Market development in sanitation is, both literally and figuratively, a mucky business. A recent video from Water For People thoughtfully illustrates the different approaches and limitations the organization has experienced in its attempts to establish a city-wide market for pit emptying services in Kampala, Uganda.
After identifying transportation costs as a main constraint to the scaling of the city’s pit emptying sector, Water For People helped to establish Sanitation Solutions Group with the aim of growing the market for this service. The Group leases vehicles and equipment to the best performing businesses already existing in the informal sector and supports pit emptiers in becoming franchisees, helping to professionalize an industry to which few aspire.
Watch the video and share your own insights and lessons learned for market-based solutions in the WASH sector in the comments!
Editor’s Note: This guest blog post was authored by John Sauer, Senior Technical Advisor for Water, Sanitation and Hygiene at Population Services International (PSI). In his piece, John lauds the growing appreciation among WASH practitioners for market-based, holistic approaches to challenges in the sector, but also notes that this enthusiasm has been slow to translate into action. He lists several reasons for this sluggish adoption and describes what PSI is doing to apply the principles of market development to its projects on the ground.
With the excitement and buzz of World Water Day behind us I’m left both inspired and concerned. I’m inspired because there is a growing understanding by WASH professionals that it will take market development and systemic change to truly solve the problem. These methods look overall at what is working and not working in terms of WASH services for populations at risk across value chains and within the market system, and then, based on that analysis, develop targeted interventions with pro-poor innovations to make markets work. What is also exciting is the impact that adopting and implementing these approaches might have on the development sector in general.
What is concerning is that I still only see a handful of WASH projects and organizations fully focused on market development and systemic change. In other words there is a lot of talk but no action. Why?
I think there are a few reasons that I hope will change quickly for the sake of WASH and for development overall.
1) WASH players are still learning how to do market development
While there have been some great thought pieces written recently about why market development approaches to WASH are critical to success, very few projects are modeling and testing these approaches. We need more players involved with market development approaches. We need more UN agencies, donors, foundations and governments asking for and demanding market development approaches to WASH programs. NGOs and other players should do market development systematically, learn from implementation (through state-of-the-art monitoring and evaluation), and share their findings with the WASH sector, as well as the wider community of practice. These findings should include real examples of what works and what doesn’t.
Fortunately for the WASH sector this energy for exploring market development comes at a time when the wider market development community (traditionally in the agriculture sector) is actively compiling and publishing practitioner resources. The market development community is also trying to get wider adoption from the health sector, in particular WASH.
2) Funders are still learning how to fund market development
Funders need evidence to drive their funding decisions (rightfully so), and market development work in WASH is in its early days. But we also know that traditional programming focused only on the number of boreholes installed or toilets constructed does not yield transformative change and is often unsustainable. And market development is also a field with some serious discipline and evidence-based thinking behind it (driven by DCED, BEAM Exchange and others). Donors looking to increase their impact should seriously consider funding new market development approaches, so long as those approaches have a rigorous evaluation process tied to them.
3) Market Development ≠ Marketing
Make no mistake; marketing is an important part of market development. Market development, though, is much wider and looks at understanding the total market as it is now and its potential for sustainable growth. It includes but goes beyond enterprise level support, as market failures will be at other levels too, especially in sanitation.
As for action, I’ve just joined PSI as Senior Technical Advisor for its WASH program and a primary driver for my move here was my new employers’ commitment to market development approaches in health. Recently, PSI has been adopting market development work into WASH, and sanitation particularly, and plans to continue to expand this work globally.
One of the programs I’m most excited about is a market development program we’ve just launched with USAID funding in West Africa (Benin, Côte d'Ivoire, and Ghana) to improve sanitation and fecal sludge management services for a projected one million people. The program, called Sanitation Service Delivery, involves partners PATH and WSUP, and will support interventions based on a market landscape and analysis in product and service design, business model development, government partnerships, and demand- and supply-side financing. There is also a strong component focused on shared learning that starts with this blog and that will continue in a variety of channels.
So learn with us and follow our progress as we build the evidence that market-based solutions in WASH work. In doing so, we hope to prompt those who are still skeptical to action as well.
Editor’s Note: This guest post is authored by Blake McKinlay, Global WASH Knowledge Manager at iDE. Through his work at iDE, Blake supports efforts across six countries that seek to develop markets for WASH products that meet the needs of the rural poor. In his post, Blake describes the centrality of markets in iDE’s approach to WASH around the globe. While recognizing that markets are not a silver bullet in solving the global sanitation crisis, he outlines various ways in which the market mechanism can be leveraged to achieve greater impact.
