Social Franchising Partnership Creates Jobs

Based on a presentation to the annual IMESA conference “Municipal Engineering: Meeting People’s Needs”, held in Port Elizabeth, South Africa, October 2013

By Kevin Wall, Oliver Ive, Jay Bhagwan, Wayne Birkholtz, Nocawe Lupuwana and Esther Shaylor for Infrastructurene.ws

An innovative Eastern Cape infrastructure and job creation project is meeting people’s needs through quality service delivery for the community, by the community. In part one of this two-part feature, social franchising is defined and the training, expectations, services and projects of a pilot study are examined.

A number of pilot projects in the Eastern Cape have demonstrated how the institutionally innovative and very practical social franchising partnership approach can successfully be used for the routine maintenance of low-technology water and sanitation infrastructure.

Whereas other approaches have built capacity and developed skills in attempts to improve service delivery, many of them have had limited success because they have not enjoyed sufficiently strong incentive structures and support systems. The social franchising partnership approach, in contrast, is built on a robust foundation of mutual support and incentives.

This paper describes how the franchise partners have been working with municipalities and provincial departments to address operational issues at a significant scale.

Many opportunities lie in applying the approach to further operation and maintenance (O&M) activities within the water and sanitation services delivery chain, and thereafter extending it to other types of infrastructure (e.g. roads and electricity reticulation).

Background

Year after year, the O & M of water and sanitation services (hereinafter water services) infrastructure in South Africa has too often been found to be noncompliant with the required standards (SAICE, 2011; DWA, 2012a & 2012b). Research has also shown that the main problem is most likely to be shortfalls in the skills and management of the institution responsible for the services.

These operation and maintenance shortfalls are particularly manifest in “the quality and reliability of basic infrastructure serving the majority of our citizens [which] is poor and, in many places, getting worse. Urgent attention is required to stabilise and improve these” (SAICE, 2011:5).  The consequent service delivery failures are pointers of warning that serious turnaround strategies are required in South African municipal service delivery.

In 2012, the Ministerial Sanitation Task Team found that the Eastern Cape needed over 800 000 toilets to ensure all households have access to sanitation, the second highest backlog in South Africa. It was also highlighted that the lack of skills and capacity to manage existing facilities is a contributing factor for infrastructure failures. The report concluded that “there is great potential for public and private investment on sanitation that could increase both benefits and cost effectiveness of public investment” (Department of Human Settlements, 2012:70).

The Water Research Commission (WRC) has for a number of years funded studies of selected institutional options that could assist in the improvement of operation and maintenance. This research, led by the Council for Scientific and Industrial Research (CSIR) and the private sector water services provider Amanz’ abantu Services, postulated that franchising partnership models, developed in the private sector for providing a wide range of services, could be adapted. The resultant social franchising partnership concept could be a valuable and viable addition to the current range of institutional models for the O&/M of public sector sanitation and water services infrastructure (Wall, 2005; Wall, & Ive, 2010; Wall & Ive, 2013).

This research, and interest shown by public sector owners of infrastructure, prompted Amanz’ abantu, in 2008, to establish a subsidiary, Impilo Yabantu (“hygiene for people” in Xhosa), to play the role of franchisor where needed.

Whereas it was originally thought that municipalities would be the first to procure social franchising partnerships, and whereas many of the officials approached expressed interest, there was a reluctance to be the pioneer of this new and untested concept. Nonetheless, the first significant interest in utilising this innovative business approach came from key officials of the Eastern Cape provincial Department of Education (DoE), who saw its potential to assist them with one of their most intractable problems, namely the poor levels of maintenance of water and sanitation infrastructure at schools. Particularly, they saw its potential for rural schools where harvested rainwater is generally the only water supply to the school, and the toilets are usually Ventilated Improved Pit Latrines (VIPs) or similar.

In less than three years, the franchisor and its trainee franchisees greatly improved the condition of the school toilets in the Butterworth education district of the Eastern Cape.

The partnerships defined

In the words of the Franchise Association of Southern Africa , a franchise is “a grant by the franchisor to the franchisee, entitling the latter to the use of a complete business package containing all the elements necessary to establish a previously untrained person in the franchised business and enable them to operate it on an on-going basis, according to guidelines supplied, efficiently and profitably” (Parker & Illetschko, 2007:15).

Water services franchising partnerships can broadly be described as business-to-business partnerships, whereby small, locally based enterprises enter a business partnership with a larger established enterprise for the purpose of utilising a tried and tested approach to ensuring sanitation and water facilities and systems are operating in a reliable manner and in accordance with the specified availability, quality, hygiene and environmental standards.

Since the 1950s, franchising has utilised the drive of entrepreneurship while reducing many of the risks to small business (Parker & Illetschko, 2007:9). Both parties of a franchise have a stake in making sure the venture is a success while benefiting from mutual learning and shared experiences (Ahlert et al, 2008:16).

The concept of social franchising is defined as “the application of commercial franchising concepts to achieve socially beneficial ends” (Montagu, 2002) and has been identified as an approach appropriate for use in sectors where the quality of the service needs to be driven up and the cost of the service needs to be driven down through standardising on proven delivery mechanisms.

In contrast to commercial franchises such as McDonald’s, an enterprise which not only seeks to cover costs but to also make the franchisee and franchisor a significant profit, social franchising seeks to develop an enterprising solution where people from the community “contribute towards meeting their needs either with money or time (or both)” (Norton, 2010). This approach, while still needing to cover costs and allow franchisees to make a living, is also motivated towards doing social good.

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