April 2022

Linking “water funds” to Village Savings and Loans Association (VSLAs) to improve financial
sustainability of rural water systems in Kabarole district, Uganda

In Kabarole district, regular water user payments at rural water points are uncommon. This puts most rural water systems at risk of long periods of downtime and limits progress to achieving universal access to safe water.

A group of VSLA users
Multi Water Users VSLA after receiving their start-up kit in the Kabarole district, Uganda. The members are showing their personal passbook. 

Village Savings and Loan Associations (VSLAs) are community-based groups whose primary objective is to allow members to save money and access low-interest loans. VSLAs typically have robust accountability mechanisms that establish trust amongst members. Building on the work of other NGOs in Uganda (Water Trust, Water for People), Aquaya is testing the approach of leveraging VSLAs for collection and management of water user fees. Water users form a VSLA, which then establishes and maintains a savings account dedicated to water system management, called the “water fund”.

In 2021, Aquaya piloted VSLA-based “water funds” in ten communities in Kabarole district. Over the first 12-month cycle, the VSLAs collected an average of ~540,000 UGX (150 USD) in water funds, which should be enough to cover annual handpump operation and maintenance expenses. During this first cycle, several groups appropriately used water funds for source protection measures, like fencing, and minor handpump repairs. All of the ten pilot groups have rolled into a second cycle. Aquaya will continue to monitor these VSLAs to see how they perform over time.

Community members repairing a handpump.
Community members help with the handpump rehabilitation process in the Kabarole district, Uganda. The hose is attached to a dewatering pump and there is someone down in the well ensuring the hose inlet stays below the water level. Normally, this process is not so involved, but the mechanics were having trouble with the pump. That is why so many people helped.

Encouraged by these results, the Kabarole District Water Office decided to replicate the approach at ten additional handpumps this year. Led by the District Water Office, local government extension staff are working with newly formed VSLAs of water users to initiate “water funds” and support water system management. Through this expansion, we hope to understand how the VSLA-led “water fund” approach might be scaled through local government.

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