Running a sustainable business model for sanitation improvement: The case of Peepoo and Ikotoilets

Whilst researching on both Peepoo and Ikotoilets as viable sanitation solutions for Africa, I was particularly interested to understand how both of these innovations could run financially stable while still achieving their goals of sustainability and social contribution. I often find myself discussing topics on water and development in relation to issues like the environment and society, but sometimes overlook the involvement of private sectors in tackling provision of basic necessities. Personally, I relate to the general consensus that basic necessities like hygiene and sanitation are more often than not provided for by the state and its related municipal councils for communities. However, there may be circumstances that prevent them from being the most efficient or reliable in doing so, as in the cases of why innovations like Peepoo and Ikotoilets have had to be developed. 

Osterwalder and Pigneur (2010) describe Peepoo as an example of a start-up company which strives to provide for a profitable and sustainable novel solution to the many people who still lack access to proper sanitation today, and I believe that Ikotoilet is the same. The idea of social entrepreneurship stems from the adaptation of traditional business models to address community needs that existing markets and institutions have failed to solve (Njeru, 2013). Billions worldwide suffer from the lack of adequate sanitation, and access to sanitation continue to be at the crux of global development policy (ibid). Such a massive number of people may sound like a crucial market to tap into, but the economic development of such places need to be accounted for. Social entrepreneurship encompasses entrepreneurship activity with an embedded social purpose, but this 'entrepreneurship activity' still needs to be covered by sufficient cost recovery and usage. With governmental policies and traditional socio-economic actors unable to address these universal social problems (ibid), companies with sustainable business models and a social slant may provide the viable solution that can be adapted and used for in the long-run. 

Peepoo and Ikotoilets differ in various aspects, but one that stood out was that of their initial investments and overhead costs. Ikotoilets require infrastructural investment to build their basic toilet facilities, whereas Peepoo does not, and is rather low cost to operate. However, due to the nature of Peepoo bags being biodegradable, it is difficult for a large quantity of stock to be stored in advance. This is a hindrance to Peepoo accelerating its growth, with its lack of scale affecting distribution and manufacturing. Redfield (2018) explains that only when amplified to mass production, with offsets of potential revenue, could the Peepoo innovation ever hope to compete with ordinary plastic receptacles. 

People generally understand environmental implications of their actions, but for most, there will almost always be another factor that claims higher priority as to which product they choose. To a market plagued with a more serious concern of worrying about their basic necessities, environmental sustainability will hardly be their reason for picking Peepoo bags over regular plastic bags. Hence, Peepoople understands that there is a dire need to push for social marketing for people to understand how their products can be beneficial for their excretion needs, food security and long-term environmental responsibility. A sustainable solution for such a market might need to be packaged with other more pressing, short-term concerns for a more successful response. Peepoople has refocused marketing to tree farmers, but wider subvention or extensive marketing campaigns are necessary to convince customers of its superiority (Redfield, 2018). Other possible methods include government subsidies to offset certain costs and to make the collection system more affordable and popular for slum dwellers (von Münch et. al, 2009), though a long-term option is necessary to progressively ease away from government subsidies. The combination of a search for the right business model with a quest for meaningful impact is an uphill task, but Peepoople acknowledges that even though it is a tested and proven product, it is merely a starting point.

Ikotoilets, on the other hand, seem to be a more financially stable option, thanks to the shift in management of public toilets from public to private (Njeru, 2014), backed by municipal councils which bear the cost of constructing the Ikotoilets on municipal land. Ecotact is granted the right to run Ikotoilet facilities on a commercial basis for a period of five years to ensure recovery of the investment, after which they are eventually to be handed over at no cost to the municipal councils to either run them or lease out (Karugu, 2011 in Mwende, 2012). Kuria has also tapped on his growing recognition to forge successful partnerships with private businesses such as East African Breweries Limited Foundation, international NGOs and government entities to help enhance Ikotoilet's revenue base (Njeru, 2013). 

With free land guaranteed, a strong revenue base and the presence of other businesses in the same facility, it is understandable to see why Ikotoilet was deemed somewhat a success. Furthermore, its facilities were installed with cost-saving and environmentally-friendly technologies to minimize wastage and keep to a stringent financial strategy that promotes self-sufficiency via the creation of diverse income streams (Nicholls, 2006 in Njeru, 2013). With lower-income areas, Ikotoilet's pricing mechanism reflects the goal to address inequalities by introducing subsidized rates. Kuria also benefitted from the support of famous and religious figures to garner further interest in this innovation. 

Both Ikotoilet and Peepoo carry the primary focus to maximize benefits for society and the environment by implementing innovation approaches to key challenges. Though achieving variable levels of success, there is no doubt that both are highly admirable efforts in tackling sanitation issues, and given appropriate support, may be the long-term solutions necessary for change.