Technical assistance is the quiet hero behind blended finance. This month, we highlight the seven-year journey of Central America's "Azure Source Capital" in reaching rural populations, a story that shows how it can be done.
Published on: 18/12/2025
This blog is co-authored by Catarina Fonseca, IRC Associate, and Maren Barbee, Catholic Relief Services
If you work in water or development finance, you’ve probably heard it: we need to mobilise more capital for the sector. It’s true. But here’s the part that rarely makes the headlines: without the right technical assistance — the practical, hands-on support that strengthens service providers, derisks projects, and builds bankable pipelines—funds sit idle, water projects do not materialise, and communities wait for water and sanitation services.
This blog distils lessons from Azure Source Capital — a blended finance platform advancing water and sanitation in Central America. It’s a story about loans and leverage, yes—but mostly it’s a story about technical assistance: what it is, what it costs and how it’s organised.
Across Central America, millions still lack safe water at home. Even where networks exist, roughly two-thirds of rural systems underperform: connections without reliability, water flows a few days a week, intermittent pressure, weak chlorination, or limited hours of service. Utility managers and community associations often know their systems better than anyone, but they may lack the engineering expertise, financial literacy, or organisational systems to fix chronic issues or take on repayable finance.
At the same time, public investment lags: governments in the region, on average, invest well under 1% of GDP in water and sanitation—far short of what’s needed. So yes, more repayable capital must enter the sector. But capital alone is not the solution. And it’s exactly where Azure’s model starts.
The Azure initiative, spearheaded by Catholic Relief Services (CRS), and initially supported by the Inter-American Development Bank (IDB), sought to address the above challenges by creating a fund to stimulate private sector investment in WASH. It’s a blended finance structure with two main areas:
A country-based TA team meets a water service provider—a community association, municipal system, private operator, or even a technical supplier. The team signs an engagement letter, runs a full operational and engineering diagnostic assessment, and co-develops an improvement and investment plan.
Azure Source Capital then channels repayable finance through country trusts (Fideagua) managed by national development banks. Loans then flow to local commercial banks and credit cooperatives, or directly to water service providers.
Projects range from solar-powered pumps and household metering to storage tanks and network expansion plus land purchase—the kind of assets that raise service levels, increase assets and cash flow, enabling repayment.
Using an mWater-based service level dashboard (12 indicators with an A–D grade), CRS tracks whether service quality actually improves. As loans get repaid, capital recycles, TA gets sustenance, and confidence in the model increases—for lenders and providers alike.
In the past 7 years, over 350 water service providers (WSPs) have received TA, serving over 1 million people. Seventy of these WSPs (benefiting over 500,000 individuals) have demonstrated improved services.
Each country has unique legal and regulatory frameworks, water service provider structures, and political landscapes, making replication complex. El Salvador's initial lack of water law allowed for easier CBO loan access, unlike Honduras where a guarantee fund was necessary since water service providers lacked collateral.
In El Salvador community associations that hold title property can borrow. A new National Water Authority now collects extraction fees and is exploring ways to co-invest in rural providers, which is an encouraging sign.
In Honduras, municipal borrowing is typically capped to the term of the current administration unless Congress approves longer tenors and this is harder to align with infrastructure timelines.
In Guatemala, service provision is highly diverse and often municipal; national water law is evolving; large watershed funds are emerging. Azure’s approach here starts with mapping who can legally do what, then targeting the “low-hanging fruit” where TA plus finance can move first.
Other challenges:
Despite the geographical differences in regulatory frameworks, the programme has managed to expand from El Salvador to Honduras and Guatemala, with some TA in Nicaragua.
The model has also successfully demonstrated to the banking sector that WSPs, particularly larger, well-managed ones, are viable borrowers capable of repaying market-rate loans. This is also the main reason that the model has successfully blended its financing with co-investment from local governments, private sector donations, and grants.
Unlike other blended finance models, Azure is also able to support and lend (at market rates) to small community water associations, enabling them to complete projects (e.g., solar-powered pumping stations, metering).
Some of the largest development banks are committing to double their lending to the sector the next three years (see here and here) – and not only for damns and large urban areas. That will not happen without bankable pipelines, and bankable pipelines are built by technical assistance. If there’s one budget line that should be protected, coordinated, and professionalised in 2026, it’s the country-level technical assistance that turns intermittent water into daily water—and daily water and sanitation into dignity and development.
Want to read more? Check the details in the Azure Azure PowerPoint presentation.
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