Toilet Trouble

Taking India’s toilet revolution and sanitation to the next level

by Maura Farrell, Aniket George, Riju Maitra, Cesar Miranda, and Kriti Paul-Gera,

Motivation

Between 2014 and 2019, the Indian government installed over 100 million toilets in India as part of their Swachh Bharat campaign. Despite increased access to toilets, sustainable sanitation remains a major issue in India. The Indian government has struggled to align the incentives of the public to maintain sanitation standards across the country. The high costs and infrastructure needed to maintain sanitary toilets across the large country has made it particularly difficult.

This project looks to tackle three major problems in sustainable sanitation:

1. Financial Sustainability – How can we finance the project through internal and external capital generation?
2. Implementation – How can we implement the program across India?
3. Stigmatic Change – How can we de-stigmatize the negative perception around toilet cleaning in India?

India was chosen due to the team’s experience living and working in the country, putting us in a prime position to tackle these problems. With high population density and limited government funds, improved sanitisation and hygiene are one of the few tools available to combat not only the public health risks of the Coronavirus but also the long-term health risks of the population. The team will look to capitalise on the immediate focus on sanitisation brought about by the Coronavirus, lifting the ongoing standards in the region.

The project will primarily focus on promoting the below UN SDG’s:

3. Good Health and Well-being

6. Clean Water and Sanitation

9.  Industry, Innovation, and Infrastructure

This paper will go on to discuss the Project’s Value Proposition, Business Model, Scalability, Viability, and Launch, to bring sanitary toilets to India and thus address the broader issue of the health and wellbeing of the public.

Value Proposition

Our initiative will bring clean toilets to all Indians.

The FIS Process:

1. Financing Sustainability

• Funding Revenue
  • Government subsidies
  • Seek funding from private institutions, including healthcare companies and companies producing cleaning products, in exchange for advertising opportunities
• Generated Revenue
  • Pay per use model for individuals not residing in the area
  • Either annual memberships or free membership for residents
  • Sell fertilizer generated by waste

2. Implementation

• Franchise Model
  • Begin by establishing flagship toilets in central locations
  • Each flagship location promotes franchising in its designated areas
  • Franchisees are allocated funding and trained
• Oversight
  • The corporate organization monitors the flagships who in turn monitor the franchisees.
  • Franchisees that do not meet standards are penalized; in severe situations ownership is changed.
  • Oversight is also needed to ensure that each toilet is not simply “revenue maximizing,” but also makes clean toilets accessible to the general population

3. Stigmatic Change

• Owner Operator Model
  • Franchisee owners keep any revenue generated from toilet usage
  • Owners must also be the cleaners themselves, to ensure cleaning is not outsourced and thus quality is ensured
• Celebrate Achievements
  • Recognize achievements of franchise owners – cleanest toilet, best service, highest revenues, most customers, etc. They must feel like they are a part of a community of franchisees, and thus of our organization
  • Winners receive financial rewards, as well as invitations to be stewards of hygiene education in their area.

Financial and Sustainability Goals:

The project will aim to be semi-dependent financially in the short run whilst aiming for full independency in the long run. From a sustainability standpoint, the franchise model of toilet ownership and operation will help scale the project across India. Standards will be maintained by the corporate bodies and regional champions, to ensure ongoing sanitation.

Measuring Progress

The key performance indicators will include the below:

1. Funding per year vs. Revenue generated per year: This will indicate the independence of the organisation
2. Number of toilets per person in each region: This will indicate where we are well represented and where we need to be better represented
3. Number of users per day (by toilet): Indicates user penetration and pricing mismatches
4. Cleanliness reporting: As measured by regional flagships who will in turn monitor the franchises on a quarterly basis
5. Reduction in defecation in area: Measure the correlation between toilets and defecation
6. Rate of sickness and disease: Measure the correlation between clean; toilets and health

UN SDG Indicators to be evaluated

·       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) ·       6.2 By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations ·       6.2.1 Proportion of population using (a) safely managed sanitation services and (b) a hand-washing facility with soap and water ·       6.a By 2030, expand international cooperation and capacity-building support to developing countries in water and sanitation-related activities and programmes, including water harvesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies ·       6.b Support and strengthen the participation of local communities in improving water and sanitation management ·       6.a.1 Amount of water- and sanitation-related official development assistance that is part of a government coordinated spending plan ·       6.b.1 Proportion of local administrative units with established and operational policies and procedures for participation of local communities in water and sanitation management

Business Model

Operations:

Our proposed solution is a franchised system of toilets, modelled after the Sanergy system in Kenya. Our company enters agreements with local entrepreneurs (franchisees), who pay a monthly fee for regular servicing. The franchisee charges customers on per-use or subscription basis for access to the toilet.

