OBA Sanitation Microfinance Program

Bangladesh has made notable progress in reducing the practice of open defecation, from 34 percent in 1990 to just 1 percent of the national population in 2015. However, according to the report of the Joint Monitoring Program (JMP) 2015, the current prevalence of improved sanitation is 61 percent, mounting at only 1.1 percent annually. Good sanitation is vital for good health and for wealth creation as well. Hygienic latrines are considered the next generation of toilets, fully confining waste from both the user and the surrounding environment. Many households in the rural areas of Bangladesh don’t have sufficient cash in hand to upgrade sanitation systems, but can afford the cost if they are able to spread the cost over time.

In the backdrop of prevailing high rate of unhygienic toilet which is about 65%, PKSF has decided to adjust a demand led strategy for promoting expansion of hygienic toilets by using lending instrument. However, grant instrument may be required for the ultra-poor households in this regard. 

Project development Objectives
Under the OBA Sanitation Microfinance Project, hygienic latrines will be constructed for 170,000 poor households in rural Bangladesh, benefitting 850,000 individuals. Based on the existing customer base of the PKSF-POs, approximately 90 percent of the borrowers are expected to be women.

By the end of the project
(a)   170,000 poor households have received sanitation loans from MFIs under the project.
(b)  850,000 people have been provided with access to hygienic sanitation facilities.

Project cost &Components
The total fund of the project is US$ 25 million. Of this, US$ 3million will be provided by the World Bank and the rest US$ 22 million will be financed by PKSF and its Partner Organizations (POs).

The project has two components

  • Component 1 (US$ 2.4 million)
    The component will provide US$2.4m subsidies to improve access to on-site sanitation for a total of approximately 170,000 low-income households, benefitting 850,000 people in rural areas. The one-off OBA subsidy will be available for household loans for low-cost technologies pricing between BDT 3500 and BDT 10,000. The OBA subsidy will range from 10 to 12.5 percent of the total value of loan to be disbursed upon independent verification outputs.
  • Component 2 (US$ 600,000 Implementation support and independent verification agent -IVA)
    This component will finance the operational and implementation related costs of the project.

Types of Latrines
Most of the rural households in Bangladesh have access to direct pit latrines. These are improved latrines but not hygienic because wastes are not kept completely away from users and environment. Under this project, a set of standard latrine models have been promoted to upgrade the existing systems, in order to meet the hygienic standards that could keep wastes fully away both from users and surrounding environment. The project-designed latrines are:

  • Aram, Aram Plus and
  • Bilash or Bilash box
Figure-1: Bilash Box latrine

Figure-1: Bilash Box latrine

These latrines are being constructed on a small piece of land, at a low cost and are poor people friendly.

Figure-2:  Map of OBA Sanitation Microfinance Program working areas

Figure-2: Map of OBA Sanitation Microfinance Program working areas

The PKSF-POs are working all over Bangladesh. 21 POs were selected based on geographical context, previous working experience in sanitation projects and their implementing capacity. The project working areas have been selected in considering the geographic variations e.g., plain land, hilly areas, islands, char areas and low land areas etc.  At present, the project is being implemented in 273 Upazilas or Sub-districts of 41 districts in Bangladesh through 1365 branch offices of 21 POs.

Project Management Unit (PMU)
PKSF has formed a Project Management Unit (PMU) consisting of senior management level officials and two consultants. Among them, one Deputy General Manager (DGM) and one manager from PKSF are fully engaged in this project. The DGM is designated as the Project Focal Person and the Manager as Deputy Project Focal Person to oversee the overall implementation. Also eight panel leaders and 17 dealing officers from PKSF are indirectly/partly involved in this project. The Executive Directors/Chief Executive Officers   of the POs are directly/partly involved in the field level implementation.


Furthermore, 21 Focal Persons and relevant Area Managers and Branch Managers of the PKSF’s POs (1365 Branch Managers and 4620 Loan/Credit Officers) are actively involved in this project for the field level operations. So, at present, a total of 6,270 field level staff of the PKSF’s POs are actively involved in the implementation of OBA sanitation Microfinance Program.

Progress (Up to October, 2017)
The project was declared effective from 23 February 2017.  Up to October 2017, PKSF has disbursed Sanitation Development Loan (SDL) of about US$ 2.82 million (BDT.22 crore) to 20 Partner Organizations.

A total of BDT 22.15 crore was disbursed by PKSF-POs as loan finance among 22,348 households as of October 2017 and hygienic latrines installed in accordance with the World Bank latrine catalogue.

Figure-4: workshop participants

Figure-4: workshop participants

Moreover, to meet the requirements of project developed Environment and Social Management Framework (ESMF) and the Small Ethnic Communities and Vulnerable People Development Framework (SECVPDF) in the field, three workshops on Environment and Social Safeguards were organized and facilitated by the Project Management Unit (PMU) of Palli Karma-Sahayak Foundation (PKSF) from 21 September 2017 to 05 October 2017 at PKSF Bhaban, room no. 306, consisting participants of PKSF-POs focal person, PKSF dealing officers, PKSF-POs area managers/zonal managers/credit coordinators and PMU staff.