Partnership Development - Innovative Finance -Environment & Sustainability

How to Partner with the Private Sector to Expand Access to Water, Sanitation, and Hygiene (WASH)

Article | August 25, 2021

Ensuring the global population has access to clean water, sanitation, and hygiene (WASH) is a pressing concern for the international development community. UNICEF and the World Health Organization estimate that 1 in 3 people lack access to safe drinking water, while over 2 billion people worldwide do not have access to basic sanitation. 

The severe global gap in WASH access is a crisis: Annually, hundreds of thousands of young children die due to diarrheal diseases linked to inadequate WASH services. Limited WASH access curbs school attendance rates and places undue burden and strain on women and children, who often must trek many miles from their homes to access clean water.  

What can the global development community do to make progress on WASH goals? Like many sustainable development challenges, there are no easy or quick fixes. However, we’ve seen the potential of market-led solutions and private sector innovations for WASH—and we’d argue that the private sector must be part of the solution. 

Through our work partnering with the private sector on WASH in East Africa, we’ve extracted five key insights on how the international development community can better mobilize and partner with companies and private finance institutions to achieve WASH goals. 

How to Collaborate with the Private Sector on Water, Sanitation, and Hygiene (WASH): 5 Key Insights 

1. Engage the private sector as a key partner for scalable, sustainable WASH solutions. 

In many countries, local governments lack the resources or capacity to build, operate, and maintain centralized water and sewer systems, especially in rural areas. It’s also usually cost-prohibitive for the private sector to go it alone. But when governments and the global development community co-invest in partnership with companies—local, regional, and international—we can unlock new opportunities to find effective solutions, injecting private sector innovation and market-driven pathways into WASH delivery systems. 

The private sector can bring resources such as technology, expertise, funding, and market linkages that can deepen development impact.  

In Tanzania, we worked on the USAID/Tanzania Water Resources Integration Development Initiative (WARIDI), led by Tetra Tech, to extend access to clean water and improved sanitation for hard-to-reach communities in rural and peri-urban areas. We designed, built, and implemented 15 private sector partnerships.  

For example, take WARIDI’s partnership with eWATERservices: We worked together to pilot eWATERservices’ smart water meter technology in rural Tanzania. eWATERservices’ technology allows community members to pre-pay for water at village water points using mobile money. The technology also ensures water revenue is tracked, accountable, and transparently used by water authorities to pay for needed maintenance and improvements to the water system. Resonance, WARIDI, and eWATERservices piloted the system in four villages, serving about 23,000 people. 

Our final evaluation found that the introduction of eWATERservices reduced the time to collect water at community water taps by 60 percent and increased water availability from 10 hours to 24 hours per day. Based in part on this pilot, eWATERservices secured a World Bank-funded grant to install 650 prepaid water meters in 82 communities in Dodoma and Singida to scale its impact.  

We also partnered with LIXIL—which owns global brands such as American Standard, GROHE, and INAX—to help boost rural distribution channels for its low-cost SATO (“Safe Toilet”) latrines. Through the partnership, we connected LIXIL to hundreds of small retailers across 20 rural and peri-urban districts of Tanzania and helped forge relationships between LIXIL and wholesalers and regional distributors. The partnership supported LIXIL in the early period following the launch of SATO in Tanzania—priming LIXIL to scale its SATO latrine products for impact even after the WARIDI project closed. 

By investing in private-sector partnerships like the ones with eWATERservices and LIXIL, the development community can help test and refine promising solutions in new markets—working together to clear initial obstacles, so companies can scale faster.

2. Help stimulate local markets and homegrown private sector solutions for WASH. 

Young and growing companies can face numerous obstacles as they work to design, launch, and scale new solutions, particularly in rapidly growing economies. As part of our work on WARIDI, we first sought to understand what the major barriers were that prevented promising WASH companies from getting their products or services to communities. In Tanzania, many WASH companies struggled to build their supply chains and rural/peri-urban distribution channels.  

We selected and supported three WASH companies with promising products and interest in expanding their distribution channels to rural areas. One of those companies was Kasole Secrets, which manufactures menstrual hygiene products. Our team tailored business development services and training to help Kasole Secrets with business planning, organizational development, human resources, and marketing management capacity. We also coordinated a series of meetings between Kasole Secrets and WARIDI’s network of potential distributors and retail partners across 20 districts.  

This support helped Kasole Secrets win major grants from Grand Challenges Canada and UNICEF to continue building out manufacturing and distribution channels in peri-urban and rural Tanzania.  

