Innovations for sanitation need financial muscle
Digging deep into the waste saga
Two of the biggest problems confronting the Water, Sanitation, and Hygiene (WaSH) sector are open defecation and manual scavenging — issues that have a direct bearing on human health, dignity, and equality. While the government is constructing toilets across the country as part of its Swachh Bharat campaign to provide last-mile access, the need for entrepreneurial solutions to address the woes of collection, transportation, processing, and disposal of waste is dire. The United Nations observes the World Toilet Day on November 19 to recast the spotlight on “sustainable sanitation that can withstand climate change and keep communities healthy and functioning”.
Social Alpha (SA) has been working for the past five years identifying key barriers in the WaSH sector and the scope for supporting early-stage innovations in this space. Mallika Sridhar, who is heading the WaSH innovations in SA, talks to Pratik Ghosh about how blended financing, advocacy campaigns and communication can go a long way in helping entrepreneurs transform the sanitation space.
- Despite the government’s consistent efforts, why does sanitation continue to be a matter of serious concern?
In the past four years, India has made rapid progress towards ending open defecation in the country. The launch of the Swachh Bharat Abhiyan has led to a concerted bid to providing access to toilets with an impressive 9.2 crore toilets having been built since 2016. However, this achievement must be sustained by channelling efforts towards building up and strengthening the rest of the sanitation value chain. From access to collection, transportation to disposal, the huge incentive given to building sanitation infrastructure should be complemented with a strong focus on operations and maintenance. This will help sustain better sanitation and hygienic practices aiming at better health outcomes for the population at large. However, existing policies and regulations need to be streamlined for the handling and treatment of sewage waste. Deployment of effluent treatment plants (ETP) and sewage treatment plants (STP) is mandated by regulation and usually requires heavy capital investment. The operations and maintenance (O&M) of these plants, however, continue to be suboptimal, calling out the need for innovations in waste treatment plant infrastructure and O&M.
Another unsettling aspect in the sanitation value chain is the collection and aggregation of sewage waste, that which does not get treated in the ETPs and STPs. In many places, this waste is manually handled by sanitary workers who work in unsafe conditions. This inhuman practice and other severe health implications of poor sanitation in the country have led to an acute need for innovation, financing, regulatory, and policy support that the sector requires. Covid-19 has put the WaSH sector on the frontline, making it urgent to bring awareness towards better hygiene. The pandemic-induced crisis demands innovative and robust solutions that can be scaled and deployed effectively to mitigate far-reaching and complex health concerns.
2. But behavioural change has a major role to play…
Building and sustaining sanitation infrastructure must be met with the adoption of this infrastructure where behavioural change has a key role to play. The government and other organisations have put in tremendous efforts to provide access to better sanitary infrastructure for the last mile but we still have a long way to go before open defecation ends in our country. The government continues to direct efforts towards messaging, organising campaigns, and ensuring that more is spoken about topics that were taboo. Behavioural change is critical for the access aspect as well as for formulating policies and regulations that can help in the handling and treatment of sewage more effectively.
3. What is the scope for innovation in this sector that has been languishing for years?
The WaSH sector is abuzz with startups and innovations that are trying to bring about better sanitation practices and addressing the humungous challenges of treatment and disposal of sanitary and sewage waste. Social Alpha (SA) has been working for the past five years to identify key barriers in the WaSH sector and the scope for supporting early-stage innovations in this space. Social Alpha believes that entrepreneurship has a far-reaching impact on building sustainable and scalable revenue models for the sector. While we have identified the need for innovative and affordable toilet construction at the decentralised community level, we also think that there is a dire need for supporting solutions that incorporate the Internet of Things (IoT) and Information and Communications Technology (ICT) to streamline the operations and maintenance of public toilets. Even as access to toilet infrastructure remains a critical issue, we feel that innovations can have an exponential effect in the collection, segregation and disposal of waste, thus ensuring sustainable sanitation practices. Social Alpha is currently supporting three startups that address the concerns of collection, aggregation, and treatment of sewage and menstrual waste.