Markets are efficient mechanisms for allocating resources between those that have them and those that want them. For over 30 years, iDE has used markets to enable poor, rural households in developing countries to purchase products and services they want through a chain of profitable businesses. These efforts have benefitted more than 23 million people and enabled iDE to gain a strong understanding of how markets work, why they fail, and how to get them to function properly. We have also learned that market development has its challenges, like reaching the extreme poor, and thus should not be implemented in isolation. Although market development is not a silver bullet, it can effectively (i) build off the success of other approaches and (ii) provide a strong foundation that can be leveraged by future efforts. This type of collaboration holds significant potential, but must be coordinated to be effective.
Many people wrongfully view market development as just a supply side intervention; however, markets cannot function properly without both supply and demand. With funding from the Stone Family Foundation and the Bill & Melinda Gates Foundation, and technical assistance provided by the World Bank Water and Sanitation Program (WSP), iDE implemented the Sanitation Marketing Scale Up (SMSU) project in Cambodia. By placing equal focus on generating demand (via pro-active sales and an aspirational product) and facilitating supply (via capacity building for local businesses), a total of 100,000 latrines were purchased through local businesses in the first two years of the project.
Essential to a functioning market is a functioning supply chain that makes desired products or services available when the customer wants to purchase them. To ensure goods and services remain available; the businesses involved in their supply must earn an adequate profit to sustain their interest. In many developing countries, this supply chain is broken or non-existent. Market development efforts identify the problem and engage or enable businesses to profitably fill the gap. iDE uses the Human Centered Design process to understand the needs, wants, and constraints of all supply chain actors. These insights enable us to identify specifically why the supply chain is broken and develop potential business solutions.
By building the capacity of existing businesses and/or training new businesses to enter the market, iDE creates functional supply chains that enable the private sector to produce and sell hygienic latrines. Once functioning, these supply chains should be leveraged. Not only can other sanitation approaches access these hygienic latrines in their projects, but the supply chain itself can be used for the production and sale of other products. The cost of piggy backing on an existing supply chain is lower than building a new distribution network, and the profits generated incentivize the businesses to stay involved as long as demand exists. Strategic coordination with functioning supply chains offers significant opportunity to achieve a variety of development objectives cost effectively.
As markets require products and services to be sold rather than given away, they cannot function without sufficient customer demand. In a functioning market, demand is often created by the businesses through advertising. In dysfunctional markets, like those in most developing countries, passive marketing efforts by local businesses often don’t generate sufficient demand. This ‘extra’ demand can be generated by both the private sector (i.e. businesses) and publicly funded efforts (e.g., government campaigns or NGO programs). Market development focuses on building the private sector’s capacity to generate its own demand for a product or service at scale. For example, iDE trains a network of sales agents to build demand for latrines through group and one-on-one sales meetings with potential customers. These meetings highlight the problems of open defecation, such as inconvenience, shame, and sickness, and position the latrine as the solution. Should people want to address this problem, the sales agents will connect the customer with an affordable hygienic latrine retailer.
By building the capacity of local entrepreneurs, we aim to help the private sector to generate its own demand, creating a more functional market. As many WASH efforts involve strengthening demand for sanitation, it is essential that these strategies complement each other and we all think strategically about how they can be leveraged to achieve multiple goals. This type of collaboration can reduce redundancy and increase impact in our sector.
Even those approaches that are seemingly antithetical to market development can benefit from a functioning market. When functioning properly, markets effectively filter out those who are unable to pay. This feature could help a subsidy program in identifying which households to target in order to maximize impact. Again, however, this requires thoughtful synchronization. If subsidies and market approaches happen simultaneously without strategic coordination, efforts can be nullified and markets could collapse. However, if we stagger the approaches, or closely coordinate them, more people can be reached and resources will be used more efficiently and effectively. iDE is currently working with East Meets West Foundation to explore integrating smart subsidies into the market under the SMSU project.
There are a variety of agendas and approaches in the WASH sector, each with something to bring to the table. The supply and demand infrastructure created by market development efforts can be leveraged by others. The best way to maximize the impact of all approaches is through strategic coordination. We’re all here to achieve the same goal, but each of the approaches has its comparative advantages, and the better we understand this, the better we can coordinate and ensure we maximize impact.
Editor’s Note: We pose five questions to foundation, NGO, and thought leaders in the WASH sector as part of our “5 Questions for…” series. In this post, David Auerbach, co-founder of Sanergy, shares his thoughts on the sanitation value chain, community ownership, and exciting innovations in sanitation in response to our questions.
