On-site sanitation for public and private facilities
On-site sanitation for public and private facilities
Business Model Description
Operate self-sufficient private sanitation plants adjacent to or embedded into facilities like social housing, hospitals and schools that are outside the network of a wastewater treatment system.
Expected Impact
Provide access to basic services for the underserved population; help meet social needs and support economic growth.
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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Case Studies
Country & Regions
- South Africa: Western Cape
- South Africa: Mpumalanga
- South Africa: Limpopo
- South Africa: Gauteng
Sector Classification
Infrastructure
Development need
South Africa faces significant challenges in achieving SDG 9- Industry, Innovation and Infrastructure, with a score of 45.0. Scores for other goals include 48.7 for SDG 3 - Good Health and Wellbeing, 67.0 for SDG 6 - Clean Water and Sanitation, 79.0 for SDG 7 - Affordable and Clean Energy, and 77.9 for SDG 11 - Sustainable Cities and Communities.(1)
Policy priority
The National Planning Committee identified 9 primary challenges, 4 of which have infrastructure development needs and implications: the public health system cannot meet demand or sustain quality, the economy is unsustainably resource intensive, spatial divides hobble inclusive development, and infrastructure is poorly located, inadequate and undermaintained.(2)
Gender inequalities and marginalization issues
Poor infrastructure can exacerbate the gender gap. In low income countries, women collect over 70% of water and fuelwood. Women spend 200 million hours on water collection every day. Unsafe and low security transport also disadvantage women who are more affected by violence, which affects their wellbeing and workforce participation.(8)
Investment opportunities
President Ramaphosa has an investment drive to mobilise $100 billion for priority sectors, including the energy, water, transport and logistics, and data and ICT sectors.(4) The Sustainable Infrastructure Development Symposium South Africa organised by the Investment and Infrastructure Office within the Presidency seeks to create a $20.5 billion infrastructure fund.(5)
Key bottlenecks
High fixed costs, high levels of debt and low cash reserves may cause a liquidity crisis.(6) Construction was restricted during lockdown and sharp contractions of fixed investment can be expected as firms reconsider or postpone implementation.(7) Projects exposed to foreign currency risk foreign exchange fluctuations and further uncertainty if not previously hedged.(6)
Utilities
Development need
According to the 2019 SDG report (9), ahead of 2030, South Africa must deliberate on how to provide to underserved areas safely managed and sustainable sanitation facilities that are both water-smart and sustainable.
Gender inequalities and marginalization issues
Inadequate access to sanitation and hygiene facilities disproportionally affects poor women and girls, constraining educational pursuits and putting personal safety at risk.(8)
Investment opportunities
An estimated ~R90 billion per year of investment is needed in water and sanitation infrastructure over the next 10 years. Public funding gaps provide an opportunity for private sector financing of water and sanitation projects to achieve access to adequate and equitable sanitation and hygiene for all South Africans.(10)
Key bottlenecks
Given high investment and operating costs, human capital and technology resources and governance needs, some urban infrastructure services cannot reach the desired efficiency levels. New models are needed to improve efficiency in urban infrastructure.
Water Utilities and Services
Pipeline Opportunity
On-site sanitation for public and private facilities
Operate self-sufficient private sanitation plants adjacent to or embedded into facilities like social housing, hospitals and schools that are outside the network of a wastewater treatment system.
Business Case
Market Size and Environment
16 million South Africans do not have access to adequate sanitation facilities.
16 million South Africans do not have access to adequate sanitation facilities.(11). South Africa’s population experienced substantial population growth between 1994 and 2020, increasing from 40 million to 59.62 million people. This has led to a greater number of households that need to be serviced.(12),(13)
Indicative Return
5% - 10%
Scholars estimated investment in certain segments of the water, sanitation and hygiene (WASH) sector can be expected to generate annualised returns of between 5% and 10% until 2030.(14)
Investment Timeframe
Short Term (0–5 years)
Small-scale self-sufficient private sanitation plants generally require little time to install.(15)
There is opportunity to produce cashflow shortly after project implementation through sales of components, and maintenance and waste management contracts (< 5 years).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - CapEx Intensive
Market - High Level of Competition
Impact Case
Sustainable Development Need
The current waterborne sanitation infrastructure system is unsustainable. South Africa is a water-scarce country and water scarcity is likely to increase as a consequence of climate variability.(17)
Many South Africans are outside the network of a wastewater treatment system, and consequently still lack basic sanitation services.
