Scaling Up Access to Finance and Capacity Development in the Ghanaian WASH Sector

Catalyzing Water, Sanitation and Hygiene (WASH): From Possible to Profitable (P2P) seeks to improve access to finance and technical assistance for WASH investments and services.  A €4 million revolving fund is now accessible by households or house owners and Micro, Small and Medium Enterprises (MSMEs).

This five-year (2015-2019), nation-wide project is anticipated to reach households, MSMEs and MFIs in rural, peri-urban, and urban areas in all ten regions of Ghana. P2P is expected to reach 2,600 households with loans to access WASH services in urban areas. Loans will also be received by 200 micro-businesses, 350 small businesses, 300 medium businesses, and at least 7 large businesses. Agatha Quayson, the P2P project manager, said that 3.6 million Ghana Cedis have already been disbursed to 250 households and 88 enterprises, as of November 2016. These funds are used to finance projects in hygiene services, liquid and solid waste management, water provision, and household latrine construction.

Limited Access to Financing

This project was initiated because of the increasing difficulty private sector entities face within Ghana’s WASH sector to access finance from traditional financial institutions. Limited access to financing has resulted in weak links across the water and sanitation service and value chains. A 2014 study showed that there was a high need for finance by WASH MSMEs. However, only 53 percent of Ghanaian MSMEs surveyed were willing to source loans through existing commercial banks and microfinance institutions. This unwillingness was due to high interest rates and robust collateral requirements.

Private Sector Approach

P2P uses a private sector development approach to maximize value for money in the WASH sector. Financing for households and MSMEs will be provided through a revolving fund housed at Fidelity Bank Ghana Limited. To strengthen Fidelity Bank Limited’s ability to appraise WASH businesses for credit, a training was held with 94 Relationship Managers and Credit Officers. Fidelity Bank serves as a custodian and fund manager. The bank on-lends to WASH MSMEs and MFIs at an attractive interest rate. These MFIs are a conduit to reach households with loans, and also serve as the financial intermediary between households and Fidelity Bank.

This initiative will also provide technical assistance, enabling MSMEs to establish the technical structures required to obtain loans from financial institutions and adequately respond to the growing demand for WASH services among households. This technical assistance will be delivered through the P2P Business Academy. The curriculum will include general and WASH specific expert knowledge. Topics include financial management, human resources, marketing, strategic management, and environmental management. An on-demand knowledge sharing and skills building platform will also be available. After graduating from the P2P Academy, beneficiaries will be assigned a mentor to guide the practice of this acquired knowledge for six months.

P2P is funded by the Embassy of the Kingdom of the Netherlands. It is jointly implemented by the SNV Netherlands Development Organization, and Fidelity Bank Ghana Limited.