WSUP: Scaling Strategies to Expand Partner Capacity and Mobilize Financing
As part of this Scaling Snapshot, see also WSUP’s Organizational Overview, Getting Ready for Scale, and Pearls of Scaling Wisdom. You can find the full snapshot PDF here.
After spending several years testing and directly implementing pro-poor business model solutions and public and private sector capacity development, Water & Sanitation for the Urban Poor developed a clear theory of change for achieving its vision of universal WASH coverage for the urban poor:
- Demonstrate and evaluate effective WASH delivery models, showing governments, utilities, SMEs, and others how WASH can be done differently.
- Build partners’ capacity to implement these models.
- Strengthen the enabling environment, including triggering financial resources and influencing policy.
- Document learnings to share with others.
This framework guides WSUP’s scaling strategies, which span from direct growth to building partner capacity to indirect impact through mobilization of financing and policy change.
STRATEGY: DIRECT GROWTH
While Water & Sanitation for the Urban Poor continues deepening engagement in six core countries, it has also created a less resource-intensive platform through which to expand the model to new countries.
Water & Sanitation for the Urban Poor’s foundational work occurs in-country, where it tests, refines, and helps sustainably scale WASH services benefiting the poor.
Core Country Depth
WSUP continues to “go deep” in its six core countries, testing new approaches and methodologies (e.g., public- private collaboration, new management models for WASH enterprises) and building the capacity of partners to refine their offerings. WSUP moves beyond initial cities to regional or national levels, taking on greater and greater challenges in ensuring WASH access for the poor. This depth of work and development of scalable models in-country was key to achieving sustainable impact. As WSUP CEO Neil Jeffery explains, “our active implementation is a mechanism and a tool to help institutions see that things could be done differently. It has served as a doorway into the institutions to gain trust and demonstrate that WSUP could provide solutions.”
New Country Expansion
Knowing that the problems associated with urban WASH are global in nature and that demand for WSUP’s services was growing, WSUP sought to extend its reach in a less resource-intensive way. In 2015, WSUP launched WSUP Advisory, a wholly-owned for-profit consultancy arm of WSUP, which applies WSUP’s proven models in new countries through a consultancy arrangement.
WSUP Advisory is contracted by international NGOs, financial institutions, governments, and private companies to work on limited-term WASH projects. For example, one of WSUP Advisory’s projects — supported by the Innovation Investment Alliance, a collaborative funding partnership between USAID and the Skoll Foundation — adapted WSUP’s approach for the Indian context and supported the Government of India in achieving the goals of the Swachh Bharat Mission (SBM), or Clean India Mission. The project identified a pilot city, Visakhapatnam, where WSUP and its government and private sector partners developed and demonstrated a scalable model. The project eliminated open defecation and improved access to toilets for 250,000 people — helping open the door to scale the model nationally.
WSUP’s hybrid model enables shared knowledge and practice between WSUP and WSUP Advisory, allows WSUP to bring its approach and expertise (in a less resource-intensive way) to new geographic locations, and results in earned revenue (i.e., unrestricted capital) for the nonprofit. In order to meet the talent needs of its consultancy projects, WSUP Advisory is able to call on a pool of international consultants with a mix of engineering, business modelling, and research skills complemented by wide-ranging geographic and technical experience.
YOU SHOULD KNOW: Implications of Direct Expansion
Learning Lab: Direct implementation allows WSUP to test new approaches and innovations, perform business analysis, and take on greater challenges while also serving as proof-points to engage public and private sector stakeholders.
Scalability: WSUP sees direct implementation as necessary but insufficient to achieve its ultimate impact. The lower-resource, shorter-term approach of WSUP Advisory is more scalable than WSUP’s resource- intensive core country model and is also supplemented by WSUP’s wider-reach policy and financial mobilization efforts (as described below).
Talent: Direct implementation leans into WSUP’s core competencies of locally-based technical and engineering expertise. WSUP Advisory expanded the talent needs to include staffing and leadership with for-profit consulting experience. Managing a hybrid also required additional time and attention in order to manage a shared culture and align incentives, goals, and governance structures.
New Funding Sources: WSUP Advisory is able to bid for large contracts from international financial institutions that WSUP is less well-positioned to secure as a nonprofit. Additionally, WSUP Advisory brings in additional unrestricted revenue.
Risk: The commercial nature of WSUP Advisory adds a new risk profile requiring additional governance structures to manage. The hybrid structure can also bring in tensions between impact and revenue goals.
Two-Way Learning: Working in new contexts with new partners creates opportunities for two-way learning between WSUP and WSUP Advisory.
STRATEGY: ENABLING PARTNERS TO IMPLEMENT
Through partnership and capacity building, Water & Sanitation for the Urban Poor transfers ownership of WASH outcomes to key public and private sector partners.
Water & Sanitation for the Urban Poor recognized that in many cities and countries the capacity, organization, and governance of existing sector institutions is weak and requires strengthening in order to sustain WASH services and achieve scale. Therefore, a key element of WSUP’s work is building the capacity of public and private sector partners to take ownership and eventually scale-up delivery of services to low-income communities.
