported by technical assistance and an evaluation and monitoring strategy.
Participants asked many interesting questions, notably about de-risking sanitation portfolios, especially when governments and other organisations implement competing programmes in the same location. We were thrilled to host such an interesting and engaging session and are looking forward to the next edition of All Systems Connect!