1. What is the number one most critical issue facing the WASH sector today?
The most critical issue that the WASH sector faces is the lack of systems-based thinking. We need to go beyond simply providing a toilet. Although 2.5 billion people lack access to a clean toilet, 4.1 billion are at risk because sewage is not treated. At Sanergy, we take a systems-based approach that addresses the entire sanitation value chain. We provide clean toilets through a franchise network of local micro-entrepreneurs, collect the waste professionally, and treat it properly by converting it into useful byproducts, such as organic fertilizer. Failure to address the whole chain ultimately pushes the challenge further downstream.
2. Tell us about one collaboration or partnership your organization undertook and the lessons learned from that experience.
Sanergy sells Fresh Life Toilets to local micro-entrepreneurs. The franchise package includes installation, marketing, training and business support, and a daily waste collection service, and costs about $600 for the first year. In our work with the residents of Nairobi’s slums, we came across micro-entrepreneurs who were excited to launch Fresh Life businesses -- especially women and youth -- but who did not have immediate access to finance to start up their businesses. Kiva, an online micro-lending platform, partnered with us to provide 0% interest loans to future Fresh Life Operators. The partnership has led to 73 loans being issued and the construction of over 120 Fresh Life Toilets. Those operators serve 5,000 residents with hygienic sanitation daily. At the same time, Kiva gives us an incredible platform to share the resilient, compelling stories of our micro-entrepreneurs with the world.
By partnering with Kiva, we are overcoming an important hurdle -- access to finance -- and are creating a grassroots, sustainable solution to provide critical sanitation services.
3. How do you work with local communities to promote project ownership and sustainability?
All 161 of our Fresh Life Operators -- each of whom has invested their own savings in Fresh Life -- are from the Mukuru community. They are critical to the sustenance of our business and are key players in effectively tackling the sanitation crisis. One such operator is Agnes Kwamboka who has a remarkable story of the transformation that she was able to make as a partner with Fresh Life. Tired of having to bribe policemen so that she could run her unregulated brew business, she closed it down and had two Fresh Life Toilets installed. Now, she earns a good income, which enables her to sustain her family and no longer worry about the police. She has also reinvested the profits by purchasing additional Fresh Life Toilets and in literacy classes for herself. Testimonies like these show that we are positively changing the community and changing people’s mindsets about their role in society.
The other significant way in which we gain community buy-in is by hiring from the community. Sixty percent of our 135-person team is from the local community and over 60% of our staff is between 18 – 25 years old -- the age bracket with the highest unemployment in Kenya. The residents know how the lack of adequate sanitation can have disastrous effects on their lives and this makes them extra-determined to change their communities for the better.
4. Tell us about an emerging technology or solution that excites you and that you think will make a big impact in the WASH sector over the next 5-10 years.
One great initiative to emerge is the Bill & Melinda Gates Foundation’s Re-invent the Toilet Challenge (RTTC). Institutions and researchers have received generous grants to come up with innovative approaches for the hygienic provision, collection and treatment of waste. The initiative has really catalyzed the entire sector and, moreover, broken down taboos to bring the sanitation challenge to the center of any development conversation. Through the RTTC, Sanergy has benefited significantly. We have partnered with The Climate Foundation to develop biochar -- an organic soil conditioner. We have worked closely with Agriprotein in South Africa to develop a protein-rich animal feed made from maggots that consume only human waste. These technologies have the potential to be massively important for the agricultural input industries. In creating value from waste, we give incentive for everyone to participate in the sanitation value chain.
5. There are lots of great WASH resources, ranging from striking data visualizations to good, old-fashioned reports. What’s caught your eye lately besides WASH funders, of course?
Lately, we have read a couple of compelling papers from the World Bank’s Water and Sanitation Program about what a toilet’s worth, from ID Insight about IDE-Cambodia’s work with microfinance, and Dean Spears’ research on the effect a lack of hygienic sanitation has on children’s height.
We strive to make the WASHfunders blog a forum for thoughtful reflection and conversation on the challenges, successes, and innovations taking place in the WASH sector. Indeed, this year our blog featured a range of topics, including market-based solutions to the world’s water crisis, lessons learned from monitoring and evaluation of projects, and considerations for long term sustainability in the sector. Here’s a look back at the top five most popular blog posts from 2013.
2013 marked the first official World Toilet Day formally recognized by the UN, though the World Toilet Organization (WTO) has celebrated the occasion since its founding in 2001. In this post, Anirudh Rajashekar, business development manager at the WTO, describes the organization’s market-based approach to sanitation and points to the creation of SaniShop, a program that trains local masons in Cambodia and India to build and market toilets in their communities, as an example.
