Financial Innovations that Scale Water Service

To scale the rate at which families gain access to WASH services, Thrive Networks tested a competitive bidding approach and smart subsidies meant to attract private enterprise bidders. While maximizing social welfare for households, the project supports the financiial sustainability of private business operations.

Today, only 47% of Vietnam has access to water that meets Ministry of Health quality standards. Connection costs and technical and financial sustainability issues are among the primary reasons for limiited coverage and poor service, especially in rural communities.

Launched in October 2016 in Vietnam, the Innovations for Private Sector (PSI) Development in Rural Water Supply projects developed a method for calculating full cost recovery tariffs and smart subsidy levels. In response, six private operators are delivering piped water connections to 6,892 households.

The PSI project demonstrates that an innovative funding mechanism can significantly increase private enterprise involvement in rural water service delivery. Surveys of the businesses that participated also showed that most private enterprises do not expect ot receive direct investment from the government, but would like increased access to funding sources.

Evidence from PSI is being used to advocate for regulatory reform and encourage government buy-in to the value of transparent bidding processes and innovative financing mechanisms.

Read More to learn how financial innovations are delivering piped water systems to last mile households.

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