Category Archives: Economic Benefits

Developing Markets for Sanitation: A Blog Series

In response to the growing prevalence of market-based approaches to sanitation, the Bill & Melinda Gates Foundation convened a meeting between three leading sanitation development practitioners—iDE, PSI, and Water for People—to discuss their experiences in building supply capacity and demand for sanitation products and services, and possibly develop a joint understanding of the process. The result of those discussions are presented in this four-part blog series.

PART 3 of 4: Achieving Sustainability and Measuring Results

Read Part 1 of 4: The Basics: Terminology, Organization, and Process
Read Part 2 of 4: Selling Sanitation: Who Does What?

Achieving Sustainability: Two Approaches

There are many facets to the concept of “sustainability.” To focus the discussion, the group examined sustainability by asking, “How would you explain market sustainability to your grandmother?” To which, the group provided the following possible answers:

  • “The children’s children of the people who buy a latrine today should be able to buy a latrine for their new homes using the supply chains originally initiated by the intervention.”
  • “Something that lasts a long time.” In the case of market development, the “something” refers to the ability to access desirable, affordable sanitation solutions, be it a pit latrine or a more sophisticated product. “A long time” implies that these solutions are available in the market for multiple generations after the initial market development efforts.
W4P_San_Install

Photo by Water For People

A slightly more sophisticated way to describe sustainability (perhaps to a very savvy grandma or grandpa) is to say that market development approaches should leave the market in the hands of direct value chain players whose returns on investments are sufficient for them to continue delivering products and services that are affordable and desirable. These definitions indicate that market development efforts aim to develop supply chains that last, and to influence users’ perceptions and behaviors so that they reflect a priority for sanitation products and services.

Interesting follow-on questions included:

  • How do we arrive at 100% coverage?
  • How do we arrive at sustainable markets?
  • Is there a trade-off between coverage and intensity of intervention?

iDE’s approach is to use the market to drive towards 100% coverage as much as it is cost-effective and efficient to use the market mechanism. iDE acknowledges that overall market activity will drop if and when iDE pulls out. This is especially true for latrine demand given iDE’s support of direct sales for demand creation. However, iDE believes in improving sanitation coverage as quickly and effectively as possible to meet SDG targets. Thus, iDE intends to play an active role to support market growth efforts up until the point where further efforts lead to substantially diminishing returns. For example, iDE may find that active intervention in the market leads to rapid rates of market penetration up until a certain point, say 80%, after which there are diminishing returns. At that point, iDE would likely recommend a more traditional approach combined with smart subsidies in order to reach the laggards (who may also be the poorest within the community).

iDE_San_Install

Photo by iDE / 2016

iDE also anticipates that at about 100% coverage of improved, hygienic latrines, the overall market activity would drop anyway, since demand will drop given high coverage. However, iDE believes that there will still remain a sufficient level of supply to provide for replacement latrines. Of course, it is still yet to be seen whether businesses will continue to invest in the R&D for more sophisticated products and services.

Water for People and PSI believe in a lighter touch approach from the intervening organization so as to reduce the feeling of dependency, the external aid requirement, and to build a robust supply chain with healthy competition and active investment in new products and services. Actively driving towards 100% coverage is not the immediate project target of such an approach, but rather growing latrine ownership within the population to a point where social norms begin to dictate defecation practice and latrine ownership, and thereby latrine use is the only acceptable form of social behavior.  That is, Water for People and PSI’s theories of change hinge on the assumption that there is a “tipping point” that the interfacing agency can help reach.         

Both approaches have their merits and disadvantages, and it is too early to decide which one is more successful and cost-effective. However, it is an important question and one that informs intervention design. Like a lot of questions in development, the answer usually starts with “It depends…” In this case, it depends on the theory of change and the primary objective, whether it is to rapidly increase latrine coverage (and use), or develop independent, sustainable latrine supply chains. All three organizations agree that the two objectives are mutually reinforcing at this point, which is why each has chosen to adopt a variation of a market-based approach to improve sanitation.

PSI_San_Install

Photo by Kiran Thejaswi / PSI

Measuring Market Development

For market-based approaches, sales are the topline metric.  As such, sales should be a process that is integrated into all levels of the program.  It is not just an afterthought. Below is a list of other indicators that are useful for monitoring market development.

