Challenges & Business Opportunities Africa

With around 600 million of people without improved sanitation and 334 million of people without safe water supply, the need for water and sanitation in Sub-Saharan Africa is huge! However, considering that more than 400 million of people are still living on less than $1.25 a day, what are needed are innovative business models that ensure the integration of the poorest of the poor at the “bottom of the pyramid” in the business cycle.

Many challenges have to be faced when starting a business targeting the market in the water and sanitation sector, especially at the bottom of the pyramid that has been traditionally donor-driven. Many people without access to improved water and sanitation are generally limited in their ability to take an active role to improve their living conditions, being in some cases victims of poor health. But even if they are enthusiastic about doing something, most of them simply cannot afford the goods and services. Therefore, any entrepreneur that wishes to build up a business in the sector must understand his/her market and the customers constrains in order to offer products and services that are desirable, affordable, easy to access, operate and repair. In fact, not only the financing but also the physical accessibility of the product becomes a challenge in Sub-Saharan Africa, as the market segment at the bottom of the pyramid usually are located in rural areas and slums, which lack proper infrastructure, communications and financial services. Understanding and partnering with the existing distribution networks is of paramount importance for any SSWM entrepreneur, who also has to be aware of the institutional environment, roles and responsibilities at the governmental level to understand the dynamics of the sector. In its broader sense, doing business in Sub-Saharan Africa is not an easy task, as complex regulations, high start-up costs, corruption, weak governments and even political instability, are still major barriers in many countries. Additionally, the lack and intermittent availability of electricity, the poor infrastructure conditions and the lack of qualified personal remain as major challenges in the region.

But despite of those challenges, no entrepreneur should be discouraged to start a business in Sub-Saharan Africa. Entrepreneurs and businesses are needed to effectively improve access to water and sanitation in the region, and it is indeed profitable, considering the “collective purchasing power” of 400 million people!!! The business opportunities in the sector are manifold: advertisement and promotion of sanitation and water, hygiene promotion, advocacy, training and capacity development, procurement of materials and equipment (pipes, pumps, measurements and monitoring devices, etc.), development and commercializing of household appliances such as filters and compact wastewater treatment, planning, design and construction of community and city-level SSWM systems, facilitation of participatory process, monitoring during implementation, provision of expertise, providing (water) and environmental sanitation services (e.g. pit emptying, sludge collection, solid waste collection, etc), financing and banking, among others.

Envisioning the developments in the Water and Sanitation sector the need for consultancy and construction services will grow continuously. In Zambia, for example, the recently launched National Urban Water and Sanitation program envisages an investment need of 4 billion USD till 2030. In early 2012, the Government of Zambia and the USA have signed an agreement to invest 350 million USD in water and sanitation infrastructure. Today, those and other upcoming projects already create need for high quality consultancy services offered by the private sector.

The opportunities for entrepreneurs do not end with the direct provision of water and sanitation services. With an annual growth rate of 5% per year, Sub-Saharan Africa is attracting investments from all over the world, and governments in the region are working towards the creation of a more business-enabling environment. Africa is projected to have 128 million households with discretionary income by 2010, which invites for the development of new industries to cover basic needs such as food, shelter, health, transport, energy, etc., all of which are only possible with enough water of good quality.

Besides offering an in-depth analysis of the business challenges and opportunities in Sub-Saharan Africa, this section will also contain factsheets describing the SSWM business situation for different countries.