This is the speech of, Arie Kraaijeveld, the chairman of the Netherlands Water Partnership, at the Water and Microfinance Seminar, in Delhi, which was part of the Dutch Royal state visit to India this week.
Your Majesty, Royal Highnesses, Your Excellencies, Distinguished guests, Ladies and Gentlemen,
In the following minutes I would like to give you an overview of trends in the international water sector, explore the challenges we face and highlight why we think the Netherlands and India can be true partners in finding innovative solutions to link micro finance with water and sanitation initiatives.
But before continuing, I want to say something about the NWP. The principal aim of the NWP is to harmonize the activities and initiatives of the Dutch water sector and to promote Dutch expertise in water worldwide; it currently consists of 160 participants coming from governmental organizations, knowledge institutes, private sector and NGOs.
Representatives are also present here today from the Dutch financial sector, specifically those who are active in the field of microfinance.
Let me start by drawing your attention to three important trends during the last 30 years in the International water sector:
- Since the 80s we have witnessed a great number of changes. Owing to the vast expansion of the world’s population and ever spreading urbanization we are faced with a growing competition for natural resources. In the 80-ies this resulted in severe problems related to the quality and quantity of water. For instance by groundwater depletion, like in India. On top of that we now have to deal with climate stress.
- It is interesting to notice how our approach to these problems has gradually changed. In the 80s we were convinced that a top down hierarchical approach from the government would solve all problems. In the 90s we believed that the private sector and the free market would hold the key.
- However, water related problems have worsened by the increased globalization and we now realize that there are no easy answers.
- Many of the challenges we are faced with today require flexible, tailor-made solutions embedded in a local context. For that purpose the government, the private sector, NGO’s and local communities need to join hands.
I believe that this trend will continue and we will witness an increased demand for tailor-made decentralized solutions. So altogether this trend will give a new dimension towards providing safe drinking water and sanitation.
Here you see one example of a mobile decentralized water system that was recently developed by Philips. It illustrates the challenge to move away from large-scale drinking water and waste water treatment plants, into small scale integrated facilities for consumers at household level. A good example of how high-tech can be applied to meet specific ‘low-end’ markets.
This shift has been caused by rapid changes in the market and society.
In the water and sanitation sector this has created challenges and opportunities for new concepts and innovative products. At the same time new approaches and products in the field of financial engineering are being developed.
As the previous speakers have clearly illustrated, microfinance could make an important contribution to the provision of safe drinking water and sanitation solutions. At this seminar it seems to develop into a royal alliance. If applied correctly, it may help reduce income disadvantage, lessen the vulnerability of the very poor and empower women.
History has shown that the market economy has its own ways of encouraging innovation and seizing market opportunities. Business men and women will always look for gaps in the market and try to bridge them. Today the market for water and sanitation requires incentives that will motivate the private sector to serve people with a very low income, which is called by experts the base of the pyramid.
Microfinance has already shown us the way and if we can combine water and sanitation products and services with microfinance we could make this affordable for the people. The availability of clean water and sanitation will generate income and therefore justifies microfinance mechanisms.
There are examples in India and the Netherlands of innovative entrepreneurs and organizations that have developed affordable and sustainable products for the base of the pyramid market. However, placing products on these markets has proved to be a challenge.
Products must be fully purpose-built / adapted to local needs and conditions. They must be the so called ‘appropriate technologies’. It has proven not to be easy to meet these requirements and develop sound business plans. Funds are available, but potential investors tend to be hesitant because they want to have a clear view on the risks and the benefits of the business case.
In the Netherlands the Micro Water Facility (MWF) has been set-up to help entrepreneurs and other organizations to develop clear business plan, in which risks and opportunities are presented in a professional way to investors. Representatives of the Micro Water Facility are here today to discuss this further this afternoon.
Besides that there are a few other challenges:
- Reaching out to and creating awareness among the poor.
- Multilayered institutional settings, which result in high overhead costs.
- The difficulties in sharing knowledge about best practices.
If we truly wish to speed up development we will have to continue to look further. It is often in unexpected partnerships that true innovation can be found.
I would like to draw your attention to a specific initiative called AKVO, which means “water” in Esperanto. It is still in the early stages of development but reflects the type of innovation I am talking about. AKVO is a pioneering, open source internet project that aims to speed up the implementation of water and sanitation solutions by building on the strengths of the IT sector. The AKVO team has forged relations with leading Indian NGOs, Microfinance Institutes and the IT community in Bangalore and is in the process of securing funds from FMO to implement a pilot project in India. It is inspired by such projects as Wikipedia, E-Bay and YouTube.
The AKVO team is building a system through which we can openly share all available knowledge on appropriate water and sanitation technologies, by building on the concept of Wikipedia. They also aim to incorporate an online marketplace, much like eBay, where individuals like you and me and micro finance organizations can lend money directly to any person living in poor conditions anywhere, whose aim it is to start his or her own water business. With help from a trusted intermediary local organization, he or she can share experiences with us online to show the results of the business in the form of a picture, movie or short project description. Representatives of AKVO are here today and I urge you to speak to them should you wish to be involved.
So we need to think about new ways to expand these small scale decentralized initiatives, by giving better information about possibilities, and showing how – with simpler financing and reporting tools – we can prevent every project in every community, becoming an administrative hurdle.
This is a picture taken in an urban slum in Delhi not far from here, just a few weeks ago. The women who raise their hands show us who amongst them own a mobile phone.
Mobile phones are becoming a simple and quick way to transfer money across borders, under a deal announced this week by the main international mobile phone operator’s body. 35 mobile operators with 800 million customers in more than 100 countries take part in this money transfer pilot scheme. So phones can become the method of payment in microfinance schemes.
The opportunities of this development are mind-boggling.
In the beginning of my speech I mentioned that the principal aims of the NWP are to harmonize the activities and initiatives of the Dutch water sector and to promote Dutch expertise in water worldwide. We feel there is a lot of scope for structural cooperation between the Netherlands and India concerning all water issues. We support the idea which is brought forward by both sides to establish an India-Netherlands Water Platform with the objective to promote cooperation, improve information exchange and initiate partnerships with the purpose of implementing new projects. The next step will be a visit of the Dutch Water sector to India in the beginning of 2008. So there will be a bright future for our mutual cooperation in this field.
Your royal highnesses, we have been challenged by you to bring together water and microfinance. Ladies and gentleman, lets pick up this challenge together.
Thank you very much for your attention your Majesty, Royal Highnesses, Your Excellencies, Distinguished guests, Ladies and Gentlemen.
I really want to thank both Mr. Kraaijeveld for saying such nice things about us, and to the Prince of Orange for inviting us to this event in the first place. We made some really excellent contacts which I will tell you more about in the future.
Posted from Delhi, India.
Thomas Bjelkeman is the founder of Akvo