Incofin cvso disburses a EUR 1.7 million loan to Bina Artha, the financial institution that, through micro-loans, allows hundreds of thousands of entrepreneurial women in Indonesia to build a better future for themselves.

Indonesia is not only known for its idyllic beaches, but also for impressive economic growth rates since the Asian crisis in 1997. The economy is now part of the top 20 largest economies in the world. This growth went along with important poverty reduction, with a poverty rate at 10% in 2020, while at the turn of the century that group was still twice as large. However, there are still around 26 million people living below the poverty line. The consequences of COVID-19 – which might push between 5 and 8 more million Indonesians into poverty – is therefore a setback. It shows that economic progress is still very fragile for a large part of the population.

While Covid-19 is having a significant impact on the Indonesian economy, Incofin CVSO has at heart to support microfinance institutions (MFI) even in times of crisis. In this context, CVSO has provided a loan of EUR 1.7 million to PT Bina Artha Ventura (Bina Artha) at a time of tight liquidity management and operations stabilization efforts from the MFI. The support from its international lenders partly explains Bina Artha’s resilience during the crisis.

Bina Artha – founded in 2011 – is one of the biggest institutions in Indonesia in terms of portfolio size. The MFI brings micro-credits to more than 350,000 low-income households in rural communities – increasing financial inclusion. In Indonesia, 51% of the adult population still do not even have an account in a financial institution. Therefore, with a total population of 270.6 million, there is a huge market growth potential for microfinance.

Especially low-income women have barely access to the formal financial sector because they lack independence and education. That is why microfinance institution Bina Artha focuses mainly on women who don’t have or have only partial access to the formal financial sector.

By increasing the access to capital, Bina Artha supports the income generation of entrepreneurial women, such as Bu Sabaria Bunga Lele. I used to sell my vegetables with a cart going around from place to place. At the end of 2017, I decided to take a loan from Bina Artha and open a shop on the road side near my house. Now, I provide a wide selection of fresh vegetables, spices, dried fish and other products. The people of the community around my shop buy their necessities from my stall and lots of cars stop with people from further afield as well. Thanks to the strategic location, my store is also doing fine despite the pandemic.

Incofin cvso believes that Bina Artha is well positioned to efficiently and rapidly grow further, thanks to its business model, support from its Credit Access network and investments in technology. They have for example integrated third party payment services into their core banking system.

“Bina Artha has been very transparent in dealing with clients and funding partners and therefore continues to gain support. Incofin is a proud partner of Bina Artha, via them we can deliver our impact and open up opportunities to many Indonesians for a better livelihood”says Vuthy Chea, Deputy Regional Director Asia of Incofin Investment Management.

The regions where Bina Artha operates are in dark blue.

At the beginning of the pandemic, COVID-19 put a break on a vast majority of businesses around the world. Logistical chains were broken, borders were closed, planes could not fly, people could hardly move. This created massive disruptions in many sectors, including hospitality, tourism and any other industry reliant on imports or exports. Slowly, in some regions and sectors, businesses have begun  to recover from the impact of the pandemic by adapting to this new situation. 

Meanwhile, sectors that work to produce and provide a basic good, embedded in domestic economies dynamics, serving local populations, are not only surviving… in certain cases, they are even growing faster than expected. It is the case of local small scale agriculture production. For instance, Incofin IM noticed that the agricultural portfolio in comparison to its financial inclusion portfolio tends to face less risk.

Similarly, water businesses that increase access to drinking water to local populations seem to manage well in these times. Since the start of the pandemic, Incofin IM, along with its partner Danone Communities, have been monitoring a number of water businesses around the world to better understand the impact of COVID-19 on their operations.

This article is part of a series of articles titled “Water businesses in COVID-19 times, even more needed, even more wanted”. In the first article we discussed the case of water kiosks (safe water enterprises). Today, we explore the realities faced by small scale, decentralised piping water companies. These companies typically operate where public utilities do not go, serving as “last mile water providers” for many of the bottom of the pyramid population. They directly connect a pipe from a neighbouring water station to household premises.

All around the world, COVID-19 awareness campaigns have sensitized people on the need to keep a strong immune system. In fact, drinking water consumption has been increasing and these decentralised piping water companies have been there to provide the supply, while reinventing themselves.

