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Safe Water For Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Safe Water forAll Safe Water Harnessing thePrivateSectorto Reach theUnderserved Ray Witlin Safe Water for All iii ACKNOWLEDGMENTS Prepared by Joe Brown, University of Alabama Tom Outlaw, University of North Carolina – Chapel Hill Thomas Clasen, London School of Hygiene and Tropical Medicine Jianyong Wu, University of North Carolina – Chapel Hill Mark D. Sobsey, University of North Carolina – Chapel Hill Additional input by Kari Leech, University of North Carolina – Chapel Hill Simon Spooner, Atkins Global Consultants Safe Water for All: Harnessing the Private Sector to Reach the Underserved was commissioned by the Sustainability Business Innovator (SBI) Group of Environment and Social Development Department of IFC as part of IFC’s work to identify and support innovative business models, which can enable access to sustainable water and sanitation services. IFC Reviewers Russell Sturm, Corinne Figueredo, Alice Lin Demas, Anna Rosa Hidalgo Peer Reviewers We thank the following for their critical review and comments: Sabrina Birner, Frances Gadzekpo, Anne Lagomarcino, Joyita Mukherjee, Afifa Raihana, and Reinhard Reichel from IFC; Jacqueline Devine, Peter Kolsky, Jan Willem Rosenboom, and Kameel Virjee from the Water and Sanitation Program of the World Bank; Glenn Austin, Kendra Chappell, Kate Woolley, and Greg Zwisler from PATH; Guy Howard from DFID; Kristina Kohler from DAI; Cecilia Kwak from PSI; and Kellogg Schwab from Johns Hopkins University Center for Water and Health. Please address questions or comments to Russell Sturm ([email protected]) or Alice Lin Demas ([email protected]). IFC, a member of the World Bank Group, creates opportunities for people to escape poverty and improve their lives. It fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to busi- nesses and governments. Cover Photos courtesy of Joe Brown, Tom Outlaw, and the World Bank. iv Safe Water for All Trevor Samson Trevor Safe Water for All v FOREWORD Since 1993, IFC, the private sector arm of the World Bank Group, has financed investments in the water sector in developing countries. It also participates in the creation of standards and benchmarks for the measurement of water footprinting as well as the development of a water fact base to provide a framework for prioritizing investment to address water scarcity. IFC’s investments have focused on extending reach and access, and on supporting specific water sector technologies. They have primarily followed traditional water supply models based on infrastructure and municipal water system investment rather than sup- porting innovative business models and technologies that address water scarcity and issues of access to clean and safe water for the underserved. IFC believes that to meet the Millennium Development Goal for safe water, improved ac- cess in low-income countries can be enhanced significantly though creative deployment of the financial and other resources of the private sector. There are a number of safe-water technologies, business models, and financing strategies that can significantly impact Base of the Pyramid markets in developing countries, if they can be appropriately scaled up. This publication is intended to raise awareness and to advance safe-water innovation, with the goal of mobilizing investment with sustained input into the safe-water sector in emerging markets. There are significant opportunities for leveraging IFC’s resources and expertise in banking, risk management, and policy development to work along the public-private con- tinuum. In collaboration with its private sector partners, IFC seeks to facilitate an enabling environment in which technologies for safe-water products and services can thrive. How- ever, the private sector itself must realize that water is no longer exclusively a concern for governments; in fact, it is a market opportunity. This report is built on research conducted in Kenya, Uganda, China, and India. These coun- tries represent emerging markets that offer promising investment opportunities for increas- ing access to clean, safe drinking water. IFC believes that there are opportunities such as these around the globe in Base of the Pyramid markets. We believe that the private sector has a strong role in addressing the sustainability of safe- water technologies and business models to reach the underserved in developing countries. The recommendations set forth at the end of this report provide what we hope will be a framework for the effective public-private partnership that will be necessary to meet the Millennium Development Goal for safe water. Greg Radford IFC Environment and Social Development Director TABLE OF CONTENTS ABBREVIATIONS ...................................................................................................................................................viii EXECUTIVE SUMMARY ...........................................................................................................................................1 BACKGROUND ..........................................................................................................................................................4 SECTOR OVERVIEW ..................................................................................................................................................5 Safe-water access needs to be significantly improved ............................................................................................5 Waterborne diseases cause significant social and economic burdens .....................................................................6 Safe-water technology is effective; so, why isn’t it more widespread? ...................................................................7 The safe-water market is growing rapidly .............................................................................................................8 Challenges of safe-water market segments differ significantly .............................................................................8 OVERVIEW OF BUSINESS MODELS .......................................................................................................................10 Legal structure ....................................................................................................................................................12 Access to financing ............................................................................................................................................12 Entrepreneurial capacity .....................................................................................................................................12 Partnerships .......................................................................................................................................................14 Revenue model ..................................................................................................................................................14 FACTORS INFLUENCING SCALE-UP OF SAFE-WATER PRODUCTS AND SERVICES ...............................................16 User awareness, consumer demand, and behavior ..............................................................................................17 Product characteristics ........................................................................................................................................19 Manufacturing and importation .........................................................................................................................23 Distribution .......................................................................................................................................................24 Marketing ..........................................................................................................................................................24 Financial barriers ................................................................................................................................................26 Dominic Sansoni GOVERNMENT AND POLICY ISSUES .....................................................................................................................28 The role of government in laying the groundwork for investment .......................................................................29 The role of the international community in creating standards ............................................................................30 ON THE HORIZON ...................................................................................................................................................33 New technologies ...............................................................................................................................................34 New delivery models ..........................................................................................................................................35 New partnerships ...............................................................................................................................................39 RECOMMENDATIONS TO ACCELERATE THE BOP SAFE-WATER MARKET ...........................................................40 1. Strengthen the enabling environment .............................................................................................................41
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