Why Sanitation Should be Envious of Funeral Parlours – the Challenge of the ‘Missing Middle’ ...

by David Schaub-Jones

Last week’s post suggested that a lot of the buzz around sanitation right now is linked to issue of sanitation entrepreneurs (itself partly due to the craze for all things labelled ‘social entrepreneur’).  But it also asked how many of those businesses involved in sanitation in developing countries could truly be considered entrepreneurs?  All of which set me to thinking about the ‘missing middle’ ....

The ‘missing middle’

A session on small-scale finance at Stockholm first introduced me to the concept of the ‘missing middle’. What was meant by this is that there is a dearth of meso-finance (between $5000 and $500 000) available to the water and sanitation sector – i.e. medium sized amounts of money.

So if you need more than a small microfinance loans, but less than a large government, donor or commercial loan or grants then you struggle. (Click the link for a slide on this).

I suspect that this situation is even more pronounced for sanitation, with very few making this sort of money accessible to sanitation providers.

For sanitation, this led me to also question how many sanitation businesses are of the medium-size anyway – and would be looking for this money to begin with? 

In other words – how many are medium-sized ‘entrepreneurs’ and how many are really just small, one or two person businesses that won’t ever grow beyond that?

How important is the broker?

The other ‘missing middle’ for me was not about finance per se, but about the important brokering role that must take place if sanitation entrepreneurship is to ever really take off at the scale many of us hope for.

The problem is not that the sanitation business lacks glamour (a situation that has hardly slowed the growth of funeral parlours or pest eradicators). The problem is that the sanitation business lacks predictability, simplicity and rigour (at least in the eyes of bankers, small business consultants and others we are hoping take more of an interest).

To take this metaphor further - you don’t need to explain to a bank what a funeral parlour does. The business is easily understood and financial projections simple to apply. For now, this level of comforting familiarity eludes the sanitation sector.

We’re not yet where we need to be – i.e. boring and predictable.

So while the "Sanitation, everyone's Business" tune (last week’s hit single) may be zooming up the charts, there remains a need for people and organisations to act as a broker.  In developing country contexts, they help overcome the challenge of the ‘missing middle’ by extending one arm to the legion of private businesses active in sanitation and the other to the donors, bankers, venture capitalists and others that are keen to bring their finance and expertise to bear.

Let us worry later about whether people are looking to make money out of the ‘bottom of the pyramid’, to reach the poorest of the poor, or both.  First let us make the sanitation business boring, predictable and ‘simple’!

BPD, along with other pioneers, is trying to fill this ‘missing middle’. The role of broker, facilitator and mentor is hard and sometimes thankless work. But hopefully it will be worth it in the end.

After all, wouldn’t “Sanitation, everyone’s Business” be so much more satisfying as a platinum-selling album than a one-off chart topper?!

Paralysis by Analysis - Does Thinking Global Really Help?

by Ken Caplan

Over the past year, a wide range of people have been encouraging us at BPD to “blog” – to put some of our ideas down in a space that allows us all to explore, to play, to provoke. Certainly we in the water and sanitation sector do too little of all three. Exploration means admitting we do not have the answers. Playing means discounting the seriousness of the sustainability challenges we are facing. Provoking is not something that is done in polite society (at least not generally on an individual level among and between colleagues, friends or peers). So this new blog is meant to be a space to share things we are thinking about. Exploring allows us to get away with not having the answers. We learn a lot from play. And a bit of provocation might just keep us more honest. So here goes…

Much of the talk in the water and sanitation sector these days is about scale – trying to get our heads around the scale of the problems we face and of the contributions we are making both to the problem and the solutions. The related scale of climate change and global warming is something most of us can’t really comprehend. Our small efforts in the UK to convert to energy-saving light bulbs and turn off the taps when brushing our teeth seem rather insignificant somehow. This leaves the messengers feeling frustrated that they are not getting through and a vast number of us –perversely - positively disincentivised to change our behaviour, uncertain that our contribution makes a difference. 

I was recently asked to facilitate a meeting that brought together civil society partners from various countries to revisit the impact of a governance programme halfway through its funding cycle. This wise and experienced group were struggling with how best to learn together and share their experience. Part of the challenge was to find ways of overcoming the seemingly huge differences in the contexts in which they are operating. There is a bigger problem at hand though. While the conversation was going on, I couldn’t help but think that we have done ourselves a disservice in some ways by constantly reiterating just how enormous the water and sanitation challenge is. The numbers and implications are certainly staggering and incomprehensible to those of us who have had the very basic services of running water and access to toilets in virtually every aspect of our lives since birth – at home, at work, on public transportation, in big towns and small.

Yes, somehow - unbelievably - we still need to convince the wider world – donors and funders, policymakers and decision-makers, friends and “competitors” from other development sectors – that water and sanitation are critical to human development. With clear parallels to the climate science discussions, I can’t help wondering whether this shouting to the outside world has had an impact on us within the sector. I have often been struck of late by how colleagues from across the developing world, though justifiably proud of their achievements, are reluctant to draw out their learning for wider audiences – thinking perhaps that it wasn’t of sufficient magnitude to live up to the enormous needs, that it wasn’t ground-breaking, fully formed, easily transferable, a magic bullet, or the holy grail. 

Are the pressures to find the answers so great that we are losing the art of iterative thinking and learning? While the poor are desperate for services, they may recognise better than anyone that small steps can make a huge difference in people’s lives. I was reminded at this meeting in India that learning comes from the ground up – by doing, exploring, playing, provoking. It then gets shaped, reshaped, discounted or exaggerated as it makes its way up the system – sometimes for the better, sometimes for the worse. Whilst we should still be encouraged to think big and think bold, we need to keep sight of the pressures this puts on us to big-up or bold-up, which may in fact immobilise most of us when we come to articulate our learning. In a fast-moving world where big ideas only take hold now and then, we need the perspective to maintain those smaller conversations that encourage the little “Aha” moments and the everyday reflections that might ultimately make the most difference.