Four key conclusions can be drawn from the decentralised piping companies during COVID-19 times:  

  1. Where public utilities fail, privately-owned piped water companies play a crucial water access role, as they help address households’ water needs while complying with the social distancing constraints linked to COVID-19.
  2. Despite offering one of the lowest prices per litre, revenues of decentralised piped water supply companies are highly resilient, since water consumption, a necessity, is non-cyclical. In fact, many pipe networks, especially in developing countries saw consumers’ demand increase.
  3. Because of its strict requirements on social distancing at best, full lockdowns at worst, the pandemic has accelerated the need and implementation of digital solutions including digital finance, automated services, and remote monitoring to be more efficient and resilient in the future.
  4. Decentralised piping water companies’ advantage of steady cashflows has become more prominent during the pandemic. Combined with the social impact of providing a necessity at an affordable price and offering better hygienic and health options to underserved populations, the business model makes a strong proposition to impact investors.


CONCLUSION 1: Piped water supply’s ability to provide on-demand on-premise water access addresses households’ water needs of high public health relevance in a social distancing-compliant manner.

While access to safe tap water is usually taken for granted in developed countries, in the developing world, a vast population lives off grid and needs to venture out to collect water. This water may not be adequately treated and expose people to risks of various water borne diseases. During the time of COVID-19, these daily water collection journeys carry greater risks. Without on-premise piped water supply and sewage systems, quarantined people essentially lose access to water and sanitation services. Stock-outs of bottled water, interrupted water transport and increased prices are other risks that many face in this context.

But it doesn’t have to be so. Well managed, small scale, decentralised piping companies can extend the water grid to the underserved population and equalize the on-demand on-premise access to safe drinking water.

In Cambodia, while access to water in urban areas is catered by public utilities, rural populations often have no other solution than to collect rain water or buy from water trucks. While the  government has put water access high on its agenda, it also recognizes that it does not have the means to reach the whole country. The private sector needs to play a role. In such context, the government decided to grant a 20-year exclusive license in rural Cambodia to attract private investors.

Khmer Water Supply Holding (KWSH) runs a portfolio of water stations across 4 provinces in rural Cambodia. Each station serves thousands of households in one to two local districts. A centralised engineering team ensures the stations are efficiently managed and adhere to the high quality standards, which are more stringent than national standards. KWSH is also pilot testing a project to install handwashing sinks for connected households at a below market price, with the hypothesis that the sinks would not only improve household hygiene practices but also increase water consumption by an amount that is more than enough for KWSH to recover the losses in the sales of the sinks. In this context commercial and social interests are well aligned.

Another example is 3BL, a water business in Ethiopia, that provides affordable piped water to rural homes and farms. Ethiopia is considered as a ‘water stressed’ nation, due to the accelerated increase in population size over the last 10 years. In 2017, 89% of the people had no access to safely managed drinking water creating a demand that can be filled by the water businesses. Ethiopia aims to invest in water related infrastructure to address the obstacles to safe drinking water and to increase its access.

3BL works with communities that have already existing infrastructure: 3BL connects the pipes to the households and is responsible for the maintenance. The water is first treated at the source before it is released through the pipes. The company uses technology like water meters to quickly detect and repair leaks so that the communities have a continuous water supply.

The pipe network supply is an ideal model in times of lockdowns and social distancing because on-demand, on-premise access to drinking water makes physical contact avoidable.


CONCLUSION 2: The revenues of decentralised piped water supply companies are highly resilient

While the economic impact of the outbreak prompted people to cut back on spending, heightened public health awareness has made it clear that safe water is not the commodity to save on. This is especially the case in underserved areas in developing countries, as those “fresh onto the grid” tend to consume based on need rather than want: a person with a tap at home in rural Cambodia typically consumes 70 litres water per day, a data point that is easily upward of 200 litres in the United States.  As such, what KWSH has observed among its clients during the COVID-19 crisis is that water consumption outperformed projections and strong bill payment rates.

This increase in water consumption was also observed at 3BL in Ethiopia. However, in the beginning of the pandemic, the company faced delays of payments because many of their clients who were economically negatively impacted did not have any savings to pay their water bills.

