In the race to achieve the Millennium Development Goals (MDGs), the role of small-scale WATSAN (water and sanitation) providers is indispensable. However, as this report "Small-scale finance for water and sanitation" claims, there is little awareness or cohesion among external support sgencies (ESAs), including EU donors, on the best way to increase financing for small-scale providers.
In one of the report’s findings, households in developing countries invest more than donors or governments in water and sanitation services, but these investments are often 'sub-optimal' because of limited access to finance. WATSAN entrepreneurs, although they provide critical services particularly for the poor, often find that their financing needs fall in the 'missing middle' (estimated roughly at between USD 2000 and USD 100,000). Limited access to financing is a key obstacle for small-scale finance recipients to deliver sustainable services.
The objective of the report is to identify ways in which governments and ESAs can increase access to finance for small-scale WATSAN providers by channelling public funding to support the market and
leverage private sector financing. The ultimate objective in doing so is to increase access to services for poor households.
The report has been developed as part of a component of the work programme of the European Union Water Initiative – Finance Working Group (EUWI-FWG), which looks at enhancing the role of the private sector in WATSAN and how EU donors can provide strategic support.