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Creating an Enabling Environment will take more than changing the rules- we have to change minds!

Lesley Pories, Manager, Sector Strategy, and Co-Chair, SWA High-Level Policy Dialogue Working Group
09 Oct 2020

As we within the SWA community prepare to host and engage the world’s Finance Ministers in a new, regional format, much attention is focused on what we think Finance Ministers should do differently that can assist in the shared goal of universal access to water and sanitation – with a new focus on responding to the global health crisis that has engulfed us all.

We focus on Ministers of Finance because we see them as ‘gatekeepers’ to The Rules – the financial policies and regulations that either allow and (hopefully) encourage private, commercial investment in the water sector or obstruct these critically-needed sources of capital from contributing to the solution.

While ensuring that the right set of rules is absolutely critical for more private finance to enter the water and sanitation space – which we all understand is necessary if we are to meet the ambitious goals of SDG 6.1 and 6.2 – a singular focus on government actors comes at the expense of the real target of our advocacy: private financial actors decide on whether or not to invest in water, sanitation and hygiene (WASH), and at what level.  

Think of this as the proverbial, ‘You can lead a horse to water, but you cannot make it drink’.  Policies play a major role in a financial actor’s assessment of risk versus reward. However,  the go/no-go choice ultimately resides with the financial sector player his or herself, and they arrive at their decision based on a set of factors – of which the financial rules at play are only a part.

Last year, colleagues and I co-wrote a paper, “Mobilising finance for WASH: Getting the foundation right.” This paper inspired the newly-issued SWA publication, “Water and sanitation: how to make public investment work – a handbook for Finance Ministers” that will be a part of the upcoming regional Finance Ministers’ Meetings.  In the Foundations paper, we outline the ten core issues that must be addressed in the water sector to attract and retain private investment.  Amongst other things, the paper observes “Helping the domestic finance suppliers – the investors – see the opportunities for financing WASH and how small adjustments to making transactions can improve the risk profile for these loans is an equally critical aspect of the enabling environment”.  The paper further recommends, “Some technical assistance should be targeted to helping commercial investors understand the WASH sector better. Improved understanding can help to build confidence in investing in this area”.

Many organizations committed to solving WASH challenges concentrate on helping government actors, particularly Finance Ministers, understand the sector.  Who is working to change the deep-seated perceptions maintained by commercial financiers – international and domestic – that the risk of investing in WASH [in emerging economies] is prohibitively high? Any person engaged in advocacy will tell you that policy changes happen slowly.  It bears remembering, though, that changing the deeply ingrained assumptions of an individual often happens just as slowly.’s experience has borne witness to the stubborn perseverance of outdated assumptions. We have been in the business of stimulating financial institutions to offer dedicated microloans for water and sanitation since 2004.  As of June 2020, partner financial institutions lent a total of $2.4 billion (of their own money, not ours) to low-income households across 12 countries, 99% of which has been repaid by those borrowers.  These numbers send a strong signal that, contrary to popular opinion, investments in the poor are not actually such a risky investment.  Yet many lenders remain skeptical about the ability of the poor to repay, even when confronted with this data.

We need both the Finance Ministers and the finance sector actors to change for our plan to succeed, so we should be working on both stakeholders now.

Addressing the foundational issues alone will not automatically result in an influx of private investment.  There need to be a set of brokers or middlemen who actively cultivate commercial investors – help them understand the nuances of our beloved sector as well as its potential.  Build their comfort with investing in a new space; craft the story about why they should be involved.   

We are those brokers.  

Let us work together and develop a strategy for educating the finance sector about WASH so that when we lead them to that water, they want to take a drink.