The Dow Chemical Company will provide $30 million dollars of loan guarantees to support the financing of up to 2,000 community water systems provided by WaterHealth International (WHI).
WHI has been providing sustainable, low cost, community based water systems to rural villages in India for the past two years. The technical and economic viability of their model has been validated. To date, with the assistance of local NGO's to provide water and sanitation education, WHI has installed 100 systems. Communities are very supportive of this effort because they gain ownership of the water system after an initial loan is repaid.
The need for financing is slowing WHI's ability to bring water systems to more communities. Generally, communities pay 20-30% down payment and finance the remaining amount through local banks. This has proven to be a cumbersome and time consuming process. Dow's commitment will help to extend WHI's reach well beyond the current projections of 3,000 systems over the next five years.
Measures of Success:
Success will be measured by the number of people that have access to clean drinking water as a result of village water treatment systems financed through loans that have been guaranteed by this commitment. The size and number of systems can vary, but the target metric is to provide access to clean drinking water to more than 10 million people.
As governments, NGOs and business work together to address pressing needs of emerging economies, new and innovative business models become an integral part of success. While social entrepreneurs can gain insight into local needs and opportunities, they are often unable to access the resources needed to scale their businesses, and provide services to populations in need.
The inspiration for this project stems from WHI's need for added capital to scale their low-cost community based water systems. By facilitating access to capital through loan guarantees, many more communities will be reached. Lessons learned from this model could likely be leveraged into other start-up businesses facing similar financing constraints. The CGI provides an excellent forum to publicize the success of the WHI business model and encourage other companies and donors to take similar actions to increase capital sources available for community based solutions.
The project will be implemented within the current WHI business structure. WHI estimates that the guaranty would enable the funding of a few hundred water systems between the CGI Annual Meeting and March 2008, and the funding of up to a total of 2,000 water systems by March 2009. Thus, over the next year and a half, the loan guaranty would be instrumental in funding water systems to serve about 11 million people who currently lack access to affordable, potable water.
Anticipated Launch: 3Q 2007
First Milestone: 300 new system installations
Identify, install and implement 300 new water systems
Participants: WHI, Dow, local banks and NGOs