Transcript IFC Global Clean Water Access Survey

IFC Global Clean Water Access Survey
Team Planning Meeting
Washington, DC
June 9, 2008
Joe Brown, University of Alabama
Thomas Clasen, London School of Hygiene and Tropical Medicine
Tom Outlaw, Kenan-Flagler School of Business, University of North
Carolina
Mark Sobsey, University of North Carolina School of Public Health
Simon Spooner, Atkins Global Consultants (UK)
Kari Leech, University of North Carolina School of Public Health
Jianyong Wu, University of North Carolina School of Public Health
Agenda
• Team Introductions & Background
• Project Scope
– Phase I:
– Phase II:
Survey
Investment Options
• Focus Countries
– Kenya
– China
– India
• Communicating Findings
– Translating knowledge into action
• Timeline and deliverables
Ex-ante Assumptions
• Access to safe water in developing countries
is limited by scale of existing programs
• Investment opportunities exist for promising
technologies and/or delivery models
• Scale & sustainability can be achieved
without long-term subsidy
Scope
• Technologies and delivery models for scaling up
– Point-of-use/household-scale technologies
• produce improved water based on WHO risk-based
criteria
– Commercial models
• multinationals/domestic
manufacturers/licensees/entrepreneurs
– Financing strategies
• microcredit/loan guarantees/equity investment
Scope, cont’d
• Focus on economically-viable solutions with
potential to scale, given targeted investment
• Include technologies from Europe/N.
America/elsewhere suitable for lower-income
countries/market segments
PUR
Water
Additive
Ceramic
Water
Purifier
Plastic
Biosand
Filter
Phase I
• Project Survey:
– assess technologies and delivery models in focus countries
– based on front-end research & in-country interviews/data
• Target Markets:
– urban/peri-urban/rural
– lower-income/Base of Pyramid
• Target Technologies:
– disinfection/filtration/hybrid
• Provenance:
– locally-developed/imported/licensed/hybrid
• Delivery models and organizations:
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100% commercial/private sector
public-private partnership
100% subsidy (gov’t/NGO)
Vended safe water, decentralized technologies
Data Collection
Detailed program-specific data on…
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Region/Country
Water/water technology supplier name and type (NGO/business)
Target market: geography (urban/rural/peri-urban, on/off grid)
Target market: income (high/medium/lower)
Target intervention (POU/micro-utility water supply)
Technology description
Business model description
Value proposition (cost, quality, convenience)
Cost per liter to supplier (COGS)
Consumer cost per liter
Subsidy (or profit) per liter
Subsidy structure
Track record (profitability and growth rate)
Barriers to growth
Tools available to IFC
Phase II
• Goal:
Develop commercial-viability profiles of
promising technologies & delivery models
• Prospective criteria:
1. Technology well-characterized re effectiveness & health impact
• or a local adaptation with strong evidence of local viability
2. Economically-sustainable business model
• a sound cost-recovery & reinvestment plan, without hardware subsidies
3. Well-developed supply chain (or potential, with targeted investment)
4. Technologies must be scale-able
• And have a plan in place for scaling up coverage to maximize access to
safe water at the country level
Goal: Increasing Coverage
Through Targeted Investment
• 3 approaches:
1. Invest in microfinance mechanisms
(demand & supply side)
2. Equity investment in companies marketing effective
safe water products
(supply side)
3. Investment in companies with broad market reach
to also manufacture/distribute safe water products
(supply side)
Country-specific plans:
Phase I survey
• Kenya & Uganda
• China
• India
• Chosen because:
– Transition economies with emerging markets for safe
water technologies
– Opportunities for investment and scaling-up
– Low access to safe water, particularly rural areas
– High incidence of diarrheal/waterborne disease
Kenya
Kenya
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Pop: 36.5m (2006), 59% rural
GNI per capita (2006): US$580
GDP per capita growth rate (1990-2006): 0%
% population < US$1/day (1995-2005): 23%
Access to improved water (2004): 61%
28% with household connections
Access to sanitation (2004): 43%, 4% with
household connections
Uganda
Uganda
• Pop: 16.8m (2006), 88% rural
• GNI per capita (2006): US$300
• GDP per capita growth rate (1990-2006):
3.1%
• % population under US$1/day (19952005): 85%
• Access to improved water (2004): 60%,
1% with household connections
• Access to sanitation (2004): 43%, 1% with
household connections
Kenya (& Uganda)
Country Contacts
– Manufacturing
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Trojan UV
Chujio Ceramics
Vestergaard-Frandsen
Kentainers, Inc.
