Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
case, end users contribute monthly in a pay-over-time scheme toward the purchase of
building materials to build one room at a time. This model might be more accessible
where access to finance is a challenge.
While finance is clearly necessary to provide access to housing – one of the most
expensive things for most households around the world – the BoP household might
also need to use finance to buy other things that require a large cash outlay. Broadly
speaking, if impact investments are to succeed at delivering products and services to
BoP populations, the customers’ access to finance will be a critical component of
growing the market across all sectors.
Having walked through the housing sector study in detail, we will review the same
approach in less detail taken in the other sectors. The first sector we examine is the
water sector.
Case studies:
Byrraju Foundation
Water Health International
Water: Clean Water units for rural areas
Case study: Community filtration units
There are a few different business models aimed at providing water to BoP
populations, from point-of-consumption filtration systems to community filtration
plants. In choosing our case study, we again reference the work of Monitor Inclusive
Markets. Monitor studied the market in India in particular, and found that point-ofconsumption
carbon water filtration units can often be too expensive for BoP
populations in India. There are also concerns that point-of-consumption filtration
units are less effective over time, since the user may not change filters as frequently
as required, for example.
The business model on which Monitor focused its analysis is the community water
system, where a centralized filtration unit provides water for the community and is
operated by trained staff. This business model is illustrated by India’s Byrraju
Foundation and by Water Health International (“Water Health”), which operates in
India, Ghana and the Philippines 58 . According to Monitor, the community filtration
business model provides access to purified water at about half the price of individual
activated carbon water filters and about a third of the cost of boiled water. It has
disadvantages as well, such as leaving the buyer to transport the water back to the
home for use 59 . Nonetheless, this has been a successful business model employed by
the two case studies, and the affordability leads us to choose the community filtration
model over the point-of-consumption model for our analysis.
Potential size of investment: $5–$13bn; estimated profit opportunity: $2.9–$7bn
Using the economics of these community filtration units, we conclude that the
potential size of investment in this market over the next 10 years could be $5–$13bn,
with an estimated profit opportunity of $2.9–$7bn. Table 12 highlights the key
assumptions going into this conclusion, and we explain them in more detail below.
58 See Emerging Markets, Emerging Models, Monitor Group, March 2009 for more examples.
59 Both Byrraju and Water Health International have offered delivery services, though many
Byrraju customers have stopped using this service citing price.
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