Sewage treatment and services

Sewage treatment and services

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Sewage treatment and services

Country
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.
Infrastructure
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.
Waste Management
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).
15% - 20% (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.
Only 23% of Kampala's population received sewerage services in 2019-20.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Good health and well-being (SDG 3) Clean water and sanitation (SDG 6)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11)

Business Model Description

Construct and operate small-scale sewage treatment plants, and provide affordable services with sewage and sanitary trucks for solid waste extraction and public latrines in densely inhabited areas.

Expected Impact

Provide safe sanitation and water options to low income communities in urban areas.

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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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Uganda: Central
  • Uganda: Karamoja
  • Uganda: Acholi
Learn more

Sector Classification

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

Infrastructure

Development need
Inadequate infrastructure was one of the 5 key areas ‘problematic to Uganda’s progression’.(II) Accessible and modern infrastructure is crucial for developing other sectors of the economy. Thus the government will strengthen the link between infrastructure development and growth of those sector to attain the synergy effect.(III)

Policy priority
The Third National Development Plan III 2020/21 – 2024/25 prioritizes investment in resilient urbanization with affordable houses and proper waste management as well as transport infrastructure. The aim is to enhance transformation, improve living standards of citizens of Uganda and create workplaces to keep pace with the country's rapid population growth.(III)

Sub Sector

Waste Management

Development need
Uganda's urbanization needs more investment to support physical planning and low cost houses with proper services such as waste management and sanitation for middle income earners in urban and peri-urban settlements, and to upgrade informal settlements.(III)

Policy priority
Uganda’s long term goals include ensuring all stakeholders address climate change, as well as promoting green growth and sustainable development. This comprises reducing vulnerability and increasing investments in infrastructure with a special emphasis on settlements, social infrastructure, transport, sanitation, power and disaster risk management.(III)

Industry

Waste Management

Pipeline Opportunity

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

Sewage treatment and services

Business Model

Construct and operate small-scale sewage treatment plants, and provide affordable services with sewage and sanitary trucks for solid waste extraction and public latrines in densely inhabited areas.

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.

Only 23% of Kampala's population received sewerage services in 2019-20.

In 2019-20, access to some form of sanitation increased from 77.2% to 78% in rural and from 87.9% to 89.1% in urban areas.(29) In the same period, basic sanitation was available for 18% of rural areas and 44.8% of urban areas.(30)

At the same time, safely managed sanitation was available for only 7.1% of rural and 39.2% of urban areas, signalling both insufficient infrastructure and a significant discrepancy between the two areas.(31)

In 2019-20, only 23% of Kampala's population received sewerage services (centralized sewerage system managed by the National Water and Sewerage Corporation), or more than 800,000 citizens. This number is less than the national target to provide sanitation services and infrastructure to 3.6 million people.(32)

Indicative Return

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

15% - 20%

The estimated return rate for investors is 17% - 21%. This rate is a benchmark based on a cost of equity with a country risk premium, reflecting an average return required by investors active in the water utilities subsector.(37)

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)

According to companies active in the space, the investment should be treated as capital intensive with the breakeven point around 5 to 10 years.(40)

Market Risks & Scale Obstacles

Capital - Limited Investor Interest

Inadequate allocation of funds to preventative healthcare, sanitation and hygiene (24), weak institutional and management framework (25)

Market - Volatile

Rapid population growth resulting in development of large, congested, informal settlements, which makes providing safe sanitation facilities challenging. (27)

Market - Volatile

Unplanned settlement patterns, leading to difficulties in providing water and sewerage services (28)

Impact Case

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

Sustainable Development Need

Uganda's population growth rate (i.e. 3.5% a year since 2010) places growing pressure on existing sanitation infrastructure and services.(2),(3)

Kampala’s urban sewer system covers less than 10% of the population. Inappropriately designed/maintained pit latrines pose a serious health risk. Between 2015 and 2019, malaria and pneumonia have been the leading causes of death in Uganda.(4)

Use of basic sanitation was 18% in rural areas and 45% in urban areas. Use of safely managed sanitation in rural and urban areas was 7.1% and 39.2% respectively (2019-20). (5) These challenges mean a significant percentage of the population relies on open defecation.(6)

Gender & Marginalisation

Poor sanitation and hygiene, as well as unequal access to safe drinking water, are major causes of early childhood diarrhea, which can be deadly and contribute to Uganda's high level of stunting.(7),(38)

Expected Development Outcome

Improved sanitary and WASH (water, sanitation and hygiene) conditions in highly populated areas, reduced pollution of the natural environment, lakes and rivers due to improper disposal of sewage waste.

Reduced cases of poisoning and diarrhea arising from drinking dirty water, reduced spread of water-transferred diseases like cholera and typhoid fever

Improved access to clean water and affordable sanitary services, increased quality of life and wellbeing of unserved areas

Gender & Marginalisation

Low income communities are expected to benefit most from products and services, given they are traditionally most excluded due to their lack of purchasing power.