The international development and donor community can play a pivotal role in eliminating or reducing obstacles that stand between promising WASH products and services and the communities that need them. Such support achieves multiple goals. It helps local economies and creates jobs; it also gets WASH solutions into difficult-to-reach communities—tapping market-led channels that can, ideally, continue to take off, evolve, and scale without continued donor support.  

3. Encourage partnerships between local finance institutions and WASH companies.

Around the world, many households do not have enough disposable income to fully pay for WASH solutions such as plumbing or latrines, especially in rural areas. However, the financial sector is often reluctant to finance these household purchases because they do not generate cash flows to repay the loan—as compared to other assets such as motorbikes or basic farming equipment. Further, the companies that sell and distribute WASH products often deprioritize rural households in favor of urban households due to the greater costs involved in rural customer acquisition and providing post-sales maintenance services.

We see two key mutually reinforcing ingredients to help close this rural financing gap: The first is crafting partnerships between socially-minded local finance institutions (such as microfinance institutions or banks with strong rural presence) and WASH companies. By sharing costs, such partnerships can reduce the burden on WASH companies and financiers as they work to identify and support customers in rural areas. Second, we need simple loan products with comparatively longer tenures (12-24 months) than what is commonly provided to rural households. These loans may be supported with a combination of grants and de-risking mechanisms such as (a) grants to support the partners’ operating expenses until the loan portfolio reaches a minimal scale (ideally break-even); (b) partial guarantees on loan portfolios; and/or (c) partial principal repayments on individual loans tied to WASH impact.

The global development community can do much to advance such partnerships and crowd-in financiers to provide WASH loans to rural households. It is as much about crafting the right partnerships as it is about designing the right financial products or de-risking mechanisms.

4. Host open innovation competitions to find market-led WASH solutions. 

For decades, the private sector has used innovation hubs and open innovation challenges and prizes to source new and more sustainable technologies, inputs, products, and packaging. Forward-thinking multinational companies such as Unilever, PepsiCo, and Ingredion understand the value that can come from crowdsourcing and combining the ideas, knowledge, and expertise of people inside and outside their companies.   

The global development community is also increasingly tapping open innovation to solve intractable or fast-emerging development challenges—as we’ve seen with USAID’s flagship Development Innovation Ventures (DIV) program and the Bill & Melinda Gates Foundation’s Global Grand Challenges—both of which have invested in WASH innovators. And we’ve witnessed first-hand the evolution of this approach to global development: We’re currently leading the USAID Catalyst project to support USAID in deploying open innovation across the Agency, spanning diverse development sectors and every geography.  

Open innovation has been—and will continue to be—a powerful tool for WASH, allowing us to source, test, and scale promising new ideas and context-smart business models from local and global innovators.

5. Support stronger partnerships between local governments and the private sector to advance WASH access. 

In many countries, local government agencies struggle to vet, contract, and partner with private enterprises. At the same time, the private sector may be reluctant to do business with government, as in some countries there can be a deep mistrust between the two sectors.  

But to succeed in expanding access to WASH, we need the government and the private sector working together. One way that we’ve found to help bridge the divide is for the global development community to provide training, tailored support, and technical assistance to local governments to help them launch or deepen partnerships with the private sector on water management and sanitation solutions. For example, on the USAID/East Africa Planning for Resilience in East Africa through the Policy, Adaptation, Research, and Economic Development (PREPARED) project, we worked with local government, regional bodies, and water management authorities in target countries to enhance private sector engagement (PSE) for water resources management. In addition to PSE capacity building for target public sector partners, we also facilitated a partnership between the Ugandan National Water and Sewerage Corporation, a public utility, and an international technology company, Itron. Together, the partners piloted new technology to combat non-revenue water—or water lost due to leaking pipes, broken water meters, and illegal connections. The partnership reduced non-revenue water in the system from 45% to 20%, increasing the water utility’s revenues by hundreds of thousands of dollars and enabling new water connections for roughly 12,000 people. 

Partnering with the Private Sector to Expand WASH Access 

Access to clean water and sanitation for all people is part of the United Nation's 17 Sustainable Development Goals (SD-6). For the development community, including USAID, making progress on this goal is a key priority. By 2022, USAID aims to provide 15 million people with sustainable access to safe drinking water services and 8 million people with sustainable access to sanitation services. 

By working with the private sector to find and deploy WASH solutions, we will have a better chance of reaching our WASH goals faster, more sustainably, and at scale.  

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