Sewage treatment and services
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
- Uganda: Central
- Uganda: Karamoja
- Uganda: Acholi
Sector Classification
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)
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)
Waste Management
Pipeline Opportunity
Sewage treatment and services
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
Market Size and Environment
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
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
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
Market - Volatile
Market - Volatile
Impact Case
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
1.4.1 Proportion of population living in households with access to basic services
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)
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
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
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
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
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
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
Uganda: Central
Uganda: Karamoja
Uganda: Acholi
References
- (I) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. (II) Schwab, K. (2016). The Global Competitiveness Report 2015–2016. http://www3.weforum.org/docs/gcr/2015-2016/Global_Competitiveness_Report_2015-2016.pdf (III) National Planning Authority. National Development Plan III (NDPIII) 2020/21 – 2024/25. (IV) Government of Uganda. Uganda Vision 2040. https://consultations.worldbank.org/sites/default/files/materials/consultation-template/materials/vision20204011.pdf (V) Ministry of Works and Transport. Works and Transport Sector Development Plan (WTSDP) 2015/16 – 2019/20. (VI) Ministry of Finance, Planning and Economic Development. Strategic Plan 2016-2021. https://www.finance.go.ug/sites/default/files/Publications/MOFPED%20STRATEGIC%20PLAN%202016_2021%20printed.pdf
- (1) Bertelsmann Stiftung and Sustainable Development Solutions Network (2019). Sustainable Development Report. Transformation To Achieve The Sustainable Development Goals. https://s3.amazonaws.com/sustainabledevelopment.report/2019/2019_sustainable_development_report.pdf
- (2) McConville, J., Kvarnstrom, E. and Maiteki, J. (2019). 'Infrastructure Investments And Operating Costs For Fecal Sludge And Sewage Treatment Systems In Kampala, Uganda', Urban Water Journal, 16. https://www.tandfonline.com/doi/full/10.1080/1573062X.2019.1700290
- (3) Worldometer (2020). Uganda Population 2020. https://www.worldometers.info/world-population/uganda-population/
- (4) Uganda Bureau of Statistics (2020). Statistical Abstract 2020. https://www.ubos.org/wp-content/uploads/publications/11_2020STATISTICAL__ABSTRACT_2020.pdf
- (5), (6) Ministry of Water and Environment (2020). Water And Environment. Sector Performance Report. https://www.mwe.go.ug/sites/default/files/library/Water%20and%20Environment%20Sector%20Performance%20Report%202020.pdf
- (7) United Nations International Children's Emergency Fund (2018). Water, Sanitation And Hygiene (WASH). https://www.unicef.org/uganda/what-we-do/wash#:~:text=But%20in%20Uganda%2C%20poor%20sanitation,and%20at%20risk%20of%20death.&text=In%20Uganda%2C%20nearly%20a%20tenth,do%20not%20wash%20with%20soap
- (8) National Planning Authority (2020). Third National Development Plan (NDPIII) 2020/21 - 2024/25. http://www.npa.go.ug/wp-content/uploads/2020/08/NDPIII-Finale_Compressed.pdf
- (9) Industrial Economics, Incorporated for Ministry of Water and Environment (2018). Strategic Investment Plan for the Water And Environment Sector, Uganda (2018-2030). https://www.mwe.go.ug/sites/default/files/library/Water%20and%20Environment%20Sector%20Investment%20Plan%20%202018.pdf
- (10) Ministry of Water and Environment (2015). Water And Environment Sector Development Plan 2015/16 - 2019/20. https://www.mwe.go.ug/sites/default/files/library/Sector%20Development%20Plan%20%28SDP%29%2023%20June%202017.pdf
