Sanergy : toilets in Nairobi’s slums

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KENYA — In the slum areas of Kenya’s capital, indoor flush toilets are a rarity. Most people have to make do with plastic bags and outdoor pit latrines. To remedy the situation, a company called Sanergy has built up a network of low-cost pay toilets that are put to optimal use, given that the organic waste is converted into fertilizer and sold to farmers.

THE CONTEXT

This business model premised on serving the poor has the support of the Novastar venture catalyst firm, in which Proparco holds a stake. Over 2.5 billion people around the world lack access to adequate sanitation. In Nairobi’s slums alone, the figure is 2.5 million. The inhabitants have to make do with outdoor pit latrines or plastic bags, which they leave on the streets or throw away further from home.

“Sanergy makes the provision of sanitation to slums profitable – and thus sustainable. Our aim is to serve half a million people in Nairobi.” David Auerbach, Sanergy co-founder

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Sanergy, an American-Kenyan company, has developed toilets similar to the cubicles installed on work sites, using local materials and workers, many of them slum dwellers themselves, to fabricate them. These compact Fresh Life Toilets (FLTs) are equipped with their own waste storage cartridges. They can be installed and used anywhere. To distribute the FLTs, Sanergy franchises them out to local residents – dubbed Fresh Life Operators – who operate them as small businesses on a pay-per-use basis. There are currently over 300 such entrepreneurs.

They themselves set fees based on customer income: from €0.025 to €0.043 on average (from 3 to 5 Kenyan shillings). Sanergy also works to get landlords to install hygienic sanitation facilities on their property. While some have raised rents to offset the cost of FLTs, most of them have experienced higher occupancy rates in housing equipped with toilets, with the result that they have no trouble recouping their investment. To guarantee service quality, the proper functioning of FLTs and to stimulate demand, Sanergy provides the Fresh Life Operators with support in obtaining titles to property and building permits, which are complex procedures in slum areas.

Operators can also get training in basic accounting skills, customer service and so forth. In partnership with Diva, an NGO that encourages Internet users to lend money to local microcredit institutions, Sanergy offers 12- or 24-month zero-interest loans for the purchase of toilets at a unit price of $500. Since late 2011, when the programme began, 646 toilets have been installed in eight Nairobi informal settlements. They are used over 30,000 times a day and have made it possible to collect and treat 7,500 tonnes of waste to date.

NEXT STOP, KIGALI, KAMPALA?

Waste treatment and conversion are Sanergy’s primary source of income as well as the key to its success. Logistics teams provide FLT maintenance and collect the waste cartridges in the slum areas. In addition, the growth of its network has even enabled Sanergy to expand the service to include food waste collection for other companies.

The waste is transported to a central processing facility and converted into organic fertilizer, called Overgrow, and insect-based animal feed. These by-products are sold to over 200 farms. Overgrow is said to increase crop yields by between 30% and 100%.

David Auerbach, one of Sanergy’s co-founders, today aspires to “extend this initiative to all the big cities in the world where it can be usefully installed: Kigali, Kampala and Mombasa.”

NOVASTAR, OR BELIEVING IN SOCIAL BUSINESS

Through its Investment and Support Fund for Business in Africa (FISEA) advised by Proparco, the AFD Group has invested $5.5m in Novastar Ventures East Africa Fund. The goal of the $80m fund is to assist start-ups that offer innovative ways to make essential goods and services available in East Africa. Novastar has already invested in eight companies, including: SolarNow, which provides low-cost solar home systems to rural Uganda; Bridge International Academies, a chain of nursery and primary schools for underprivileged children in Kenya, Uganda and Nigeria; and Sanergy.

AN EXPERT’S POINT OF VIEW

Bénédicte Faivre-Tavignot, Associate Professor at HEC Paris, co-founder of the HEC Chair Social Business/Enterprise and Poverty

Did you say social business?

“In recent years, the concept of social business has emerged as a middle road between philanthropy and the pursuit of maximum profit. The idea is rooted in a dual realization. On the one hand, governments and civil society are striving – especially in poor countries – to resolve problems such as food insecurity and insufficient access to healthcare, water, energy and adequate housing. On the other, the principle of maximizing profits is showing its limitations by intensifying pressure on resources, contributing to global warming and widening social inequality. The private sector can provide solutions to these challenges: through social business, it supports social causes. Profit thus becomes the means rather than the end; businesses are not acting independently but in co-creation with public institutions and civil society.

From “Social business: a different way of doing business and investing”, Private Sector & Development, N° 23, February 2016.

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