The case of Safe Water Enterprises, from Kenya to Cambodia
COVID-19 has put a break on the vast majority of businesses around the world. Logistical chains are broken, borders are closed, planes cannot fly, people can hardly move. This has created huge disruptions in many sectors, including hospitality, tourism and any industry relying on imports or exports. Meanwhile, the sectors that work to produce a basic good, embedded in domestic economy dynamics and serving local populations, are not only surviving… some of them are even growing faster than expected. This is the case for the local, small scale agriculture production. Incofin has noticed that their agricultural partners, compared to other investees tend to face less portfolio at risk.
Also water businesses that provide drinking water access to local populations seem to manage well in these times. Since the start of the pandemic, Incofin, along with its partner Danone Communities, has been monitoring a number of water businesses around the world to better understand the impact of COVID-19 on their operations.
This article is part of a series of articles titled “Water Businesses in COVID-19 times, even more needed, even more wanted“. Today we explore the realities faced by a specific type of water businesses, the Safe Water Enterprises (SWE), or most commonly known as water kiosks. Because of COVID-19 campaigns people are becoming more sensitized to the importance of a strong immune system, drinking water consumption from Kenya to Cambodia is in fact increasing and water kiosks are there to provide it while reinventing themselves.
Six key conclusions can be drawn from the water kiosk in COVID-19 times:
- Since the pandemic started, safely managed drinking water was promoted as an essential good and water businesses were promoted as crucial “COVID-19 fighters”.
- Despite decreasing purchasing power from clients, drinking water consumption from low income population has been going up across the world. The majority of safe water kiosks managed to preserve or even increase their revenues during the crisis.
- Safe Water Enterprises’ decentralized operating structure is made of numerous points of sale, close to local production for local consumption, this allows to spread the risk.
- The Safe Water Enterprise business model has proven to be able to adapt in contexts of crisis: some businesses accelerated the implementation of the delivery service, others also focused on accelerating digital payment solutions, using mobile applications or water ATMs.
- Thanks to their grass roots nature, Safe Water Enterprises have been powerful amplifying agents of the WHO messaging overall and played the role of last mile health agents in local communities.
- By cumulating a strong social impact and a proof of financial resilience, Safe Water Enterprises are the perfect partners for impact investors looking to support self-sufficient businesses in need of capital and know-how to bring their contribution to UN SDG 6 on “ensuring availability and sustainable management of water and sanitation for all”.
Since the pandemic started, safely managed drinking water was immediately promoted as essential to maintain a high immune system, playing a crucial role in the fight against COVID-19
Water is essential for good health – it is the largest single constituent of our bodies (about 60% on average) and is vital for us to live and function well. Water helps to maintain normal physical and cognitive functions with an intake of at least 1.6-2 liters per day as advised by various international public health organizations including the World Health Organisation (WHO). Proper hydration is the fundamental pillar for the optimal development of the most important physiological functions that occur in our body. Staying hydrated, as well as other good practices like sleeping, exercising and eating well keeps people healthy and in a better position to fight off any illness.
When people get sick, it is also essential to keep providing them enough quantity of safe water. When people go through fever (COVID-19’s main first symptom), risk of dehydration is high, and more specifically in the risk groups (older people, children and pregnant women). Drinking water is also good to soothe throat irritation. Given the above, it goes without saying that promoting access to safe drinking water is an even more imperative need during the COVID-19 times that we are in.
Demand for water during COVID-19 is increasing
Despite decreasing purchasing power from clients, it seems that drinking water consumption from low income populations has been going up across the world. The majority of water kiosks managed to preserve or even increase their revenues during the crisis. They provide a unique and affordable way to access safe drinking water for vulnerable populations for whom buying 1.5 liters packaged water for example is too expensive and who have no other affordable options except boiling untreated water extracted from boreholes putting their health at risks.
Most SWEs have seen their volume of water sold increasing every month since the beginning of 2020. Some SWEs witnessed a sales decrease in April due to lock down restrictions, but by showing strong adaptation of their delivery model, also these businesses noticed that on a year-to-date basis (from January to May 2020), their volumes are above last year’s performances.
Supply remains sound thanks to the decentralized business model
The decentralized model of SWEs has been their key strength to face the crisis. Water kiosks’ operating structure is made of numerous points of sale, close to local production for local consumption, each kiosk reaching about 3,000 to 5,000 people. The consequence of such organisation is that the risk is spread. Even if one kiosk has to close, it will have a very low impact on the overall capacity to supply water.
Furthermore, most water kiosks organize their network in clusters, where a sub-group of kiosks are supervised by a regional office whose role is to support kiosks’ operational needs, helps them to develop outreach strategies to deepen their outreach, ensure water quality at all times, and lead marketing and awareness campaigns to boost sales. With such a set– up, in case one kiosk was to run into difficulties, the cluster structure would easily allow an agile reorganization.