The company sends sanitation staff every 1-2 days to change the tank of the toilet. The waste is sanitarily transported from the toilet to a state-of-the-art processing plant, where waste is turned to organic fertilizer, which is sold in agricultural input stores.

Profitability:

	Revenues	Costs
Our Company	·    Fees from franchisees ·    Sales revenue from fertilizer ·    Advertising revenue from corporate partners and other income	·    Onboarding and training franchisees ·    Toilet manufacturing and installation ·    Toilet servicing (waste removal) ·    Waste processing
Our Franchisees	·    Revenue from paying customers on a per-use or subscription basis. The prices charged are at the discretion of the franchisee, based on frequency of use, location, and other factors	·    Monthly payments to our company for servicing ·    Cleaning costs ·    Labor costs should they choose to hire additional staff to collect customer fees

The franchise model in action:

As an illustrative example, a single toilet may serve 12 families of 6 people in an urban slum, and will reach breakeven with a price per use of approximately 5 Indian Rupees. The economics work best with economies of scale – more toilets installed in a given locale lead to reduced maintenance and servicing costs across all of them.

Toilets can be installed in small land area, so they can be sited deep inside urban slums. They are a substitute for pit-hole latrines, which can cause contamination; and open defecation, which poses a public health risk. The toilets are equipped with hand washing stations and soap, so they further public health indirectly as well. In these ways, our sustainability and financial goals are aligned in the project. The more toilets are franchised in the urban slum environment, the more profitable our company becomes, and the greater the public health outcomes in the community.

In order to succeed, our company required buy-in from the local community. There will be resistance from the operators of existing toilet options in the area. One option is to partner with them to switch their model. Alternately, our toilets may compete directly with existing systems, in which case there will be a need to offer an enhanced customer experience. We propose to do this by offering a higher level of sanitation and cleanliness in our facilities compared to others. Additionally, without the need for pipes or pits, our toilets can be sited almost anywhere – making them more accessible.

Community engagement and education will be important to explain the value of our toilet system to the community. This can also be achieved through reliance on the franchisees, who live in the community and can educate their neighbors on the product value.

In order to scale, it will be pertinent to build relationships with the municipal government in order to have the necessary permissions. This will also be helpful should the company decide to pursue a public toilet service contract with the government.

The downsides of our business model are twofold. First, there are increased emissions associated with our model because we transport waste to our processing facility using trucks. However, we believe this is mitigated by the immense public health benefit realized through cleaner soil and water. Second, the argument can be made that replacing public services and traditional infrastructure – piped toilets – with privatized, distributed infrastructure is a net loss for communities. However, we take the pragmatic view that in our target locations – urban slums – the availability and likelihood of traditional toilet infrastructure is virtually non-existent and unlikely to be provided in the near future. Therefore, we believe that our project represents a net gain for the communities we serve.

 

A key area of information uncertainty that we face is whether individual franchisees will adopt this model. The cultural nuance of the caste system in India means that toilet cleaning roles are shunned by a large portion of the under-educated class in India. In order to overcome this uncertainty, we propose conducting qualitative interviews and focus groups with members in the slums that we will be targeting initially and understand how to incentivize and structure the franchising system so that it is taken up effectively.

The project goals are achievable in the next five years due to timing and the incentive structure. Firstly, given the fact that India along with the world is in the midst of a global pandemic, sanitation will be one of the areas that continues to receive funding attention after the pandemic has passed. It will also remain a government priority well beyond the Swachh Bharat campaign (which ran from 2014 to 2019). Secondly, our franchise model creates the right incentives for franchisees to earn income and maintain toilets. The testing described below will allow for us to effectively achieve our goals in a five year timeframe.

Scaling Up

In terms of how the project can be expanded across the countries there are several different hurdles we have to face.

