For decades, cities across the developing world have sought the next infrastructure project to address chronic shortages of clean water, inadequate wastewater treatment, and overflowing solid waste systems. Governments negotiate loans, pursue donor grants, and celebrate new treatment plants, pipelines, and landfills. Yet only a few years later, many of these same systems begin to deteriorate because maintenance is deferred, operating budgets are insufficient, and expansion cannot keep pace with urban growth. The real problem is the absence of sustainable business models. Developing countries do not simply need more infrastructure; they need institutions capable of financing, operating, maintaining, and continuously renewing infrastructure for generations. Enterprise financing offers that model.
The scale of the challenge is growing rapidly. The United Nations projects that nearly 70% of the global population will live in urban areas by 2050, with almost all future urban growth occurring in Asia and Africa. At the same time, the World Bank estimates that achieving universal access to safely managed water and sanitation requires more than US$114 billion in annual investment in developing countries. Meanwhile, the global municipal solid waste stream is expected to increase from approximately 2.24 billion tonnes in 2020 to nearly 3.9 billion tonnes by 2050, according to the World Bank. These trends make one reality unavoidable: governments alone cannot continue financing urban environmental services through annual budgets and periodic donor-funded projects. A different financial architecture is required.
Enterprise financing begins with a simple but transformative principle: water supply, wastewater, and solid waste services should be managed as financially sustainable public enterprises rather than as government departments. Under this model, utilities remain publicly owned but operate with professional governance, transparent financial management, predictable user-fee revenue, performance-based operations, and long-term capital planning. Revenues generated from service delivery support operations, maintenance, and future investments while strengthening the utility's ability to access affordable financing from development banks and domestic capital markets. Rather than depending on uncertain annual appropriations, utilities create continuous investment cycles that sustain infrastructure over decades. This approach does not prioritize profit; it prioritizes financial resilience, operational reliability, and stewardship of public assets.
One of the strongest real-world examples comes from Citizens Energy Group in Indianapolis, Indiana. Operating as a public charitable trust, the utility financed the nearly US$2 billion DigIndy Tunnel System primarily through enterprise revenues supported by wastewater user fees and long-term low-interest financing. Instead of privatizing the system or relying entirely on taxpayer funding, Citizens Energy Group created a financing structure that aligned stable revenues, affordable borrowing, and phased investment while keeping ownership firmly in public hands. The result is one of the largest wastewater infrastructure projects in the United States, significantly reducing combined sewer overflows and improving river water quality. The lesson extends far beyond Indianapolis. The engineering may differ from city to city, but the financing principles - predictable revenue, institutional credibility, disciplined governance, and long-term investment - are broadly transferable.
For developing countries, enterprise financing should extend beyond individual utilities toward integrated urban environmental enterprises. Water supply, wastewater management, stormwater management, and solid waste services are interconnected systems that share infrastructure, financial risks, customer relationships, and environmental outcomes. Integrating planning and financing across these services creates operational efficiencies, improves asset management, strengthens revenue collection, and supports circular economy initiatives such as wastewater reuse, energy recovery, recycling, composting, and resource recovery. Instead of managing separate departments competing for limited public budgets, cities can build unified environmental enterprises capable of leveraging economies of scale while delivering more reliable public services. This systems approach also strengthens climate resilience by allowing infrastructure investments to be prioritized based on long-term risk rather than annual political cycles.
Critics often worry that enterprise financing inevitably leads to unaffordable tariffs or privatization. Neither outcome is necessary. Well-designed enterprise models maintain public ownership while using transparent tariff structures that balance affordability with long-term financial sustainability. Targeted subsidies can protect vulnerable households without undermining the financial health of the utility. Independent regulation, strong corporate governance, performance benchmarking, digital billing systems, and public accountability further improve trust between utilities and customers. In fact, financially stable utilities are often better positioned to protect low-income communities because they can maintain reliable services, expand coverage, reduce service interruptions, and avoid the costly infrastructure failures that disproportionately affect the poor. The objective is sustainable public service delivery, not commercialization.
The future of urban infrastructure will be determined by which cities create institutions capable of financing infrastructure continuously for the next fifty years. Enterprise financing represents that institutional shift. By transforming environmental services into professionally governed public enterprises, developing countries can replace cycles of deterioration with cycles of reinvestment, resilience, and continuous improvement. Water supply, wastewater management, and solid waste services should no longer be viewed as recurring fiscal liabilities but as strategic public enterprises that protect health, enable economic growth, improve environmental quality, and strengthen urban competitiveness. Sustainable cities require sustainable institutions, and sustainable institutions require sustainable business models.
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Dr. David Tsetse, Ph.D. | SiBI
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