February 25-26, the Sankalp Africa Summit 2016 was held in Nairobi, Kenya – focused on opportunities for inclusive and high-impact enterprises. One of the key sector based sessions focused on Innovative Business Solutions for Water and Sanitation Services. Africa Funded founder and director Saskia Reus-Makkink was one of the speakers in this session and shares 10 insights below.
The session on Innovative Business Solutions for Water and Sanitation Services at Sankalp Africa was hosted by Dick Bouman, Fund Manager of VIA Water at Aqua for All. Africa Funded, incubator manager of Aqua for All, co-hosted the co-lab session. The other speakers were entrepreneur Andrew Foote of Sanivation and David Kuria of Africaqua. Over thirty people attended this session, including many investors. The session led to a lively discussion on improving operations, how corporates can contribute to local SMEs and other discussion points.
Below are some highlights of what was discussed in the session, followed by a case study of the VIA Water Challenge, one of the initiatives we presented.
1) There are promising innovations in water and sanitation, both in service delivery and introduction of new elements, such as pre-paid metering. There are many opportunities also in smart water for agriculture. ICT oriented companies can support in lowering operational costs.
2) It is challenging to develop a business case, build and run a company focused on water and sanitation for the BOP. Fine-tuning the business model takes time, expertise and investment; profit margins are low; scale (and economies of scale) are hard to achieve and legal frameworks are sometimes a major obstacle.
3) Startups need support in terms of funding, networks and mentoring. Providing the Base of the Pyramid with water and sanitation requires innovative business models, but entrepreneurs providing needed innovations often struggle to get their solutions to the market.
4) Clear legislation is needed, as water and sanitation services tend to overlap with the government’s mandate.
5) Figuring out the right distribution and marketing model is key. Hygiene education and promotion of good quality water, often by going door to door or to schools, is an important element to it.
6) There is a big potential for BOP businesses to bundle and benefit from sharing established channels and models. Some examples: Charcoal, mobile / financial services, water; all need similar distribution and finance channels. Equally there is the potential for bundling with startups needing similar apps or ICT.
7) Innovation can play an important role in improving and managing distribution and operations. An example: Apps for tracking distribution and financial flows, keeping track record of every customer, collecting data.
8) Multinational companies can be of good value to startups by adding capacity and expertise. However, experts need to have a thorough understanding of the BOP. One needs to evaluate the pros and cons of getting them on board.
9) Corruption might be a challenge. Startups should define and follow their own policies on transparency, tax paying and non-bribing. It helps to involve government officials in your work, just as it helps to create demand for your services from end consumers.
10) Funds and incubator/accelerator programs provide needed support particularly for fine-tuning business models. Below is a case study of the VIA Water Challenge initiated and managed by Africa Funded, one of the initiatives we presented in the session, supporting pioneers in Africa to develop sound models.
The VIA Water Innovation Challenge
The VIA Water Innovation Challenge is one of the initiatives we presented in the session. This intense six-week accelerator program took 8 innovative water startups from 4 countries in Africa to a pilot proposal stage. Incubator/seed fund manager Africa Funded and UNESCO-IHE initiative VIA Water initiated the program to support innovators to come up with a sound proposal to pilot their ideas. Entrepreneur Andrew Foote of Sanivation, one of the speakers in the session, participated in the VIA Water Challenge.
The VIA Water Innovation Challenge program consisted of a six-week virtual track, in which the entrepreneurs participated in workshops and received individual coaching sessions. Africa Funded, together with partners Aqua for All and WASTE supported the pioneers in identifying the best approach to take their idea forward, and to produce sound proposals for the VIA Water Fund. All in all, the program was a great success. In addition to the results of the actual acceleration program, pipeline to the VIA Water Fund was improved from 75 applications in a year to 127 applications in just six weeks time.
The participants were very positive about the program: 83% of respondents rated the VIA Water Challenge program as ‘outstanding’, and 17% as ‘good’. 80% of participants judged the program had fully addressed their personal key barriers to developing a business proposal. The other 20% said it had done so to an extent.
One of the participants remarked: “This program is exactly what young entrepreneurs in Africa need. We are in so many cases discouraged to start our own businesses. Having someone to listen to you and guide you to improve your business idea, no matter how weird it may seem at the beginning, is a great opportunity. Please don't give up on people's ideas so easily. Give people the chance to test, probably fail and improve their ideas. That's how all great inventors succeed”. Read more about the survey results here.
After Sankalp Africa 2016
The Sankalp Africa Summit 2016 again shows there are many promising innovations in water and sanitation in Africa, both in service delivery and introduction of new elements. It’s also clear that funds and incubators can provide much needed support, particularly for fine-tuning business models.
The VIA Water Challenge program is one example of the programs managed by Africa Funded. In 2016 Africa Funded will organize more accelerators aiming at supporting innovative business models to improve water, sanitation and waste situations in developing countries. We will also continue to engage more investors in supporting early stage entrepreneurs in water and sanitation. Providing the Base of the Pyramid with water and sanitation requires innovative business models, and we have to collectively support entrepreneurs providing needed innovations to get their solutions to the market.