Water for the Poor: What the Private Sector Can Do

Local Indian residents in a west New Delhi slum use  a broken water pipe to bathe. In a city of 16 million people, one-quarter of New Delhi residents have no access to piped water. (Robert Nickelsberg/Getty Images)
Local Indian residents in a west New Delhi slum use a broken water pipe to bathe. In a city of 16 million people, one-quarter of New Delhi residents have no access to piped water. (Robert Nickelsberg/Getty Images)

NEW YORK, June 3, 2009 – In recent years, the inability or unwillingness of governments around the developing world to address the water crisis in their countries has led to the founding of several organizations that aim to provide affordable water solutions to the underprivileged. Can these newer organizations use microfinance to bridge the gap between water scarcity and equity, and the costs of acquiring clean water?

A recent panel discussion at Asia Society headquarters moderated by Nicola Armacost, managing director and co-founder of Arc Finance, brought together leaders in the microfinance domain who have been active in proposing water solutions for the poor. Paul Sathianathan, executive director of Gramalaya Urban and Rural Development Initiatives (GUARDIAN), highlighted the time and financial constrains faced by low-income families in securing clean water. India's government, he explained, provides a water supply system, but "collecting water is the main problem…[since water supply] is not adequate for their consumption, [low-income families]…wait for one or two hours [for a] meager 5-10 pots of water from the collection points," he said.

There is a strong case for extending credit to those at the bottom of the pyramid. "People are already paying a credible amount of money for their water purposes, particularly people in urban slums. They are paying in time and in terms of cash…[The] ironic part is that subsidies that [are] going into water and sanitation [are] captured by the middle-class with connections to the utility and they don't pay the real cost of water. The poor who can't connect to the utilities pay the market price or even greater because of the inefficiencies [of the subsidy system]," argued Gary White, executive director and co-founder of WaterPartners International. His organization's vision, White said, is to work for the "day when everyone in the world can take a safe drink of water."

But governments must also work towards this goal, stressed the panel. "Government has to meet the social cost of certain things," said Joe Madiath, founder and executive director, Gram Vikas. "Water and sanitation are one of the urgent..[issues] where democratic governments, like the Indian government, [have] to address…and move away from the paradigm that the poor need poor solutions. The poor need optimal solutions."

The struggle in developing nations is not just providing water and making it affordable but insuring that the water is potable. Gender roles is another issue in South Asia, where women are entrusted with securing water for the household which means that they must do so without compromising the time spent educating and feeding the families.

While a lot of social good is achieved by different organizations, more linkages must be made within the philanthropic sphere for microfinance to reach its full potential in empowering underprivileged societies. Often the optimal solutions are the most obvious rather than being the most ground-breaking. "Fundamentally, it is all about sustainability. We need to fund things that work, that we are not going to..[have to contribute towards forever]," maintained Claire Lyons, a manager at the PepsiCo Foundation. In order to create sustainable impact, corporations must make social investments that complement their business goals. "People trying to meet the water needs of the world are... [perceiving the problem from a charity perspective]. If we help turn their charity into a more sustainable investment to serve more people", said Kurt Soderlund, CEO, Safe Water Network, we would succeed in leaving a sustainable, positive impact on the underprivileged.

Reported by Chandani Punia