Loan to Support Leading Micro Finance Institution Focusing on Clean Water and Sanitation Loans in India
Mumbai, India, November 30, 2011 – Acumen Fund, a recognized pioneer of impact investing celebrating its tenth year of working to create a world beyond poverty, today announced an investment in GUARDIAN (Gramalaya Urban And Rural Development Initiatives And Network). The four-year-old organisation is the world’s first microfinance institution (MFI) engaged in microlending to communities that lack access to individual water and sanitation facilities. GUARDIAN operates in the communities in and around urban and peri-urban Tiruchirapalli (Trichy), Tamil Nadu.
“Ten years after our first investment, Acumen Fund remains committed to India’s future,” said Jacqueline Novogratz, CEO, Acumen Fund. “Although access to clean water and adequate sanitation is not yet a reality for many impoverished communities, organizations like GUARDIAN with their innovative financial solutions give us hope that we can create sustainable models to provide access to safe water and sanitation for all.”
Over 2.5 billion people suffer from a lack of access to improved sanitation globally. According to a report released by the World Health Organization in 2008, seventy-five percent of India’s surface water is contaminated by human and agricultural waste and industrial effluent. This contaminated water supply results in life-threatening illness. Additionally, lost productivity and other consequences of unsanitary water and inadequate sewage treatment can have a significant negative effect on GDP.
“Our investment in GUARDIAN is exciting for Acumen Fund because it is our first venture into the ‘water credit’ space, and our first investment in sanitation in India,” said Meghna Rao, Country Director of Acumen Fund India. “Our support of GUARDIAN gives us a unique opportunity to examine the consumer behaviour and attitudes towards sanitation, and from a broader perspective, develop a deeper knowledge base for utilizing microfinance as a tool to help poor households begin to build assets.”
The $1 million USD loan that Acumen Fund is providing would play a critical role in helping GUARDIAN build its portfolio and transition from a partially grant-funded NGO to a fully self-sustaining MFI. At the same time, it would support a scale-up of a potentially path-breaking model for increasing the coverage of water and sanitation solutions in poor communities. GUARDIAN currently offers micro-loans for the purchase of water and sanitation assets at the household level: connections to municipal water supply, toilet construction, rainwater harvesting equipment, and household water purifiers. It lends to members of existing women’s self-help groups, each with up to fifteen members, and to five-member joint-liability groups that they help form. The loans range between Rs. 3,000 and Rs. 10,000 ($65–215) per individual with repayment made in equal monthly instalments over eighteen months.
About GUARDIAN
GUARDIAN was founded by social entrepreneur, Dr. Paul Sathianathan, who also serves as the organisation’s Chief Executive Officer. Dr. Sathianathan worked in the Indian government for over two decades before he joined the NGO Gramalaya. With the support of a $240,000 grant from Water.org, Gramalaya spun out the water credit program into GUARDIAN. While GUARDIAN currently only lends for water and sanitation purposes, the organisation is actively exploring a diversification of its loan product portfolio as a way to retain customers that have already successfully repaid water or sanitation loans.
Welcoming the Acumen Fund investment, Dr. Sathianathan said, ”Ensuring safe water alone will not be adequate if people do not have appropriate sanitation facilities or develop good hygienic practices, as diseases can not only be spread through the contamination of water, but through other means. Hence, let us work for the promotion of safe water and sanitation.”
About Acumen Fund:
Acumen Fund is a pioneering not-for-profit venture fund that is changing how the world addresses poverty. Acumen Fund invests patient capital in business models that deliver critical, affordable goods and services to the world’s poor, improving the lives of millions. Since its founding in 2001, Acumen Fund has invested more than $70 million in 63 companies that provide access to water, health, energy, housing and agriculture inputs to low-income consumers in South Asia and Africa. For more information on Acumen Fund’s activities and investments, visit http://www.acumenfund.org and http://www.acumenfundblog.org.
Acumen Fund in India:
Acumen Fund has been investing in India since 2001, focusing on a wide range of sustainable, scalable businesses that use market-based approaches to deliver products and services to millions of rural and urban poor. Investments made by Acumen Fund India in local enterprises include high-quality maternal and pediatric healthcare services; safe water for consumption and livelihood; and clean energy. Leveraging strong relationships with local academic institutions and businesses as well as the global Acumen Fund network, Acumen Fund India is actively exploring further investments in healthcare services, as well as potential investments in housing, agriculture and energy services.
Tags: GUARDIAN, India, Investee News, sanitation, water