Progress-Linked Finance: a study of the feasibility and practicality of a proposed WASH financing approach

Finding appropriate ways of financing sanitation for urban poor communities remains a key challenge. Approaches like output-based aid (OBA) are attracting enormous interest, and rightly so. However, OBA models aren’t appropriate for all contexts, and other approaches also need to be explored.

This report assesses the feasibility of a financing model, Progress-Linked Finance (PLF), designed to incentivise and support water, sanitation and hygiene (WASH) service providers to meet the needs of poor urban residents in a financially sustainable manner. Under the PLF model, international financing institutions (potentially including multilaterals, bilaterals, and foundations) would enter into commitment agreements with urban WASH service providers, notably utilities and municipalities.

In very simple terms, PLF can be summarised as an agreement of the following type: “If the service provider can demonstrate 3 years from now that they have met conditions A, B and C in relation to financial viability and pro-poor commitment and capacity, the financing institution will provide a grant or loan of amount X for WASH scale-up”. In reality, agreements would likely be more complex, for example entailing a series of agreements involving a number of financing institutions. Central to the model is positive incentivisation coupled with rigorous verification that conditions have been met.

On the basis of desk analysis and wide-ranging interviews with urban WASH financing experts, this initial assessment finds that the PLF concept is broadly feasible. This report explores different variants of PLF, and suggests various ways in which the concept might be put into practice.

This Discussion Paper is co-published by Water & Sanitation for the Urban Poor (WSUP) and the Overseas Development Institute (ODI). This paper is presented at this stage as a basis for sector debate, and should not be considered a definitive statement of the views of either WSUP or ODI.

Evaluating the health impact of urban WASH programmes

Improving health is a key justification for WASH interventions…but evaluating health impacts is often viewed as too complex and costly.

This Discussion Paper, a WSUP/SHARE collaboration, argues for more widespread evaluation of the health impacts of WASH interventions: not with the aim of demonstrating that WASH can improve health (we know it can), but rather with the aim of assessing the impact of particular interventions.

We suggest that more frequent evaluation could contribute to improved effectiveness, by encouraging investors and implementers to focus on impacts rather than outputs (such as number of toilets constructed). More widespread health impact evaluation would also enable more objective comparative assessment of the value-for-money of different types of urban WASH intervention. Further, we argue that health impact evaluation need not be as costly as is widely thought. We discuss available methods, and suggest that the most appropriate approach in urban WASH evaluation contexts will often be the before-after concurrent control (BAC) design.

This Discussion Paper is co-published by Water & Sanitation for the Urban Poor (WSUP) and the Sanitation and Hygiene Applied Research for Equity (SHARE) Research Consortium. It is presented at this stage as a basis for sector debate, and should not be considered a definitive statement of the views of these organisations.

Loowatt – the waterless toilet system

The Loowatt system creates a low-cost and simple solution for waterless sanitation that converts human waste into biogas. We have built and tested a working system in London and see great potential for our toilets to make a difference in the developing world. The key benefits of Loowatt are that it’s easy to use, low-cost, clean and not at all smelly. Along with this, it creates a local supply of biogas.

In July 2011, the Loowatt team spent two weeks in on an intensive study in and around Madagascar’s capital city, Antananarivo, also known as Tana. We’ve outlined some of our observations in a series of photos.

Our objective in Tana was to gather information and explore ways to implement Loowatt systems. We collaborated with Water and Sanitation for the Urban Poor (WSUP), a partnership between NGOs, the private sector, and academia, which engages with local governments and has been working in Tana for several years.  They take a systems-based, market-driven approach to implementing sanitation solutions which was critical in exploring our key topics, including, household costs related to sanitation, energy use, and consumer aspirations. While much of this information is available in existing studies from WSUP, much is new, and all is understood more deeply through first hand investigation and discussions.

We conducted research in the urban center (a.k.a. CUA), the peri-urban area (a.k.a. FIFTAMA), and Ikibo, a rural village 25 miles from the city. In Ikibo, we were hosted by the Madagascar Development Fund, which has transformed the village by providing safe drinking water and creating local enterprise. Everywhere we went, we met with stakeholders in government, NGOs, commercial entities, local academics, enterprises, manufacturers, households, and more.

In Tana there is an urgent need for better sanitation. 75% of city center residents, and 95% of the peri-urban ones rely on dry pit latrines. The entire urban area is without any formal disposal system for fecal sludge. 98% of latrines are emptied by informal service providers or private companies, with no regulation on where fecal sludge is discarded.  We witnessed first hand the dumping of untreated human waste into local watercourses. The city’s current sanitation system remains decentralized.

The Loowatt System fits this situation perfectly, as it provides safe sanitation without the need for central infrastructure, and at the same time delivers valuable biogas and fertilizer. A key task for Loowatt is to understand how value is generated by our system, also taking into account any negative impacts. This will help us to build robust scenarios for the system, which are economically self-sustaining and offer real incentives for adoption.

GIS & mapping tools for water and sanitation infrastructure

Continuing developments in GIS software are opening up a number of possibilities for capturing and processing geographical data, and then presenting it via the internet. The ability to manage information on water and sanitation services and then overlay it onto Google Earth images has wide-ranging benefits for project planning and design, and for monitoring, advocacy and accountability.

