The Executive Director of the United Nation’s (UN) newly created Sanitation And Hygiene Fund (SHF), Mr. Dominic O’Neill, has called for a new set of statistical approach to investment in the sanitation sector.
According to Mr. O’Neil, some 3.6bn people across the world constituting 46% of the entire global population do not have access to safely managed sanitation services which are climate resilient. He attributed the issue particularly to women and girls who are disproportionately affected by the challenge, with many unable to go to school and all too often face sexual violence when they do not have safe facilities.
His duty, he says, is to facilitate a dramatic scaling up of investment into the sector by attracting climate and gender focused investors into the sanitation sector.
Mr. O’Neil points out that, the approach to this need has always been a rely on non-governmental organizations and bilateral support schemes to build the needed facilities. “This has the downside of being unsustainable, as funding to maintain these facilities is often missing,” he added.
Investment Opportunity
Mr. O’Neil noted that the SHF is adopting an entirely different approach, by looking at the problem of sanitation as an investment opportunity that investors can appreciate.
“We want to use grant funding to kickstart these sanitation economies and catalyse investments.”
Mr. Dominic O’Neill
While admitting that returns may not be as lucrative as some other sectors, Mr. O’Neil believes the fund has the potential to deliver stable, long-term returns for investors, as well as significant impacts on gender equity and climate resilience.
“Already, similar systems are in place in Asia, notably India, and have attracted the interest of private equity firms in Switzerland. I believe that this system is workable in Africa, the other continent along with Asia where the need is most acute.
“Given the difficulty of developing integrated sewerage systems in most of the communities in need, the public sector schemes under this model, which can be retrofitted into already developed communities, offer a more convenient way to deliver the benefits of safe sanitation.”
Mr. Dominic O’Neill
Private Sector Approach Promises Success
For this to work, Mr. O’Neil disclosed that the process must be private sector-led, with governments playing a facilitating role. He believes the Local and central governments will need to set the rules, oversee the granting of concessions and agree profit share schemes with operators.
“With strong local government leadership, these schemes can thrive, with benefits not only in the areas of health, but also in the creation of a circular sanitation economy, where bio-products are already being used to power homes and shore up agricultural production.
“The important thing is to gain investors’ interest and that is why the SHF has commissioned a report detailing the prospects of the sanitation economy.”
Mr. Dominic O’Neill
That notwithstanding, Mr. O’Neil further revealed that the SHF approach will rely heavily on development finance institutions (DFI), with which it is actively seeking partnerships. He added that the fund itself sees its role as mainly catalytic, and will not be seeking to raise and spend billions of dollars in the traditional manner.
“Basically, we are catalysts, we are not going to replicate or build new financial institutions. We don’t need to. The DFIs are crucial to this because they have a public development mandate and will generally go into higher risk areas.
“The Africa Urban Sanitation Investment Fund of the African Development Bank, for example, is a likely partner and the SHF is actively pursuing avenues of collaboration with it and other IFIs (International Financial Institutions).”
Mr. Dominic O’Neill
Mr. Dominic O’Neill in his conclusion stipulated that the outcome of the SHF and other partners will be critical to define the success of the agency. “Investors, of course, will be keen to see the report,” he said.
