Published on: 04/03/2019
Since my first post about some first-hand experience of running a WASH business within the Ethiopian business framework I've been wondering how much of the challenges is due to being a foreign business. Maybe the thought occurred to a few readers.
Since 2006 I've met some amazing social entrepreneurs in Ethiopia, both foreign and local. The challenge of setting up businesses that contribute in some way to the SDGs seems to push some people's buttons. Some of them, like theparadigmproject.org are great at telling their own story. Others need telling.
One of my favourite WASH businesses in Ethiopia has been started by Fikadu Taye, a young entrepreneur who I first met in 2012 when he and two colleagues helped out with some bacteriological testing to compare the performance of different types of water filter. During the last six years he and his two colleagues have developed their skill and expertise in testing both source water and treated water for various Household Water Treatment and Safe Storage technologies. They've worked on contracts for Tearfund, Oxfam, Global Team for Local Initiatives, Water is Life, Hydraid and also for MINCH filter. I asked Fikadu to tell me about his new company 'SPARKLE'.
Basically Sparkle offers a microbial water quality testing service. There's a couple of things that are unique about our business ... Firstly, we go anywhere where the project is. We've been everywhere from the very eastern border with Somaliland to the very south west on the river Omo. I've been some places which are only accessible by motorcycle but our kit is extremely compact and portable. Secondly, we develop the results in the field which give the communities and our customers immediate feedback on water quality. Thirdly, we use chromogenic media which unlike what most NGOs are using give bright blue confirmed E. coli counts which are clearly visible. Fourthly, because of the clarity of our tests we keep photographic evidence of all our tests which helps the customer to be satisfied that the testing is real. Lastly, we enter all our data into an online system which allows the user to see the results as soon as we've uploaded, even if we are still returning from the field.
Yes, they do but sometimes it is not working, or they don't have the people who know how it works or how to interpret the results, or sometimes they don't have the reagents or consumables. When people call us they know they will get the tests done in the right way and they will get clear data and we can even help them understand what is going on. Also, when you consider the costs of per diems and so on, we are even cheaper and provide a better service.
We faced a lot of challenges and we are trying to overcome them. For one thing the requirements of starting a business in Ethiopia were quite tough. Even though we mainly provide a field service, we were required by law to have an office. The government even tells us how many desks and chairs we need to have (one for working and one for guests). Also it is not possible to start small and build your business. The requirement to start is 15,000 birr ($600) and on top of that I have to show a contract for an office for six months. The monthly rent I can find is about 3000 birr so to start I needed to have about 40,000 birr.
It was good but to be honest I spent about half of the year satisfying all the requirements for the government. From the income side it was good. We got about 5 different contracts with two different customers. Now I can't say much about business because we are again struggling to renew the business licence because we have to fulfil all the same criteria that we did to start the company including the laboratory certification process. On top of that I had to pay an accountant to calculate the tax and pay my rent in advance to fulfil the requirements for a business licence.
Well I think if you have the capital then it's easy. But my main challenge is to find that. I tried to get a small business loan of 30,000 birr to help me get going. But the banks don't actually want to take the risk with businesses like mine. They ask for a guarantee from someone else for the loan, but if I had that then I wouldn't need the loan.
But I've learned a lot about business and I have a good feeling about continuing. The customers are there and we can provide the service. I have to go and work at another job and maybe save money until I have enough money to renew the licence and pay the fines for renewing late! It will be OK. I can make it.
There are a number of things that would be a game-changer for Ethiopian entrepreneurs like Fikadu who play a role in the WASH business environment. Here's a couple for starters, but I'm sure readers will suggest more:
• Access to loan capital:
Clearly, Ethiopian banks are naturally uncomfortable with higher risk loans in new business sectors where returns are not yet demonstrated. We need players supportive of WASH businesses that can underwrite loans like these and then walk the entrepreneur through to business success.
• Entrepreneur-friendly business space:
Legal requirement for long-term office lease is entirely reasonable, but it's a barrier for entrepreneurs getting a foot on the ladder. We need players who can support WASH businesses (or social enterprise in general) to help WASH entrepreneurs access hub spaces (existing hubs have some limitations).
• WASH business champions:
Young entrepreneurs like Fikadu have to negotiate these challenges alone. They may not have business know-how or supportive networks. We need champions for WASH businesses who walk entrepreneurs through the specific challenges they are facing, (rather than a one-size-fits-all training programme).
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