Millions of people in third-world countries are living each day in deplorable conditions, without even the most basic necessities of life such as food, water and sanitation systems. The inadequate safety and reliability of the water supply and the absence of sanitation facilities are the chief areas of concern for international relief agencies, as the lack of these two vital services leads to disease and death.

While local governments and NGOs grapple with the question of how to provide access to clean water for drinking and washing, a goal that World Bank officials say would require $114 billion a year, trillions of dollars are flowing out of these nations each year due to poor fiscal management, lack of business skills, crime and corruption. Clamping down on criminal activity, such as money laundering, and professionalizing government services might be a good start toward achieving this important goal, but they may also be extremely difficult to accomplish.

Microfinance Can Help Lessen the Water and Sanitation Crisis

Microfinancing offers a potential strategy that could significantly assist in beating this challenge and meeting the UN’s water and sanitation Sustainable Development Goals for 2030. Microfinance is an infrastructure that provides manageable credit, saving opportunities and other key financial services for under-served populations, and it has achieved a good track record in densely populated rural areas, cities and small towns. It helps jump-start local economy by providing responsible business loans to entrepreneurial individuals who wish to start a small business, thus enabling them to improve their financial situation and provide work for others. It helps people save for education, health, etc., and generally encourages people to gain financial perspective and take control of their money.

How Is All This Connected to Water?

It’s simple: many residents of these impoverished areas lack water and sanitation services because they cannot afford the hook-up fees or the costs of extending water and sewer lines from nearby locations. By improving private economy, microfinancing can help people pay for domestic water provision and sanitation services. Of course, this is not an all encompassing solution – microfinancing isn’t available in all third-world countries, and this problem has to be approached simultaneously from several direction. It isn’t an easy solution either -, microfinancing requires infrastructure and collaboration between the state, the banks and private lenders, let alone education. But it is effective, and it can help significantly.