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Looking Beyond CSR: Can Private Sector Companies Transform The Sanitation Sector Into A Profitable Business Model?

A massive 1.96 lakh crores is required to eradicate open defecation from India. Involvement of the corporates can turn the sanitation sector into a profitable business

The involvement of the private sector was a talking point at the India Sanitation Conclave
  • Rs. 12,000 crores is needed to build 6 crore toilets in India
  • The private sector should look beyond CSR initiatives
  • Skill development, sustainability and profit should be the key factors

The Swachh Bharat Abhiyan began with Prime Minister Narendra Modi’s clarion call to end open defecation across India by October 2, 2019. The Prime Minister invited citizens and both the public and private sector to invest in the building of toilets and working towards eradicating open defecation from both urban and rural areas. The private sector responded warmly to Prime Minister Modi’s call for a clean India, and over the next two years, the Swachh Bharat Kosh received noticeable expenditure as a part of corporate social responsibility (CSR). The Union Government is also working towards making 30 per cent of CSR money towards sanitation mandatory, a step that could see more private investment in the sector of sanitation and waste management.

2014-15 saw India’s private sector spending nearly Rs. 42 crores towards toilet construction under Swachh Bharat. Within two years, the donations seemed to have dwindled, as of the Rs. 245 crores donated towards Swachh Bharat in 2016-17, 212 crores came from the public sector companies, while smaller companies and charitable organisations accounted for the rest Rs. 33 crores, as big private sector names remained missing from the list.

Is the private sector’s interest towards a cleaner India diminishing? While the figures may suggest so, the private sector’s involvement in expenditure towards sanitation is a complicated phenomenon that should not be written off on the basis of figures alone. Till now, the private sector expenditure was seen a part of CSR initiative where the involvement of private companies ended with the assigning a certain amount towards the mission. But experts reckon that it would be more effective is if sanitation and waste management ventures are turned into profitable business models, which could then grasp long term attention of private sector and also in turn lead to revenue generating mechanisms for small and medium enterprises in the sector of sanitation and waste management.

At the India Sanitation Conclave organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) recently, the role of the private sector in Swachh Bharat evolved as a major discussion point. Instead of looking at financial contribution to the Swachh Bharat Mission as just CSR, it was established that the need of the hour was to create an avenue for private sector where skill development, advocacy and profit could co-exist. Doing so would result in the creation of an institutional framework and form a comfortable partnership between the private and public sectors.

It is time that the corporate sector starts looking at the Swachh Bharat Mission as a sustainable business opportunity rather than just extended CSR. There are a lot of opportunities to utilise the sanitation sector and create sustainable business models out of them. But to do that corporate involvement must extend beyond grants and donations, said Naina Lal Kidwai, Chairman, India Sanitation Coalition.

Some examples of the corporate sector working in the realm of Swachh Bharat have already been seen since the campaign began. Anand Mahindra, Chairman, Mahindra & Mahindra Group spent Rs. 24 crores in constructing 4,597 toilets across 11 districts in India and Rs. 6 crores in the maintenance of those toilets. Ronnie Screwvala, founder and CEO of UTV Group has also done considerable work in improving sanitation conditions in rural India. Screwvala’s Swades Foundation focuses on 2,000 villages in Maharashtra’s Raigad district and has built nearly 14,000 toilets in the villages. The CSR wing of Bharti Enterprises constructed over 5,000 toilets in 210 villages in Ludhiana in 2015. But such examples are few and far between in the three years since the Swachh Bharat Mission began.

Private sector companies must look at Swachh Bharat as not just as CSR

Private sector companies must look at Swachh Bharat as not just as CSR

There are several reasons why many private sector companies have kept away from active involvement in the Swachh Bharat Mission. One of the major complaints from the private sector has been the prevalent red tape in municipalities, block development offices, gram panchayats, seen as a major hurdle. To invest in toilets – their construction and maintenance, private sector companies have to work closely with the local governing bodies. But it seems that the difficulty in coordinating with local bodies has resulted in dwindling interest in active involvement of the private sector.

Many corporates have rightly complained that they find it difficult to work along with state governments or local governing bodies. What both parties must realise is that a successful institutional framework can translate in to a win-win private public partnership when the workflow is smooth, fast and effective instead of being pulled back by red tape and lack of interest, said Gaurav Gupta, Regional Director (Asia), Dalberg Development Authority.

The role of private sector can be more expansive in the sanitation area. Apart from building toilets, corporates could also play an active role in ensuring that people use and maintain the toilets. This can only be achieved when the private sector starts working at the grassroot level. Reckitt Benckiser and HSBC have pledged to adopt 10 cities in Maharashtra and work towards constructing pit toilets, ensure that people keep using them by conducting awareness programmes and empower self-help groups financially so that they can collect the waste, treat it and can commercially sell the manure. The Government of Maharashtra has set a deadline of October 2017 to eradicate open defecation from urban areas of the state.

Private sector companies should look at sanitation as a profitable business area

Private sector companies should look at sanitation as a profitable business area

The corporate sector should share best practices among themselves to understand better how the sanitation sector could be transformed into a potential profitable business. The ideal partnership would be between corporates, governments. The partnership will only be successful when corporate organisations stop looking at CSR as just a mandatory activity without any bigger purpose, said Ms. Kidwai.

Even by conservative estimates, Rs. 20,000 is required in building and maintaining a toilet. To build 6 crore toilets, Rs. 12,000 crores are required, an amount the public sector companies and Union and state governments cannot bear all by themselves. More importantly, a toilet requires additional investment for maintenance once it has been built. What the private sector should look at is gradually building a business model out of sanitation initiatives. The private sector can invest in micro-finance institutions, which in turn can lend small amounts to households for building toilets, compost pits and community waste treatment plants which can produce manure for commercial sale.

Also Read: Building Toilets Is Not Enough. Why India Needs Them To Be Waterless And Zero-Waste

1 Comment

1 Comment

  1. Suranjan Ghosh

    May 1, 2017 at 9:44 pm

    Read the views expressed regarding waste management.Yes I agree that the private sector participation is needed with a waste management systems and reusable techniques.This can be developed into a huge industry by more and more people participation and contributions.But the local municipal corporation s in towns and State governments should also cooperate in such initiatives.In villages the Panchayat and Block s should not create hindrance.Unless big to small private companies intervene India can’t be Clean.Central Government or State Governments can float turnkey projects to such organizations in district s and develop waste management,recycling orders to them.Social organizations, school s , colleges and common people will come forward— only a opportunity has to be created.

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