By Njeri Kirumbi, Regional Director, Africa, WaterEquity

Micro-, Small- and Medium-sized Enterprises (enterprises) are the backbone of the world economy, accounting for most businesses across nearly every region. They represent more than 95% of registered firms worldwide, account for more than 50% of jobs, and contribute more than 35% of gross domestic product in many emerging markets.

The International Finance Corporation estimates that 65 million firms, or 40% of formal enterprises in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of global enterprise lending. East Asia and the Pacific accounts for the largest share (46%) of the total global finance gap and is followed by Latin America and the Caribbean (23%) and Europe and Central Asia (15%). Latin America and the Caribbean and Africa regions have the highest proportion of the finance gap compared to potential demand, measured at 87% and 88%, respectively. As one can see, there’s a significant global need for increased financing to support enterprises in developing regions.

In addition to their broad economic impact, enterprises play a crucial role in addressing the global water and sanitation crisis, one of the most urgent issues of our time. With 2.2 billion people lacking access to safe water and 3.5 billion lacking safely managed sanitation, this crisis not only risks health and well-being but also affects economic opportunities and exacerbates poverty. Climate change threatens to increase the water crisis, halting progress and reversing gains

Enterprises are vital in delivering water and sanitation services, particularly in regions where large utilities fail to meet demand. Evidence gathered by the International Growth Centre in a report from developing countries reveals that enterprises are instrumental in supplying necessary goods and services to marginalized regions, often underserved by large firms due to low demand and high transaction costs. By catering to small-scale and dispersed local markets, enterprises bridge this gap, reaching some of the most economically vulnerable consumers and enhancing their economic and human capacities.

Expanding Access through MSMEs

At WaterEquity, we’ve found that one of the most effective ways to improve water and sanitation access is through affordable financing. Economists estimate the market opportunity to provide water and sanitation services to all by 2030 at $1 trillion USD. Yet, the current levels of investment needed per annum to match that opportunity are significantly lower. The World Bank estimates an annual need of $114 billion between now and 2030, three times the current investment levels, if we are to achieve the targets related to water, sanitation and hygiene (WASH) of Sustainable Development Goal 6.

WaterEquity’s partnership with Sidian Bank in Kenya is an investment of $10 million USD to finance loans for enterprises delivering water and sanitation products and services. This initiative is set to on-lend more than 1,100 loans to local water and sanitation enterprises, such as small, piped water service providers and water equipment suppliers. This partnership is crucial in a country where only 62% of the population has access to safe drinking water.

WaterEquity seeks to address this investment gap by providing debt capital to financial institutions in emerging markets, enabling them to expand their water and sanitation lending activities. These financial institutions then use the capital to on-lend to local enterprises delivering water and sanitation products and services or expand their water and sanitation microloan portfolios.

Impact of WaterEquity’s Investments

Lack of financing at the local and household levels remains a significant barrier to equitable access to safe water and sanitation. To date, WaterEquity has reached more than 5.8 million people with access to water and sanitation. Enterprise loans have played a pivotal role in driving the expansion of water supply and sanitation, providing crucial support to businesses in the sector. Since 2016, WaterEquity has provided over $81 million in loans to financial institutions and enterprises, supporting 12 direct enterprise loans and 674 indirect loans through financial institutions, with an average loan of $45,000. These efforts aim to help underserved communities access safe water and sanitation.

Photo Credit Family Bank

Like nearly 25% of the global population, Suleiman Juma—a retired professional, father, and entrepreneur in Kenya—lacked access to safe water.
After retiring, Suleiman began farming in Nguluni, Machakos County, but faced severe water scarcity. Determined to help, he drilled a borehole and founded a small water enterprise—Kumon Fresh Aqua Limited— to provide affordable, safe water to his community.
Suleiman secured a loan of 1 million Kenyan shillings ($7,782 USD) from Family Bank Kenya, a WaterEquity partner. The loan was used to expand his business to increase water distribution and connection through piped water and build a second water kiosk for those not connected to the water pipeline. The loan from Family Bank Kenya was provided through their Maji Plus loan product. It had a repayment period of up to 60 months and a grace period of 6-12 months, with up to 80 per cent financing and no collateral required. Being a small business, this arrangement provided Suleiman with the necessary financial relief until his project could generate revenues

Photo credit Family Bank

Today, Kumon Fresh Aqua Limited pumps 24,000 liters daily, with the addition of their second water kiosk. This enables them to service over 80 homes in Nguluni with reliable water access. The business also offers purified bottled water, providing affordable access to safe drinking water. In expanding his enterprise, Suleiman’s has created jobs for six employees, including his son, who manages the project.
This is one example of the 2,126 loans WaterEquity’s investment to Family Bank Kenya will enable. In providing debt capital, WaterEquity helps expand lending opportunities to water and sanitation enterprises like Suleiman’s Kumon Fresh Aqua to reach more people with access to water and sanitation solutions while also bolstering local economies. 


Celebrating Enterprises

On June 27, we celebrate Micro-, Small-, and Medium-sized Enterprises Day, recognizing the pivotal role these enterprises play in fostering economic growth, innovation, and sustainable development. At WaterEquity, we deeply appreciate the contributions of enterprises, especially in the water and sanitation sector, where they serve as crucial agents of change. By tapping into global capital markets and providing affordable financing solutions, we aim to empower these enterprises to create significant social impact, improving water and sanitation access, driving economic growth, supporting healthy communities, and promoting resilience against climate change.


Suleiman Juma information shared by Family Bank.
Fund performance data cumulative across funds as of 03/31/2024. Social impact data as of 12/31/2023. Past performance is not indicative of future results.