– Financing
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K-Rep
FINCA
BRAC
Aga Khan Agency for Microfinance
– NGOs
• Kenya Water for Health Organization (KWAHO)
• NETWAS International, Kenya
• African Peri-Urban Community, Kenya
– Donors
• WSP, IFC, GTZ, USAID
China
China
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Pop: 1.31 bn (2004), 60% rural
GNI per capita (2006): US$2010
GDP per capita growth rate (1990-2006): 8.8%
% population under US$1/day (1995-2005): 10%
Access to improved water (2004): 77%, 69% with
household connections
• Access to sanitation (2004): 44%, 22% with
household connections
China
• Existing partners and contacts
– Kenan Institute Asia
– Chinese Ministries of Environment and Water
Resources
– DfID-China
• Approaches
– Identifying private sector partners with national
market access and potential for scale-up; many
manufacturers of safe water technologies exist
• Obstacle: most have not been independently verified for
effectiveness
• Few have national reach, many for export
– Microfinance institutions for rural and urban markets
India
India
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Pop: 1.15 bn (2006), 72% rural
GNI per capita (2006): US$820
GDP per capita growth rate (1990-2006): 4.5%
% population under US$1/day (1995-2005): 34%
Access to improved water (2004): 86%, 19% with
household connections
• Access to sanitation (2004): 33%, 9% with
household connections
India
• Existing partners and contacts
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AED
Institute of Technology, Bombay
PATH
National Institute of Communicable Diseases, India
CARE/ACCESS
Hindustan Lever
• Approaches
– Microfinance investments to facilitate access to popular filter lines:
• Eureka Forbes: tabletop filters
• Usha Brita
• Unilever
– Connecting and mobilizing Women’s Self Help Groups (SHG)
– National-level retailers who have access to urban and rural
markets with interests in health products, safe water products,
consumables
Promising Technologies and
Actors:
• Identify partners with key technologies and
Base Of Pyramid markets
– Vestergaard-Frandsen (LifeStraw)
– Proctor and Gamble (PUR)
– Stefani/Pozzani/Katadyn/Doulton ceramic filters
– NGOs with business models & private-sector
approaches
• e.g., Cambodian ceramic water filter scale-up by IDE
– Local entrepreneurs with potential for market entry
Communicating Findings
• Connecting investors with opportunities
• Post-project dissemination event in Washington DC
• Final report
– 3 or 4 most-promising projects
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their technologies
business models
barriers to growth
support needed
consider risk management tools (e.g., credit guarantee facilities)
• Publication and presentation of findings to
academic and development communities
Deliverables
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Week 3. Detailed workplan.
Week 11. A written interim report to IFC that will
include:
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a general overview of the clean water market in countries
surveyed;
analysis of available clean water technologies and delivery
models and opportunities to scale them up,
Week 12. Interim report presentation in
Washington DC
Week 16. Draft final report
Week 19. Final report submission
Week 20. Dissemination event in DC
Prospective timeline
Business Models 101
Offering
Value proposition: The products &
services a business offers.
Finances
Pricing
Cost structure
Revenue model: How company
makes money through multiple streams
Customers
Beachhead customer
Distribution channel(s)
Marketing strategy
Customer service
Infrastructure
Core capacities to execute
Partner network and alliances
Value configuration: How a business
makes itself mutually beneficial
for a itself and its customers.
Key Characteristics of
Base of Pyramid (BOP) Market
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Labor-Rich
Capital-Poor
Low Education/Low Literacy
Power Dynamics (gender, caste, age, race, etc)
Not One Segment, But Many!
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“Dirt-poor”
“Climbers”
“Aspirers”
“Consumers”
(subsistence-level)
(price-driven, unbranded products)
(desire brands, can’t purchase consistently)
(brand-driven, purchase consumer durables)
Key Challenges in Marketing
to BOP Consumers
• Designing safe water solutions that are:
– Efficacious
– Reliable
– Affordable
– Durable
– Easy to use
– Do not require electricity, and,
– Appeal to preferences/lifestyles/attitudes of
targeted consumer segment(s)
Key Tools for Reaching
BOP Consumers
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Creative Financing
Consumer-driven Product Innovation
Supply Chain Strengthening
Marketing/Behavior Change
Community Mobilization
Policy changes
Affordability As Barrier to Adoption
Affordability is Part Reality and Part Perception…
Affordability
=
Ability + Willingness
Household income
and cost of technology
Understanding, trust,
and perceived value placed
on product
Economic Growth
Systemic Shocks
Cost Control
Creative Financing
Smart Subsidies
Promotional Activities
Hearing/Seeing Satisfied Users
Consumer Education
Public-Private Partnerships
Leveraging Public-Private
Partnerships
Private Sector Roles
Product
Design &
Development
Quality
Assurance
Production
Distribution
Marketing
Sales &
Financing
Supply
Chain
Public/Donor Sector Roles
Evaluating Business Models:
Key Aspects for Strategic Firm Management
Opportunity
Financial
Strategy
Degrees of
Strategic Freedom
Capital
Sources
Debt
Equity
Strategic
Financial
Model
Value Proposition
Marketing Model
Time to OOC
Risk/Reward
Business
Strategy
Ops/Supply Chain
Financial
Requirements
Driven by:
Burn Rate
Capital Investment
Profit and Loss
Revenue Streams
Pro Forma
Business
Model