Primary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty

1.4.1 Proportion of population living in households with access to basic services

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

6.3.1 Proportion of domestic and industrial wastewater flows safely treated

6.3.2 Proportion of bodies of water with good ambient water quality

Secondary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

Directly impacted stakeholders

People

Urban population, lowest income communities benefitting from products and services

Gender inequality and/or marginalization

Women and children experiencing fewer health disruptions

Planet

Natural environment less impacted by pollution

Public sector

Municipal authorities

Indirectly impacted stakeholders

Corporates

Businesses gaining an opportunity with secondary services, such as cleaning public latrines

Public sector

National health system, authorities released from verious cleaning exercises associated with open defecation and pollution

Outcome Risks

Disinfection byproducts from applying a chemical water filtration method may contaminate the environment.(21)

The lifecycle of a new water purification system may affect the environment negatively, so precautionary measures should be taken during the project planning and execution phase.(22)

A potential risk posed by the micro-organisms present in wastewater (e.g. Escherichia and salmonella, which can get into sewage sludge and survive for months) should be addressed.(23)

Impact Classification

A—Act to Avoid Harm

What

Small-scale sewage treatment plants and associated services, which contribute to increased sanitation, and reduced open defecation and pollution of soil and water.

Who

Urban population; municipal authorities; natural environment; society which is aggrieved due to limited access to improved sanitation, spread of water-borne diseases and lower standard of living

Risk

Although the model is market proven, if deployed without necessary precautions, investment may carry a risk of health hazards and environmental degradation.

Impact Thesis

Provide safe sanitation and water options to low income communities in urban areas.

Enabling Environment

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

Policy Environment

3rd National Development Plan (NDPIII): This plan contains the Human Capital Development Programme, which aims to increase productivity of the population for increased competitiveness and better quality of life for all. One of its expected results is to improve access to safe and clean water and sanitation.(8)

Strategic Investment Plan for the Water and Environment Sector 2018-2030: This plan defines funding requirements to meet national 2030 targets for the sector, and presents investment plans and models. It introduces indicators reflecting unit gaps to achieving 2030 targets; one of the gaps is 47.6 million people requiring improved sanitation (assuming constant population growth rate of 3.05%).(9)

Water and Environment Sector Development Plan 2015/16 - 2019/20: This plan aims to increase access to improved sanitation in rural areas and to improve urban sanitation and hygiene services. It provides a sectoral analysis including state of rural water supply and sanitation services and urban water supply infrastructure and sewerage services.(10)

Health Sector Development Plan 2015/16 - 2019/20: This plan aims at strengthening intersectoral collaborations and partnerships to effectively implement the environmental health and sanitation program area. It identifies promoting improved hygiene and sanitation at the household level and in public places as a major intervention to address the key determinants of health.(11)

According to an investor operating in the sector, a major challenge is that regulations and policies are not properly enforced.(40)

Financial Environment

Fiscal incentives: If procured locally, inputs for construction (such as pipes) attract only local taxes.(34) Water treatment effluent plants are exempt from all taxes under the 5th schedule of the East African Community Customs Management Act 2004.(35)

Other incentives: Although the restrictions on technology transfer and repatriation of funds by foreign investors have been abolished, a minimum value for foreign direct investment (USD 250 000) and a minimum value for portfolio investment (yet-to-be-specified) have been introduced.(39)

Regulatory Environment

National Water and Sewerage Corporation Act: This Act confirms continuation of the National Water and Sewerage Corporation as the public utility company responsible for water supply and sewerage services provision in Uganda.(13)

Water (Waste Discharge) Regulations: These regulations establish standards for effluent and waste as well as their discharge.(14)

National Environment (Standards for Discharge of Effluent into Water or on Land) Regulations: These regulations introduce standards for effluent and imposes a general obligation to mitigate pollution.(15)

Water Act 1997: This Act facilitates devolving water supply and sewerage undertakings, and regulates the water supply and sewerage sector, including constructing sewerage works, private sewers and related matters.(16)

Public Health Act: This Act regulates provision of public sewers and sewage disposal works, establishes and regulates a right to connect to public sewers, and regulates provision of drainage and latrines for new and existing buildings and related matters.(17)

Marketplace Participants

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

Private Sector

Goshen Company (u) Ltd, Neriah Sewerage Disposal and Firewood Supplier Ltd, Karf Aqua Engineering Solutions Ltd, Veolia Water Technologies Uganda, Davis and Shirtliff International Ltd

Government

Ministry of Water and Environment, National Environment Management Authority, National Water and Sewerage Corporation

Multilaterals

World Bank, European Investment Bank (EIB), African Development Bank (AfDB), KfW, United Nations Human Settlement Program (UN Habitat)

Non-Profit

United States Agency for International Development (USAID), German Corporation for International Cooperation (GIZ), IHE Delft Institute for Water Education, Agence Française de Développement (AFD)

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
urban

Uganda: Central

Countrywide, with a special focus on small and medium towns and urban centers, which are not served by the National Water and Sewerage Corporation (NWSC), as well as large urban centers currently unserved and in need of sewage and associated services.(33) The lowest sanitation coverage (5%-46%) is observed in Buvuma, Karenga, Kaabong, Kotido, Moroto, Napak, Nabilatuk and Amudat Subregions (40).
rural

Uganda: Karamoja

Countrywide, with a special focus on small and medium towns and urban centers, which are not served by the National Water and Sewerage Corporation (NWSC), as well as large urban centers currently unserved and in need of sewage and associated services.(33) The lowest sanitation coverage (5%-46%) is observed in Buvuma, Karenga, Kaabong, Kotido, Moroto, Napak, Nabilatuk and Amudat Subregions (40).
rural

Uganda: Acholi

Countrywide, with a special focus on small and medium towns and urban centers, which are not served by the National Water and Sewerage Corporation (NWSC), as well as large urban centers currently unserved and in need of sewage and associated services.(33) The lowest sanitation coverage (5%-46%) is observed in Buvuma, Karenga, Kaabong, Kotido, Moroto, Napak, Nabilatuk and Amudat Subregions (40).

References

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