This Practice Note introduces three tools of this type – Google Fusion Tables as used by WSUP, WaterAid’s WaterPoint Mapper and Water For People’s FLOW – and briefly discusses the advantages and disadvantages of each.

Click on the image to download the Practice Note.

This document forms part of WSUP’s Practice Note and Topic Brief publication series. Further documents can be downloaded from the WSUP website  http://www.wsup.com/sharing/index.htm

Introducing the UniLoo from the Ghanasan project

The Ghanasan project is a collaboration between Unilever, Water and Sanitation for the Urban Poor (WSUP), and IDEO to develop new products and services for in-home sanitation in Kumasi, Ghana.

The project aims to address the barriers that prevent 1 billion people in urban areas from accessing adequate sanitary facilities. These include insecure or non-existent land tenure, cramped living conditions and poor access to finance.

The idea is that low income households receive a branded self-contained plastic toilet when they sign up to a regular paid-for emptying and cleaning service provided by a local franchisee. The service will either be run by local entrepreneurs through a franchise agreement or through a network of service operators employed by the enterprise.

Stage 1: Research

The first six weeks of the collaboration focused on uncovering new opportunities for providing in-home sanitation to the urban poor. In order to better understand the end-users’ challenges and aspirations the team conducted interviews on the individual, community, and civic level. They used research tools such as inspiration cards, observations, shadowing, and storytelling to gain a deeper understanding of their day-to-day lives and sanitation needs and preferences. Additionally, the OpenIDEO community and the project team worked together to share inspirations and generate concepts, working together to uncover unmet opportunities in urban sanitation.

Stage 2: Design

The second six weeks was spent building and refining prototypes of early ideas and incorporating the learnings from those prototypes into the designs shown in the presentation below. The team took four toilet prototypes to Kumasi, each designed to test a different functional approach to collecting and removing waste from the home. They left each toilet with a family for several days, returning afterward to gather the family’s feedback, collect and clean the toilets, and repeat the test with a new family. Additionally, they sought to understand users’ preferences regarding placement in the home, service and maintenance, branding and marketing, and pricing and purchase.

Stage 3: Test

Since the idea is a radical departure from existing low-cost sanitation technologies in the developing world, the Ghanasan team are running a small 6-month trial in a specific area of Kumasi to test the basic idea. The trial, beginning in July 2011, will begin with about 20 paying customers and will be able to grow up to a maximum of about 100. They will use existing portable toilets available on the market with a view to manufacturing a small number of IDEO-designed toilets to test later on in the trial. Customers in the trial will receive the first month free to let the service sell itself. WSUP will contract with a local business to service the toilets and training will be given in customer service and operation, and uniforms will be provided.

A key objective of the trial is to gather sufficient data to enable a launch of the business in 2012. Cranfield University students will assist in data collection as well as identifying promising treatment opportunities, such as waste-to-energy and fertiliser for resale, adding additional revenue to help the business scale. The data will be included in a business plan which will be used to attract further funding for scaling up the enterprise in Ghana and beyond.

View the Ghanasan design summary by clicking on the link below:

http://www.slideshare.net/slideshow/embed_code/8124018

CALL TO ACTION: Supporting sustainable slum sanitation – the case for more investment from IFIs and donors

To mark World Water Day 2011, WSUP (Water & Sanitation for the Urban Poor) has released a Call to Action urging governments, funding institutions and other decision-makers worldwide to invest now in urban sanitation.

Sanitation-related diseases are having a profound negative impact on the health and wellbeing of millions of children in cities throughout Africa and South Asia. Investing in sanitation is one of the most cost-effective means of improving child health. We need a global programme to support investment in urban sanitation, and we need it now.

WSUP is a tri-sector partnership between the private sector, civil society and academia focused on addressing the increasing global problem of inadequate access to water and sanitation for the urban poor and the attainment of the Millennium Development Goal (MDG) targets, particularly those relating to water and sanitation. www.wsup.com

When are communal or public toilets an appropriate option?

We would all prefer to have our own household toilet rather than just access to a communal or public toilet but in some low-income urban communities, provision of individual household toilets is problematic. A recently published Topic Brief from WSUP (Water & Sanitation for the Urban Poor) argues that, despite numerous challenges, communal or public toilets can be the most appropriate medium-term solution in some specific situations: notably in high-density slums with a high proportion of tenants and/or frequent flooding and water-logging. In such situations, what can be done to ensure that communal or public toilets provide a high-quality service of genuine benefit to all members of the community including women and the very poor? This Topic Brief offers an overview of these questions for sanitation professionals and planners.

The financial sustainability and ongoing maintenance of communal and public toilets is a particular concern. The WSUP Practice Note “Financing communal toilets: the Tchemulane Project in Maputo” takes a look at issues around the financing of communal toilets in Maputo (Mozambique), including citywide scale-up costs.

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These publications form part of a newly initiated series of Practice Notes and Topic Briefs, through which WSUP aims to share experience and stimulate debate about water and sanitation service provision for the urban poor.

To keep up to date with this growing publication series, go to http://www.wsup.com/sharing/index.htm or join our mailing list at http://www.wsup.com/news/index.htm.