This piece was originally featured on the Devex site.
By Sherina Munyana, CEO, Sanitation Solutions Group and John Sauer, WASH Senior Technical Advisor, PSI
By 2030, global leaders have committed to ensuring the availability and sustainable management of water, sanitation, and hygiene for consumers everywhere. But as of today, 2.2 billion people lack safely managed water; 4.2 billion lack safely managed sanitation; and 3 billion lack basic handwashing facilities in their home.
To accelerate progress for consumers and countries, development efforts need to aggressively tap markets and engage the private sector to find solutions. In short, achieving the scale and speed necessary to deliver true impact by 2030 will require a more deliberate focus on the business of WASH.
But how? Through the following:
- Improve policy, laws, and regulations that set clear rules of engagement and incentives for the private sector; for example, automatic qualifications for tax exemptions.
- Share costs with WASH businesses in the first three to five years of operation, specifically management costs and asset acquisition.
- Support research and development to allow for more affordable and appropriate technologies; for instance, toilets and containment options that can be installed with minimal skill and without expensive cement and rebar inputs.
- Increase business development services for small- and medium-sized enterprises such as sales support, financial management, and strategy development.
- Improve the provision of low-cost financing for businesses and consumers, while stimulating consumer demand and behavior change.
The good news is that market development activities are ongoing in several countries, and businesses can be active partners if donors shift their strategies to engage the private sector more directly.
There are successful social enterprise service delivery models that show potential for scale — but these are often confined to one country. Examples include Sanergy’s “Fresh Life” toilet model in Kenya; Clean Team’s container-based sanitation model in Ghana; and Whave’s water services maintenance model in Uganda.
- Sanergy maintains a franchise network of pay-per-use toilets across Nairobi’s urban slums, offering an affordable and effective alternative to sewers.
- Clean Team provides safe, affordable in-home toilets for low-income families. Customers pay a small weekly fee for the toilet and collection service.
- Whave works with local governments and rural communities to provide water maintenance services. Communities pay a small annual fee so that the services are sustainable at scale.
Given support, solutions can be replicated in more countries and contexts with similar needs. However, as company founders are often focused on making their businesses viable and profitable in their initial country of focus, they may not feel like the model is scalable — yet. If they do, they may not have the luxury of time and resources to consider or invest in multicountry scaling.
Donors must explore how to quickly move promising solutions across contexts in a way that protects the intellectual property of the founders and acknowledges the urgency of scaling solutions. Donors could underwrite market research and development, asset acquisition, and management costs. They could also support technical and financial proofs-of-concept for product and service delivery models in new contexts.
For example, Sanitation Solutions Group in Uganda saw donor-supported investments in asset acquisition and management costs by the Stone Family Foundation in 2016 scale up a fecal sludge-emptying business. This resulted in the creation of eight teams providing both gulper and cesspool emptying services to approximately 2,000 low- and middle-income households annually by 2019.
More work is needed to improve coordination and revenue generation to reinvest in better WASH services through public-private partnerships.
Despite the challenges, the following are good reasons for businesses to consider WASH as a growth area.
1. The market size is unquestionable
For example, an estimated 100 million households in sub-Saharan Africa need an upgrade from an unimproved toilet to a hygienic and improved toilet, so businesses who have entered this market from Benin to Ethiopia are finding customers willing to pay for upgrades.
2. Donor funds do exist for private sector WASH pursuits
Governments and donors want to solve this problem, they just need to be shown how businesses are key partners in the fulfillment of contracts for service delivery and innovation to introduce new products and services.
3. Businesses can apply their unique skills
Innovation is needed, and NGOs — the usual development partners in WASH — are generally risk-averse and less able to pivot quickly. Business engagement in WASH can yield impact through rapid innovation, and employees will have greater satisfaction in the work they do.
4. The opportunity to learn a new market segment
Businesses that use the WASH market as an entry point will be gaining incredible and priceless consumer knowledge about a segment that is largely unknown. Businesses should take advantage of this opportunity to gain first-mover advantage.
5. Global partnerships already exist
To help engage and guide the private sector in their move to WASH, platforms like the partnership Sanitation and Water for All and the Toilet Board Coalition have prioritized private sector engagement.
As of now, only a handful of large, global, and national private sector actors have engaged in the WASH sector. These players still primarily offer their products and services to wealthier market segments or remain focused on constructing large infrastructure.
Even larger WASH companies such as LIXIL that have engaged these issues, confront high barriers to market entry such as channel and supply chain development, sales, and promotions — all hindrances to reaching priority, hard-to-reach, rural and peri-urban households in Asia and sub-Saharan Africa. There are also workforce and installation challenges, which could be solved through further R&D.
Governments and donors — despite acknowledging the importance of WASH businesses’ role in providing better services — haven’t sufficiently strengthened the structures and systems needed to adequately engage the private sector. More work is needed to improve coordination and revenue generation to reinvest in better WASH services through public-private partnerships.
It’s time to rethink how to achieve U.N.’s sixth sustainable development goal — ensuring the availability and sustainable management of water and sanitation for all — through effective partnership models with the private sector.
Where significant WASH progress has been made, PPPs have always been at the center. Now is the moment to address the root causes of why effective PPPs aren’t materializing more frequently in other contexts, particularly in sanitation, and double down on efforts to make sure they happen now.
Banner photo credit: Sanitation Solutions Group.
