Water, hygiene and sanitation: does business have a role to play?

Post date: Oct 18, 2013 7:19:19 PM

No-one needs to explain to the rural residents of Zambia's Western Province the value of water. They know all too well. Two in three people lack safe water to drink in the region's villages, and even fewer have access to a clean toilet.

So when Village Water Zambia arrived offering to provide wells, hand pumps and sanitation facilities, the charity was warmly received. Likewise, when US bank Bank of America Merrill Lynch stepped in and gifted the charity's UK arm more than £100,000 over two years, hands clapped once again. Ten additional villages now have safe water, and 1,600 Zambians are now less likely to suffer diarrhoea and other nasty water-born illnesses. What's not to like?

Yet corporate philanthropy, especially of the chequebook kind, has become something of a dirty word in sustainability circles of late. Everything has to have a long-term, strategic objective and an underlying business case, the experts say. Just look at all the wells built by well-meaning companies that now lie broken across Africa. Case closed.

Should we dismiss corporate philanthropy so quickly? Many water and sanitation charities are certainly wary of such hard-nosed business logic. An estimated 783 million people still lack access to clean water, according to the United Nations. Most rank among the very poor. Carving out a business case for servicing such low-income communities is far from straightforward.

Indeed, the concession of water services to profit-making companies, which was very much in vogue in the late 1990s and early 2000s, met with widespread opposition in developing countries. Bitwater's experience in Tanzania and that of Bechtel in Bolivia are both illustrative. Water is a basic right, critics said; not a marketable commodity.

The clearest case for a viable business case belongs to water utilities. If you can provide slum-dwellers or rural communities with clean water and sewage services, revenues should theoretically rise. Water and Sanitation for the Urban Poor (WSUP), a cross-sector initiative launched in 2005, is developing "pro poor" demonstration models premised on just this kind of bottom-line thinking.

WSUP's partners invest in infrastructure improvements that bring "non revenue" city-dwellers (ie those without water supplies or formalised connection) on stream. They also adopt measures to reduce leakage rates, improve billing and the like. "All of these actually improve water sales and increases the volume of water sold", explains Andy Narracott, WSUP's deputy chief executive.

Creating a business case for non-water companies is far harder. The closest overlap comes with firms that use high volumes of water in their products or manufacturing processes. The agriculture, beverage, chemical and mining sectors all have vested interests in averting risks associated with water scarcity. They can't do that alone, however. To stop the pumps to their fields or factories running dry, companies must engage with other local water users too.

"If a company is getting involved in how water is allocated in poor countries, they inadvertently find themselves sharing a platform with people like slum-dwellers… We can then use that to our advantage to make sure that they represent the views of the underserved communities", says Scott McCready, senior business development manager for WaterAid.

The role of philanthropy

McCready is quick to recognise the vital importance of the "nuts and bolts" financing that companies can offer. The UK charity boasts ten corporate sponsors , including Unilever, Diageo and H&M. "In terms of our partnerships with businesses, they are predominantly funding based partnership so they give us money to deliver particular project work in a particular location … all of this is very traditional charity-based partnerships", says McCready.

One of the most significant water-related grants in recent years comes from HSBC. Last year, the global bank announced a five-year, £100m water partnership with WaterAid, WWF and Earthwatch. "Unlike some philanthropy that I've seen, it's not dabbling… it's a sizeable chunk of funding for a decent period of time", says Dave Tickner, head of freshwater programmes at WWF-UK.

Concerns about corporate monies being misspent are gradually reducing too. "The NGO sector has learned lots of lessons over the years", argues Alison Parker, a lecturer in international water and sanitation at Cranfield University, a WSUP partner. She cites the example of WaterAid, which has developed benchmark best practices for water-related social projects in the developing world. Principles such as local partnerships, community ownership and long-term infrastructure maintenance all feature heavily nowadays.

Corporate donors are increasingly anxious to support such practices too. "There is an acute awareness that we need not just to be handing out money to build a shiny new asset that won't be working in two years time", says Piers Clark, commercial director at Thames Water. Instead, businesses should be looking for efficient charity partners with a sustainable approach and an "ability to deliver on the ground", he advises.

Part of that delivery capacity may draw on business methods. WSUP's Narracott is the driving force behind a new initiative focussed on for-profit models for water and sanitation services to the very poor. A case in point is Clean Team. The venture involves the rental of branded toilets to homeowners in Kumasi, Ghana's second city. Local franchise providers then collect the resulting waste for a fee and then convert it for use as electricity or fertiliser. The programme is coordinated by WSUP Enterprises, a business unit within the WSUP initiative.

Narracott says donor money often remains essential to "kick start" water and sanitation projects, but argues that establishing a profitable business model is the best way to guarantee a project's long-term viability.

"If you can link service provision with people's inherent desire to make money and improve your worth, then you have a sustainable model. The challenge is to develop the capacity of the service provider, such that when the aid programme finishes they can carry on."

Source: Gurdian