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Drinking water distillation and distribution

Drinking water distillation and distribution

Photo by Shutterstock

Drinking water distillation and distribution

Compare IOA
Country
Uganda
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Beverages
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in ROI)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
More than 20 million Ugandans require water from reliable sources.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Clean water and sanitation (SDG 6)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9) Reduced Inequalities (SDG 10)

Business Model Description

Develop and operate water distillation facilities and distribute drinking water in 5-10 liter bottles to households without piped water access.

Expected Impact

Enable healthier lives due to access to safe and reliable drinking water at affordable prices.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Uganda
Region
  • Uganda: West Nile
  • Uganda: Western
  • Uganda: Central
  • Uganda: East Central
Learn more
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
70% of Ugandans are employed in agriculture (IX), and the sector constitutes approximately a quarter of gross domestic product (GDP) and a large proportion of exports (III). The agriculture sector is marred by low levels of productivity and output, mainly caused by poor agricultural practices as well as the impacts of climate change.(VII)

Policy priority
The government supports the development of the agriculture sector, emphasising agro-industrialisation in the Third National Development Plan 2020/21 – 2024/25.(IV) The Vision 2040 recognises agriculture as one of the key pillars for the country's development and acknowledges the need for innovation and integration of the sector.(X)

Investment opportunities introduction
Approximately 80% of Uganda's land is arable, however only 35% is currently being cultivated. Agricultural development is predicted to contribute to domestic wealth creation and increased employment.(IV)

Key bottlenecks introduction
The Agriculture Sector Strategic Plan 2015/16 - 2019/20 provides a detailed analysis of opportunities and challenges in agriculture, emphasising agro-processing, innovation, improvement of skills and establishment of market linkages, which will help transform the sector towards industrialisation and higher value adding.(IV)

Sub Sector

Beverages

Development need
Only half of Uganda’s population uses basic drinking water services.(1) This means more than 20 million people require access to water from reliable sources.

Industry

Non-Alcoholic Beverages

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Drinking water distillation and distribution

Business Model

Develop and operate water distillation facilities and distribute drinking water in 5-10 liter bottles to households without piped water access.

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

More than 20 million Ugandans require water from reliable sources.

Only half of Uganda’s population uses basic drinking water services.(1) This means more than 20 million people require access to water from reliable sources.

Less than 20% of the rural population and less than 40% of the urban population has access to basic handwashing facilities including soap and water. With current population growth at 3.6% annually and the pandemic-related new healthcare habits, the number of people looking for reliable water source will likely increase.(1)

Indicative Return

ROI
Describes an expected return from the IOA investment over its lifetime.

10% - 15%

The estimated return rate for investors is 12.7% to 16.7%. This rate is a benchmark calculated as a cost of equity, reflecting an average return required by investors active in the subsector.(23)

For the benchmark project with a production output of 44,400 liters annually, the assumed profit is USD 69,920 annually. The revenue potential is estimated at USD 81,120 annually. Capital expenditure will be approximately USD 27,200.(21)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

For the benchmark project assuming the production plant with the output of 44,400 liters, the development timeframe for the facility is 4 years.(21)

The sectoral benchmark investment timeframe is estimated to be 5 to 20 years.(23)

Market Risks & Scale Obstacles

Business - Business Model Unproven

Difficult access to remote rural areas facing water shortages

Market - Highly Regulated

Insufficient public budgets limit provision of safe water sources.(26) Private companies may have faced obstacles trying to invest in the water management sector due to its political characteristics.(27)

Capital - CapEx Intensive

Capital expenditure and the high cost of distillation in general should be accounted for when scaling up the business. There is also the possibility of strong competition from big, international players.
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Access to clean and safe drinking water is important for ensuring proper hydration, which improves overall wellbeing, reducing exposure to health threats, by improving hygiene and reducing bacteria spread.(2)

Due to disparities in water access in Uganda, urban people living in poverty pay as much as 22% of their income to access water from water vendors (3), compared with 3% - 5% recommended by the World Health Organization.(4)

Households without a connection to piped water spend several times more on water provided by informal vendors.(2) This reduces overall household income, further limiting opportunities to build savings and break the poverty cycle.