We need to think of these kiosks as franchisees: a local entrepreneur is on the ground operating the kiosk, and is strongly supported by her/his network. When COVID-19 started, it was clear that to remain convincing towards clients, water kiosks had to be exemplary in their implementation of “good behaviors” to fight COVID-19. This is where the power of the franchise business model kicked in. Most SWEs approached their entrepreneurs through their regional managers to instruct them to implement appropriate social distancing measures and guide them on business continuity measures. They were able to continue providing drinking water and to make an income for themselves.
Naandi, in India, showed exemplary business continuity and innovation reflexes during the first weeks of the crisis. To ensure proper maintenance in areas touched by lock down, where its team might not be able to travel, Naandi quickly put together a database of all local entrepreneurs who met their quality and expertise criteria and could support any kiosk facing maintenance issues.
An agile model, proven able to adapt in contexts of crisis
The SWE model covers the whole value chain, from water extraction to payment collection.
We have seen a fast transformation of the business models to adapt to new consumer behaviors. Some businesses accelerated the implementation of the delivery service, like Oshun in Senegal, or Jibu in Kenya, by collecting and activating consumers databases and overcoming logistic barriers. Others also focused on accelerating digital payment solutions, using mobile applications or water ATMs without contact between consumer and operator.
In India, in the context of a strict lockdown, people are looking for a home delivery service and e-commerce. At Naandi, everything was done to keep the contact, albeit mostly virtual, with consumers and to get their feedback. Today, Naandi is in the process of developing an app for consumers to place their orders more easily and during the lockdown, they continuously communicated around health and safety via Whatsapp, SMS or phone calls.
Safe Water Enterprises, last mile health agents in local communities
Dealing with water should imply abiding by the highest standards of hygiene and purification rigor. SWEs’ first priorities were to protect the health of their workers and to lead by example. Many SWEs provided trainings related to Water and Sanitation to their staff to inform on how to stop the spread of the virus. They quickly adopted WHO recommendations, by making hydroalcoholic gel and masks available to all staff and train them on measures of social distancing.
For instance, Naandi, a water kiosks network touching more than 300,000 clients around India, quickly set up an internal management committee in order to reinforce organizational alignment. The work of this committee has led to designing new communication channels and guidelines as well as redefining the roles and responsibilities within the team, implementation of safety measures, sharing inspirational stories from the field across the network, dispelling fake news and sharing ways to manage their well-being.
Thanks to their grass roots nature, SWEs have been powerful amplifying agents of the WHO messaging overall. For instance 1001fontaines Cambodia, a network of around 200 kiosks mostly located in rural Cambodia, has sent their consumers text messages to educate them on the WHO sanitation guidelines. 1001fontaines Cambodia has also partnered with UNICEF to distribute free bars of soaps in rural areas.
Meanwhile in Mexico, the testimony of EcoAlberto underlines how close SWEs are to the local community and how their proximity allows them to operate as a last mile health agent: “In a context where the community is not precisely aware of what preventive measures they can adopt, our team made the difference. Each time our staff implemented WHO advised behavior in front of our clients it had a positive impact and a change of habits of our clients.”
EcoAlberto has donated 30,000 liters in 4 communities via the bulk system reaching approximately 900 people who were lacking safe drinking water access. Many other SWEs took specific actions: Jibu in Uganda gave water to hospitals and to orphanages, while Oshun donated water to NGOs taking care of babies. Waterkiosk Limited for example distributed in partnership with Bilal Kenya pedal operated hand washing stations to communities along the coastal region in an effort to curb the spread of COVID-19.
SWEs are active and resilient players in their community
Water kiosks or SWEs are providing one of our most precious and basic goods on this planet: water. The fact that they succeed during a global crisis in continuing delivering their service proves their strong resilience.
Awareness campaigns made people, including the most vulnerable ones, understand the importance of clean drinking water to preserve their health. Through a decentralized model, a deep outreach and agility, water kiosks established a customer recognized brand, as proven by the sales increase since the first quarter of the year.
They have also shown that in a difficult and disrupted business environment, they can adapt and continue to operate, using new home delivery strategies and digital payment solutions to maintain their revenues and cash flows. Additionally, water kiosks have proven their true and original nature as social businesses, playing the role of the last mile health agents in those parts of the world where basic facilities can be miles away.
By cumulating a strong social impact and a proving financial resilience, SWEs are the perfect partners for impact investors that look to support self-sufficient businesses in need of capital and know-how in order to contribute to the UN SDG 6 “ensuring availability and sustainable management of water and sanitation for all”.