Changing The Paradigm: Project Maji Founder Sunil Lalvani
Project Maji founder Sunil Lalvani is tackling water scarcity across rural sub-Saharan Africa with a strategic (and effective) business approach.
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We are all creatures of habit, especially when it comes to dealing with problems. Some people repeat conscious or unconscious patterns of creating problems, others are good at avoiding or grappling with issues that appear in their lives and businesses, and there are also a few that have unique innate instincts for solving whatever might come their way. The latter springs to my mind as I listen to Sunil Lalvani, founder of Project Maji, a Dubai-based social enterprise that deploys solar-pumping technology across sub-Saharan Africa to provide sustainable clean water access to rural communities.
Lalvani tells me that it was in 2014, when he witnessed Ghanaian children collecting dirty water from roadside puddles, that he took take a career-changing (and indeed, life-changing) decision for himself. That was when, after two decades at his family's electronics business, Binatone, Lalvani decided to look into why 785 million people -as per the Joint Monitoring Program for Water Supply and Sanitation by WHO and UNICEF- lack access to a basic drinking water source.
This part of the story saw us talking about the United Nations' 2030 Agenda for Sustainable Development, and particularly about Goal 6 (ending the global water crisis and reaching everyone with clean water, sanitation and hygiene) of its 17 Sustainable Development Goals (SDGs). I have learnt that the World Bank estimates that achieving the Goal 6 targets is expected to cost approximately US$114 billion a year until 2030, while the Official Development Assistance, which is defined by the Organization for Economic Co-operation and Development as a government aid that promotes and specifically targets the economic development and welfare of developing countries, allocates just a small part of it- around $13 billion a year.
According to the Joint Monitoring Program for Water Supply and Sanitation by WHO and UNICEF 785 million people lack access to a basic drinking water source.
Source: Project Maji
In any case, Lalvani assures me that "everybody in this space knows that we're not going to get anywhere close to complete water coverage by 2030," and I get my first hint of his problem-solving skills, with him not mincing words when describing the issue, and explaining what needs to be done to overcome it. "The problem, which I get very frustrated about, is that even the numbers that get thrown around are wrong," Lalvani explains. "The UN says that we need trillions of dollars every year for the next 10 years to solve the SDGs, and while I don't know about other SDGs, I know that the water problem is solvable in our lifetime. For that, we need the right business models and the right funding. There is huge corruption in this space. I was in government tenders in some countries, and since our solution costs $15,000 and not three times that, a government employee I spoke to wasn't even interested to ask the next question, probably worried that we would be taking a part of his income away. So, the problem is not insurmountable, it is solvable. Also, it's not a technical problem, but purely financial, and it has to be approached in the right way."
So, how has Lalvani arrived at a potential solution? Firstly, he developed the Project Maji solar-powered water kiosk, which can be installed wherever underground water is available. It is a cost-effective, scalable, and measurable solution that pumps 5,000 liters of water per day with no electricity grid. In a nutshell, Lalvani's approach was to (i) invest his time, money, and expertise, (ii) reiterate the solution as many times as needed, and (iii) be unapologetic about the solution's high-quality standards, especially due to the mission it is supposed to serve.
The Project Maji team
Source: Project Maji
"I'm a huge believer in the minimum viable product (MVP)," Lalvani explains. "In December 2014, I got the first team together to work on it in Dubai, and we came up with an engineering masterpiece. We built it, and it worked, but then we realized that we had completely overengineered it, because we were sitting in Dubai in a conference room. After our team had gone to Africa, sat there, and observed how people used it, we completely re-engineered it, because we had to make sure that it was affordable, but more than anything, that it was completely reliable. There's no shortcut in terms of watching the customers, so we would sit in the village, and watch people come up to our kiosk, what time they were collecting water, how much of it, and so on. That is not a mindset that a non-governmental organization (NGO) would have. My father's vision of quality first has been drilled into me from day one, and although in consumer electronics there have always had to be some tradeoffs that are being fixed by our service centers, with Project Maji, when I'm providing water to a village which is their life source, not one thing can go wrong."
In a little more than five years, Project Maji has provided over 50,000 Ghanaians and Kenyans with sustainable access to safe drinking water, pumping over 90 million liters per year in over 50 sites. For his work, Lalvani has recently been awarded the Mohammed Bin Rashid Al Maktoum Global Water Award, and was also been selected as one of the 14 honorees from around the world for the 2020 Young Presidents' Organization's Global Impact Award. The Project Maji team targets rural communities that have a maximum of 1,000 people, because those are often overlooked by governments and other NGOs.
However, Project Maji's plans are big, including scaling the program to additional countries (starting with India this year), and Lalvani's vision is to reach one million people by 2025. "In this space, I saw two things that were wrong," Lalvani says. "One, people were still building handpumps, which is an ancient technology. We have no right to give villages a handpump. Not only because it requires a physical pumping, but because it is hugely unreliable as any other mechanical product. Even the best hand pump is going to break. Then, if it breaks, they assume that the village will fix it, but nobody goes back and checks. People build schools or hospitals and walk away. They don't do it with a bad heart, but also with no long-term understanding of the problem. The principle of building something and giving it to the people in the area is good, but these people need more help, guidance, and support."
