WATASOL: To make it last, make it a business

The WATASOL approach aims at creating a market and setting up a profitable supply chain with the production of chlorine.

The giving away, free of charge, or subsidisation of Point-of-Use (POU) water treatment systems such as chlorine has not only distorted the market. It has also created an expectation that POUs are goods which are better to wait for than to buy. The challenge is to reach the millions of customers that have not benefited from government intervention and free delivery systems. Major progress can only be achieved through private initiative as the driving force.

Grow with the flow: low-cost services require more volume

Supply chains to Base of the Pyramid customers, the largest but poorest socio-economic group, are characterised by low prices and narrow margins; they can only become profitable with certain volumes. The introduction phase thus requires substantial inputs of social marketing. In fact, the real market for chlorine exists where people are aware of the benefits, such as after a cholera epidemic. In other areas and with people who are unaware that their water is unsafe, this awareness needs to be promoted through social marketing.

These up-front costs in market creation cannot be recovered directly through the price (due to lower margins) but they can be covered with high volumes in the long run. In the short-term, this means that, while it builds up momentum to a sustainable level, the WATASOL approach has an operational loss.

The WATASOL approach is ambitious as social and business issues have to be considered and balanced but it does vouch for the sustainability of projects. We are in a learning process and exploring different approaches which are not yet 100% financially sustainable, whilst we have every confidence that they will soon become so.