Creating a Profitable Business from Sanitation

In 2016, I spent 6 months in Nairobi, Kenya working with a social enterprise called Sanergy (coincidentally founded at MIT). Sanergy as a whole is aiming to solve the sanitation crisis in the world today, with over 2 billion people lacking access to adequate sanitation facilities. This population is diverse and widespread, spanning from Brazil to India, rural settings to urban slums. Governments and relief organizations haven’t been able to solve the problem at scale, and historically sanitation has been considered a public group so participation from the private section has been limited.

Sanergy is trying to solve this problem by using a two-pronged approach. On one side, their non-profit arm has created a novel, waterless toilet that’s sold at low cost to customers in Nairobi who lack access to clean sanitation facilities. Those individuals are also able to treat the toilets as a business, charging a small per use fee and are subsequently incentivized to keep the toilet clean and operational. On the other side, Sanergy’s for profit arm collects the waste and uses novel methods to process the waste into byproducts to sell to the market. Its current products are fertilizer and animal feed, with other products in the pipeline as well.

I think a social enterprise like Sanergy well poised to solve this problem, because the problem intrinsically requires emotional motivation that comes with a mission driven organization, coupled with the innovation engine that comes from the private sector. To support this hypothesis, one can look back at attempts by the public sector or private sector in a silo. For example, India’s government has launched several campaigns to install toilets in slums and rural areas to decrease open defecation rates. The cost per toilet is much higher than what Sanergy can produce today, and most fall out of use after a period of time (however, the latest campaign in partnership with the Gates foundation shows promise). On the private site, a Japanese company called Lixil made a wildly successful low-cost toilet called SaTo which has sold over a million units thus far. The scale and impact of the toilet is irrefutable, but I believe SaTo misses the human element in its implementation. It sells the product through a network of vendors and distributors, but what happens with the product after it’s bought is not their concern. Solving this problem doesn’t just require innovation in design, but large-scale behavioral change as well.

The most obvious challenge with Sanergy’s approach, which they are well aware of, is scaling across regions and countries. The infrastructure required and regulatory hurdles faced with each expansion are significant, and even the disciplined expansion within Nairobi has been a challenge. According to the UN, inadequate sanitation affects over 2.3 billion in the world today. Solving at this scale requires a model that can be replicated efficiently and rapidly. If Sanergy can solve this challenge, I believe the model could very well be a critical part of the final answer in solving the global crisis.

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