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ProCredit gets $2 million IDB loan to finance communal water projects in El Salvador

Project to help expand and improve access to clean and affordable water to as many as 14,000 low-income families in El Salvador

The Inter-American Development Bank (IDB) will help expand and improve access to clean and affordable water to poor communities in El Salvador by providing a $2 million loan to Banco ProCredit S.A to start a credit and technical assistance program for communal water projects throughout the country.

ProCredit will use proceeds from the IDB loan, in addition to $2 million of its own funds, to lend to local small-scale community water operators to improve, repair and expand their water supply systems. The project will also provide training for these small operators to strengthen the management of their business, finances, assets, as well as the environmental impacts of their operations. As many as 14,000 low income families are expected to improve or gain access to affordable water services.

“The development impact of this project can be tremendous. Communities with clean drinking water and sanitation systems are healthier, with fewer diarrheal diseases and lower child mortality rates,’’ said Carmen Alvarez-Basso, the project team leader at the IDB’s Opportunities for the Majority (OMJ). “They spend less on water and women and girls no longer spend hours collecting water from faraway sources and are more likely to stay in school.”

ProCredit loans will be used by operators to expand their networks and increase connections, drill wells, build, repair, and maintain water tanks and other equipment, buy or replace pumping equipment as well as purchase land where wells exist, in order to guarantee water sources. Technical assistance for the program will be implemented by the Foundation for Sustainable Development of El Salvador (FUNDES).

For over 30 years, small-scale community water operators have been providing drinking water and sanitation services in Central America. They sprang up from community development associations that have formed private or semi-private enterprises to supply low-income households with water and sanitation services at prices lower than those charged for barreled water.

Even though these local operators have been successfully running and maintaining systems for decades, their growth has been limited by lack of managerial skills and access to finance. Currently these organizations provide water and sanitation services to 40 million people in Latin America, where they could potentially reach 18 million more.

Once proven successful, the financing model ProCredit will be offering in El Salvador to communal water projects can be replicated and scaled up in other Central American countries such as Honduras, Guatemala, and Nicaragua where drinking water is scarce, and where rural, local operators have also filled the gap to provide essential water and sanitation services.

About Opportunities for the Majority

The Opportunities for the Majority (OMJ) of the IDB supports the development and expansion of innovative business models that can improve living conditions and earning opportunities for people living at the base of the socioeconomic pyramid in Latin America and the Caribbean.