Christiaan Broekman and Maurits Waardenburg are students of Erasmus University and visited Mombasa, Kenya as winners of a competition set up by the Erasmus Centre for Strategic Philanthropy. The competition required students to write a business plan detailing how to best invest 10 million Euros to solve one of the Millennium Development Goals. Their plan laid out a strategy to build an incubator for micro-insurance companies in Tanzania. The prize comprised a trip to Kenya to visit a successful development project.
Text: Maurits Waardenburg Photography: Christiaan Broekman
Henk and Erik are not your typical development workers; they do not shy away from some luxury. Furthermore, they are far from your typical Kenyan resident. In fact, both of them were successful businessmen in the European energy and pharmaceutical sectors respectively. Essentially, they are the last people on Earth you would expect to run Dutch Water Limited, the small water factory just north of Mombasa, Kenya that performed a minor miracle for the local population. Around the age of 40, both of them left their management roles in the Netherlands behind to take over an essentially faltering undertaking initially set up with the goal to provide Mombasans with affordable drinking water. Christiaan and I were allowed to take a peek inside of the success story.
Kilimanjaro on the background
We had been travelling around the southern side of the country for a couple of days. Having grown up in Africa and having been on many a safari, I can honestly say that the safaris we went on cannot be beaten for sheer beauty: the wide expanses, dramatic backdrops, and abundance of wildlife and lush vegetation really make the place a modern day Eden. Taking a photo of an elephant gets a whole other dimension with Kilimanjaro on the background. This beauty stops outside of the national parks, tour buses, and luxurious hotels; however. Kenya suffers from the same grinding poverty that almost every other African nation is fighting.
Constant shortage of drinking water
One of the major problems the many people in the shanty towns and slums of Kenya are facing is a constant shortage of drinking water. While we paid about 300 Shillings (just under 3 euros) for a bottle of water in our hotel, the normal shops would sell it for about 50 Shillings (45 euro cents) a litre. At around 15% of the minimum loan per day, this is almost unaffordable for an average local worker with a family.
Great production of water
Dutch Water Limited has turned this fate around. While initially operating at a loss, the small facility now pumps up, sanitizes, and produces about 40,000 litre of water a day. A fourth of that is given away to the poorest schools, hospitals and other institutions in the area. The rest of the water is sold at a tenth of the market price to the people living in the neighbourhood.
The small margin that is left is used entirely to reinvest in the facilities of the company. The company first broke even on July 2009 and ever since it has made the difference in countless situations. Among the most astonishing turnarounds is the provision of drinking water to a local hospital that had not had drinking water for several years.
Succesfull businessmodel
There are several reasons for the success of the business model. Using an employee intensive production process keeps the costs down while providing 70 employees with a salary above the market rate. Proprietary pumps also keep down the raw material costs. Perhaps most importantly, though, the Kenyan government has been sparing Dutch Water Limited from a 3 Shilling luxury tax per litre of water, which would raise the price of their water by almost 60%.
Government, change your mind!
Recently, the Kenyan government has changed its mind on this aspect; however, and it is now demanding for the company to start paying these taxes. With revenues that barely allow the undertaking to break even, Henk fears for the worst: “Let’s pray that the Kenyan government will change their mind; otherwise we might as well pack up and leave. This is not a luxury product; this is providing Kenyans with a way to live.” It remains to be seen whether the two Dutch pioneers will be allowed to do so into the future.
