Scaling Market-Based Results of a WASHPaLS Desk Review July 12, 2018 Sanitation: An Overview Presenters Jesse Shapiro (USAID) Rishi Agarwal, Morris Israel, Jeff Albert (WASHPaLS)
What is WASHPaLS? • Water, Sanitation, & Hygiene Partnerships for Learning and Sustainability. 5-year (2016–2021) research and technical assistance project • Goal: Enhance global learning and adoption of the evidence-based programmatic foundations needed to achieve the SDGs and strengthen USAID’s WASH programming at the country level 2 2
The WASHPaLS Research Design Summary Ongoing field Ongoing field When and how are CLTS Desk CLTS Desk research with research with sanitation approaches Review Review partners partners effective and sustainable? Achieve Ongoing field This MBS universal research with Desk Review sanitation and partners What does it cost? hygiene Pending field Pending field Play Spaces Play Spaces How to repeat success research with research with Desk Review Desk Review at scale? partners partners Goal Key Questions Outputs 3 MBS: Market-based Sanitation; CLTS: Community Led Total Sanitation
Poll #1: Attendee connections to MBS 4
Operational definitions Market-based Sanitation: The development of a sanitation market in which the user makes a full or partial monetary contribution (with savings and/or cash equivalents) toward the purchase, construction, upgrade, and/or maintenance of a toilet from the private sector . T oilet: A sanitation fixture used for capture and storage, or disposal of human urine and feces. The term toilet refers to the basic substructure (underground) components and the interface (e.g., slab, pan, water closet). A toilet may include the superstructure (walls, roof, and a door). 5
To understand the challenges facing Market-based Sanitation (MBS) interventions we reviewed available literature and 13 interventions Literature Interventions Listed 1,429 WASH documents 1,253 WASH grants Prima-facie MBS Filtered 595 MBS-related 107 interventions Reviewed 595 MBS-related 9 cases 23 Supplementary sources 4 caselets Note: Caselets are more narrowly-focused on one of the three evidence gaps identified for the desk review viz., appropriate product and business model 6 choices; Viability of local entrepreneurs; unlocking public and private finance
True market-based sanitation interventions are far and few in- between Entries reviewed for WASHPaLS 1,253 1,146 107 96 11 52 44 26 18 Reviewed Sanitation- Single-country Scaled to MBS Interventions related Interventions >10,000 Interventions Interventions T oilets at Scale Reviewed interventions were either related to another 11 multi-country Interventions that Interventions were not truly market- sector (such as water or hygiene) or if related to interventions across did not scale to based (government or community– sanitation, were research, product development, or total of 43 countries provide 10,000 based organizations played the role fecal sludge management related toilets of product supplier) Note: In the desk review we defined scale as more than 10,000 toilets sold as one criterion to identify interventions for case study with the premise that such 7 interventions were successful in fostering market activity i.e., participation by more customers and entrepreneurs
However, if funders stay invested, interventions can scale up Inter-annual trend of toilet sales for select MBS interventions 250 70-90 % of toilets were sold SMSU Cambodia oilets Sold (‘000) in the second half of the Hands-Off SanMark interventions Cambodia 200 PHA Benin 3Si India (Bihar) 150 Cumulative Number of T 100 50 0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Year 8
Amongst MBS interventions at scale, there is a variance in cost to scale Number of toilets sold vs. programmatic cost per toilet 250 SMSU Cambodia TSSM Indonesia Number of toilets sold (‘000) 200 3Si India (Bihar) Hands-Off SanMark Cambodia 150 100 CHOBA Vietnam CHOBA Cambodia 50 TSSM Tanzania RWSSP Bangladesh RWSSP Nepal RBF Ghana CSM Peru 0 0 50 100 150 200 Programmatic cost per toilet 1 (USD) Note: Programmatic cost per toilet as reported or estimated from program budget literature and toilets purchased; excludes the household’s expenditure on purchasing toilets or funds from other sources (e.g., government subsidy programs); the types of cost included in programmatic costs may differ by program 9 due to variations in reporting methods
The sanitation market can be depicted through this framework, which allows for diagnosis and problem–solving for scale SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 10 10
MBS interventions face barriers to scale across the sanitation market system ― Enterprise SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 11 Lack of “critical mass” of customers to serve profitably Lack of product systems that are acceptable to customers and suppliers Lack of cost-effective mechanisms to activate demand 11 Lack of efficient mechanisms to fulfill orders
Target market selection is important to ensure entrepreneurs can profitably serve customers and sustain their participation in the market Market segmentation for Mi Baño in Peru Market Solution 60% of total Households Target market Innovation in Product (0.5 million HHs) and Delivery Model Served Innovation in Product Potential / limited (5 million Households) and Delivery Model (1.8 million HHs) + Credit 40% of total households Innovation in Product Subsidized segment and Delivery Model (1 million HHs) + Subsidy 12
Appropriate product systems , which are acceptable to both customers and entrepreneurs, are an outcome of iterative product development processes Design and prototypes Customers’ preferred functions and aesthetics Multiple Final product and Contextually appropriate technologies iterations delivery model(s) Local entrepreneurs’ assets and capabilities Field tests 13
A range of delivery models exist and should be used based on the context to simplify customers’ buying experience No Full Aggregation Aggregation Turnkey Solution Provider Mason/DIY Network One-Stop Shop (OSS) (TSP) Concrete products Mason Brick supplier Focal Point manufacturer Cement, sand, Super-structure Pan supplier Customer gravel etc. materials 14 DIY: Do-it-yourself
Demand activation is the missing middle that can enhance households’ willingness to purchase toilets Customer “I have a toilet in my “Open defecation is “I see some value in “I’ve decided to buy a state of home acceptable in my community getting a toilet and am toilet and have/ am and there is no benefit to thinking about how to ordering one” mind using a toilet” build one” Demand Demand Demand generation activation fulfillment Promote a solution(s) Raise awareness of the problem benefiting entrepreneurs CATS / CLTS MBS 15 CATS: Community Approaches to Total Sanitation; CLTS: Community Led Total Sanitation
MBS interventions face barriers to scale across the sanitation market system ― Customer SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 16 Lack of awareness Lower priority accorded to sanitation Lack of savings/seasonal incomes limiting ability to make upfront payments Inadequate income to afford available 16 products
Low liquidity can limit the customer’s ability to make an upfront payment to purchase a toilet, which can be overcome with credit Growth in sanitation loans in Bihar, India (No. of loans issued) ~33,000 ~21,000 ~2,600 End 2015 End 2016 End Q2 2017 17
Customer participation can be limited by low affordability , which can be overcome in part with market-compatible subsidies Sanitation coverage among ID-poor 1 and 2 villages in Cambodia 53% 44% 32% 23% Baseline CHOBA MBS only MBS + CHOBA Coverage (2012) only (2016) (2016) (2016) Note: ID Poor refers to the poverty classification system by the Government of Cambodia; CHOBA: Community Hygiene Output-Based Aid Source: East Meets West Foundation, and WSP. 2016. “Study to Measure Impact of Output-Based Aid and Sanitation Marketing on Sanitation Adoption in 18 Cambodia.”
MBS interventions face barriers to scale across the sanitation market system ― Entrepreneur SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 19 Low profitability —at unit/ business level and/ or absolute amount High opportunity cost in selling toilets Limited availability of entrepreneurs, especially in rural contexts Lack of affordable capital to invest in 19 sanitation enterprise
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