Jibu, equipping entrepreneurs to launch drinking water franchises
As public sector programmes and donor-funded projects fail to sufficiently address the water crisis in the developing world, inclusive business Jibu has developed what it calls a ‘self-propagating, scalable, and locally-owned solution’. Here, CEO and Co-founder Galen Welsch, tells us about the unique business model of the ‘water sector’s only incubator’.
What is the core value proposition of your business?
Our core value proposition is the financing of a business – in – a –box for our entrepreneurs to be able to provide safe, packaged drinking water that is affordable. So our core proposition can be split into two: the model (clients = entrepreneurs) and the end product (clients= consumers.). Being both a franchisor and a bank is what makes us unique and what we believe is our core game-changing innovation. We provide not only generous financing but also the necessary tools and support for emerging market entrepreneurs to own and manage a successful drinking water business: water-filtration equipment, branding, business plan, and more. Providing financing only or business guidance only is not enough in the emerging market – in order to change the game we need to help each Jibu entrepreneur and business owner gain an advantage.
Currently, the end product that Jibu entrepreneurs are providing is safe water. In order for water to sell, we need to additionally extend a unique value proposition to end-users/consumers. We do that by providing radically cheap, aspirationally packaged water. Piggybacking the aspirational aspect of bottled water as it has been marketed to the upper class, Jibu water is 30-50% the market price of bottled water. To consumers, the barrier to entry is lowered because they can dispense from our bottle directly and do not have to buy both a bottle and dispenser. Our water is so cheap because we eliminate 1.) retail mark-up (water is sold direct to consumer, 2.) distribution costs (each depot serves a two km radius), 3.) the cost of plastic (all bottles are exchangeable for refill.) Additionally, the cap-ex is dramatically reduced with Jibu’s small footprint and treatment system as opposed to a centralised bottling plant. The target price of Jibu water is the same as the cost of boiling. We hope we can drive the price ever lower with economies of scale.
What stage of operation have you reached?
We have opened franchises in three countries over the past two years, collecting enough data and experience to scale up in 2015 with the goal of launching two new franchises per month. We successfully installed water filtration equipment and opened a franchise in Rwanda and another in Uganda in January of this year, so we are on track to meet our 2015 goals. We have just closed our first round of financing with 1.4M and the likely possibility of a matching grant from USAID of up to 1 M (2.4M total).
How do you market and distribute your product/service to your target ‘beneficiaries’?
One of the reasons we are able to keep the cost of water so low is because each Jibu franchise focuses on only a 2km radius, hence the cost of distribution is minimal. We open new franchises in heavily populated urban centers where much of our marketing is conducted by word-of-mouth and door-to-door.
We also implement strict branding guidelines including logos, signage and bottle labels, so that everyone who drinks our product cannot forget that it’s Jibu water. We also advertise our business model and recruit new franchise owners through posters and pamphlets in our storefronts and in local health clinics and community centers, as well as through our website, jibuco.com.
Tell us about your beneficiaries. Who are they, how do they use your product/service?
Our primary beneficiaries are the local consumers within the catchment zone of franchises who buy our water. We target the middle 70% of the population, who can afford to pay a small price for water but who cannot afford to buy commercially-bottled water available in supermarkets.
Jibu leverages the dominant form of water distribution within the communities, which typically involves walking to a central water source (municipal, private, or public), filling a large, usually 20L, bottle, and carrying the bottle home. We have tested various bottle designs and designed one that is lighter and more easily transported than the average bottle. Most of our customers initially purchase a new bottle of water from one of our storefronts, and then return to the store 2-3 times per week for refills.
What feedback have you received from your ‘beneficiaries’?
The most frequent customer feedback is that our water tastes good and that it is very cheap. We’ve avoided purification systems such as reverse osmosis which remove the natural flavor of the water, opting for a filtration system which preserves natural flavor while removing harmful components.
Tell us about the impact you are having in the communities where you operate.
Our social impact includes providing lasting education about the benefits of clean water and sanitation. Environmentally, our water systems reduce fuel consumption, as consumers no longer need to boil their water or travel long distances to get water. Our economic impact is evidenced in the amount of profits generated from water sales, along with the number of new business owners we train and enable.
The chart below illustrates the impact we aim to achieve by 2020:
What would you say is the most challenging aspect of starting and running your inclusive business?
Not being able to hire staff and open new franchises quickly enough to keep apace with the need and desire for purified water.
What is the one factor that has most enabled your inclusive business to progress this far?
Partnership and support from a highly committed group of donors and stakeholders, who have not only entrusted us with initial seed capital, but have also dynamically shaped Jibu’s growth through their guidance, expertise, particularly in regards to franchising, and their legal counsel. Also, the ability of the business model and approach to attract top local talents who have helped us to rapidly refine and adapt the model. Because we are providing a true ownership opportunity of a profitable company, we have had to do little soliciting and yet have an all star cast of local entrepreneurs.
You have won a number of entrepreneurship awards from ANDE, GSBI etc and have now been chosen as a Sankalp finalist, how critical has this external support been to your business? How have you leveraged it to grow your business?
Absolutely critical. The brain-power and experience that these networks represent is enormous. The stamp of accreditation that awards and memberships give played a critical part in fundraising.
Where do you see your business five years from now?
We see it as an organically profitable business that launches new water franchises at a noteworthy speed, as familiarity and confidence in Jibu water spreads. I envision not being able to go anywhere in Kampala, Kigali, Lubumbashi or many of the peri-urban surroundings without seeing Jibu franchises.
What is the one piece of advice you would give to entrepreneurs looking to start an inclusive business?
Don’t focus on fundraising – focus on building a great company. Then, when funders come with questions, you will have the real answers and have the confidence to identify which funding/capital partners fit with your goals/needs rather than vis versa.