As you may know from our previous reports, the project to promote improved sanitation solutions through micro-credits in Cochabamba has been advancing, but the number of people who finally obtained these micro-credits were below our expectations. We analyzed the situation at several moments and continuously improved our model - and at two moments our local micro-finance partner as well - but the results kept being somewhat disappointing.
Our analysis of the experience as a whole led to the identification of the major obstacles:
- Many families living in peri-urban areas rent their house and thus are not entitled to change infrastructure, and the landlords often are not present or not interested in investing in improvements in sanitation.
- Sanitation seems to be a low priority of families in peri-urban areas - in spite of the fact that in urban areas of Bolivia, only 35% of the population has access to improved sanitation facilities. When offered a flexible micro-credit, many families decided to invest in building a wall for their lot in order to increase security.
- The market conditions for credits have been changing drastically in Bolivia over the past few years. As an example, one of the leading micro-credit institutions decided to raise the minimum amount for micro-credits to $ 2,000 - which by many standards no longer is considered a micro-credit.
All these factors led to few cases of micro-credits given to families, in spite of training and informing thousands of families. Therefore, the costs of promotion are very high in comparison to the number of credit approvals, and if we wanted to recover some of these costs through the micro-credits, the interest rates would have to be very high. As we have a clear mandate to improve water and sanitation conditions of low-income households, we consider that we need to be able to offer conditions which are significantly better than the commercial micro-credits, which is not possible at the moment. As a conclusion, we decided to suspend promotion activities for the moment.
However, we do not give up on the idea of improving sanitation conditions through micro-credits. The need for adequate water and sanitation solutions in Bolivia continues to be enormous, and the social and economic benefits of these solutions are very significant. We think that the model we have developed and tested is good, and so are our local and international partners. We now need to find a way to finance our promotional costs before we can launch a next phase of this project. Please stay tuned to this platform (or to the institutional website of the SODIS Foundation: www.fundacionsodis.org) and keep looking for the latest developments regarding this project.
In the meantime, you can also support our other projects, for example a project to improve water and sanitation conditions (without micro-credit) in 40 schools. Each donation made as a gift to someone will generate an additional $5 until May 15, so please consider making use of this opportunity (Mother's Day is approaching).
Best regards from the whole project team,
This is a short update on our project to facilitate micro-credits to low-income families in Cochabamba (Bolivia). Throughout 2012, the project reached the following milestones:
This means that 29 families – more than 200 people - have significantly improved their lives. The families who access credit really do improve their living conditions and are very satisfied with the services provided by the project. Throughout the year, we realized that it makes sense to combine improvements in sanitation conditions with general improvement of the houses, which provides additional benefits. As an example, the picture above shows Martha Zurita, one of the clients of our project, in the middle of the construction work for her new toilet/bathroom. Thanks to the micro-credit provided by the project, she now has access to decent sanitary facilities, which improved health and wellbeing of her whole family of six.
In spite of these success stories, the numbers also show that we are going at a slow rate – in a city of some estimated 600,000 inhabitants, thousands of families are still without basic sanitary services. Therefore, the challenge at hand is formidable: Based on our experience, out of 100 families who participate in our information sessions, 6 show up at one of the offices of our micro-credit partner institution and 3 comply with all the conditions to access credit. This means that the costs of promotion are high, and we need to find better ways to cover these costs.
It also is important to point out that so far, credit failure rate is below 1%, which even on a micro-credit standard is a very good value and shows that the model of the project is working. Thus, we are looking forward to new progress and additional families accessing credit for improving their housing and sanitation conditions in 2013.
Please feel free to provide us feedback on the project and our reporting. Our mission is to continuously improve the water and sanitation conditions of people most in need, and you can help us doing this by letting us know what you think about this project and the report.
Wednesday, October 17 is another Bonus Day. This means that all donations we receive that day will be matched by 30% by the Global Giving Foundation. This is an excellent opportunity to make your donation have an even bigger impact than usual, enabling additional families in Bolivia to access a micro-credit for water and sanitation improvements.
