Running on Empty: Challenges Faced by Private Pit Emptiers in Urban Uganda

By 2050, over two-thirds of the world’s population will live in urban areas. However, water and sanitation services are often unable to keep pace with population growth in rapidly urbanizing cities, leading to deteriorating health conditions.¹ Uganda is no exception. The country’s urban population is expected to nearly double between 2018 and 2050,² putting significant strain on the country’s sanitation infrastructure. At present only 2% of the 1.8 million urban Ugandan households are connected to a sewer line,³ with the others relying on on-site sanitation facilities such as septic or pit toilets. Space constraints and the high cost of construction prevent households and institutions from building new toilets when their pit toilets fill up.

As a result, the provision of safe and affordable pit emptying services is a growing need in urban Uganda and a necessary component to achieving universal access to safely managed sanitation.⁴ The government of Uganda’s fecal sludge management (FSM) interventions focuses mainly on building treatment infrastructure and promoting the construction of emptiable toilets—the provision of pit emptying is considered to be the role of the private sector.

Currently, pit emptying is generally comprised of three types of private-sector services (see Figure 1):

1. Mechanized emptying through cesspool trucks; i.e., 3,500 to 10,000-liter tanker trucks equipped with motorized pumps.
2. Semi-mechanized emptying through ‘gulpers’; i.e., manually operated pumps that are used to extract sludge into barrels (typically 200 liters in volume).
3. Manual emptying wherein an individual removes sludge either by entering the pit and scooping it out with buckets or by tunneling into the pit wall and allowing the sludge to flow out.

Cesspool and gulper emptiers don’t come into direct contact with fecal sludge. If they dispose of the emptied sludge safely into a treatment plant, their services are considered safe and hygienic. However, manual emptiers are directly exposed to fecal sludge, and so their service is considered unsafe and is illegal in Uganda.

Figure 1: Types of FSM services available in urban Uganda

Despite this, many urban households and institutions still opt for manual emptying, as cesspool truck entrepreneurs (CTEs) and gulper entrepreneurs (GPEs) are relatively few in number, are concentrated in Kampala, and are considered expensive.⁵ Kampala has an active market for safe FSM services, with 88 active cesspool trucks and 10 active gulper operators.⁶ However, most other urban or urbanizing areas in Uganda do not have a vibrant market for safe FSM services. They have very few CTEs and GPEs, and most of them run informal business with limited scale.

The Uganda Sanitation for Health Activity (USHA) is a project funded by the United States Agency for International Development (USAID) and works towards sustainable improvements in quality, access, and supply of water and sanitation services. FSG is partnering with USHA to enhance access to safely managed FSM services by improving the business models of FSMEs. We are approaching this by first understanding the barriers faced by FSMEs, and then identifying business model tweaks that can help overcome these barriers. We commenced our work in select urban areas within three USHA districts—Jinja, Kyotera, and Masaka. This article lays out our understanding of the barriers preventing FSMEs from building sustainable business models in these locations.

USHA’s FSM project team, which consists of USHA program staff, FSG staff, and FSM experts from Sanitation Solutions Group (SSG), conducted initial field research in June and November 2019. This involved interviewing ten FSMEs operating in the urban areas, to understand their business models and the challenges they face. From the interviews, we learned that nearly all FSMEs in these three districts:

• Are informal; i.e., they are not registered, do not have the required environmental licenses, and often have no physical office or business address.
• Run single-truck businesses; i.e., they use a single cesspool truck or pick-up truck/tricycle (either owned or rented) to provide emptying services.
• Have a limited understanding of their revenues and costs. In part, this could be due to the FSMEs not maintaining business records in a structured manner. Further, they do not account for all costs in assessing their own profitability; e.g., depreciation. Instead, FSMEs focus on per-job economics. However, even at a per-job level, there are significant variations in the price charged from job-to-job, which are not fully explained by differences in the type of job (e.g., short-haul vs. long-haul), or customer (e.g., institution vs. household).

The project team shortlisted seven FSMEs that showed the most interest in partnering with USHA. We then held a series of consultations with them to prepare detailed annual profit and loss (P&L) statements⁷ to understand their financial health and key challenges.

In this article, we discuss these key challenges based on a P&L analysis of two FSMEs (one CTE and one GPE). These challenges are indicative of issues faced by FSMEs in urban areas outside Kampala. All FSMEs shared data confidentially, so we have not named them and have excluded their actual financial figures. We have instead reported these figures as a percentage of revenue (see Figures 2 and 3).

Figure 2: Costs as a percentage of revenue for representative CTE

Figure 3: Costs as a percentage of revenue for representative GPE

_{*The project team was unable to obtain a further breakdown of ‘Rent and Salaries’}

We found that while both FSMEs can cover the direct costs of providing an emptying service (i.e., labor, fuel, and disposal fees), they incur net losses. This is driven by three broad factors: low utilization, high transport costs, and high customer defaults.

