World Toilet Day is on 19th November. This is no laughing matter for 4.2 billion people worldwide and that alone makes it worth highlighting. Counter-intuitively, it also sheds some light on a fantastic long-term investment opportunity.
The inconvenient truth is that, globally:
- 673 million people practice open defecation
- 3 billion lack basic hand-washing facilities
- One third of schools lack basic sanitation facilities
- Inadequate sanitation leads to 432,000 deaths from diarrhoea each year.
The spotlight has been on India for a number of years and the construction of toilets has been a (self-imposed) indicator to measure Prime Minister Modi’s success.
Before Narendra Modi came to power in 2014, less than 50% of households had access to sanitation facilities and only 30% of wastewater and sewage we treated before being released into streams and rivers.
His government’s goal of making the country open defecation free by 2nd October 2019 – the 150th anniversary of Mahatma Gandhi’s birth – was incredibly ambitious.
Poor sanitation and contaminated water caused 80% of diseases in rural India, with diarrhoea the biggest causes of under-5 deaths, killing between 800,000 and one million children, hospitalising 900,000 and causing 327,000 visits to clinics each year. [1]
“A clean India would be the best tribute India could pay to Mahatma Gandhi,” said Narendra Modi as he launched the Swachh Bharat Mission/Clean India Mission in October 2014.
India has now achieved that ambitious goal. According to the official website (Swachh Bharat Mission) 101,273,314 household toilets have been built since 2nd October 2014 and all 36 states are declared open defecation free.
One of the key challenges facing India, and other countries where poor sanitation remains a serious problem, is combining the functionality that toilets need to reduce the spread of infectious diseases while remaining cost-effective enough to be provided for poor communities. Toilets found in developed nations are impractical in developing countries due to the plumbing systems and large volumes of water required for operation.
These figures are certainly a vast improvement on attempts to deal with the sanitation issue in previous years. It is important that the quality of the facilities is maintained. The treatment and disposal of the sewage is as important as the existence of toilets. If new toilets are not plumbed in correctly or treatment facilities are not properly set up or maintained then changing attitudes will be impossible.
Building the toilets is a huge step along the road to better sanitation and the obvious health benefits should be welcomed and applauded. Attitudes also need to change so that open defecation is no longer considered as an option.
Better sanitation leads to a healthier population, and a healthier population is more productive.
What drives economies?
Two factors drive economies - young and growing populations and rising productivity. Both of these are enhanced by better sanitation.
Couple that with Modi’s economic reforms and there is the potential for a quantum leap in India’s productivity.
Demographics
India is set to be the most populous country on the planet by 2050, overtaking its neighbour China. The vital factor is the youthfulness of this population, essential for a country wishing to sustain high levels of growth.
And the median age of the population in India is a mere 28 years. This contrasts with 45.8 years in Italy, or 40.5 in the UK.
Simply put, a 25-year-old working Indian with young children has much greater economic potential than a 70-year-old Italian pensioner.
The potential upside is also illustrated by the size of the economy (GDP) per head of population
- for Italy this is $38,200 per person
- for India it is $7,200 per person
Where would you rather invest? Into the greying, high income, populations of the West? Or the youthful potential of India?
The Clean India Mission, and World Toilet Day generally, highlight something much bigger for investors. There is huge potential in India. It has come a long way but still has a long way to go.
Nothing happens overnight. Neither fantastic returns nor the changes needed to underpin the coming decades of economic development.
India has taken great steps in dealing with its sanitation. These improvements, not just in sanitation but also in infrastructure and reforms will unlock great potential for investors over the coming years and decades.
FURTHER READING
[1] https://www.hindustantimes.com/health/the-top-10-causes-of-death-in-india/story-lFLxCFVHmF7svw2RKCl70K.html