Gender & Marginalisation
Inadequate access to sanitation and hygiene facilities also disproportionally affect poor women and girls, constraining educational pursuits and putting personal safety at risk.(18)
Expected Development Outcome
Strengthen the delivery of basic services; help meet social needs and support economic growth
Increase access to sanitation services to underserved populations
Gender & Marginalisation
Help give women and girls access to sanitation and hygiene services
Primary SDGs addressed
1.4.1 Proportion of population living in households with access to basic services
Proportion of population living in households with access to (i) improved sanitation facilities: 82.0%; (ii) improved electricity: 89.6%; (iii) improved water facilities: 86.4% in 2017.(17)
South Africa’s key poverty reduction program (2000) provides assistance to 17 million South Africans. In 2015 social grants covered 71.9% of all elderly persons and 92.2% of those classified as poor, one-third of households with children and 61.3% of poor households with children. Expenditures on social grants are expected to rise by 26% between 2016/17 and 2019/20.(26)
6.2.1 Proportion of population using (a) safely managed sanitation services and (b) a hand-washing facility with soap and water
Proportion of population using safely managed sanitation services, including a handwashing facility with soap and water - Basic service: 70% (2017); limited service: 13% (2017); unimproved: 15% (2017); open defecation: 2% (2017).(17)
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Public sector
Indirectly impacted stakeholders
Planet
Outcome Risks
The environmental impact of the sanitation system. Water wastage: Regular desludging of waste must be ensured, effluent and sludge require further treatment and/or appropriate discharge.
The hazardous dimension of waste can be mitigated through reuse solutions such as composting, and processing of byproducts such as fertilizer from waste.
Impact Risks
Efficiency risk given the heavy involvement of local authorities in water utilities management
Impact Classification
What
Important, positive outcome: access to sanitation infrastructure
Risk
Low risk
Impact Thesis
Provide access to basic services for the underserved population; help meet social needs and support economic growth.
Enabling Environment
Policy Environment
2019 National Water and Sanitation Master Plan: Volume 1 of the plan encourages private sector financing for municipal infrastructure.(20)
National Infrastructure Plan: This 10-year plan aims to address the estimated backlog of to supply 2.1 million households with basic sanitation.(21) In line with this plan and national policies, local municipalities endeavour to prioritise providing basic water and sanitation to all citizens in their jurisdiction.
Financial Environment
Financial incentives: The government subsidy scheme for providing basic water and sanitation services.(24)
Fiscal incentives: Key grants include the Equitable Share, Municipal Infrastructure Grants, Regional Bulk Infrastructure Grants and the new Water Services Development Grant.(24)
Regulatory Environment
Water Services Act (No. 108 of 1997): This Act provides a legal framework for providing water services or potable (drinkable) water and sanitation services.(2) Together, the National Water Act and the Water Services Act form the overarching legal framework for water and sanitation.
Strategic Framework on Water Services (SFWS) (2003): Water services and sanitation are governed and regulated by the Department of Water and Sanitation (22). The Strategic Framework on Water Services expands on the Water Services Act and provides a comprehensive summary of policy relating to the water service sector.
