Rokeya and Tahasina Begum (shown here with DSK community health promoter, Shadona) stand proudly in front of the new, clean toilet they built with a loan from Water 1st and our Bangladesh partner, DSK.
The loan program helps Water 1st and DSK reach more people in need of safe water and toilets; repaid loan funds are used to begin additional water and toilet projects. In 2009, paid back loans helped Water 1st and DSK finance additional projects benefitting 2,400 people with safe water in the urban squatter settlements of Dhaka and Chittagong City, Bangladesh.
The beneficiaries of our water and toilet loan program in Bangladesh's urban slums of Dhaka and Chittagong have a 98% loan repayment rate. That's a rate any lender would envy. But these loans were made to the poorest people in the world, who value safe water and toilets so greatly they will pay for them.
Besides leveraging funds to pay the capital costs of additional water points and toilets, there are additional benefits to the loan program. People participating in the loan program are proud that their loan repayments will be used to help a neighbor finance a new toilet or water point. This financial investment on the part of our project participants also tells us that they place a high value on improving their water supply and gives us a greater assurance that a project will be well-maintained. (More details on how the loan program works can be found at the end of this blog.)
It is estimated that 90% of people living in the slums of Dhaka and Chittagong lack legal access to the public water system and do not have a hygienic toilet. Hanging latrines, which deposit waste directly into open waterways, are a common feature of the slums and are extremely unhygienic. The results of life in these filthy and sub-human environments are not surprising: over 325,000 children die each year in Bangladesh.
Poor people value safe water and toilets
What may have the greatest long term effect is the FACT that extremely poor people DO repay loans for access to water and sanitation. Not only do these people who live on less than $1 per day repay the loans for the infrastructure, they reliably pay the monthly user fees. Many governments do not extend these services to the poor. The excuse that is widely accepted by the international community is that the beneficiaries are too poor to pay for the services. Extending the services is viewed as an additional drain on government resources that are already stretched thin. The data our partner has collected for water and sanitation services completely refutes this commonly held assumption. It should be revolutionary information that gets the attention of the UN, World Bank, and every donor nation on earth.
Water 1st is incredibly proud of our compassionate and brilliant partner organizations, like DSK, who have so much to teach the world about effectively combating the scourge of extreme poverty.
Bathing in clean water is now possible in the Madbar slum of Dhaka, Bangladesh, through our innovative loan program.
Details on how our Bangladesh loan program with DSK works: During our first three years of project implementation with DSK (2006-2008), 5,269,830 Bangladeshi Taka (that’s the local currency, about $78,000) was spent to construct 322 water systems and toilets. Including the interest owed, the total recoverable amount equaled 6,323,796 Taka.
What happened to that money? The answer is: Wow! DSK recovered 98% of loan on schedule. As of the end of fourth year, December 2009, they had recovered a total of 5,464,803, which because of the small 10% interest charge, is actually nearly 4% more than the total amount given out in loans. Over two-thirds, or 222 of the 322 loans, have been repaid in full. Over the course of 2010, DSK expects to recover most of the outstanding loan balance of 858,993 Taka.
The repaid loan money went into an account that DSK designated for future Water 1st projects. In 2009, Water 1st’s contract with DSK covered $209,256 worth of work. $132,000 of the funding came from Water 1st in the form of a new grant. The remaining $77,256 came from the recovered loan fund generated by our previous projects. So we were able to do roughly 50% more work than we had new funding to cover. That translates to roughly an additional 2,400 water beneficiaries. That’s a powerful result. In 2010, the revolving loan fund accounts for $87,110 of the overall budget of $287,110, or 30.3%.
