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Presentation given at Stockholm World Water Week 2013
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Innovative Partnerships for
Resource Recovery & Reuse (RRR)
WLE/IWMI 2013 World Water Week, Stockholm
1st September 2013
Agro-industrial waste - Energy
Wastewater – Water (irrigation, aquaculture)
MSW, Faecal sludge - Nutrients (ag. production)
Innovative RRR initiatives – to close water, nutrient and energy cycle loop
Beyond ecological benefits.…
• RRR offers significant opportunities for cost-recovery for the sanitation sector esp. in low-income countries
• Business opportunities that can attract private capital and leverage donor investments
Game-changing processes that can completely
alter the current sanitation-agricultural landscape
with the implementation of sustainable
business models and innovative
cross-sectorial partnerships
Stages of Business Life Cycle
Time
Phase I – Start-Up
Ou
tpu
t Phase II – Business Development
Phase III – Up- and Out-Scaling
Phase I – Start-Up
Time
Ou
tpu
t
Challenges • Buy-in of business concept by investors: capital
investment • Access to inputs • Development of suitable technology • No proven market • Regulatory environment
Solution strategies and partnerships • Finance (donors, govt, fin. inst.) – model
demonstration, info. • Inputs suppliers • Technology:
• Business partners – technology transfer • Research institutes – innovation
• Market strategy/entry – product awareness • Regulatory envt: incentives (tax breaks, subsidies)
Proof of concept New period of growth New markets and dist.
channels Larger market share New revenue streams
Organizational type: PPP
Idea: Devt. and testing of innovative tech. for wastewater treatment (domestic/industrial); avert pollution of water bodies
Value offer: Potable treated water, filleted retail packaged fish, animal feeds
Business model: value-driven & cost-driven end-sales
Scale: 70.000 m3/day
Case of Terraqua Barranca: Phyto-remediative wastewater treatment & fish production
Buy-in of business concept by multiple entities Cost of investment: $22 M Investors (IADB through govt, equity–pilot phase/ 60% of capital reqts);
rural campesinos invest land, municipality supply of ww Returns/ownership: 75% - Terraqua, 15% - municipality, 10% - campesinos Develop market niche via established distributors Driving factors: Water scarcity, abundant ww polluting water bodies,
land availability and conducive ownership structures.
Municipality WSP
Rural Campesinos
Government
WW
Land
Terraqua
Finance Expertise, finance
Export market
Domestic market
Fish
Clean water
$ $
$ Licensed
Wholesaler/
distributor
Time
Ou
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t
Revenues increasing
New market opportunities
Smooth running of business process – stabilization
Competition is surfacing
Fine-tuning business model
Phase II – Business Development
Challenges • Increasing competition
- Input procurement - Output market
Solution strategies and partnerships • Input procurement:
- Incentives for consistent supply - Logistics – transportation
• Output market: - Existing and established partner
distribution systems – access new markets
• Research: Tailor products to market needs ; fine-tune technology
Fine-tuning business model results in growth and stability ; exploration of up- and out-scaling initiatives
Case of EcoFuel Africa, Uganda
Organization type: Private company
Idea: Alternative fuel sources to avert deforestation and burning of agro-waste
Value offer: Produce cheap and clean cooking fuel (briquettes)
Business model: Value-driven, micro-franchising scheme
Scale: 1000tons/yr
Form of financing: No subsidies, private equity, seed grant
Driving factors: unavailability of firewood, abundance of waste, low-cost & simple technologies
Increasing and stable sales and profits, however competition is growing
(local & intl).
Households Institutions
Briquette & Stoves
Briquette & Stoves
Transport
Training $
Logistics
company
EcoFuel
Africa Farmers,
Agricultural
residue
producers
Research &
Development
Distributor
Input
Expertise
$
Training, installation of stoves
$
$
$
Compost $
Partnerships to mitigate competition effects: 1. Input procurement and delivery • sources ag. residue from various farmers • outsource collection
2. Fine-tune technology: increase industrial capacity (research partners -Makerere Univ.) 3. Output market : outsource distribution and marketing; sale of complementary goods
Phase III: Up- and Out-Scaling
Time
Ou
tpu
t
Challenges • Adaptation of business model o Entry into new markets o Adaption of tech. to context
• Funds and resource mobilization (R&D, pilots, infrast., land…)
• Market information
• Regulatory environment
Choice of entity New period of growth New markets and dist.
channels Larger market share New revenue streams Increased
impact/beneficiaries
Phase III: Up- and Out-Scaling
Time
Ou
tpu
t
Solution strategies and partnerships Funds: • Devt. partners, local fin. inst. – proven concept,
lower investment risk, impact Resource mobilization: public, private • Land, access to waste.. • Technical support for H/E mitigation measures
Market info: Private marketing companies, ag. prod. org.