Dr. Kerstin Danert at the Skat Foundation reflects on the Monitoring Sustainable WASH Service Delivery Symposium she attended in April and observes that, while country-led monitoring is paramount to the sustainability of WASH projects, developing country governments and ministries are infrequently involved in this process. In her post, Kerstin compellingly argues that this fragmentation in ownership and monitoring of WASH projects undermines accountability and democracy and highlights possible solutions.
How have partnerships been successfully leveraged in the WASH sector? In her blog post from March, Lisa Nash, CEO of Blue Planet Network, provides one such example in describing her organization’s H20+ program. The initiative -- which employs a multi-sector approach by incorporating interventions in WASH, health, and education -- brings together stakeholders from local NGOs, the private sector, and local government. Lisa describes some of the coordination challenges that arise when working with a large group of partners and provides some lessons based on the experience.
In July, Catarina Fonseca, Senior Programme Officer at the IRC International Water and Sanitation Centre, wrote about adapting IRC’s life-cycle cost methodology to assess the true cost of projects focused on WASH in schools. In her piece, Catarina provides interesting insights into the numerous considerations involved with assessing cost, such as establishing standards and indicators to determine what constitutes an acceptable level of service.
The most trafficked blog post on WASHfunders in 2013 came from Jim Chu, CEO of dloHaiti. In his post, Jim calls for more private sector and business involvement in the provision of WASH services to ensure long term financial sustainability and reduce the incidence of WASH technologies that, once installed, break down and remained unfixed. He highlights the role that the philanthropic sector can play in supporting market-based innovations that can be adopted and scaled up by the private sector.
Leave a comment to let us know what WASH topics you would like to see covered in 2014. Interested in contributing a piece yourself? Contact us at email@example.com. Thanks for reading and Happy New Year!
Editor’s Note: This guest post was authored by Anirudh Rajashekar, business development manager at the World Toilet Organization (WTO). Founded in 2001, the WTO is an international platform for toilet associations, government, academic institutions, foundations, UN agencies and corporate stakeholders to exchange knowledge and leverage media and corporate support in an effort to influence governments to promote clean sanitation and public health policies. Anirudh discusses WTO’s approach to market-based solutions and public private partnerships in this post.
Developing innovative and sustainable market-based approaches to address the sanitation crisis is at the heart of what we do at the World Toilet Organization (WTO). By combining global expertise with local insights, WTO strives to facilitate capacity building, broader understanding and replication of sustainable sanitation solutions. WTO pioneered the creation of SaniShop — a social enterprise that improves sanitation conditions globally by empowering local entrepreneurs. Based on a “social franchise” model that involves training local masons in developing countries to build and sell toilets to their community, SaniShop is now implemented in a diverse range of regions — a marked progress from its humble beginnings in 2008.
WTO started its market-based approach in collaboration with the University of North Carolina, Lien Aid and IDE in Kampung Speu where it built close to 10,000 household latrines in 2010. In 2012, SaniShop Cambodia tested the market in 7 provinces and has since scaled up in Kampung Chnnang where it has trained close to 60 sales people and 15 SaniShop franchisees. In 2012, the SaniShop ecosystem built 1,800 toilets and we expect that this rate of toilet construction will be financially sustainable in the future in each province. The key value proposition of SaniShop is to create a market for sanitation where there previously is none by facilitating the sale and production of toilets with strict quality control standards and fixed affordable pricing. SaniShop has also begun working in Odisha, India and Vietnam since 2012. In Odisha, WTO collaborated with a social enterprise, eKutir; while in Vietnam, WTO has worked with a large multinational to establish Toilet Academies to train sales persons and masons.
SaniShop aims to restructure local sanitation marketplaces by encouraging the spirit of entrepreneurship among local communities. Entrepreneurs are able to build, produce and sell toilets to sustain their livelihoods; therefore, SaniShop is not only bridging sanitation gaps but also acts as a catalyst to better a community’s way of life.
In addition to its SaniShop operations, WTO is currently embarking on two pivotal public-private partnerships to pilot school sanitation projects for communities in South Africa and Nigeria respectively. In South Africa, WTO is working with Unilever to establish the Domestos Toilet Academy (DTA) in KwaZulu Natal. This is the first program that aims to integrate delivery structure to a community by implementing awareness, capacity building and affordable sanitation technology in schools and communities. Currently at the pilot stage, WTO will be implementing a baseline study; this will then be combined with stakeholder analysis to form a basis for implementation and evaluation before replicating across South Africa. In Nigeria, WTO is working on a partnership with Tolaram Foundation (Singapore) to refurbish 4 school toilet buildings in Lagos, Nigeria. This will also include the implementation of health and hygiene programs; the success of these programs will be measured by monitoring and evaluating students’ hygiene habits, health and school attendance.
