How can a trickle become a torrent? (PDF 2.57 MB)
8 insights on how impact entrepreneurs can bring safe water to millions
Access to safe drinking water and sanitation is everyone’s right. Just like the right to liberty or the right to a fair public hearing. There’s not a drop of difference.
But in the real world, it doesn’t always work that way. This isn’t down to a lack of effort. Every year, billions of dollars are ploughed into projects to improve water, sanitation and hygiene (WASH) services – many of which are exemplary.
Yet, progress remains stubbornly slow. Clearly, some fresh thinking and new ways of working are needed. But where to look?
Enter business. No, not the huge privatised water utilities. When it comes to helping the world’s poorest households, the really exciting innovations are happening elsewhere: among grassroots impact entrepreneurs.
With a shared mission to provide safe water for all, these entrepreneurs run organisations that are typically fleet of foot, small in scale and community based. What really sets them apart, though, is their operating model. Rather than rely on grants, they look to generate revenues from the services they provide.
Consider the Suvidha Centre in the Indian city of Mumbai, set up by Unilever in 2016. For local adult residents, for example, it costs just 1–3 rupees (€0.01–0.03) per day (kids go free). There’s also an option for families to pay a fixed fee (around 150 rupees) for a monthly pass.
The goal of this pay-per-use model isn’t just about making access to WASH services affordable, clarifies Kees Kruythoff, President of Home Care at Unilever. Ultimately, it’s about making WASH-related services more self-sustaining over time.
“Innovative models like this reduce service providers’ reliance on philanthropic capital and increase the availability of private capital to accelerate their growth and provide millions more people with safe water,” he says.
At Unilever, we are experimenting with a number of market-based interventions like Suvidha, particularly in Africa and Asia, where access to safe drinking water represents a massive unmet need. We believe these examples and others like them represent huge untapped potential.
For that reason, we asked the professional services firm EY to analyse some of the best examples currently out there. Below, we consider two of the key findings from their report (PDF 2.57 MB), which is published today.
There’s no ‘ultimate’ model when it comes to using the power of the market to help bring safe water to some of the world’s poorest and most marginalised communities.
As with any business, success depends on social enterprises responding to local conditions. No one market is the same: customers’ income levels will differ, treatment challenges will vary and cultural norms will diverge.
As the authors of the EY report observe: “It’s important to understand that achieving scale depends on finding the best fit for a particular blend of circumstances.”
‘Best fit’ doesn’t necessarily mean ‘best in class’. Simple solutions frequently deliver better outcomes than more sophisticated (and often costly) alternatives.
The need to ‘start simple’ is a maxim that our Water Centres in Nigeria have very much taken to heart.
The local women entrepreneurs who run the Centres often start out with little formal experience in business management, so to an extent they are learning on the job, says Barbara Ryl, a global brand manager in Unilever’s Home Care division.
“As a consequence, they’re upskilling themselves all the time. So it’s very important to keep things simple and not over-engineer.”
Take something as simple as book-keeping. In an attempt to drive efficiency, a digital solution was piloted across the Centres, using electronic tablets and cutting-edge software. In the end, though, implementing the new approach just proved “too complicated”, Barbara admits.
Another commonality between all the successful examples studied by EY was a ‘lean thinking’ mindset, involving continuous improvement and experimentation.
“Safe water enterprises need to be willing to tweak the existing models... to bring innovative new ideas and business model configurations into play,” the report states.
The Water Centres exemplify such agility in their service model. The Centres sell water direct in-store as well as via a subscription-based delivery service. They also serve distributors, who resell the water to customers in more remote areas.
While it’s important to work towards greater structure and established frameworks, says Barbara, the need to remain adaptable never goes away. Ideally, the two should go hand in hand.
“There needs to be a basic framework because otherwise you can’t achieve scale, but there will always be parts of the enterprise that you need to continually flex and adjust according to local dynamics.”
Small may be beautiful, but to generate significant returns you need scale. This is never more true than in social enterprises in the WASH sector.
In part, it’s a question of basic economics. Achieving scale enables impact entrepreneurs to offset their relatively high fixed costs with large sales of water, which costs little to produce.
Scale is also bound up in social impact. Obviously the wider an enterprise’s reach, the more of the 2 billion people without access to water and sanitation it can help.
To this end, the report makes a number of timely recommendations. This list includes making the most of your existing assets, keeping your portfolio as free of underperforming sites as possible and staying “lean on capital”.
The third of these resonates particularly strongly with Clive Allison. Clive is Global Director for Innovation and New Business Models in Unilever’s Chief Sustainability Office and is working with the team responsible for Pureit, Unilever’s market-leading water purifier.
Pureit has a partnership to develop community-based water plants across India and currently runs four pilot plants in the southern Indian state of Karnataka.
“The plan is to establish many more plants, but it’s tough to attract capital investment because the payback time is too slow for most commercial investors,” Clive notes.
As a result, Pureit is looking to public and private social impact investors and other sources of so-called ‘patient capital’ to help finance the expansion.
Even so, with a ticket price of 8 rupees (€0.1) per 20-litre can, it takes time to turn a profit and pay off a plant’s initial capital expenditure. Investors in the social capital space understand this.
For a long time, organisations providing affordable water for low-income communities have been dependent on philanthropy and grants, Clive notes: “These safe water businesses are making great progress but to help the sector really scale up, there is a need for a major influx of patient capital.”
Of course, it’s important to be realistic. Social enterprises are still only a small part of the picture. Nor by themselves will they secure the right to safe drinking water and sanitation for everyone on the planet.
But safe water entrepreneurs are already making life-changing impacts for millions of people. It’s our hope that others will borrow from, and build on, their approach. By doing so, we can collectively speed up the day when access to water is not just everyone’s right, but everyone’s daily reality as well.
8 insights on how impact entrepreneurs can bring safe water to millions