In order to facilitate this transition of ownership, WSUP provides training and technical assistance with the goal of public and private sector institutions working together more effectively, having improved business models, creating program efficiencies, and improving reach to vulnerable populations. For example, in 2015 WSUP created a Public-Private Partnership, SWEEP, which has transformed the market for emptying toilets in Bangladesh. SWEEP enables private operators in four major cities across Bangladesh to lease vacuum tankers from the public sector, reducing the barriers to entry for smaller operators who then are able to supply fecal sludge management services to a range of market segments through a differential pricing model. WSUP supports the public sector partner to define the terms of the lease arrangements, including setting standards for minimum number of low-income consumers served by the leasing entities. The leasing entities — the SWEEP operators — are supported by WSUP in developing a financially viable business model and marketing their services to low-income consumers.
In addition, WSUP expands its reach by disseminating knowledge and best practices so other organizations working on WASH for low-income communities can improve. For example, in 2017 WSUP released “A Guide to Strengthening the Enabling Environment for Faecal Sludge Management,” sharing widely its hard-won insights in areas such as regulatory effectiveness and private sector enablement. WSUP has also used its research and country teams to create a Sector Functionality Framework to help inform cities about the key steps to achieve inclusive citywide water and sanitation. This Framework empowers city leaders to engage the support they need to move efficiently and effectively toward WASH goals.
YOU SHOULD KNOW: Implications of Enabling Partners
Unit of Impact: Moving away from direct delivery required WSUP to shift the unit of impact from providing individuals with new services to city-level or national-level metrics.
Measuring Impact: As direct provision of services transitions to partners, impact directly attributable to WSUP can be difficult to measure.
Sustainability: Partnering increases the sustainability of WSUP’s efforts by institutionalizing them with long-term actors in-country, including utilities and government.
Supporting the ‘Competition’: WSUP’s effort to share best practices with other WASH service providers could mean that it is helping to create competition for some of the same funding resources. However, WSUP believes that more robust providers need to enter the field to achieve scale and that, as an organization, it can innovate to stay ahead of the curve.
STRATEGY: INLFUENCING THE ENABLING ENVIRONMENT
Across its core countries, Water & Sanitation for the Urban Poor works to codify a robust evidence-base that allows it to influence policies and financing in support of pro-poor WASH service delivery.
Water & Sanitation for the Urban Poor recognizes that an improved enabling environment — one that removes barriers and enhances incentives — is essential to the long-term sustainability and scale of WASH service delivery to low-income consumers. WSUP focuses on two key levers to improve the enabling environment: strengthening institutional and regulatory frameworks and unlocking new financing.
Strengthening Institutional and Regulatory Frameworks
WSUP’s investments in a research agenda that gathers and codifies evidence — with the intent of strengthening others — drives its success in influencing institutional and regulatory frameworks. WSUP engages a “combination of practical activity on the ground and intuitive learning that comes with that, connected to thought leadership at the international level,” shares Sam Drabble, WSUP’s Head of Research and Learning, who works with country teams to set research priorities. In Kenya, for example, WSUP collaborates with the Kenyan Ministry of Health and Water Services Regulatory Board on the Urban Sanitation Research Initiative, which contributes to the evidence base guiding pro-poor urban sanitation policy. This research partnership has led to tactical regulatory changes, such as the introduction of a key performance indicator, KPI10, that requires country-owned utilities to report on their pro-poor coverage. In the first year of KPI10, only nine of the 42 utilities had a pro-poor, low-income service footprint. By year three, all 42 utilities had such a footprint. In another research study, also in Kenya, WSUP is analyzing the willingness of non-poor consumers to pay a pro-poor sanitation surcharge — potentially leading to the introduction of utility surcharges to allow for cross-subsidization.
Unlocking New Financing
In addition to influencing the effectiveness of large-scale investments from financial institutions, another important lever WSUP engages to increase impact at scale is to influence and mobilize public and private investment in urban WASH. WSUP works to unlock and maximize investments from international finance institutions (including major World Bank investments), public sector (local and central government funding), private sector (see SWEEP example above), and households (pay for service).
According to Baghi Baghirathan, WSUP’s Director of WASH Finance,
“Achieving universal access to WASH in cities will require billions of dollars of investment. That’s why one of WSUP’s best tools for creating change is to unlock and trigger new finance and investments that can support citywide WASH services. In Mozambique, for example, WSUP’s pilot sanitation program in the capital city Maputo has led to its replication with increased investments by the Municipality and the preparation of an urban sanitation master plan supported by the World Bank. This in turn has triggered the preparation of a $115 million World Bank funded major sanitation investment project for four cities including Maputo.”
To date, WSUP has helped unlock nearly $300 million of additional investment and aims to reach $600 million by 2020.
YOU SHOULD KNOW: Implications of Influencing the Enabling Environment
Impact: It can be difficult to measure the impact attributable to WSUP from this indirect work, but the impact itself can be more sustainable and transformative.
Politics: Changing political priorities can sidetrack the work on policy and financing.
Staffing: WSUP has committed resources to staffing up a global research team to lead this work, supported by in-country Research and Policy Leads with deep knowledge of the local enabling environment.
Maintaining Focus: Research is a means to an end for WSUP which requires maintaining a laser focus on building an actionable research agenda that can inform policy and practice.
Funding: Thought-leadership is attractive to some public-sector funders and foundations but too theoretical for others, so funding this work can be a challenge.
Published March 2019. Find the full Scaling Snapshot PDF at https://rebrand.ly/wsupscaling.
Authored by Erin Worsham, Kimberly Langsam, and Ellen Martin.