Both companies explain that once a certain level of trust has been reached and the customers understand the value of having clean water at home, the demand increases as the access becomes more convenient, particularly when compared to other water sources that are not on premise.


CONCLUSION 3: the pandemic has accelerated the need and implementation of digital solutions, including digital finance, automated services, and remote monitoring.

The first impact of COVID-19 made many companies realise that in order to ensure business continuity and to remain competitive in this quickly changing context, accelerating and analysing their digitalisation strategy was a necessity.  Although this entails an initial (capital) investment, which is less favourable in times of a crisis, the positive long term effects are clear and the pandemic has shown that digital applications can be crucial to ensure business continuity. Digital innovations in the water sector can contribute to reducing water loss and increasing operational efficiency. Digital solutions have been developed for billing and payment, pre-paid systems, quality and process control and operation, water loss reduction, and consumer relations.

3BL uses digital technology for real time tracking activities, maintenance and invoicing. All these functionalities can also be used offline considering the low internet penetration rate in Ethiopia. The company further recognised the importance of the digital tools that came in handy during the pandemic in ensuring the smooth running of the operations.

KWSH already planned before the pandemic to prepare for a move to a cloud based solution for customer relationship management and work-order. This will enable the company to scale efficiently. Additionally, auto-head meters are introduced at water treatment plants to execute real-time monitoring and reduce non-revenue water. KWSH will continue to invest in these types of digital solutions, as this improves overall business continuity.


CONCLUSION 4: Steady cashflows and the social impact of providing a necessity at an affordable price and offering better hygienic and health options to underserved populations, make that decentralised piping water companies’ have a strong proposition to impact investors.

The COVID-19 pandemic has posed a significant challenge in the progress towards the Sustainability Development Goals (“SDGs”)[1]. In 2017, the World Bank pointed out that USD 29 billion is needed on a yearly basis to achieve basic WASH needs and USD 114 billion to achieve safely managed WASH needs in 140 developing countries[2]. Already pre-COVID, in 2019 the World Bank indicated that the present value of additional funding needed in the WASH sector through 2030 would exceed USD 1.7 trillion[3]. In addition to other crises such as the accelerating climate change and the growing debt crisis in many developing countries, COVID-19 has had a negative impact on financing the WASH sector and SDG 6, and has widened this financing gap even more. The pandemic reinforced the importance of access to safe and affordable drinking water[4].

Small-scale, off grid decentralised piping water companies is a more CapEx intensive business model with a longer payback period, thus they have traditionally faced a more challenging funding landscape when compared to a franchisee water kiosk model. However, in a crisis environment like COVID-19, piped water supplies’ resilience, backed by steady demand and stable cashflows truly stands out. Part of this resilience also lies in the fact that compared with other sources, piped water is typically priced at a level affordable to low income populations, who during a crisis time would rather economize other discretionary spending over water consumption, which is necessary and affordable. Multilateral organizations such as OECD, UNDP and ADB typically define affordable water as households spending less than 3-5% of their income on water. In the case of KWSH, a typical monthly water bill for a household of 5 individuals is around USD 5, which is well below the affordability threshold, even for those living on less than USD 1.9 a day, the international poverty line. The model thus makes an appealing case to impact investors who can bring patient capital and a comprehensive value creation strategy in exchange for stable financial return and social impact achievement.

In these turbulent times, Incofin IM is actively working on creating short-term solutions to support our investees, while also continuing to build initiatives that will support entrepreneurs to drive growth and impact in the long-term together with our partners such as Danone.

By investing in the water companies and by offering technical assistance, the Water Access Acceleration Fund (W2AF), aims to contribute to SDG 6 and accelerate the development of the water sector in developing countries.










German Development Minister Gerd Müller announces the launch of ALF, the new initiative of the ministry with Incofin IM and German bank KfW.

The Agri-Finance Liquidity Facility (“ALF”) is a debt facility investing in sustainable agri-enterprises in mainly Africa and Latin-America, funded by KfW/BMZ and managed by Incofin IM as the Alternative Investment Fund Manager.

With a size of EUR 40 million, the facility will support actors in the sustainable agri-food value chain in developing and emerging countries to maintain their operations during and after the Covid-19 crisis.