The water security initiative sets out a framework for national, regional and local water security. It is intended to guide the water sector with investment planning for developing water resources and delivering water and sanitation services.(23)
Marketplace Participants
Private Sector
Development Bank of Southern Africa, GAIA Infrastructure Capital, Sanitech, Water and Sanitation Services South Africa (Pty) Ltd, Enviro Options
Government
Tsogang Rural Development Agency
Non-Profit
GreenCape, Bill and Melinda Gates Foundation, Mvula Trust, Bremen Overseas Research and Development Association (BORDA), University of KwaZulu-Natal (UKZN)
Target Locations
South Africa: Western Cape
South Africa: Mpumalanga
South Africa: Limpopo
South Africa: Gauteng
References
- (1) 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. https://dashboards.sdgindex.org/#/ZAF
- (2) National Science and Technology Forum (2019). The National Development Plan. http://www.nstf.org.za/wp-content/uploads/2019/04/All-The-NDP-1.pdf
- (3) Le Roux, A., Arnold, K., Makhanya, S. and Mans, G. (2019). South Africa’s urban future: Growth projections for 2050. Green Book. https://pta-gis-2-web1.csir.co.za/portal2/apps/GBCascade/index.html?appid=3c4901e8681244d1a7989e8ed2ace1f9
- (4) Industrial Development Corporation (2019). The Case For Investing in South Africa. https://sainvestmentconference.co.za/wp-content/uploads/2019/11/The-case-for-investing-in-South-Africa-2019-Executive-summary-31-October-2019.pdf
- (5) Sustainable Infrastructure Development Symposium (2020). Sustainable Infrastructure Development Symposium South Africa. https://sidssa.org.za/
- (6) Deloitte (2020). The Impact of COVID-19 on infrastructure projects and assets. https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/finance/ng-the-Impact-of-COVID-19-on-Infrastructure-project-and-assets_27052020.pdf
- (7) Arndt, C., Davies, R., Gabriel, S., Harris, L., Makrelov, K., Modise, B., Robinson, S., Simbanegavi, W., van Seventer, D. and Anderson, L. (2020). Impact of Covid-19 on the South African economy. https://sa-tied.wider.unu.edu/sites/default/files/pdf/SA-TIED-WP-111.pdf
- (8) Organization for Economic Cooperation and Development (2019). Gender Equality and Sustainable Infrastructure. http://www.oecd.org/governance/gender-equality-and-sustainable-infrastructure-paris-march-2019.htm
- (9) Statistics South Africa (2019). South Africa SDG Report. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (10) GreenCape (2020). Water Market Intelligence Report. https://www.greencape.co.za/assets/Uploads/WATER_MARKET_INTELLIGENCE_REPORT_19_3_20_WEB.pdf
- (14) McCallum, S. and Viviers, S. (2018). How impact investment can tackle our water shortages. https://www.news24.com/fin24/Opinion/how-impact-investment-can-tackle-our-water-shortages-20181114
- (15) Organization for Economic Cooperation and Development (2010). Environmental Performance Reviews.
- (16) Interview with Raldo Kruger from GreenCape on 06/02/2020.
- (17) Statistics South Africa (2019). South Africa SDG Report. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (18) Organization for Economic Cooperation and Development (2019). Gender Equality and Sustainable Infrastructure. http://www.oecd.org/governance/gender-equality-and-sustainable-infrastructure-paris-march-2019.htm
- (19) WaterAid (2017). Technical guidelines for designing a decentralised waste water treatment system. https://www.pseau.org/outils/ouvrages/wateraid_technical_guidelines_for_designing_a_decentralised_waste_water_treatment_system_2017.pdf
- (20) United Nations Statistical Division (2020). Global indicator framework for SDGs. https://unstats.un.org/sdgs/indicators/Global%20Indicator%20Framework%20after%202020%20review_Eng.pdf
- (21) South African Government (2020). National Infrastructure Plan. https://www.gov.za/issues/national-infrastructure-plan?gclid=Cj0KCQjwoub3BRC6ARIsABGhnybmK6tufpbhpvwrA5H6YedOYiSJGurH-RukRzXaMD0AWeREwoVm064aAh1aEALw_wcB
- (22) South African Government (2018). National Water and Sanitation Master Plan: Vol 2. http://www.dwa.gov.za/National%20Water%20and%20 Sanitation%20Master%20Plan/default.aspx
- (23) South African Government (2019). National Water Security Framework. https://www.nationalplanningcommission.org.za/assets/Documents/Frameworks/NWS%20Framework%20Public%20Version%200.0%2011%2006%202019.pdf
- (24) Bertha Centre for Social Innovation and Entrepreneurship (2016). Innovative Finance in Africa Review. https://www.gsb.uct.ac.za/Downloads/InnovativeFinanceAfrica_1.pdf
- (25) Statistics South Africa (2018). General Household Survey. http://www.statssa.gov.za/publications/P0318/P03182018.pdf
- (26) United Nations (2019). South Africa Voluntary National Review: Empowering People and Ensuring Inclusiveness and Equality. https://sustainabledevelopment.un.org/memberstates/southafrica