Debunking Five Myths Around Sanitation as a Business
We read Jemima Sy’s piece on Flushing Five Myths About the Business of Sanitation on NextBillion with great interest. In the article, she addresses 5 widely held misconceptions associated with the provision of hygienic sanitation in developing economies. We agree strongly with her findings through our work to provide hygienic sanitation in one 500,000 person informal settlement in the south east corner of Nairobi. Here is why our experiences in the field support her view from the World Bank.
1. “Firms serving the base of the pyramid are predominantly micro firms because the market is small.” Myth.
FACT: In the last two years, Sanergy has grown organically to build a well-oiled franchise network of 170 micro-entrepreneurs running 330 Fresh Life Toilets. We’ve become the largest provider of hygienic sanitation in Mukuru in a very short time. We’ve created about 400 jobs including micro-entrepreneurs, their staff, and our staff who provide a range of critical services – waste collection, marketing and branding, and business operational support.
2. “Sanitation is a low margin business.” Myth.
FACT: The number one reason that our micro-entrepreneurs invest in sanitation is because they understand the consequences and therefore the opportunity of inadequate sanitation. So far, our 170 Fresh Life Operators, who each own an average of 2 toilets, are earning a yearly profit of $2000 (this is based on 50 users per day per Fresh Life Toilet, and a customer fee of $0.06 per use). The daily operating costs of each toilet is about $0.30, while revenue is about $3. It’s a pretty healthy business. We even make the financing easy for the entrepreneur by offering a 0% interest loan through Kiva – the online micro-lending platform.
3. “Lack of interest in sanitation is driven by the lack of money.” Myth.
FACT: Affordability is only one part of the equation that drives interest. Convenience, habit, and cleanliness are just as important if not more so. For our operators, 90% of users come from only 25m away to use Fresh Life Toilets. If we get toilets close to where people are living, then they will use them. At the same time, we recognize that people have resorted to practices such as flying toilets and pit latrines for a very long time. We are working to unwind people’s habits of using unhygienic sanitation and adopting ours. We have a variety of strategies to do this, such as loyalty programs, vouchers, and aggressive marketing throughout the community. We put Fresh Life front and center of people’s lives. Finally, the toilet has to be clean for people to want to use it. We have high compliance standards for our operators and if they do not meet them, we shut down the toilet. While, thankfully, we have not had to do this very often, the credible punitive measure is effective for enforcement.
4. “Poor households are looking for ‘improved’ sanitation.” Myth.
Jemima points out that “To get households to invest in sanitation, they need an offer they cannot refuse: a quality, high-value facility that is within their reach.”
FACT: The Fresh Life Toilet was designed with the end-user in mind; we received a lot of great feedback from the community members through employing various HCD (Human Centered Design) techniques. Residents demanded hygienic sanitation that “felt like a home” and so we use thin-shell cement walls and, in our next iteration, a tiled floor. Residents wanted a facility that was close to where they were living for safety reasons, so we ensured that it was a compact design – only 3ft by 5ft – meaning that we can install just about anywhere in the densely built-up slums. Residents wanted a well-lit facility, so we offered a translucent roof and a solar lantern. Residents wanted to be able to check themselves out, so we installed simple mirrors inside the facility. And finally, although it’s expensive, we use a bright blue paint on the outside that is eye-catching and attractive. All these elements give our customers what they want to generate demand.
5. “Policies promoting sanitation are critical for the private sector.” Myth.
FACT: Policies promoting sanitation are not as critical as well-regulated and well-articulated regulatory framework which enables private sector participation. Sometimes, we feel that the process of dealing with the many layers of government is Kafka-esque: every door that we go through leads to another door and the finish line keeps shifting. The government needs to create the enabling environment, but does not need to overly incentivize the private sector to participate. Sanergy has already taken important measures to support this by working with the Ministry of Health and other partners to co-convene the first ever private sector sanitation delivery Technical Working Group. As Sy says, the private sector is already excited to be there.