1. Low utilization: Both FSMEs operate well under their full capacity⁸—the CTE’s and the GPE’s utilization levels⁹ were 38% and 16% respectively. The low utilization may be a result of:

• Limited demand due to:
  • Inability, or unwillingness, of households to pay. The project team estimates that a single-stance household toilet can hold ~2,000 liters of sludge. At current prices, households would need to pay ~UGX 300,000 to have the entire pit emptied by a GPE, or ~UGX 75,000 to have it emptied by a CTE with a 4,000-liter cesspool truck. Poor urban households in Uganda, who have an average daily income of ~UGX 7,500, find these services too expensive.¹⁰
  • Inability of public institutions to pay. Public institutions (e.g., schools and health centers) also find emptying services to be unaffordable. According to a 2018 World Bank report, only 7% of government schools had adequate funds for pit emptying.¹¹
  • Inability to service customers with varying needs. CTEs and GPEs can only service a subset of customers. For example:
    • CTEs cannot empty unlined pits as the motorized pumps they use can lead to pit collapse. In addition, depending on their truck size, single-truck CTEs can cater either to institutions (who prefer high-capacity trucks) or to households (who prefer low-capacity trucks). Customers typically are wary of the practice of partially filling trucks (as a means to aggregate demand), as they wish to verify the volume being extracted and therefore expect the truck to be empty when starting a job. 
    • Gulper emptying services have a higher unit cost per liter of sludge emptied than CTEs, and are therefore not ideal for customers who need larger volumes emptied (e.g., institutions).¹² However, as GPEs are able to take on smaller job sizes than CTEs and have more flexibility to vary the job size to customer demand, they are ideal for household customers who require low volumes emptied.
• Insufficient demand activation: FSMEs do not actively market their services. While some make limited use of brochures and business cards, most rely on passive forms of marketing (e.g., parking their truck at a busy intersection). The representative CTE’s marketing expenditure, which is ~1% of revenue, is limited to the printing of business cards and the occasional payment of sales commissions. The GPE’s expense on ‘rent and salaries’ includes salaries of an in-house marketing team; however, this team does not appear to be operational.
• Inability of FSMEs to meet existing demand due to:
  • Non-availability of vehicles. Nearly all FSMEs interviewed were using second-hand vehicles, many of which were in poor condition. As FSMEs do not invest in regular maintenance, their vehicles break down frequently. FSMEs that hire vehicles on a per-job basis (e.g., the representative GPE) often face the added challenge of the vehicle being unavailable when required.
  • Limited number of jobs that can be completed in a day. Many households and institutions dispose of solid waste (such as plastic bags, bottles, diapers) into their toilet pits. In order to prevent pump damage, both types of FSMEs remove this waste manually, using hooks. This takes significant time, preventing even the most efficient FSME from completing more than two to three jobs a day.

2. High vehicle operating costs: FSMEs in Uganda spend a significant proportion of revenue on keeping their vehicles running; this includes expenditure on fuel, rent for hired vehicles, and vehicle maintenance and repair costs:

• Fuel costs: Most CTEs use old vehicles and have to ply through poor roads, and therefore have poor mileage. For example, the representative CTE has a mileage of only 1.5 km/liter in comparison to a mileage of approximately 4km/liter for a new vehicle¹³ and spends 34% of revenue on fuel (including fuel used to pump sludge). Similarly, the fuel expenditure of three other CTEs we interviewed ranges from 23-30% of revenue.
• Vehicle hire costs: All vehicles in Uganda are imported, and once taxes and duties are levied, most FSMEs cannot consider purchasing a vehicle without taking a loan.¹⁴ However, banks charge interest rates between 28-32% annually,¹⁵ which the FSMEs cannot afford. In addition, most FSMEs may struggle to satisfy loan qualification and processing requirements of banks, given the informal nature of their operations. Instead, many FSMEs opt to hire a vehicle either on a long-term lease or on a per-job basis. Both options are expensive, as seen from the P&Ls.
• Vehicle maintenance and repair: FSMEs who do own vehicles spend significant time and money to keep them working. For example, two of the interviewed FSMEs who owned their trucks (not the representative FSMEs) spent 17% and 32% of revenue, respectively, on vehicle maintenance and repairs. This may be due to use of old trucks, plying on poor roads, and lack of preventive maintenance.

3. High customer defaults: Nearly all the FSMEs we spoke to faced challenges in recovering payments from customers (e.g., the representative FSMEs lose 17-20% of their revenue due to customer defaults). Customers hesitate to pay in advance, and once the service has been completed, some do not pay in full. The main reasons for customer default include:

• Disputes between the customer and FSMEs, due to:
  • Difficulty in estimating job size. As customers are usually not aware of the exact dimensions of the toilet pit, FSMEs provide customers with a rough estimate of the volume of sludge they will empty. After emptying the estimated volume, some sludge may remain in the pit, causing customers to feel cheated.
  • Difficulty in verifying actual volume emptied. FSMEs often add water to dilute thick sludge before pumping it out, which customers may perceive as an attempt to artificially inflate the volume emptied. Further, as it is difficult to confirm the volume of sludge stored in a cesspool truck, some customers fear that CTEs only partially fill their truck in order to charge for more trips.
• Inability unwillingness of customers to pay: As discussed earlier, many customers find formal emptying services to be expensive. If there is an urgent need for emptying, some customers may engage FSMEs despite not having funds to pay them immediately.

The above challenges impact the scalability of the FSM market across the three layers of the WASHPaLS framework for Scaling Market Based-Sanitation¹⁶ (see Figure 4). The framework identifies barriers across three distinct domains: FSM market (comprised of customers, enterprises, and entrepreneurs); business environment (shaped by government policy or the availability of raw materials and financial services); and broader context (includes factors such as social norms, economic environment, and geographical conditions). Please note that Figure 4 is not meant to provide an exhaustive list of all barriers faced by FSMEs, or customers seeking FSM services, in urban Uganda. It is meant to summarize key barriers that affect an FSME’s financial health, based on the P&L analysis conducted by the project team.

Figure 4: Barriers to MBS and their effect on FSME P&Ls¹⁷

These challenges significantly hamper single-truck FSMEs from providing viable and sustainable services. FSG, working with the broader USHA team, has since developed a suite of interventions to address each of these challenges. USHA is currently supporting three FSMEs to pilot these interventions. We look forward to sharing learnings from these pilots in subsequent articles.