  • Sales: Markets are spaces where people buy and sell things. As such, the topline metric that market development programs use to measure impact is sales. However, it can be difficult to gain accurate sales information, particularly where a “light touch” approach has been used to encourage a business to enter the market.  “Why should I tell you, you have not given me anything?” was the response of one sanitation business owner in Malawi.  
  • Use: From a public health perspective, consistent latrine use is key to gaining improvements in health.  There are challenges in accurately and non-invasively monitoring use, but these measurements are key to ensuring that latrine purchases lead to latrine use.
  • Health outcomes: Significant research has been conducted to show that consistent use of hygienic latrines leads to health improvement. Further monitoring and research would be useful in establishing the coverage and use thresholds that optimize health gains. For example, how do health outcomes change when moving from 60% to 80% coverage? From 80% to 100%?
  • Access to supply chains: One question the group had is whether we should develop metrics around access in order to measure ease at which households can buy a latrine. For example, could customers get to a supplier 10km away? What is the time to delivery for the customer? What is a reasonable time for loan dispersal to for a customer? It would also be important to understand how these factors impact consumer experience and decision-making as they move from contemplation to purchase to post-purchase.
  • Viability of businesses: It can get overly complicated to measure the viability of businesses. Businesses themselves will make an informed decision about the viability of the sanitation business by choosing to engage in the market. As such, the focus of business metrics should be on whether or not they are satisfactorily serving customers (quality product, acceptable delivery time, etc.).
  • Crowding-in: As the overall objective is to develop entire markets and not just specific businesses for sanitation, it is valuable to understand the patterns of growth or change in the general sanitation market. For example, are other businesses who were not directly engaged by the intervening organization entering the market as a result of observing the success of the engaged businesses? Is the market growing without any additional form of external support?
  • Appropriate evaluation methodologies: While the Randomized Control Trial (RCT) is the gold standard for rigor, not every question requires that level of rigor to produce valuable insight/evidence. Evidence-based decision-making often does not require RCT-level rigor in order to make the right decision. Developing markets—inherently complicated and dynamic ecosystems—often requires constant iteration and close monitoring.

Read Part 1 of 4: The Basics: Terminology, Organization, and Process
Read Part 2 of 4: Selling Sanitation: Who Does What?
Check back for Part 4 of 4 on May 25, 2017.


iDE creates income and livelihood opportunities for poor rural households. In the WASH sector, we design and build markets for products that have the potential to transform people’s health by preventing diarrheal-related disease. Yi Wei ywei@ideglobal.org

Population Services International (PSI) is a global nonprofit organization focused on the encouragement of healthy behavior and affordability of health products. PSI uses a market development approach to deliver sanitation and fecal sludge management products and services in a sustainable manner.  Genevieve Kelly gkelly@psi.org

Water For People exists to promote the development of high-quality drinking water and sanitation services, accessible to all, and sustained by strong communities, businesses, and governments. Steve Sugden ssugden@waterforpeople.org

Developing Markets for Sanitation: A Blog Series

In response to the growing prevalence of market-based approaches to sanitation, the Bill & Melinda Gates Foundation convened a meeting between three leading sanitation development practitioners—iDE, PSI, and Water for People—to discuss their experiences in building supply capacity and demand for sanitation products and services, and possibly develop a joint understanding of the process. The result of those discussions are presented in this four-part blog series.

PART 2 of 4: Selling Sanitation: Who Does What?

We All Have a Part to Play

The group recognized that they are not doing their work in a vacuum, and that there are clear roles and responsibilities for every actor in the sanitation market:

Government

  • Regulation with enforcement
  • Consumer protection
  • Quality assurance standards
  • Financing large-scale public services
  • Creating enabling environments that encourage private sector participation and consumer uptake
  • Research and development
  • Underwriting risks and guarantees (delivering proof of concept for private sector to participate in market)

Private Sector

  • Delivering competitive offerings for customers
  • Lobbying government for improved market and regulatory conditions

Civil Society

  • Filling in gaps at a catalyzing level, rooted in the framework of the market
  • Market maker and loss leader
  • Bringing the market to a point where private sector actors are incentivized to join the market
  • Building the capacity of private sector actors, especially labor capacity and ability to access finance across the value chain
  • Supporting government, ensuring a high level of collaboration between the various intervening organizations and developing a unified mutually supportive approach
  • Resolve information asymmetry between buyer and seller
  • Monitoring and evaluation
PSI_San_Sales

Photo by Kiran Thejaswi / PSI

Note that many of the responsibilities listed above are related to facilitating an experience for the all-important fourth actor: the customer. The group recognized the importance of engaging communities from the beginning, as doing so ensures a higher likelihood that the proposed solution actually meets the needs of the users and a higher likelihood of buy-in and adoption. However, the market development approach does not advocate for the government and international development community to irresponsibly devolve responsibility to the community. Households should not be expected to design and construct their sanitation solutions under the guise of participatory design. In the developed world, we are not expected to design and construct our own toilets, so why should we expect this of communities who have even fewer advantages in education, income, and general access to resources? As part of a market-based approach, we believe in the importance of basing solutions on the needs and desires of the users. This process is based on gaining detailed input from users on their attitudes, beliefs, needs and desires; this information is used to guide experts in the design, engineering, and marketing processes. This approach manifests itself in desirable and affordable products that people are willing and able to purchase.