To offset the pandemic’s negative impacts on the sustainable agricultural production sector, KfW approached Incofin IM to develop a proposal for an emergency liquidity facility initially targeted for investees of the Fairtrade Access Fund (FAF). After reviewing the proposal, it was jointly decided to expand the focus of the facility to other agri-finance lenders, principally members of the CSAF (Council of Smallholder Agricultural Finance), and their investees. This will allow the facility to be as much inclusive as possible and to generate further impact.


Covid-19 caused a drop of more than USD 500 of the annual income

Covid-19 disrupted global food systems, testing the resilience of farmers who already receive the least value for their contributions to agri-food value chains. Many farmers, forced to harvest with significantly reduced personnel, lost quality and volumes of their crops.

As household budgets shrank, the sustainability of a product lost its strength as a purchasing argument. Fairtrade sales suffered a blow. On average, this meant a drop of more than USD 500 in smallholder farmers’ annual incomes, representing a substantial impact on their household economies.


Launching video ALF

The case of Safe Water Enterprises, from Kenya to Cambodia

COVID-19 has put a break on the vast majority of businesses around the world. Logistical chains are broken, borders are closed, planes cannot fly, people can hardly move. This has created massive disruptions in many sectors, including hospitality, tourism and any other industry reliant on imports or exports. Meanwhile, sectors that work to produce and provide a basic good, embedded in domestic economies dynamics, serving local populations, are not only surviving… some of them are even growing faster than expected. It is the case  of local, small scale agriculture production. For instance, Incofin has noticed that the agriculture portfolio of most of its partners tends to face less portfolio at risk.

Similarly, water businesses that provide drinking water access to local populations seem to manage well in these times. Since the start of the pandemic, Incofin IM, along with its partner Danone Communities, has been monitoring a number of water businesses around the world to better understand the impact of COVID-19 on their operations.

This article is part of a series of articles titled “Water Businesses in COVID-19 times, even more needed, even more wanted“. Today we explore the realities faced by a specific type of water businesses, the Safe Water Enterprises (SWE), or most commonly known as water kiosks. Because of COVID-19 campaigns people are becoming more sensitized to the importance of a strong immune system, drinking water consumption from Kenya to Cambodia is in fact increasing and water kiosks are there to provide it while reinventing themselves.

Six key conclusions can be drawn from the water kiosk in COVID-19 times:

  1. Since the pandemic started, safely managed drinking water was promoted as an essential good and water businesses were promoted as crucial “COVID-19 fighters”. 
  2. Despite decreasing purchasing power from clients, drinking water consumption from low income population has been going up across the world. The majority of safe water kiosks managed to preserve or even increase their revenues during the crisis. 
  3. Safe Water Enterprises’ decentralized operating structure is made of numerous points of sale, close to local production for local consumption, this allows to spread the risk.  
  4. The Safe Water Enterprise business model has proven to be able to adapt in contexts of crisis: some businesses accelerated the implementation of the delivery service, others also focused on accelerating digital payment solutions, using mobile applications or water ATMs.  
  5. Thanks to their grass roots nature, Safe Water Enterprises have been powerful amplifying agents of the WHO messaging overall and played the role of last mile health agents in local communities. 
  6. By cumulating a strong social impact and a proof of financial resilience, Safe Water Enterprises are the perfect partners for impact investors looking to support self-sufficient businesses in need of capital and know-how to bring their contribution to  UN SDG 6 on “ensuring availability and sustainable management of water and sanitation for all”.  


Since the pandemic started, safely managed drinking water was immediately promoted as essential to maintain a high immune system, playing a crucial role in the fight against COVID-19

Water is essential for good health – it is the largest single constituent of our bodies (about 60% on average) and is vital for us to live and function well. Water helps to maintain normal physical and cognitive functions with an intake of at least 1.6-2 liters per day as advised by various international public health organizations including the World Health Organisation (WHO). Proper hydration is the fundamental pillar for the optimal development of the most important physiological functions that occur in our body. Staying hydrated, as well as other good practices like sleeping, exercising and eating well keeps people healthy and in a better position to fight off any illness.

