science

Microcredit for water supply and sanitation

Microcredit for water supply and sanitation is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Microcredit for water supply and sanitation rather than just read about it. In short: Microcredit for water supply and sanitation is the application of microcredit to provide loans to small enterprises and households in order to increase access to an improved water source and sanitation in developing countries. For background, most investments in water supply and sanitation infrastructure are financed by the public sector, but investment levels have been insufficient to achieve universal access.

Key takeaways

Microcredit for water supply and sanitation belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Microcredit for water supply and sanitation to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Microcredit for water supply and sanitation from memory before moving on to harder problems.

Reference excerpt

Microcredit for water supply and sanitation is the application of microcredit to provide loans to small enterprises and households in order to increase access to an improved water source and sanitation in developing countries. For background, most investments in water supply and sanitation infrastructure are financed by the public sector, but investment levels have been insufficient to achieve universal access. Commercial credit to public utilities was limited by low tariffs and insufficient cost-recovery. Microcredits are a complementary or alternative approach to allow the poor to gain access to water supply and sanitation in the aforementioned regions. Funding is allocated either to small-scale independent water-providers who generate an income stream from selling water, or to households in order to finance house connections, plumbing installations, or on-site sanitation such as latrines. Many microfinance institutions have only limited experience with financing investments in water supply and sanitation. While there have been many pilot projects in both urban and rural areas, only a small number of these have been expanded. A water connection can significantly lower a family's water expenditures, if it previously had to rely on water vendors, allowing cost-savings to repay the credit. The time previously required to physically fetch water can be put to income-generating purposes, and investments in sanitation provide health benefits that can also translate into increased income.

Types There are three broad types of microcredit products in the water sector:

Microcredits aiming to improve access to water supply and sanitation at the household level. Credits for small and medium enterprises for small water-supply investments. Credits to upgrade urban services and shared facilities in low-income areas.

Household credits Microcredits can be targeted specifically at water and sanitation, or general-purpose microcredits may be used for this purpose. Such use is typically to finance household water and sewerage connections, bathrooms, toilets, pit latrines, rainwater harvesting tanks or water purifiers. The loans are generally US$30–250 with a tenure of less than three years. Microfinance institutions, such as Grameen Bank, the Vietnam Bank for Social Policies, and numerous microfinance institutions in India and Kenya, offer credits to individuals for water and sanitation facilities. Non-government organisations (NGOs) that are not microfinance institutions, such as Dustha Shasthya Kendra (DSK) in Bangladesh or Community Integrated Development Initiatives in Uganda, also provide credits for water supply and sanitation. The potential market size is considered huge in both rural and urban areas and some of these water and sanitation schemes have achieved a significant scale. Nevertheless, compared to the microfinance institution's overall size, they still play a minor role. In 1999, all microfinance institutions in Bangladesh and more recently in Vietnam had reached only about 9 percent and 2.4 percent of rural households respectively. In either country, water and sanitation amounts to less than two percent of the microfinance institution's total portfolio. However, borrowers for water supply and sanitation comprised 30 percent of total borrowers for Grameen Bank and 10 percent of total borrowers from Vietnam Bank for Social Policies. For instance, the water and sanitation portfolio of the Indian microfinance institution SEWA Bank comprised 15 percent of all loans provided in the city of Admedabad over a period of five years.

Examples

WaterCredit The US-based NGO Water.org, through its WaterCredit initiative, had since 2003 supported microfinance institutions and NGOs in India, Bangladesh, Kenya and Uganda in providing microcredit for water supply and sanitation. As of 2011, it had helped its 13 partner organisations to make 51,000 credits. The organisation claimed a 97% repayment rate and stated that 90% of its borrowers were women. WaterCredit did not subsidise interest rates and typically did not make microcredits directly. Instead, it connected microfinance institutions with water and sanitation NGOs to develop water and sanitation microcredits, including through market assessments and capacity-building. Only in exceptional cases did it provide guarantees, standing letters of credit or the initial capital to establish a revolving fund managed by an NGO that was not previously engaged in microcredit.

Indonesia Since 2003 Bank Rakyat Indonesia financed water connections with the water utility PDAM through microcredits with support from the USAID Environmental Services Program. According to an impact assessment conducted in 2005, the program helped the utility to increase its customer base by 40% which reduced its costs per cubic meter of water sold by 42% and reduced its non-revenue water from 56.5% in 2002 to 36% percent at the end of 2004.

… excerpt ends here. Continue reading the full article.

Worked examples

Example 1 — a first encounter with Microcredit for water supply and sanitation

Start with the simplest possible case. Write down what Microcredit for water supply and sanitation claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Microcredit for water supply and sanitation before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Microcredit for water supply and sanitation ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Microcredit for water supply and sanitation

In research: Microcredit for water supply and sanitation appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Microcredit for water supply and sanitation in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Microcredit for water supply and sanitation is common in secondary-school and first-year university syllabi. It links to neighbouring topics Microfinance, Sanitation, Water supply, so understanding it makes those chapters shorter.
In everyday life: Look for Microcredit for water supply and sanitation outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Microcredit for water supply and sanitation in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Microcredit for water supply and sanitation means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Microcredit for water supply and sanitation out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Microcredit for water supply and sanitation in simple terms?

Why does Microcredit for water supply and sanitation matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Microcredit for water supply and sanitation?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Microcredit for water supply and sanitation.