Source: Project Maji
The reason behind so many broken and abandoned hand pumps across the African continent lies in the fact that a traditional charity model is not well suited for tackling this issue long-term. This brings us to the second innovation Lalvani has been trying to introduce in the non-profit model. When it comes to the maintenance costs for its kiosks, Project Maji operates with an ongoing revenue stream, since its business model encompasses working with village communities to determine an agreeable, nominal fee for the water via mobile money. This provides each community with a secure maintenance fund, while a built-in, remote monitoring system ensures all Project Maji sites are truly sustainable, with tangible and measurable impact.
"My original model was to raise capital, build the sites, charge for the water, and then, the money from the water revenue would pay for the maintenance costs, and repay the hardware cost over a period of eight to 12 years," Lalvani says. "But I approached friends and family first, and what was interesting was that a lot of them came back saying that they did not understand that "investment thing.' They would say, "What you're doing should be charity, no? I'll give you money, but I'm not sure about investing.' Then, I went to impact investors, and they all loved what we were doing, but said that our financial returns were not fantastic. However, we sell water to villages, and we have to cap our revenue, so there is a maximum that we can sell, $2 cents per 20 litre, and our revenue is capped. The fact that we can make a return is actually really good, but investors had to come with the right mindset. So, I was stuck between friends and family who wanted to donate but not to invest, and investors who wanted higher returns."
Lalvani explains that his two main targets for seeking finance are family offices and the private sector. Although there is a growing number of family foundations already engaged in impact investing in some form (more than a quarter of family foundations are now, according to a 2019 Global Family Office report from UBS and Campden Research), some of those Lalvani has encountered could be more flexible and innovative when making investing decisions, he feels. "I sat with some senior bankers in this space to understand what this is about, and a lot of it is about asset allocation," Lalvani says.
Project Maji kiosk
Source: Project Maji
"Let's take a typical family office where you will have an amount that you will split into different investments, and then you will have your 10% leftover for philanthropic initiatives. The problem today is that impact investing space is competing for money with private equity and venture capital, where they are looking for multiple times returns. If you go to a family office and say, "I've got the next Uber,' or "I've got this water project coming out of Africa.' Then, they say, "You will get 10x your money if the Silicon Valley thing rockets, or you might get your money and a 20% on it from Africa.' So, it's a no-brainer, right? But what if you convert that impact investing formula to take money for social enterprises from philanthropic funds, saying that you can give away one million to philanthropy and get nothing, or that you can give it to these guys [sustainable social entrepreneurs] who will make this measurable impact, and you'll get the money again, and you can give it again? That's how I want to change the paradigm."
When it comes to working with commercial entities, Lalvani explains that his team targets the companies' CSR and marketing budgets. One successful cooperation he mentions is with retailer Aldo in Dubai, which donates one dirham for each of its shoe accessory sales to this cause. However, the main challenge, Lalvani says, comes from how impact investing is defined. "There are so-called three brackets of impact investments," he says. "One of them, to me, is really cheating, because it's when you invest in any huge company, and say that, since the company employs 15,000 people, you are making an impact. I think that's a bit of a stretch, but some people are doing that. The next big bracket is what they call ESG (environment, social, governance) investing. That's a real thing, but for me, that should also be considered normal investing, and not this special ESG bracket, because I classify that as a "do no evil' approach. If you are not burning the environment, you're just doing normal business. If you put women on your board, you're doing what you should be doing. The third one is to do good, actively. So, let's find a social challenge that has not been addressed and because of which people are suffering, but my point is that this is where you do have to measure returns. In doing that, however, we have the normal return of investment (ROI), which, for any social enterprise, is 5% or 10 or 20% return over a period of time, but we are trying to push for SROI (social ROI) where you look at the whole impact cost of what's been done. By giving these villages water, children can go to school, women can work, less money is spent on medicine and hospitals, and the whole area prospers. All of that is an ROI. The point is that the village is going to get the return, not you, so that can be seen as a philanthropic donation."
To prove his point, Lalvani cites research, such as by Hutton in 2015, that for every $1 invested in basic drinking water, an average of nearly $7 is returned in saved medical costs and increased productivity. At the end of the day, Lalvani's vision is for Project Maji to be seen as a core player in solving the water crisis which, he says, will require them to scale up rapidly but also to partner with many others. Currently, Lalvani is working with the London Business School experts on developing a franchise model that is supposed to start in Rwanda later this year.
As many times before, Lalvani takes time to research, analyze, and tweak in order to avoid ever compromising on his high standards. "Firstly, we have to make sure that we understand the whole system perfectly, before we give them a manual," Lalvani concludes. "Secondly, it is about making sure that our franchise partners themselves have the right mindset. We don't want someone going in and skipping any of these steps. I got into this by seeing a broken hand pump, so my worst nightmare now is ever seeing any of the Project Maji sites not working."