As we have reported earlier, the project keeps pushing ahead. Due to its nature, the project is advancing family by family, and even though we want to reach our goal of 100 credits approved by the end of the year, we are also aware that more important than than the number of credits is the change this projects brings about: families who have accessed credit are now able to store drinking water in large, safe tanks and do have water available all the time - previously, they were storing water in used (!) oil barrels, and because water is delivered only every 3-4 days by the tanker trucks, there were many days when there was no water at all. In this situation, a safe water tank makes a huge difference, not only for the wellbeing of the families, but also for health: where water is short in supply, basic hygiene tasks such as washing hands become a major challenge and frecuency of diarrheas and other waterborne diseases increase rapidly.
In the meantime, we keep promoting the micro-credits in peri-urban areas of Cochabamba and some surrounding small towns. One of the key obstacles for poor people to access credit are the security requirements: One needs to be land owner or have a long-term renting contract - both things are very unusual in informal settlements. Our micro-finance partner (EMPRENDER) is offering alternative securities (paid electricity bills, for example), and currently, we are also evaluating the possibility of giving credit to groups of people - experience has shown that this is a viable alternative which has considerable potential.
We will keep informing you about further developments of our project. Please take advantage of the opportunity of Bonus Day (October 17) and pass on the word to other people who may be interested in supporting our work.
With a big "Thank You" from the whole project team,
This is a short up-date from the field from the project to provide families in Bolivia with micro-credits for water and sanitation improvements.
Both in numbers and in processes, the project is now getting to speed - after a long phase of institutional negotiations and trials of different models, we can now focus on the promotion of the micro-credits. Since May, $6,000 in credits have been disbursed to nine families, and further $18,000 are in the process of technical and financial evaluation (by the way: the donations we receive through GlobalGiving are not used for the credits but for the promotional and educational activities of the SODIS Foundation). And here is another important number: 0% of credit defaults...
However, the project is not only about numbers, it is also - and most importantly - about people. For example Edgar Anagua and Felicia Crespo, a young couple who lives in the peri-urban zone of Cochabamba. For many years, they lived without a bathroom or toilet, which is quite a common situation in this area where the water distributions network (or the sewer, for that matter) does not exist yet. Edgar and Felicia were aware of the importance of basic sanitary installations and previously had inquired with local banks, but their requirements for micro-credit were all to stringent. Thus, when they heard of our project they immediately contacted us, and within a few days the credit was approved. For $1,500, they were able to buy a big water tank and construct the bathroom including a toilet and a shower (see pictures).
Today, they have their own toilet and they can even take a shower - which is not only a luxury in this area but really increases quality of live. Among other things, they noted that their children are much healthier, which also brings about savings and productivity gains for the parents. As Edgar Anagua points out: "This micro-credits are a great opportunity to improve our lives. This experience also taught me to be more responsible, to work hard and to be serious about my dreams".
For us, this is just one of many examples where we witness how the project is making a big difference in lives of families. And like Edgar and Felicia, there are thousands of people who need an opportunity to improve their living conditions - not by free give-aways but by their own work. Because micro-credit and sanitation are not only about survival, but also about something we sometimes forget: dignity.
We just quickly wanted to let you know that June 13th is a Bonus Day - this means that donations to our project will be matched by additional 50% on this day. This makes your donation even more effective and helps us to reach out to even more families every day.
Meanwhile, our project keeps going ahead, changing the project area one family at the time. For example the family of Pastora Perez, who is dedicated to pig breeding. Pastora Perez approached our micro-finance partner because her water and sanitary installation were in a dire state and she wanted to change this. After forming a group with four more neighbours, she was able to access a credit of 1,000 dollars in order to install a water tank and to improve her toilet. Within a short time, her living conditions have changed completely: not only can the whole family now take a shower and drink clean water, but having an improved toilet also means that they have recovered some dignity. Sometimes, this is just as important as the services provided by the project. Pastora Perez is very satisfied with her investment, because the water tanks allows her to save a lot of time which she now can dedicate to more productive activities than carrying water.
Please feel free to give us feedback about the project and this report. What kind of information would you like to receive? If you think this is an important project, please pass on the word to friends and family. And why not make a small donation on June 13th and take advantage of the unique opportunity that someone else will add 50% of your donation? We are thankful for every donation, no matter the amount.
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Combined with other sources of funding, this project raised enough money to fund the outlined activities and is no longer accepting donations.
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