Water funds within village savings and loans associations: A promising solution to improve water user fee collection in rural Uganda

Abstract

Without a functional revenue collection mechanism, rural communities in low-income countries cannot maintain or repair broken water supply infrastructure, such as groundwater wells equipped with handpumps. One approach to promote regular water user payments shifts responsibilities for fee collection from volunteer committees to village savings and loans associations (VSLAs; self-governed investment groups that follow strong accountability practices). We piloted this approach among 10 communities in Kabarole district, Uganda, and evaluated financial outcomes over two years. Qualitative interviews with 249 respondents helped identify drivers of performance and challenges. VSLAs contributed 47–221 USD annually (first-year median: 134 USD, second-year median: 112 USD) for water point upkeep (achieving 45–117% of target amounts). This revenue represented a considerable improvement over the prior scenario where communities had no reserve funds for water point maintenance. Financial transparency and increased social capital appeared to enhance collective efficacy and increase user fee collection. We identified two main threats to VSLA sustainability: perceived unfairness stemming from some water point users not joining the VSLA and the risk of water funds being loaned out if they remained unspent for too long. Coupling the VSLA model with professional handpump maintenance services could help ensure improved long-term water point functionality.