A little money goes a long way

A little money goes a long way

Years ago, I went inside an urban slum for the first time in my life. It was to see how improved water and sanitation facilities were affecting the lives of the dwellers. A group of women came up to me and proudly showed their bank pass books. It was a soul-stirring and deeply moving moment. The women had saved small amounts in the range of US$20 to US$30. That was my first introduction to micro-credit.

Today, we all know that the idea of small loans to the very poor was first popularised in Bangladesh in 1976. The Grameen Bank, spearheaded by Muhammed Yunus adopted a strategy of creating a solidarity group of five or so borrowers who could vouch for each others’ loans.

Bringing the concept of micro-credit to water and sanitation was not so easy. The high capital investment needed for this sector and the long terms for repayment of loans had ensured that there was just no business case for micro-credit.

However, many success stories later, development agencies have begun to understand the tremendous potential of microcredit in delivering water and sanitation to poor communities. Typically, loans are offered to poor households, community-based organisations and self-help groups, with a preference given to women. Sometimes the groups offer labour as in building their own toilets. The money is returned over a period of one or two years.

Revolving funds, where the loans, after being returned, are lent out again for the same purpose, are being used successfully by many communities to build latrines.

Of course, there are defaulters because once a water or sanitation facility is built, people might use their income for other purposes rather than returning the loans. However, the key is to have an effective training programme for communities so that they understand the need to ensure financial sustainability of programmes. Such trainings have had good impact as can be seen in projects in Africa, Nepal and India. It is important to use appropriate and affordable technology.

The life of the women I met at the slums in Gwalior and later in other towns had changed dramatically after their savings helped them to get safe water and sanitation. Since they did not need to travel long distances to fetch water or to defaecate in the open, they had more time and energy to set up small businesses. They felt empowered.

Though donors are pledging more money for micro-credit programmes, there are many millions without toilets and clean water. Safe water and sanitation for all is still only a dream.

But as Professor Yunus says “When tiny, tiny things start happening a million times, it becomes a large thing.”  May his wish come true.

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