Bridging gaps, creating change: Interview with Owais Shafiq of Aqua for All

It has been a little over two years since we launched our partnership with Aqua for All to scale up the availability of loan products for small and medium water and sanitation enterprises in Africa and Asia. Owais Shafiq of Aqua for All now looks back on these first two years and reflects on the future of our collaboration in developing innovative and affordable financing solutions for the water and sanitation sector.

Why did Aqua for All enter into partnership with Oikocredit?

Aqua for All’s strategy aims to accelerate progress to achieve Sustainable Development Goal 6 of universal access to clean water and sanitation by bridging the service and finance gaps that affect the sector. We strive to mobilise capital at a larger scale and faster pace for our impact finance initiatives with local financial institutions. For this, we found the right partner in Oikocredit International, a leading social impact investor with a mission to strengthen local communities through various initiatives, including by widening access to water and sanitation services. Oikocredit provides liquidity to a large network of local financial institutions that offer small and medium enterprises (SMEs) finance in the regions we target.

Why is Oikocredit such a good match for Aqua for All?

Oikocredit’s community-focused approach ensures investments benefit local people, especially those living on low incomes and in rural areas. As an impact-first investor, Oikocredit is open to exploring new thematic areas and addressing new challenges, such as financing and expanding affordable water and sanitation services. Oikocredit’s willingness to venture into the sector, a relatively new investment area, shows its commitment to making a difference, which aligns perfectly with Aqua for All’s mission and goals.

What is the ultimate goal of this partnership?

The ultimate goal of our partnership is to enlarge access of affordable and sustainable water and sanitation services for many underserved households and communities in Asia and Africa. Through this partnership, Oikocredit and Aqua for All provide a unique joint offering to financial institutions of capital, de-risking and technical assistance so that they can grow their water and sanitation portfolios and support local communities. This partnership between a global foundation and an asset manager should also pave the way for similar partnership models in the sector.

Can you elaborate on the initiatives our partnership supports?

We jointly support local financial institutions in Cambodia, Indonesia, Kenya and Uganda, and are developing initiatives in the West African countries of Côte d’Ivoire, Nigeria and Senegal.

Aqua for All’s technical assistance grants enable these financial partners to build water and/or sanitation portfolios through activities such as market studies, product development, marketing and training. Oikocredit provides the necessary liquidity (debt) so that financial institutions can offer their clients loans and other financial products. When required, Aqua for All provides de-risking capital.

The initiatives vary depending on local needs. For instance, in Cambodia, we work with piped water operators; in Indonesia, we support the development of sanitation solutions. In Kenya, we have developed a climate-resilient water and sanitation portfolio with a local bank; and in Uganda, we support microfinance institutions with water and sanitation lending.

What is your specific role in this partnership?

Across the globe, a large team of staff members from Aqua for All and Oikocredit are actively engaged in this partnership. My role is to represent Aqua for All’s interests within the partnership, overseeing and coordinating our contributions to ensure we meet our joint targets and commitments.

I collaborate with global and regional investment teams to generate ideas, set priorities and execute actions that foster a successful partnership. This includes knowledge building and sharing, joint communication opportunities and direct engagements with financial institutions. Specifically, I work with financial institutions in West Africa and Southeast Asia to develop projects that combine technical assistance and de-risking grants, aiming to positively impact the water and sanitation ecosystems in which they operate, alongside Oikocredit’s capital contribution.

What has been this partnership’s impact since its launch in June 2022?

We have already seen positive results. Our partnership has led to the development of several water and sanitation portfolios of six financial institutions in East Africa and Southeast Asia. Including private capital deployment from Oikocredit, the partnership has leveraged up to 1 to 8 in terms of funds raised.

To date, the financial institutions supported under the partnership have provided loans to around 550 SMEs and 7,500 borrowing households for water and sanitation purposes. This experience has strengthened the collaboration and laid the groundwork for future achievements.

Even so, it’s still early to report on the full impact of the partnership. Preparatory work before closing any transaction takes time. Finding the right financial institution, assessing its strengths and needs, developing and implementing a tailor-made technical assistance trajectory, and building internal capacity to ensure the loan offering meets the needs of water and sanitation SMEs should not be rushed.

What are the next steps in this partnership? Are there plans to expand it or introduce new initiatives?

After over two years, it is a good time to reflect on the progress Aqua for All and Oikocredit have made in collaborating and to distil lessons learned for the future. We are currently assessing how effective our models and assumptions have been and exploring ways to scale up our initiatives to reach more financial institutions and provide more people with water and sanitation service access. We plan to continue our partnership and look forward to finding new ways to continue achieving our shared impact goals.