Regulatory envt: policy makers • Formulate and enact policy measures – interest
rates, tax breaks, subsidies – market entry; single window clearances for H/E & business licenses
Research partners: • Cutting-edge tech. new pdt. devt; pilot
Model adaptation: Licensing agencies – brand, distribution and marketing partners
Choice of entity New period of growth New markets and dist.
channels Larger market share New revenue streams Increased
impact/beneficiaries
Case of Waste Concern, Bangladesh
• Organizational type: Research-based NGO
• Value offer: Address waste challenge by transforming MSW into high quality and safe compost
• Business model: Decentralized community private-public partnership model
• Scale: 1 – 5 tons/day of waste processed
• Driving factors: low-cost and labor-intensive tech. and prod. processes, huge demand for compost, strong community ownership, inst. support
• Plans: Replication for impact – increased beneficiaries, CDM process
Private sector Community Public sector
Compost
Donor (supply of funds)
Community-based organizations allowed to operate, monitor
collection activities
DCC, PWD (allocation of land)
Waste Concern
$
Fertilizer company
$
CBO
CBO
CBO
Buy compost, enrich and sell to farmers
Technical assistance
Compost
$
MoEF $
Land
Carbon Emission Reduction market
Carbon credit
$
Decentralized multi-partnership community based model
Strategic partnerships
Adaptation of business model: 4 management models
• Mucpl. owned – mucpl. Operated, Mucpl. owned – comm. operated, Mucpl. owned – priv. operated, priv. owned – priv. operated
Fund and resource mobilization
• Cost of investment: $50K to $100K; self-sustaining after 3 years – private sector, intl devt agencies, local govt
• Physical resources: land (MoEF, local govt); marketing (private sector), laboratory testing and quality assurance of pdt (academia)
Community ownership: Motivated community participation through model demonstration; proven concept, benefits
Market: entry – private sector (fertilizer companies); new markts – carbon credits
Regulatory environment: Formulated and enacted 27 policies , incl. single window clearances for H/E & business licenses
Summary – Partnerships as solution strategies for RRR businesses
Business Phase
Type of challenges
Description of challenges Solutions requiring strategic partnerships
Phase I and III
Funds and resource mobilization
Lack of financial resources for pilot projects
Lack of adequate funds for R&D Lack of access to credit
facilities Scarcity of resources
Model demonstration and supply of information - investor buy-in; diversified revenue streams; piggyback on existing relationships with high-level officials.
Phase I, II and III
Market Information
Lack of information about related product market
No market niche
Product awareness, private marketing company partnerships, product innovation.
Phase I and III
Knowledge and skills
Lack of proper understanding from concerned govt. agencies and communities
Negative attitude of govt. agencies
Model demonstration; Education/ awareness building campaigns
Phase I and III
Regulatory environment
Greater no. of permits required than usual no. for general projects
Limited incentives to catalyze business development
Formulate and enact policies (e.g. interest rates, tax breaks, subsidies – market entry; single window clearances for H/E & business licenses
Conclusions
1.Strategic partnerships are imperative for
business development in the RRR sector.
2.What is required and can work is highly location,
context and business phase dependent.
3.Much more research needed to understand
nature of partnerships to enable up-scaling
specific to RRR subsectors (i.e. nutrient, energy
and water).
Thank you.
Miriam Otoo, Krishna Rao,
Jasper Buijs and Pay Drechsel
http://wle.cgiar.org/rrr
IWMI, Colombo
Innovative Partnerships for
Resource Recovery & Reuse (RRR)
WLE/IWMI 2013 World Water Week, Stockholm
1st September 2013