Business analysis of fecal sludge management : emptying and transportation services in Africa and Asia

This study was initiated and funded by the Bill & Melinda Gates Foundation to map the urban sanitation situation and assesses business and operating models for fecal sludge management in 30 cities across 10 countries in Africa and Asia, specifically focussing on the extraction and transportation market segments. The study was carried out in Burkina Faso, Ethiopia, Kenya, Nigeria and Senegal in Africa and Bangladesh, Cambodia, India, Malaysia and Viet Nam in South/Southeast Asia.

Using a common analytical framework, teams of local consultants in each of the ten countries gathered users’ perspectives through 13,000 household surveys and the collected data on the financial and business models of 150 emptying service providers. This report presents the comparative analysis based on these data from those surveys.

A majority of households (5.6 million households) in the 30 cities use on-site sanitation facilities. Households spend only a small percentage of their income, on average less 4%, on emptying services. About one third of surveyed households (2 million households) rely on manual emptying for sludge management.

The total available market for emptying services across the 10 cities is an estimated US$ 134 million.

Some regional trends were seen in the business operations between Africa and Asia:

• average truck capacity in Asia is just over 3 cubic metres and in Africa around 10 cubic metres – tracking the differing average pit volumes (2 cubic metres in Asia vs. 7 cubic metres in Africa)
• age of emptying trucks in Africa is 15 to over 30 years and in Asia between 5 to 10 years
• local assembly of trucks in done in Asia, while businesses in Africa import second hand trucks
• the cost of the trucks is three times higher in Africa than in Asia
• in Asia the operating expenses per truck are about US$ 11,000 and three times that much in Africa
• African businesses spend 76% of their expenses on variable charges such as fuel and maintenance, while their Asian counterparts spend most of their expenses (62%) on fixed costs – mainly staff salaries
• the single largest component of operating costs in Africa is fuel, making up 40% of expenses.
• the annual profit per truck in Africa is US$ 12,000 and is twice that seen in Asia, due to the higher empting fee charged (US$ 60 vs. US$ 28 in Asia) and the larger number of trips per day per truck in Africa.

A general finding was that the size of the fleet was the only factor that had a clear and strong correlation to profitability of the business - two or more trucks were needed to become profitable. There was also a lack of support systems necessary to create sustainable and profitable businesses.

The report presents several recommendations to realise the potential of the US$ 134 million market for emptying services, including:

• supporting the scaling of the single truck operators to become mid to large sized operations;
• better access to finance
• introducing transfer stations to save fuel costs and increasing truck efficiency
• regulating scheduled desludging
• local manufacture or assembly of trucks, especially in Africa
• a more effective supply chain for spare parts
• constructing safe dumping sites for sludge and sludge treatment plants
• enabling sludge reuse