At WTO, we are constantly exploring new ways to reach out to the “toiletless” in sustainable ways. For example, WTO is currently researching new means of waste disposal and also new toilet designs that can tackle problematic terrain including areas with high water tables and areas with hard soil.
WTO has also undertaken a number of projects beyond its market-based model:
- Worked with the Lien Foundation to build 30 toilets in 2006 in Hambatotta and Galle, Sri Lanka. Trained 30,000 individuals in ecosan usage.
- Worked in Aceh, Indonesia following the tsunami after receiving a million dollar grant from the Singapore Red Cross in 2007. Built 7 community toilets in Banda Aceh and 6 in Meulaboh. Trainings for local engineers, contractors and architects were carried out in both cities to strengthen their capacity to design, construct and maintain sustainable sanitation systems in the future.
- Worked in Trichy, India with Scope to build 10 ecosan toilets.
- Worked with Lien Aid in Shanxi, China to build a school toilet block with the Chinese Environment Institute and the China Poverty Alleviation Association (CEEP).
We are currently moving towards a holistic, small scale pilot campaign in Bihar, India where WTO will facilitate the construction of toilets with local mason contractors with a goal of 100% sanitation facilities for all villagers. It is expected to be completed by late 2013.
From our market-based approaches and public-private partnerships in the sanitation field, we have learnt that through collaborative effort significant progress can be made to improve global sanitation conditions. We look forward to furthering WTO’s mission in bringing health, dignity and well-being to all by continuously engaging with donors, partners and stakeholders in the work we do.
Editor’s Note:This guest blog is authored by Jim Chu, CEO of dloHaiti, a for-profit, investor-led initiative to provide cleaner and more affordable drinking water for underserved Haitians. Named after the Haitian Creole word for water, dloHaiti recently earned a top distinction from Imagine H2O — a global business plan competition and accelerator for water startups. In this blog, Jim discusses the merits of market-based approaches to WASH solutions.
Invariably, we are shown scenes of handpumps in poor villages in Africa or Latin America and happy children drinking water. We instinctively reach for our checkbooks, ready to fund worthy WASH projects that change people’s lives for the better.
When statistics later reveal that most charity-driven WASH projects fail or that the majority of the handpumps in those pictures stop functioning within a few years, most of us usually don’t pay attention. (According to a 2007 UNICEF study, 40% of the handpumps in Africa no longer function and most handpumps have a functional life of 3-5 years.) We like to believe that if we provide enough money — or the right technology or more equipment — we can solve most of the issues of the poor in developing countries. For many charitable projects, especially in WASH, this is a mistaken belief.
Sustainable water and sanitation infrastructure — whether it’s a large water treatment center, a network of pipes, or just a community handpump — requires the right institutions to make it work long-term. Whether you call it “capital asset management,” “community-managed systems,” or just “sustainability,” it means that the recurring income, technical skills, supply chain support, and the right financial incentives need to be in place to keep things working. For many donor-funded, NGO-driven projects, this is an important aspect that’s missing.
However, there are already well-established institutions in almost every country that can provide sustainability: the government and the private sector. But many fear governments in poor countries. Isn’t it their failure to provide basic services to its citizens that is the root of the problem? Who wants to give money to governments whose leaders will just shift it to an overseas bank account? Even more, many fear private markets and business in particular. Providing water shouldn’t be about making money. Water is a basic human right, after all, so shouldn’t it be free?
This line of thinking leads to a situation similar to that in Haiti, where I’ve been working in WASH since 2010. The government is starved of funds to drive any meaningful change, much less multi-billion dollar projects. The private sector thus provides much of the services for potable water to the population. Unfortunately, their model relies on water trucking and is wasteful, dirty, and expensive. The Haitian consumer suffers, paying 12 cents per gallon for treated potable water — that’s 80 times more than the average price of municipal water in the U.S. Meanwhile, well-intentioned NGOs put in place programs that are only stopgaps, or they stop working after funding dries up because there is no sustainable capital asset management model in place. Worse, their efforts can put well-run local water providers out of business. I call Haiti a WASH equipment graveyard; I’ve seen enough non-functioning and abandoned water systems in Haiti to lose all hope — and I confess that I’ve contributed to some of that myself.
