India is a signatory to achieving the UN’s Sustainable Development Goals (SDG); SDG 6 aims ‘To ensure availability and sustainable management of water and sanitation for all’ by 2030. However, a huge financial gap exists between investment required in sanitation and current investment. For decades, it has been only the government which has been investing in this sector; unless private players also make an entry, sanitation will remain a charitable aim. Anand Jagtap, Ex-Officer on Special Duty, Slum Sanitation Program, Municipal Corporation of Greater Mumbai writes about the scope of businesses in this sector, and the needs private players can fulfill:
As per UN estimates, in the water sector alone, a $2.5 trillion gap needs to be filled to achieve SDGs in developing countries. The announcement of ‘Nal se Jal Yojana’ itself is estimated to draw investments of Rs 9000 per capita for the next five years, with spending estimated between Rs 5.6-6.3 trillion. But the sanitation economy is expected to be worth $62.4 trillion by this year. So far, the water and sanitation sector has been dominated by the public sector. However, the private sector can play a very active role as a business partner. Due to various reasons, the potential of this sector for investment and financial returns is not seen. There are many reasons for this perception, such as the lack of purchasing power of the poor in India, who are not seen as potential customers.
Can the poor be customers rather than beneficiaries?
This traditional mindset was demolished by corporate strategist CK Prahalad, who explained that our business class must explore their business not just with middleclass customers; there is scope for business at the bottom of the pyramid with those who are less fortunate. It is possible to engage in ethical business with the poor, which so far has been the domain of NGOs. However, NGOs are designed to function as not-for-profit entities, which limits their growth and expansion. The private sector aims to earn profit and returns from their investment. For the last few decades, it has shown interest in the water sector, however sanitation is still seen as ‘dirty business’, as returns from this sector are not very attractive, and because the private sector will have to work with the public sector, which has dominated thus far. But the government is now inviting private players to participate.
What can the private sector bring to sanitation?
For too long, the sanitation sector has been limited to civil construction activities only. But toilets require much more innovation in design as well as in utilities; currently, the choices are limited as per the demand of various groups. Toilets need to be designed to meet the varied requirements of these groups. User-friendly community and public toilets are required; they can be prefabricated and easy to install. Community sanitation requires quick solutions to meet the demand of the floating population. The septic tank with conveyance system is preferable for on-site disposal arrangements. Hence, the entire sanitation service chain is a potential source for
What forms will private sector engagement take?
Business possibilities exist in the form of community-owned or community-collaborated partnership. While there are many initiatives of the government to upgrade the sanitation sector based on sustainable principles, in practice, the sanitation and water sector is subsidy-based; the public sector is investing through grants and subsidies, but expected results such as the social entrepreneurship model have not yet materialized. There is vast scope for community engagement in various activities related to operation and maintenance of septic tanks, cleanliness of individual and community/ public toilets and allied activities. Digitalization of sanitation services under smart sanitation are new avenues for exploring business opportunities. Slum dwellers — particularly young boys and girls — can serve as grassroot managers and service providers. Allied services such as cleaning products and sanitizers can be made available to maintain expected parameters of cleanliness at individual as well at public level. The government needs to create an enabling environment for these new kinds of social entrepreneurs.
Who will businesses work with on the ground?
In rural and urban India, the human capital is enormous. The young population is looking for challenging and innovative avenues to engage in gainful employment as well as business opportunities. The private sector can associate with these young minds to work in a win-win environment. All they require are appropriate technical skills and knowledge. There are a number of schemes and programs which can be tapped for the engagement of Community Based Organizations (CBOs) and Self Help Groups (SHGs). These people are already engaged in economic activities, but are exploited by middlemen and brokers. Many companies are already working with them through their Corporate Social Responsibilities (CSR) wings. Businesses can engage with them in the form of a franchise model, CSR model, community based model or integrated value chain model. So far, only the water sector has been considered for investment by the private sector; sanitation has been lagging behind. To meet SDG targets, we need active participation of the private sector to engage with capital investment, technology and managerial skills and the active engagement of communities for effective and efficient service delivery in sanitation.