[Working session] Developing indicators for Water and Sanitation

  • Alvaro MA, Aqua for All
  • Josien SLUIJS, Aqua for All
  • Dina PONS, Incofin
  • Darren MIAO, Water.org
  • Alexandre NAYME, BNP Paribas
  • Davide LORIGGIOLA, Triple Jump


Many investors find it difficult to grow their water and sanitation portfolio; this is mostly because they lack clarity about the sector, how it exactly works or what they can get out of it. Information about this sector is indeed limited and this, in many cases, is the main reason holding investors back. In this context, Aqua for All started the effort to build an Action Group within e-MFP that tackles key information and knowledge gaps in the water and sanitation sector.

Alvaro MA from Aqua for All was the moderator of this working session, which was a first action to get e-MFP members’ buy-in and input to define and shape a water and sanitation action group within the platform. ‘Indicators and benchmarks’ was proposed as a first potential topic of discussion. Josien SLUIJS, from Aqua for All, shared that the enabling environment and the understanding of the sector are highly important for investors to assess their risk and return. She further mentioned that there is a need to bridge the gap between what investors need and what happens in the market. Before giving the floor to the other speakers, Sluijs asked them to voice their opinions on the creation of indicators and benchmarks for investments in the water and sanitation sector.


Dina PONS, from Incofin, revealed that the first challenge she encountered when setting up a fund in drinking water was to substantiate the financial performances of water businesses. Hence, the first set of indicators should be financial, she argued, to give a better understand of the basics of financial performance in the sector. Pons said it is important to differentiate the type of indicators, so as to get enough information about investment readiness and the profitability situation of a business.

Besides financial indicators, Pons specified the need for social and environmental indicators. It could be helpful to relate such indicators to the key Sustainable Development Goals (SDGs). In that case, actors should together agree on which SDGs to pick, and choose a number of indicators for each SDG. Pons noted that it is also crucial to include ways to measure ‘affordability’ as part of the social impact. Lastly, she argued that it would be good to include water quality and technology indicators, to ensure high quality and take away risks for investors. SWEs, pipe infrastructure companies and technology companies all use some type of technology to purify the water, and we need to be able to benchmark and identify suitable technologies and economies of scale that can target BoP.

Ma added that a scorecard with these four (financial, social, environmental and quality) indicator groups could serve as eligibility criteria. In order to benchmark in a later stage, these indicators need to be agreed on across the entire sector.

Alexandre NAYME, from BNP Paribas, elaborated on the bank’s experience in financing projects related to water. He stated that many risk factors are not specific to the water sector per se, but that it is important to understand what sets it apart from other sectors. As such, understanding the value chain is crucial as it supports the investor in defining and contextualising their position. Nayme also emphasised that it is important to prioritise beneficiaries when thinking about indicators. He stated that indicators about the usage and quality of water are important. In line with what Pons mentioned earlier in the session, Nayme noted that it would be helpful to rely on the SDG framework to set indicators.

Regarding the e-MFP Action Group, Nayme said that new investors could benefit from commonly accepted terminology in this field; he remarked that water experts could provide support in this regard. Having a shared understanding about terminology as well as practices would led to an increase in the ‘investability’ of the entire sector.

Davide LORIGGIOLA, from Triple Jump, argued that, besides looking for indicators for individual investments, there is a need to evaluate the entire market. Loriggiola referred to the lack of data on factors such as market size, business linkages and the number of active companies in the water sector. Knowing the size of the market would help single investments but it would also increase the confidence of investing into the sector, thus helping build a stronger portfolio for the entire water sector.

Loriggiola also stated that there is still some work to be done in terms of incorporating the overall economic outcomes of investments into social impact indicators. He added that, by knowing more about the economic cost of water and sanitation, successful models could be more easily built and upscaled in a sustainable way.

Darren MIAO, from Water.org, added to the discussion by addressing the question on how to implement indicators, besides defining them. He noted that there are lots of discrepancies nowadays between indicators of NGOs and the metrics that investors want to see and track. Miao explained that this discrepancy plays itself out when ones goes to the field and talks to SMEs. Reporting on all these metrics to different actors is costly and time consuming. Therefore, it is key to get a common set of benchmarks and indicators for the entire water and sanitation sector. Especially on the impact side, there needs to be standardisation. This requires all different actors to come together and to commonly agree on what the key indicators should be.

Miao argued that, once the indicators have been developed, it is important to think about how these can be implemented by those in the field. Out of experience, Miao explained that many actors active in the sector often do not have a well-documented track record of their WASH SME lending portfolios – not necessarily because of monitoring and evaluation capacity issues, but often because these actors simply have other priorities. Hence, it is crucial to think about how the potential investees can and will build their indicators and monitoring operations into daily tasks and processes. For smaller SMEs, this will probably require technical assistance. For SMEs, it is also important to think about how to make information collection manageable, in such a way that it does not take the focus away from their core activities. If these concerns are taken into account when developing indicators, it could take a barrier away for capital providers to invest in the sector.