Successful WASH projects need to have a clear strategy for ensuring that the right institutions, resources, and incentives stay in place to keep it self-perpetuating — or even expanding — once philanthropic funding ends. Governments clearly have a strong role to play, and the endgame is strengthening — and cleaning up — their capacity to properly regulate and eventually execute a comprehensive WASH strategy for their populations. NGOs cannot replace the long-term role of the government.
Philanthropic capital could also do more to leverage the private sector to achieve social goals. An impactful role for donors is to facilitate innovations that businesses can then implement at scale. Donors can also support entrepreneurs who are trying to solve hard social problems by creating better, cheaper products and services that serve the basic needs of the poor.
So what’s standing in the way of applying more market-driven approaches in philanthropy? Some of the barriers to a productive business-philanthropic partnership are cultural. Whether it’s about risk-taking, understanding markets, or views on profit, a bar conversation between a Doctors Without Borders volunteer and a marketing manager at Apple has a good chance it will end in tears. But businesses should not be seen just as a source of philanthropic funding or a group to be disdained. The same people who are creating breakthrough consumer products or taking big risks to innovate for profit could be spending their time figuring out the best market-driven ways to lower the cost of water in Haiti.
Ultimately, we need more entrepreneurs who are willing to build new companies that provide financially sustainable solutions to the world’s water challenges. Imagine H2O, a global conduit for water entrepreneurship and innovation, is leading the effort to identify and support promising water startups. The organization’s business plan competition and accelerator program is a powerful path-to-market opportunity for entrepreneurs entering the water sector.
My call to action — whether you are a donor, MBA graduate, or NGO volunteer —is to get business and people in business more involved in what they do best — innovating — to improve the lives of so many at the bottom of the pyramid.
Editor’s Note: This guest blog was authored by Trupthi Basavaraj and Rachel Findlay of the charity think tank and consultancy NPC, which provides strategic support to the Stone Family Foundation and has coordinated the Stone Prize for Innovation and Entrepreneurship in Water. Here they share some of the key lessons that NPC has learnt from running the Prize. A version of this story also appeared in Alliance magazine.
Prizes have long been successful at inspiring technological innovation, from determining a ship’s longitude to creating a toilet that costs less than five cents per user per day to operate. What is less common is using a prize as a tool to stimulate innovation in service delivery. So when the Stone Family Foundation set up the Prize for Innovation and Entrepreneurship in Water, it was all about doing just that.
As a part of our wider strategy to support entrepreneurial initiatives in the water, sanitation, and hygiene (WASH) sector, we launched the £100,000 Stone Prize earlier this year. After an extensive eight-month process of identifying and short-listing candidates, we finally found our Prize winner — Dispensers for Safe Water (DSW) in Kenya — and four other organisations that we hope to support outside of the Prize.
The Prize came about as a way to identify early stage water initiatives that the Foundation could support, and eventually help scale up. The search was for innovative approaches to delivering safe water in a sustainable and cost-effective manner to those without access in sub-Saharan Africa, and South and Southeast Asia. For the Foundation, running the Prize has been an exciting process, and one that has taught us several key lessons, three of which we have highlighted here.
Firstly, to attract the right type of initiatives and ultimately short-list candidates, it was important to set clear criteria — without being overly prescriptive. We identified six criteria for the Prize, but with a particular emphasis on two areas: a) innovation in technology or service delivery, typically in response to a specific need, and b) innovation in financial model, looking to harness the power of the private sector.
DSW meets both of these requirements. It addresses a clear need in rural Kenya: its water purification technology, a simple dispenser, is filled with chlorine and placed near a communal water source, allowing individuals to treat their water free of cost with the correct dose of chlorine. (To learn more about DSW's work, read this post.) But what makes this initiative truly exciting are two innovative financial models. First, the dispensers generate carbon credits by reducing the demand for boiling water using firewood, which DSW will eventually be able to sell. Second, DSW is able to bundle the dispenser as part of a wider package of agricultural goods sold by its partner, One Acre Fund. If successful, both models offer new ways of making water purification accessible and sustainable for low-income communities. It will also allow DSW to expand the Kenya Chlorine Dispenser System program into other countries.
Secondly, running a prize scheme is not just about funding. It’s also about generating publicity in a way that reactive grants programmes cannot. Getting publicity right is important not only for attracting applicants, but also for promoting the winning candidate and its approach. Our strategy was to identify the right partners and to leverage their extensive networks, reaching out to organisations both within the WASH sector and outside it. At the end of the first round, the Foundation received 179 applications from 39 different countries. We hope the Prize will not only help DSW gain recognition and attract further support from other funders, but also stimulate wider discussion on what innovation means for the water sector.