As we continue to generate 93 million tonnes of industrial sludge, most STPs and ETPs go on to face functional issues due to improper operations. Revy Environmental Solutions ensures smooth performance of waste treatment plants through the use of proprietary biochemical products that enhance organic waste treatment in WTP (waste treatment plants) and ensure clean water and sanitation as well as affordable and clean energy.
The second startup Jalodbust has developed a frugal end-to-end solution to handling sewage waste, aimed at eradicating the manual task of scavenging. The two solutions Pride and Sanipreneur are decentralised product innovations that provide mechanised fecal sludge handling. Jalodbust, however, doesn’t want to affect the livelihoods of sanitary workers and so is trying to empower sanitary workers by helping them become micro-entrepreneurs through ownership of these products.
Another Social Alpha portfolio company Green Earth Equipment has a unique product called Dahini, which focuses on climate-friendly, low-cost, and sustainable menstrual waste incineration. It does away with the need for manual intervention in sanitary waste processing. In the current pandemic, they have also evolved into addressing waste processing of PPE kits and masks that often end up in public toilets.
4. While innovators are trying to improve existing systems and processes, how difficult is the deployment of these solutions? Can the hurdles be surmounted?
Startups innovating in the WaSH sector usually seek working capital because they invest heavily in machinery and manufacturing equipment. Money is not easily available to them because of the risk-returns consideration of a sector that is primarily being financed by the government. Additionally, startups do not get adequate support to fulfil legal, regulatory and compliance requirements such as land acquisition. They also fail to attract commercial investment because the business is hardly profitable. Since they can’t furnish strong financial record, they fail to meet the mark in the government tendering processes.
There is also a need to showcase the best practices and the best solutions that exist in the wash sector, the knowledge of which is currently scattered in the ecosystem.
The daunting scenario makes it worthwhile to explore a few solutions. The critical challenges of financing the WaSH infrastructure, its operations and maintenance can be overcome with blended financing or public-private partnership. There is a need to orient both philanthropy and outcome-based financing towards enabling business scalability to a point where commercial investors can come on board. The blended finance approach strategically combines aid, public and private finance to bring about optimal utilisation of limited resources. The deployment of well-structured financing instruments is instrumental in scaling up innovations.
Entrepreneurs can also join hands with Social Alpha, a technology-business incubator that very uniquely deploys philanthropic capital towards innovative and entrepreneurial solutions in the WaSH sector that need early-stage risk and patient capital. We bring on board our expertise in building strong business models that attract commercial and public capital to scale solutions in the sanitation and waste management sectors.
Another unique financing instrument is the development and social impact bonds. These are pay-for-success tools used to link socially conscious private investors with enterprises that aim to deliver social outcomes.
5. How can other stakeholders contribute to scaling up these innovations?
The international development community, particularly, international aid, has put the private sector at the centre stage as the source of additional investment in sustainable development, particularly, WaSH innovations. The NGOs and the last-mile partners play a critical role in building credibility of these frugal innovations, providing them access to test beds as they work on large-scale community-driven programmes that are based on improved health outcomes for low-income communities. These NGOs and last-mile partners also build advocacy frameworks and effective communication that help in the adoption of good sanitation practices. They showcase multiple use cases for these frugal innovations and the tangible impact they can create on the ground. Industry partners are also increasingly aligning their CSR mandates to create an impact in the water and sanitation sectors, primarily creating better socio-economic and health outcomes through their large-scale programmes that aim to build sanitation infrastructure and/or deploy product innovations. The self-help groups and micro-finance institutions are also critical last-mile partners in the wash financing space. They offer loans to households at low interest and longer repayment cycle. The money can be used to finance a new toilet or upgrade or repair an existing facility. If some of these WaSH financing products are structured effectively, they can be used to scale and replicate solutions across the country.
It is extremely crucial for these multiple stakeholders to work unitedly to influence policy change towards building better sanitation infrastructure, sustaining them for a longer duration and influencing positive sanitation practices. While financing is one of the key aspects, it is also important to build effective advocacy campaigns and communication for better sanitation practices. The government plays a key role in bringing these stakeholders together. This in turn catalyses long-lasting positive changes in the sanitation sector.