W4P_San_Sales

Photo by Water For People

Working with the Private Sector

Private sector actors are as much part of the market ecosystem as the end user of the product/service. Their needs and desires have to be taken into consideration. Most obviously, market actors strive to maximize profit. However, many other considerations have to be taken into account:

  • Access to capital
  • Regulatory conditions
  • Convenience and ease of managing product/service line
  • Ease of creating and size of existing demand
  • Cash flow
  • Opportunity costs of other business opportunities
  • Personal/family preferences
  • The low social status that working in sanitation (particularly waste management) may imbue
  • Education level needed
  • Competitive landscape
iDE_San_Sales2.jpg

Photo by Rachel Rose / iDE / 2016

In order to attract the private sector, development practitioners need to first get a deep understanding of all of the above considerations (and potentially others) that would drive a business to reject or pursue a business opportunity.

In addition to attracting businesses to join the sanitation sector, one must also consider how to keep them involved in the sector. Even when profits are good, the low status image of working in sanitation means that these businesses are always looking for alternatives. Working in sanitation often becomes a stepping-stone to working in something more lucrative or socially respected. Maintaining a sufficient level of private sector suppliers can be a challenge.

It is important to understand the main drivers for businesses so that can they can effectively and sustainably serve customers in the sanitation market. Businesses will try to minimize cost and maximize profit. Costs could be non-financial, such as effort required. Identifying what businesses are most motivated by will help design effective ways to engage them and keep them interested in selling sanitation products/solutions.

One common aspect of engaging with businesses across market-based interventions is intervening organizations’ dependence on businesses for record keeping of sales figures, which is often needed for donor reporting. SMEs are generally reluctant to put in the effort to complete record keeping as they do not see the immediate value in record keeping and may fear visits from tax officials. In order to incentivize businesses to complete record keeping, PSI has tied record keeping with access to capital, demonstrating that complete financial records will help businesses to access a loan. iDE has also tied continued support for demand creation to completion of sales records.

Check back for part 3 of 4 on May 18, 2017.


Water For People exists to promote the development of high-quality drinking water and sanitation services, accessible to all, and sustained by strong communities, businesses, and governments. Steve Sugden ssugden@waterforpeople.org

iDE creates income and livelihood opportunities for poor rural households. In the WASH sector, we design and build markets for products that have the potential to transform people’s health by preventing diarrheal-related disease. Yi Wei ywei@ideglobal.org

Population Services International (PSI) is a global nonprofit organization focused on the encouragement of healthy behavior and affordability of health products. PSI uses a market development approach to deliver sanitation and fecal sludge management products and services in a sustainable manner.  Genevieve Kelly gkelly@psi.org

Developing Markets for Sanitation: A Blog Series

In response to the growing prevalence of market-based approaches to sanitation, the Bill & Melinda Gates Foundation convened a meeting between three leading sanitation development practitioners—iDE, PSI, and Water for People—to discuss their experiences in building supply capacity and demand for sanitation products and services, and possibly develop a joint understanding of the process. The result of those discussions are presented in this four-part blog series.

Part 1 of 4: The Basics: Terminology, Organization, and Process

Terms and Conditions

Over the last decade, a number of different terms emerged that described essentially the same type of process: using business markets to increase sanitation sales and coverage. The three most commonly used included:

  • Sanitation as a Business (SAAB). Unfortunately, SAAB implies only the micro level of enterprise support and development, and this is too limiting. Markets consists of more than just enterprises, and market development efforts need to include the role of consumers, government, and civil society.
  •  Sanitation Marketing (SanMark). SanMark can lead to misunderstandings as people often think of marketing only as promotions, instead of the wider definition of the 4 Ps of the marketing mix: product, price, place, and promotion.
  •  Developing Markets for Sanitation. The group felt that the phrase “developing markets for sanitation” captured a more holistic systems approach where customers purchase desirable products and services that suppliers can sustainably offer for a profit.

Photo by Imran Nizami / iDE

The group decided to recommend Developing Markets for Sanitation to reinforce the concept that sanitation problems must be dealt with at the ecosystem level and not just at the enterprise level. Market development involves understanding why market failures exist in the first place. For example, why are there no existing actors, be it private or public, providing these necessary goods and services? It is important to understand how the constituent parts of an ecosystem interact with each other and be aware of the dynamic relationships that exist. It is also important that we do not implement overly simplistic interventions that do not address the root of the problem, or ignore the dynamic nature of markets.