Finally, we also learnt that it was important to have the right reward in place. The promise of £100,000 for scaling up the winning initiative attracted a pool of strong applications, but as we narrowed down the candidates, it became clear that the level and type of funding offered through the Prize was not necessarily appropriate for all. As a result, the Foundation is now looking at the best way to support four highly commended candidates outside the Prize framework — this could be through providing investment or smaller grants to further test an aspect of the approach, or simply by helping to identify partners to move an initiative from pilot to scale.
For the Stone Family Foundation, the Prize has been a successful endeavour. It has enabled us to find some exceptionally strong grantees for the Foundation that we might not otherwise have discovered. It has also given us a sense of the wide range of innovations within the WASH sector, especially in countries such as Kenya, India, and Cambodia where the local environment has led to a growth in entrepreneurial initiatives. Much depends on what a funder is looking for and how a prize is structured, but we feel prizes can be an incredibly powerful tool for identifying and driving innovation.
Editor’s Note: This post was authored by David Winder, chief executive of WaterAid USA. David talks about WaterAid’s work with local NGOs in Mozambique to make water and sanitation services affordable to poor, urban populations through innovative financing models. A version of this story originally appeared here.
Having just returned to New York from Maputo, the capital of Mozambique, I'm reminded how lucky we are in this city to have reliable water and sanitation services. Thanks to investment in water pipes and sewers in the 19th century, diarrheal diseases that ran rife through our city a few generations ago have all but been eliminated, and we take it for granted that safe drinking water is available at the turn of a tap.
As in many other large cities across the developing world, Maputo is facing rapid growth of low income settlements and major challenges in providing the population with access to safe water and sanitation. The latest data (UNICEF/WHO 2012) show that only 77 percent of Mozambique's urban population has access to improved water sources. The situation is even grimmer when it comes to sanitation, with only 38 percent of the urban population having access to safe sanitation.
The country has one of the highest infant mortality rates in the world with 86,000 children dying before their first birthdays every year. Diarrhea is one of the leading causes of child deaths and 44 percent of children under five are undernourished.
Increased investment in providing access to safe water and improved sanitation dramatically impacts child survival. In low-income areas of cities like Maputo, that is often a complex task. High population density, transient populations, and poor quality housing are part of the problem and present challenges to those striving to improve water and sanitation infrastructure.
Often in low-income urban neighborhoods the provision of piped water to homes is simply too expensive for ordinary families to afford. One way of tackling that problem is by helping local residents band together and negotiate affordable payment plans with water service providers with the help of local NGOs.
Last week I visited the community of Costa do Sol on the northern periphery of Maputo and found that a community water users' association, ACODECOS, established with the help of WaterAid and local partner organization ESTAMOS had achieved great success in expanding the number of household water connections over a five year period, with very positive results for the health of the community, particularly children. Data given to us by the Ministry of Health showed that the number of cholera cases had dropped from 371 in 2003/4 to only 21 in 2008/9.
One reason why this was achieved was ACODECOS' successful negotiation of a reduction in the household connection fee to $50 (from Aguas de Mozambique, a private company receiving 75 percent of its investment from government) that can be paid in installments.
Local resident Francesca Nhantos (shown in the photo at the top) told me that having piped water available in the home had transformed her life. "Before we had the standpipe, a water truck came to the village once a week and we had to pay 5-7 meticais (20 cents) for 20 liters of water and we weren't sure how clean it was so we had to boil it."
As Arminda told me, other changes, such as the installation of latrines, hygiene education, the provision of drinking water and toilets in schools and the disposal of solid waste, have also helped to dramatically improve the health of the community.
With the absence of piped sewerage in densely populated low-income urban communities, disposal of fecal sludge from latrines also poses a major challenge. Last week, I visited a pilot project managed by Water and Sanitation for the Urban Poor (WSUP), an organization working closely with WaterAid. This project shows how offering loans to small businesses can help with the development of affordable waste management services.
Paulo Biane Vaiene from the Maputo community of Maxaquene is one such entrepreneur benefiting from financial assistance. His small enterprise UGSM Vaiene started emptying small septic tanks using a small pump and tank called a "gulper" that was pulled by a donkey. With a loan from WSUP, he was able to buy a truck that has allowed him to cover more clients and expand his radius of operations. Business is thriving, more households can now take advantage of his services, which cost around $20 and are required twice a year, and public health is safeguarded by the safe disposal of the waste.