Just over 20% of Uganda’s population has access to basic handwashing facilities including soap and water.(1) This is especially important during the pandemic, because washing hands is an effective way to prevent the spread of coronavirus. According to the US Department of Agriculture (USDA), bottled water can be a substitute to tap water when the latter is not available.(24)

Expected Development Outcome

Improved access to safe drinking water

Reduced cost of safe drinking water

Reduced health hazard

Gender & Marginalisation

Reduced health risks are expected to positively impact women and children in particular

Primary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.9.2 Mortality rate attributed to unsafe water, unsafe sanitation and lack of hygiene (exposure to unsafe Water, Sanitation and Hygiene for All (WASH) services)

Clean water and sanitation (SDG 6)
6 - Clean water and sanitation

6.1.1 Proportion of population using safely managed drinking water services

6.5.1 Degree of integrated water resources management

Secondary SDGs addressed

8 - Decent Work and Economic Growth
9 - Industry, Innovation and Infrastructure
10 - Reduced Inequalities

Directly impacted stakeholders

People

Consumers especially in informal and urban settlements

Gender inequality and/or marginalization

Especially women and children benefitting from safe drinking water

Environment due to a reduced impact of polluted water and uncontrolled packaging disposal

Corporates

Micro, small and medium enterprises, farmers

Food banks

Indirectly impacted stakeholders

Corporates

Transport providers, kiosks and supermarkets selling water

Outcome Risks

Contribute to an increase in plastic waste

Impact Classification

B—Benefit Stakeholders

What

The solution will likely increase the availability of clean water supplies through investments in facilities and distribution of distilled water

Risk

Although the model is based on good evidence, the market is already competitive. Hence, an innovative sustainable market approach is necessary.

Impact Thesis

Enable healthier lives due to access to safe and reliable drinking water at affordable prices.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Joint Water and Environment Sector Support Programme Phase II 2018-2023: This program aims to help the water sector achieve its targets and improve its performance through support that is aligned to government objectives, policies and delivery modalities.(16)

The Ministry of Trade, Industry and Cooperatives is developing a final policy on bottled water to tackle the tax disparities and boost market growth.(25)

The Ministry of Trade, Industry and Cooperatives, in cooperation with Plastics Recycling Industries, will work on strategies to increase the plastic recycling rate by establishing more collection centres for used water bottles.(25)

National Water Policy: This policy establishes principles and strategies for monitoring, assessing, allocating and protecting water resources and management frameworks, as well as water development and use.(6)

Financial Environment

Fiscal incentives: There is a 10-year income tax exemption for developers and operators in industrial parks or free zones.(20)

Regulatory Environment

Water Act 1997, Cap. 152: This Act determines the application and licensing processes for obtaining water permits, and regulates the use of water resources.(5)

Communication Education Participation and Awareness (CEPA) Strategy for the Ministry of Water and Environment (MWE) for the period 2019 – 2024: This policy provides a framework to improve communication, education participation and public awareness in water, environment and climate change issues.(7)

National Environment Act: This Act establishes controls over coordination, monitoring, regulatory and supervisory activities relating to environment, and establishes regulations for environment protection and hazard mitigation, including responsibilities and obligations of private sector actors.(14)

Environment Impact Assessment Regulations: These regulations describe the process of conducting environment impact assessments, including preparing project briefs, contents and controls.(13)

Clients Charter 2018-2022: This charter sets out the framework for cooperation between the Ministry of Water and Environment and private sector actors.(12)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Hema Beverages Ltd, N.C Beverages Ltd, Wavah Water Ltd

Government

Ministry of Water, Lands and Environment

Multilaterals

European Investment Bank (EIB), African Development Bank (AfDB), International Finance Corporation (IFC), World Bank

Non-Profit

International Reference Centre for Wash, Sanitation and Hygiene (IRC WASH), United Nations International Children's Emergency Fund (UNICEF)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Uganda: West Nile

The western part of Uganda is hilly, and people living in distant villages are often forced to walk long distances through mountains to water springs. As a consequence, they may resort to using contaminated water.(22)
rural

Uganda: Western

The western part of Uganda is hilly, and people living in distant villages are often forced to walk long distances through mountains to water springs. As a consequence, they resort to using contaminated water (22).
urban

Uganda: Central

Cities with informal settlements that lack access to safe drinking water.
urban

Uganda: East Central

Cities with informal settlements that lack access to safe drinking water.
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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