Continue reading

Webinar – Involving The Private Sector In Increasing Access To Basic Sanitation In Bihar And Abidjan

usaid
Published on Apr 24, 2017

Only 22% of Abidjan’s population has access to basic sanitation. Many low-income residents of the city live in compound houses of 4 to 45 persons, who share a common toilet.

The situation is not too different in Bihar where only 30% of the population have access to basic sanitation, and open defecation is still rife.

This webinar explores successes and failures of the strategies from:

  • the USAID Sanitation Service Delivery (SSD) program’s Healthy Compound model in Abidjan, which is using a total market approach to develop prefabricated septic tanks made of ferrocement; and
  • the Supporting Sustainable Sanitation (3Si) project in Bihar, which has used a market-based approach to overcome supply and demand barriers to latrine access and use.

    Presenters:

  • Bikas Sinha is 3Si’s General Manager for Programs. He will introduce the 3Si project and strategy and outline the milestones and learning.
  • Lassina Togola is USAID SSD’s sanitation Technical Advisor in Abidjan. He will offer first-hand experience of progress, lessons and challenges to date regarding the Healthy Compound model.
  • Dana Ward is SSD’s Chief of Party. He will introduce the discussion and set the context for providing affordable sanitation through the private sector.

In addition to the recorded webinar, the following supplementary resources are available:

Public Finance for WASH Masters Research Scholarships 2017

The Public Finance for WASH initiative (www.publicfinanceforwash.com) announces three scholarships each of GBP 1500 (or €1700) to support masters-level research around public finance for pro-poor sanitation or pro-poor WASH in low-income contexts.

Public Finance for WASH is a knowledge platform run by IRC  and Water & Sanitation for the Urban Poor (WSUP). PF4WASH aims to increase sector awareness and understanding of domestic public finance solutions for WASH, primarily through making documentation accessible and disseminating existing knowledge.

These scholarships are offered jointly by IRC and WSUP.

Masters students with projects that are due to be completed by 31st October 2017 are eligible. Projects should relate to one of the following countries: Bangladesh, Ghana, India, Kenya, Ethiopia, Uganda or Burkina Faso.

Ideal research projects will closely align with the interests of Public Finance for WASH, will generate new empirical data, will be of scope that is plausible within the short research period of a masters research project but sufficient to provide the basis for publication in a peer-reviewed journal, and will ideally help to identify solutions and ways forward.

More information about the scholarships and how to apply is provided here. All applications must be submitted to pf4wash@gmail.com by 22nd May 2017.

At stake in Johannesburg’s ‘recycling wars’: more than trash

At stake in Johannesburg’s ‘recycling wars’: more than trash. Christian Science Monitor, April 2017.

Informal and formal sectors of the economy work side-by-side in many African nations – but can they work together?

APRIL 11, 2017 JOHANNESBURG—In another lifetime, Louis Mahlangu was an electrician. It was a good job, challenging and respectable, the kind of profession that could make his family proud. wastepickers

There was just one problem.

“There was no work,” he says. No matter how hard he looked, Mr. Mahlangu was barely finding enough jobs to scrape by. Then his sister invited him to tag along to her job. The hours were good, she promised, and the pay – well, it was better than anything he was likely to earn replacing wiring in suburban houses.

And so he put on a pair of rubber rain boots, hiked to the top of a squelching mountain of Johannesburg’s garbage, and began digging for plastic.

Twenty-two years later, he’s still there, along with thousands of others like him, collecting dinged Coke bottles and pulverized yogurt cartons discarded by the city’s residents and selling them on to private recycling companies. At his peak, Mahlangu says, he made up to $1000 each month, a respectable wage in a country where the newly proposed minimum wage is around $250 per month.

Read the complete article.

The Sanitation-Education Connection: What’s a toilet worth in Kenya?

Published on Nov 19, 2016

Sanitation is a critical, yet often overlooked fundamental human right. This documentary, first in a series, broadly describes the worth of the sanitation-education connection in one area of Kenya, by defining its challenges and presenting solutions.

Water may be life, but the quality of our lives is determined in part by our health and wellbeing. It may be surprising to many of us, but in countries like Kenya, health is largely affected by access to toilets. Sanitation is a critical, yet often overlooked fundamental human right. Globally 2.5 billion people lack access to adequate sanitation. The resulting health risks touch all ages and affect every aspect of life: education included. Impacts reverberate through economies and generations as individuals fail to meet their full potential. Unfortunately sanitation is generally not a topic of common conversation nor is it often an economic priority. It becomes then, a silent emergency.

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