The primary is issue is the location, while rural India does not have a space constraint and considering the fact the that these toilets do not need much space that does not seem to be a barrier, however getting a location with constant access to clean running water is a big challenge. Hence, in many locations additional infrastructure would need to be in put in place to ensure this.

In terms of government subsidies and general aid, the amount to which government would assist would only rise with scales and the consequential improvement in the standard of living in rural India.

As we the project grows it’s also important to keep in mind the optimum number of toilets required per square area, keeping mind factors such as accessibility, affordability and population density.

Lastly we have to look at management of personnel and maintenance, these aspects get lost in organisation with scale and becomes extremely crucial with scale. Structuring a clear organisation hierarchy and clarifying each individuals roles and most importantly stating the organisation goals of maintaining cleanliness becomes extremely important as the company loses the ability to have hands on control as we scale.

 

Viability Testing

The fact that we have been considering a franchisee model makes the pricing strategy even more crucial. It is important to understand the kind of returns and the time-frame potential owners could anticipate through this investment.

In terms of the actual price, countries that have experienced similar such projects (e.g., Kenya, other African countries) should initially be used as a benchmark for pricing and the pricing models. Since the franchisees do have authority to determine the price it is important to decide whether the they should be limited within a range or be allowed complete freedom.

There would be three possible pricing models that could be used:

1. A monthly fee
2. An annual fee
3. Pay per use

While annual fees may seem practical the lack of disposable income may make this model unsuccessful. The pricing would also be more favourable for family plans rather than individual subscriptions.

Since India is such a diverse country, in order to get an accurate picture it is important to test across the country before considering scaling. Hence, we would look to start with toilets in 3-5 villages in every state in India. To understand the challenges of each state and the optimum price/pricing model whether that changes across the country.

Next Steps

1. Identify a pilot market: Given India’s vast size and the great cultural, regulatory, and economic differences from state to state, careful consideration should be given to where this venture will be launched. A study of population density and urbanization, levels of poverty, availability of sanitation, and access to government services will be needed to make this decision.
2. Connect with local and community leaders and influencers: This venture will only be successful with community buy-in and support. Thus, as one of our first steps we will identify and contact people in the communities targeted that have influence over others. These could include local authorities, religious leaders, employers, and other relevant parties with an ability to influence their communities. We would aspire to educate them and turn them into supporters and advocates for our cause
3. Secure initial funding and build a formal organization: With the knowledge obtained from our research and from the new relationships built, we can approach official government agencies and institutions that fund social enterprises for initial seed funding. This will enable us to become a formal organization and to begin implementation
4. Build and train a team for flagship facilities: Our success will be contingent on a team that can kick off this venture from the ground up, and especially that can influence others to reduce the stigma and allow us to scale up. We will find people from the regions and communities we will serve and have a more localized approach. These initial team members must be thoroughly trained as they will be the future trainers as we expand
5. Develop alliances with local and regional businesses to provide ongoing funding: As we launch operations, we will approach businesses to try to get additional ongoing funding through advertisement and other types of activities. These businesses will primarily be small and medium at first, but later on we should pursue businesses and brands with a broader geographic reach that enables us to count on them for future expansion
6. Launch an education campaign in selected communities: With the help of the identified community leaders, we will launch an education and marketing campaign on cleanliness in the neighborhoods where our pilot flagship will be located. Especially in the times post-COVID pandemic, we expect the public to be more receptive to this message
7. Launch flagship and identify potential franchisees: We will launch the flagship with a community event and offer free memberships at first to enable people to really see the difference with the previous sanitary reality. In this launch, our staff will be able to intermingle with the community, and use the opportunity to identify potential franchisees that could create more restrooms in the community
8. Launch franchisee community: To combat the stigma and to ensure commitment, a community of franchisees will be created with special perks and additional opportunities to make them feel like a part of our organization too. They can also become advocates for us in a less transactional way
9. Use initial launch as a marketing opportunity to expand to different geographies: Through word of mouth, we expect some franchising requests to start coming. But as this happens, we want to bring in our success from the pilot community to other community leaders in the region, and begin building the relationships that will enable us to take the next step
10. Perform ongoing reviews of pilot and adjust as needed: Use evaluation metrics to ensure flagship remains known for excellence, and to benchmark franchisees against them. Continue providing ongoing trainings and take corrective measures if necessary