Q&A: WASH business: A mixed business model in waste-to-value

“Fresh Life” toilets introduced in Nairobi slums by social enterprise Sanergy. Photo by: Sanergy

MANILA — The sanitation economy presents opportunities not yet fully realized, such as job creation and revenue generation. Opportunities Sanergy, a social enterprise building a network of sanitation infrastructure in Nairobi’s slums, is taking hold of.

The company, which operates with a combined nonprofit and for-profit business model, franchises low-cost toilets it calls “Fresh Life” to local entrepreneurs. It collects the waste from these centers for processing, turning them into products such as fuel briquettes, as well as organic fertilizer and even insect-based animal feed.

Read part 1 in the WASH business series: One company's journey to breakeven

What is it really like to operate as a business in the sanitation sector? Devex speaks to three businesses that are trying to bring market-based solutions to the sanitation crisis in low- and middle-income countries.

In part 2 of the WASH business series, Devex spoke to Lindsay Stradley, cofounder of Sanergy. This series explores how businesses operate in the sanitation sector, their solutions, future plans, and what it takes to succeed in the business.

This conversation has been edited for length and clarity.

You have this unique business model, where part of Sanergy is supported by grants. How important are grants in your operations, and will there be a huge impact if you operate solely as a business entity?

Sanergy is solving a huge and complex sanitation crisis. Solving it requires huge finances yet in most cities sanitation is underfunded. In fact, the World Bank estimates that as much as £114 billion ($150 billion) is required annually — around three times current levels to reach everyone, everywhere, with safely-managed water and sanitation.

To close this financial gap, both private and public resources are required.

For Sanergy, working with grants has been very impactful for building our model and demonstrating its viability both in terms of cost-effectiveness and impact to cities. This has ultimately helped us accelerate the development of partnerships with cities in Kenya, reducing the need for grants in the future.

You went through quite a few challenges in almost a decade of working in the sector, as gleaned from a case study of Sanergy published in 2018. Do you find those challenges to be common for businesses trying to work in the sanitation sector? Why do you think that is?

Building partnerships with governments for the delivery of sanitation services can be one of the common challenges facing private sector actors. It takes a long time to build private-public partnerships. This is because governments are often aiming to fulfill their mandate of serving all citizens with safe sanitation and as such, are concerned about serving large populations. With most private sector conducting small pilot projects, it is difficult for the government to be incentivized to partner with the private sector initially.

However, upon demonstrating viability and sustainability, building public-private partnerships with the governments offer an excellent opportunity to scale safe sanitation to everyone, everywhere, much faster.

Sanergy has developed a robust government relations department that builds relationships with government officials and helps to develop strong collaborations to advance our work.

How do you ensure the sustainability of your business?

To ensure the sustainability and scale of our sanitation model, Sanergy has worked to increase efficiencies in our operations while also making access to sanitation very affordable for cities to uptake. Our goal has been to establish a partnership with the Kenyan government, who is ultimately responsible for every citizen having safe sanitation, for the provision of safe sanitation at scale.

At the same time, Sanergy manufactures valuable agricultural inputs … which we sell to Kenyan farmers and which drives the sustainability of our operations.

You were contemplating whether to focus on Kenya, or expand to other countries. Have you made a decision?

With 4.5 billion people still lacking access to safe sanitation around the world and with a proven track record to safely serve people more cost-effectively than any other model, Sanergy is now partnering with cities to scale our service delivery.

Through our new program Citywise Advisory Services, Sanergy leverages a proven track record of delivering sanitation services to the poorest, most vulnerable populations in rapidly developing cities, command of technologies and service delivery models for urban sanitation, and a strong network of collaborators around the world. Citywise provides a range of services from assessment work, to developing pilots, to eventual replication in other cities.

What’s the top advice you can share for entities looking to venture into this sector? What should they consider, and what caveats/limitations should they know about?

New sanitation and circular economy approaches are often disrupting the status quo on how services have been delivered in the past. As such, it will take time to transform the sector and requires determination, patience, and persistence to succeed in this business.

Continue reading part 1 of the WASH business series: One company's journey to breakeven.

About the author

  • Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.