This fictive case study supports and illustrates the theoretic factsheet "Blended finance" with practical insights.
Made available by Roots of Impact (2018)
Sustainable Organic Integrated Livelihoods (SOIL) operate in Haiti and seek to promote dignity, health, and sustainable livelihoods through the transformation of wastes into resources. They generate two lines of revenues through toilet rental to low-income households, and selling on of compost produced from the waste. SOIL are still striving to achieve break-even with both of these processes.
SOIL would like to attract investment to scale their operations. They are convinced that through scaling and securing public service contracts they will achieve profitability, but they are aware that the perceived risk for investors is quite high. After discussions with one of their larger donors, SOIL decide to test a SIINC structure.
A set of relevant outcome metrics (e.g. no. of new households serviced/amount of compost produced) are jointly developed between SOIL and the outcome funder (donor). The local government is invited as an observer in this process, but does not have to make any commitments at this stage. The outcome funder agrees to thus pay SOIL for the positive impact that they generate. These premium payments are triggered by reported outcomes and supplement the projected earnings from SOIL’s activities, greatly improving SOIL’s financial projections. With these improved projections, SOIL are able to secure the investment they need to scale their operation.
After three years, SOIL’s toilet rental business has reached a level of scale whereby it is now financially self-sustaining. Their waste-treatment activity remains loss-making, but based on the track-record established through the SIINC intervention, the local authorities are willing to continue paying incentives to SOIL to treat the waste. SOIL no longer need donations, are able to repay the investment they secured according to the initial planning, and are now growing organically.
This Position Paper addresses three key issues that are receiving limited attention in the water and sanitation sector discussions on (blended) finance:
- The lack of finance for strengthening the enabling environment
- The untapped use of micro and blended finance
- The inequities in allocation of finance in the sector
This concept note proposes a phase-wise approach to cost recovery in the Indian water sector starting with a focus on blended finance through an assessment of existing public-sector spending on water resources management.MUKHERJEE, S. ; LEFLAIVE, X. ; KHEMKA, R. (2017): Moving ahead on blended financing mechanisms and pricing water in India. URL [Accessed: 20.04.2018]
In this seventh episode of IRC's podcast series WASH Talk, hosts Andy Narracott and Patrick Moriarty ask Sophie Trémolet of the World Bank how blended finance can close the financial gap needed to meet Sustainable Development Goal (SDG) 6. The gap is an estimated USD 114 billion per year for construction and 1.5 times that amount for maintenance. In the podcast she explains to a non-economist audience what the challenges and opportunities are when using blended finance.TRÉMOLET, S. (2017): Blended Finance – WASH Talk (video). The Hague: IRC URL [Accessed: 20.04.2018]