- (11) Ministry of Health (2015). Health Sector Development Plan 2015/16 - 2019/20. https://health.go.ug/sites/default/files/Health%20Sector%20Development%20Plan%202015-16_2019-20.pdf
- (12) Ministry of Water, Lands and Environment (1999). National Water Policy. Republic of Uganda. http://extwprlegs1.fao.org/docs/pdf/uga158331.pdf
- (13) Government of Uganda (1995). National Water And Sewerage Corporation Act. http://extwprlegs1.fao.org/docs/pdf/uga96402.pdf
- (14) Government of Uganda (1998). Water (Waste Discharge) Regulations. http://extwprlegs1.fao.org/docs/pdf/uga14390.pdf
- (15) Government of Uganda (1999). National Environment (Standards For Discharge Of Effluent Into Water Or On Land) Regulations. http://nema.go.ug/sites/all/themes/nema/docs/effluent_discharge_regulations.pdf
- (16) Government of Uganda (1997). Water Act. https://www.mwe.go.ug/sites/default/files/library/Uganda%20Water%20Act.pdf
- (17) Government of Uganda (nd). Public Health Act. https://www.kcca.go.ug/uDocs/public%20health%20act%20Chapter_281.pdf
- (18) Government of Uganda (2019). National Environment Act. https://nema.go.ug/sites/all/themes/nema/docs/National%20Environment%20Act,%202019%20(1).pdf
- (19) Ministry Of Water And Environment (2020). About The Ministry. https://www.mwe.go.ug/mwe/about-ministry
- (20) National Environment Management Authority (2020). National Environment Management Authority. https://www.nema.go.ug/aboutus/national-environment-management-authority
- (21) Barjoveanu, G. and Teodosiu, C. (2019). 'Environmental Performance Evaluation of a Drinking Water Treatment Plant: a Life Cycle Assessment Perspective', Environmental Engineering and Management Journal. https://www.researchgate.net/publication/332268536_Environmental_performance_evaluation_of_a_drinking_water_treatment_plant_a_life_cycle_assessment_perspective
- (22) Whitehead, P. (2020). Minimizing Environmental Impacts Of Water Purification. ELGA Labwater. https://www.elgalabwater.com/blog/minimizing-environmental-impacts-water-purification
- (23) Adamus-Białek, W., Wawaszczak, M. and Świercz, A. (2015). Impact Of Sewage Treatment Plant On Local Environment. ECOpole. http://tchie.uni.opole.pl/PECO15_2/EN/AdamusBialekWawszczak_PECO15_2.pdf
- (24), (25), (26), (27), (28) Ministry of Water and Environment (2015). Water And Environment Sector Development Plan 2015/16 - 2019/20. https://www.mwe.go.ug/sites/default/files/library/Sector%20Development%20Plan%20%28SDP%29%2023%20June%202017.pdf
- (29), (30), (31), (32), (39), (40) Ministry of Water and Environment (2020). Water And Environment Sector Performance Report. https://www.mwe.go.ug/sites/default/files/library/Water%20and%20Environment%20Sector%20Performance%20Report%202020.pdf
- (33) Ministry of Health (2020). Annual Health Sector Performance Report. FY 2019/2020. Republic of Uganda. https://www.health.go.ug/cause/annual-health-sector-performance-report-financial-year-2019-20/
- (34), (35) Uganda Revenue Authority (2019). A Guide On Tax Incentives/Exemptions Available To The Uganda Investors. https://www.ebiz.go.ug/wp-content/uploads/2020/03/TAX_INCENTIVES_GUIDE_FOR_INVESTORS_IN_UGANDA_October_2019.pdf
- (35) World Bank (2017). Implementation completion and results report on Sarajevo waste water project. http://documents1.worldbank.org/curated/en/904151521734042116/pdf/implementation-completion-and-results-report-icr-document-P090675-var26-03192018.pdf
- (36) Peralta-Suárez, L.M. and Yera, Y.B. (2013). Development of a Technology for Treating Wastewater Contaminated with Nitric Acid. https://doi.org/10.1155/2013/278618
- (37) PwC analysis based on Prof. A. Damodaran data, 2020.
- (38) Muhumuza, R. (2019). Africa's Booming Cities Face A Severe Toilet Crisis. AP News. https://apnews.com/article/c225ff70420846489892ea206ecca6d1
- (39) United States Department of State (2020). Uganda - United States Department Of State. https://www.state.gov/reports/2020-investment-climate-statements/uganda/
- (40) UNDP/PwC stakeholders interviews, 2021.