When people get sick, it is also essential to keep providing them enough quantity of safe water. When people go through fever (COVID-19’s main first symptom), risk of dehydration is high, and more specifically in the risk groups (older people, children and pregnant women). Drinking water is also good to soothe throat irritation. Given the above, it goes without saying that promoting access to safe drinking water is an even more imperative need during the COVID-19 times that we are in.


Demand for water during COVID-19 is increasing

Despite decreasing purchasing power from clients, it seems that drinking water consumption from low income populations has been going up across the world. The majority of water kiosks managed to preserve or even increase their revenues during the crisis. They provide a unique and affordable way to access safe drinking water for vulnerable populations for whom buying 1.5 liters packaged water for example is too expensive and who have no other affordable options except boiling untreated water extracted from boreholes putting their health at risks.

Most SWEs have seen their volume of water sold increasing every month since the beginning of 2020. Some SWEs witnessed a sales decrease in April due to lock down restrictions, but by showing strong adaptation of their delivery model, also these businesses noticed that on a year-to-date basis (from January to May 2020), their volumes are above last year’s performances.


Supply remains sound thanks to the decentralized business model

The decentralized model of SWEs has been their key strength to face the crisis. Water kiosks’ operating structure is made of numerous points of sale, close to local production for local consumption, each kiosk reaching about 3,000 to 5,000 people. The consequence of such organisation is that the risk is spread. Even if one kiosk has to close, it will have a very low impact on the overall capacity to supply water. 

Furthermore, most water kiosks organize their network in clusters, where a sub-group of kiosks are supervised by a regional office whose role is to support kiosks’ operational needs, helps them to develop outreach strategies to deepen their outreach, ensure water quality at all times, and lead marketing and awareness campaigns to boost sales. With such a set up, in case one kiosk was to run into difficulties, the cluster structure would easily allow an agile reorganization 

We need to think of these kiosks as franchisees: a local entrepreneur is on the ground operating the kiosk, and is strongly supported by her/his network. When COVID-19 started, it was clear that to remain convincing towards clients, water kiosks had to be exemplary in their implementation of “good behaviors” to fight COVID-19. This is where the power of the franchise business model kicked in. Most SWEs approached their entrepreneurs through their regional managers to instruct them to implement appropriate social distancing measures and guide them on business continuity measures. They were able to continue providing drinking water and to make an income for themselves.

Naandi, in India, showed exemplary business continuity and innovation reflexes during the first weeks of the crisis. To ensure proper maintenance in areas touched by lock down, where its team might not be able to travel, Naandi quickly put together a database of all local entrepreneurs who met their quality and expertise criteria and could support any kiosk facing maintenance issues.


An agile model, proven able to adapt in contexts of crisis

The SWE model covers the whole value chain, from water extraction to payment collection.

We have seen a fast transformation of the business models to adapt to new consumer behaviors. Some businesses accelerated the implementation of the delivery service, like Oshun in Senegal, or Jibu in Kenya, by collecting and activating consumers databases and overcoming logistic barriers. Others also focused on accelerating digital payment solutions, using mobile applications or water ATMs without contact between consumer and operator.

In India, in the context of a strict lockdown, people are looking for a home delivery service and e-commerce. At Naandi, everything was done to keep the contact, albeit mostly virtual, with consumers and to get their feedback. Today, Naandi is in the process of developing an app for consumers to place their orders more easily and during the lockdown, they continuously communicated around health and safety via Whatsapp, SMS or phone calls.


Safe Water Enterprises, last mile health agents in local communities

Dealing with water should imply abiding by the highest standards of hygiene and purification rigor. SWEs’ first priorities were to protect the health of their workers and to lead by example.  Many SWEs provided trainings related to Water and Sanitation to their staff to inform on how to stop the spread of the virus. They quickly adopted WHO recommendations, by making hydroalcoholic gel and masks available to all staff and train them on measures of social distancing.

For instance, Naandi, a water kiosks network touching more than 300,000 clients around India, quickly set up an internal management committee in order to reinforce organizational alignment. The work of this committee has led to designing new communication channels and guidelines as well as redefining the roles and responsibilities within the team, implementation of safety measures, sharing inspirational stories from the field across the network, dispelling fake news and sharing ways to manage their well-being.


