*This blog post is part of a new series that will look at the impact of blended finance. Jibu, the company profiled below, is a Convergence member. Go to the bottom of the page for other blogs from the series. *
Media, a 34-year old mother of two, owns a store in Rwanda the size of a small kitchen, surrounded by large blue bottles of water on shelves. She’s an entrepreneur, and this store is one of four franchises she owns. She’s making money and creating new jobs while providing her community with safe, clean, and affordable drinking water. Business is good. Her only real competitor? Potential customers boiling their water to kill bacteria, which is not easy, often ineffective and costs about the same as Jibu when factoring in the cost of carbon-based fuel.
Media is a franchisee for Jibu, a hybrid for-profit company that uses blended finance to catalyze and equip emerging market entrepreneurs to bring affordable high-quality drinking water to their communities. Jibu blends grants, equity, and debt to scale their network of locally-owned franchises. They’re a great example of blending over time, relying on a higher amount of grants, ~30% over the first few years to help launch the business in least developed countries, and then decreasing very soon to ~0% as the model is proven and scales. Investors include USAID PACE, Stone Family Foundation, the Conrad N. Hilton Foundation as well as many private angel investors.
Jibu is a network of locally-owned franchises focused on underserved urban neighborhoods. Franchisees pay an upfront license fee for the right to sell Jibu in an exclusive 2km square territory. Jibu then provides a full turnkey storefront, equipped with a retail space, a production room, and an eco-friendly ultra-filtration system that produces commercial-quality drinking water. Once set up, Jibu charges franchisees a flat rate per litre for processed water to recover the upfront capital expenditure and the other costs of managing the network.
Jibu's eco-friendly ultra-filtration system.
The impact is two-fold, underserved communities get access to safe drinking water, which can lead to better health and well-being, and at the same time the franchise model offers economic opportunities in the form of new businesses with a much higher probability of success than standalone start-ups, also spawning decent jobs.
Much of blended finance targets middle-income countries – Jibu is an exception. They go where they can have the biggest impact to reach underserved communities, working primarily in least developed countries, with a focus on East and Southern Africa including Rwanda, Uganda, Kenya, and Zambia among others.
Within these underserved communities, Jibu’s model targets the middle 70%, who typically drank boiled or untreated water as they couldn’t afford to regularly purchase safe water before Jibu, which sells its water at ~$1 for 20 litres. The bottom 20% are reached most often, quite surprisingly, by only needing to subsidize the cost of the first returnable bottle (~$8). Around 80% of their customers couldn’t afford to drink safe water exclusively before Jibu.
The model seems to be working. Most franchises become profitable after 3-9 months and Jibu breaks even on launch costs in about two years. Jibu currently has over 90 franchises in six countries, 250 micro franchises, and 1,700 grocery retailers – with a new business launching each week since 2014. These franchises serve over 300,000 daily consumers via 360 full-time local entrepreneurs, many of which are young women like Media, creating significant employment opportunities in the process.
A single franchisee can make a big impact. Media’s four franchises alone reach nearly 5,000 individual families, selling at least 50,000 litres of water per month in each of her four franchises.
Media's production volume in each of her four franchises.
What’s next for Jibu? They’re planning on expanding their existing model into new products that are complementary to water, such as fortified porridge, ice, and vitamin water. Eventually, they’re also looking to perhaps replicate their model with basic commodities, like eggs and bread.
For Media, who was born to refugees in Burundi before settling in Rwanda, the future looks bright, “Jibu is having a positive impact on Rwandan society, not only because the water is affordable and improves health, but because we’re providing jobs and improving overall well-being.”
Other blogs from our impact series: