Outline:

• Brief of Ga West’s 5-year Compound Sanitation Strategy • HFC Boafo’s micro-finance loan products• Findings from sanitation financing interviews

Ga West’s 5-Year Compound Sanitation strategyKey principles

1. Collaborative and aggressive marketing campaign

2. Create a customer and business-friendly environment

3. Engaging sanitation providers

4. Mobilizing private finance

Relevant Delivery Principles

Catapulting the Private Sector into Pole Position

HFC BOAFO MICRO-FINANCE LOAN PRODUCTS

5 Loan Products Available:1.Multiple landlords (ABUSUA) Up to GHC 30,000 to be granted2.Singe landlord (EFIEWURA) Up to GHC 30,000 to be granted3.Landlord + tenants (Nkabom) Up to GHC 50,000 to be granted4.Adjoining houses (OMAMA) Up to GHC 20,000 to be granted

per house5.Sanitation providers (WASAB) Up to GHC 50,000 to be granted

NB.oSource of funds for loan HFC Boafo’s own fundsoInterest rate 3% per monthoRepayment period 4 to 36 months

Key results of sanitation financing interviews conducted by PATH – 8 Interviews:• Microfinance Institutions (MFIs) (2)• Banks (2)• Government (1)

oGreater Accra Metropolitan Area (GAMA) Sanitation and Water Project (World Bank funded)

• NGOs (2)oYSEF, Slum Dwellers International

• Clean Team (1)

• Goal: Gain understanding of role, operations, potential involvement of finance organizations in Ghana.

Ghana: Macroeconomic instability and credit contraction

“Approved loan clients are down 25% in the last three months” - MFI

• Financing requirement of the government is effectively vacuuming credit and liquidity out of the private sector.o Inflation: non-food rate 23%.o Government of Ghana 180-day

Treasury bonds yield 26%.

• All banks/MFIs noted three strategic initiatives:o Reduce loans.o Buy Treasury bonds.o Increase deposits.

“Loan recoveries are a problem. We are buying government bonds”

- Bank

• $1bn International Monetary Fund rescue loan tied to a structural adjustment program.oStabilization to be a painful multi-year process through at least 2017.

• Credit is very expensive: oCommercial loans >30%oMFIs 40%-60%

Overall effect: Private-sector financing is restricted.

Ghana: Macroeconomic instability and credit contraction

Reliance on concessionary international capital

o Possible to Profitable (P2P) project Dutch Ministry of Foreign Affairs, SNV, and Fidelity Bank €2M grant (project administration), €4M revolving fund; target 3000+

households and 500+ MSMEs

o Opportunity International (UK) and Sinapi Aba Department for International Development, Opportunity International,

and Sinapi Aba MFI-cum-bank Pending funding, broadly similar to SNV-Fidelity Bank project

o GAMA Sanitation and Water Project World Bank and municipal government of Accra $34/150M for sanitation, 5-year grant project; target 50,000 HH toilets

• Major sanitation finance projects in Ghana 100% grant funded• Revolving loan demonstration project could pave new approach

• Near-term opportunities with World Bank project

Key Takeaways

o Severe credit contraction eliminates most financing options.o Notable Sanitation Financing pilots in Ghana depend on grant capital.o Low-hanging fruit opportunity with World Bank project in Accra.o Challenging access to low-cost capital for MFIs: Identify and connect with social ventures/donors to provide seed

capital for revolving funds Lower cost capital = lower interest rates charged while remaining

profitable to MFI partner. Lower interest rates = greater loan ‘affordability’ and potential

beneficiary reach.

There are opportunities to:

o partner with well-capitalized Sanitation Financing projects such as SNV-Fidelity to extend and enhance their impact; and

o collaborate with World Bank GAMA PCU project in Accra.

THANK YOU