Thanks to their grass roots nature, SWEs have been powerful amplifying agents of the WHO messaging overall. For instance 1001fontaines Cambodia, a network of around 200 kiosks mostly located in rural Cambodia, has sent their consumers text messages to educate them on the WHO sanitation guidelines. 1001fontaines Cambodia has also partnered with UNICEF to distribute free bars of soaps in rural areas.


Meanwhile in Mexico, the testimony of EcoAlberto underlines how close SWEs are to the local community and how their proximity allows them to operate as a last mile health agent: “In a context where the community is not precisely aware of what preventive measures they can adopt, our team made the difference. Each time our staff implemented WHO advised behavior in front of our clients it had a positive impact and a change of habits of our clients.

EcoAlberto has donated 30,000 liters in 4 communities via the bulk system reaching approximately 900 people who were lacking safe drinking water access. Many other SWEs took specific actions: Jibu in Uganda gave water to hospitals and to orphanages, while Oshun donated water to NGOs taking care of babies. Waterkiosk Limited for example distributed in partnership with Bilal Kenya pedal operated hand washing stations to communities along the coastal region in an effort to curb the spread of COVID-19.


SWEs are active and resilient players in their community

Water kiosks or SWEs are providing one of our most precious and basic goods on this planet: water. The fact that they succeed during a global crisis in continuing delivering their service proves their strong resilience.

Awareness campaigns made people, including the most vulnerable ones, understand the importance of clean drinking water to preserve their health. Through a decentralized model, a deep outreach and agility, water kiosks established a customer recognized brand, as proven by the sales increase since the first quarter of the year.

They have also shown that in a difficult and disrupted business environment, they can adapt and continue to operate, using new home delivery strategies and digital payment solutions to maintain their revenues and cash flows. Additionally, water kiosks have proven their true and original nature as social businesses, playing the role of the last mile health agents in those parts of the world where basic facilities can be miles away.

By cumulating a strong social impact and a proving financial resilience, SWEs are the perfect partners for impact investors that look to support self-sufficient businesses in need of capital and know-how in order to contribute to the UN SDG 6 “ensuring availability and sustainable management of water and sanitation for all”.


Incofin IM, together with Triodos Investment Management, BlueOrchard, Developing World Markets, Microvest, Oikocredit, responsAbility, Triple Jump and Symbiotics signed a Memorandum of Understanding (MoU) for coordination in response to COVID-19 to support the microfinance sector.


Together, these nine investment originators and fund managers in impact investing have about USD 15 billion of assets under management in financial inclusion, invested in more than 80 emerging and frontier markets across Africa, Asia, Eastern Europe, the Middle East, the Caucasus, Central Asia and Latin America.

Measures taken locally to reduce the spread and impact of COVID-19 can affect clients, operations and liquidity of Microfinance and SME finance institutions. The Memorandum aims to coordinate efforts in the provision of ongoing refinancing in a responsible manner, thereby enabling these institutions to adequately respond to temporary changes in business conditions.

The MoU notably emphasises: “Microentrepreneurs and SMEs will form a vital basis for social and economic recovery. Supporting Financial Inclusion and preservation of the strong foundations that have been built over recent years is therefore of vital importance. This calls for enhanced cooperation within our sector. We have learned from previous experience that through transparency and close cooperation we can best help our partners and our own organizations through challenging times.”

The MoU is not legally binding but forms a strong basis for coordination over the coming months, with pragmatism, transparency and tolerance as key principles. The MoU also serves as a basis for dialogue with other stakeholders, such as multilateral and development finance banks and policy makers.

The signatories welcome additional impact fund managers to join the initiative in the coming weeks, as many have expressed interest. Strong alignment among market protagonists is the best possible way to safeguard the interests of impact investing, and ultimately the social impact and benefits that the sector offers to low income households and small businesses in low- and medium-income economies.

Incofin is pleased to announce the third edition of its Impact Newsletter.

We are convinced that in order to build sustainable businesses, managing social performance the same way we manage financial performance makes good business sense. This enables institutions to better understand the needs of their clients and to be more results and outcomes oriented, leading to increased business performance.

Discover the most recent updates on impact in our third Impact Newsletter.