Just as Paulino has demonstrated that fecal sludge removal can be a profitable business, there are opportunities to develop small businesses selling a selection of toilet designs to families. A range of viable technologies has been developed, but business models need to be developed with finance plans to ensure that options are affordable to all families regardless of income. We found that all needed construction skills exist in the communities, so the focus needs to be on ensuring these skilled laborers are able to find employment that not only helps their families out of poverty but also helps communities stay healthy and meet their basic needs.
These experiences show how innovative financing models can impact on health in low-income urban communities. When water connection charges are not only reduced but split into installments, poor families can afford to get linked to the municipal piped water system, and the support of small private service providers ensures families have access to effective and affordable fecal sludge removal services until the sewage network can be expanded.
These examples also show the importance of linking larger systems — such as pipes for the water utility or waste management and sewage systems — with community and household-based needs and approaches. Reducing poverty and protecting people's health and well-being requires a combination of efforts, from local capacity building and small business development to larger-scale infrastructure development. I was inspired by the efforts being made by NGOs and community-based organizations to build healthy communities. The skills, the demand, and the creativity are there. We have so many opportunities now to make the most of them.
Editor’s Note: Our new Spotlight On... series shines a light on funders and NGOs working to bring critical solutions to water, sanitation, and hygiene issues. This guest blog is the first in the series. It is authored by Adrian Fradd, senior consultant at New Philanthropy Capital, who is in charge of the day-to-day management of the Stone Family Foundation and provides strategic support to its trustees.
Being a new funder in the WASH sector has sometimes felt like being the new kid in high school. It can be hard to know where you fit in — particularly when you’re not that big, or experienced, or well-connected. You have to decipher a whole new language and get up to speed on all the unspoken power dynamics and history. And there’s the danger you’ll fall in with the wrong crowd, try and be something you’re not, or get frustrated, drop out, and go it alone.
Of course the analogy only goes so far, and also has the effect of making people think I had a very unhappy time at high school. But I guess in a way it highlights some of challenges that a new, mid-sized funder faces when trying to work out its strategy, and the importance of initiatives like WASHfunders.org.
For us at the Stone Family Foundation, we still feel very much like the new kids, but we’re getting a clearer idea of the direction we’re heading in and the way we want to spend our annual WASH budget of £4m ($6.25m).
Our current approach is based on three main hypotheses. First, that market-based solutions, have the potential to provide sustainable, scalable, and efficient water and sanitation services to low-income households. Second, that more grant funding is needed to help these initiatives to transition from a successful pilot to operating at scale. And third, that the Stone Family Foundation is well-placed to fill this funding gap. We can provide grants of a meaningful scale, we have an appetite for risk, and we can take advantage of the business skills and experience of our trustee board and their contacts.
Since the end of 2010, we’ve started to put in place specific funding programs to refine, develop, and test these hypotheses. And as we seem to like to do things in threes, this has coalesced around three main initiatives.
The first, the major grants program, is focused on three countries, Cambodia, Zambia and Tanzania, where the foundation is making a small number of grants, with an average size of £1m ($1.6m). In Cambodia, it is funding a cluster of work in sanitation marketing — two programs are scaling up their work with local entrepreneurs, and then a third is exploring how to integrate sanitation marketing into a portfolio of approaches (such as targeted subsidies, CTLS, and government regulation) in order to achieve 100% sanitation coverage in a specific area.
The second, an innovation grants program, is looking to reach further down the food chain, identifying projects that are at an earlier stage of their development. In sanitation we are continuing with a proactive model — as promising ideas have been relatively straightforward to source — but with water, we’ve taken a different approach and have set up the Stone Prize for Innovation and Entrepreneurship in Water. (First round applications close on 22nd March.)
And then the third, more nascent initiative, is a strategic grants program looking at how the foundation can help strengthen the resources and the support available to organisations looking to develop and scale their work. So for example, the foundation is funding Monitor Inclusive Markets to support a group of Indian organisations to test and strengthen the business model of their urban water purification. And it is exploring potential ways to open up sources of finance, by partnering with social impact investors and microfinance providers, as well as potentially supporting organisations to access carbon financing.
This is where we are at the moment. It’s all quite early stage, but also quite exciting, and we feel we’ve already learnt a lot, and are starting to refine and challenge some of our working hypotheses — for example, the specific role and potential of market-based solutions, and also the extra capacity the SFF will need to fund in this space.
As we learn more and our partners start to report back on the progress of their projects, we’ll post and blog the lessons on this site, and we’re happy to talk with others off-line and share our experiences in more detail — like why we chose Cambodia, Zambia and Tanzania as a focus for our major grants program. We’re also currently writing up a short report on what we’ve done to date, which should be out at the beginning of April.