Scaling Market-Based Results of a WASHPaLS Desk Review July 12, - - PowerPoint PPT Presentation

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Scaling Market-Based Results of a WASHPaLS Desk Review July 12, - - PowerPoint PPT Presentation

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


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Results of a WASHPaLS Desk Review

July 12, 2018

Presenters Jesse Shapiro (USAID) Rishi Agarwal, Morris Israel, Jeff Albert (WASHPaLS)

Scaling Market-Based Sanitation: An Overview

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  • 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

What is WASHPaLS?

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Key Questions Goal Outputs

Achieve universal sanitation and hygiene

Ongoing field research with partners Ongoing field research with partners Ongoing field research with partners Pending field research with partners Pending field research with partners

When and how are sanitation approaches effective and sustainable? How to repeat success at scale?

CLTS Desk Review CLTS Desk Review

What does it cost?

Play Spaces Desk Review Play Spaces Desk Review This MBS Desk Review

The WASHPaLS Research Design Summary

MBS: Market-based Sanitation; CLTS: Community Led Total Sanitation

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Poll #1: Attendee connections to MBS

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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

  • f a toilet from the private sector.

T

  • ilet: 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).

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To understand the challenges facing Market-based Sanitation (MBS) interventions we reviewed available literature and 13 interventions

Listed Filtered Reviewed 1,429 595 595 23 1,253 107 9 Literature Interventions 4 cases caselets Prima-facie MBS interventions WASH grants Supplementary sources WASH documents MBS-related MBS-related

Note: Caselets are more narrowly-focused on one of the three evidence gaps identified for the desk review viz., appropriate product and business model choices; Viability of local entrepreneurs; unlocking public and private finance

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True market-based sanitation interventions are far and few in- between

18 26 44 96 107 52 MBS Interventions at Scale Scaled to >10,000 T

  • ilets

Single-country Interventions 11 Sanitation- related Interventions 1,146 Reviewed Interventions 1,253

Entries reviewed for WASHPaLS

Reviewed interventions were either related to another sector (such as water or hygiene) or if related to sanitation, were research, product development, or fecal sludge management related Interventions that did not scale to provide 10,000 toilets Interventions were not truly market- based (government or community– based organizations played the role

  • f product supplier)

11 multi-country interventions across total of 43 countries

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 interventions were successful in fostering market activity i.e., participation by more customers and entrepreneurs

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However, if funders stay invested, interventions can scale up

250 200 150 100 50 Y8 Y7 Y6 Y5 Y4 Y3 Y2 Y1 3Si India (Bihar) PHA Benin Hands-Off SanMark Cambodia SMSU Cambodia Cumulative Number of T

  • ilets Sold (‘000)

70-90 % of toilets were sold in the second half of the interventions

Year

Inter-annual trend of toilet sales for select MBS interventions

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Amongst MBS interventions at scale, there is a variance in cost to scale

200 150 100 50 200 250 150 100 50 RWSSP Nepal CHOBA Cambodia CHOBA Vietnam Hands-Off SanMark Cambodia 3Si India (Bihar) TSSM Indonesia SMSU Cambodia Programmatic cost per toilet1 (USD) Number of toilets sold (‘000) RBF Ghana CSM Peru RWSSP Bangladesh TSSM Tanzania

Number of toilets sold vs. programmatic cost per toilet

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 due to variations in reporting methods

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The sanitation market can be depicted through this framework, which allows for diagnosis and problem–solving for scale

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BROADER CONTEXT SANITATION MARKET BUSINESS ENVIRONMENT

CUSTOMER

Affordability Availability

ENTREPRENEUR

Target Market Delivery Model Product System Sales & Marketing

ENTERPRISE

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MBS interventions face barriers to scale across the sanitation market system―Enterprise

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BROADER CONTEXT BUSINESS ENVIRONMENT

CUSTOMER

Affordability Availability

ENTREPRENEUR

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

Lack of efficient mechanisms to fulfill orders

ENTERPRISE

Target Market Delivery Model Product System Sales & Marketing SANITATION MARKET

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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

Served (5 million Households)

Market Solution Target market (0.5 million HHs) Potential / limited (1.8 million HHs) Subsidized segment (1 million HHs) Innovation in Product and Delivery Model Innovation in Product and Delivery Model + Credit Innovation in Product and Delivery Model + Subsidy

60% of total Households 40% of total households 12

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Appropriate product systems, which are acceptable to both customers and entrepreneurs, are an outcome of iterative product development processes

Design and prototypes Final product and delivery model(s) Contextually appropriate technologies Customers’ preferred functions and aesthetics Local entrepreneurs’ assets and capabilities

Multiple iterations

Field tests 13

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A range of delivery models exist and should be used based on the context to simplify customers’ buying experience

Full Aggregation No Aggregation One-Stop Shop (OSS) Turnkey Solution Provider (TSP) Network Mason/DIY

Focal Point Mason Brick supplier Cement, sand, gravel etc. Concrete products manufacturer Customer Pan supplier Super-structure materials

DIY: Do-it-yourself

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Demand activation is the missing middle that can enhance households’ willingness to purchase toilets

Customer state of mind

“I see some value in getting a toilet and am thinking about how to build one” “Open defecation is acceptable in my community and there is no benefit to using a toilet” “I’ve decided to buy a toilet and have/ am

  • rdering one”

“I have a toilet in my home

CATS / CLTS MBS

Raise awareness of the problem Promote a solution(s) benefiting entrepreneurs

Demand generation Demand activation Demand fulfillment

CATS: Community Approaches to Total Sanitation; CLTS: Community Led Total Sanitation

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MBS interventions face barriers to scale across the sanitation market system―Customer

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BROADER CONTEXT BUSINESS ENVIRONMENT Availability

ENTREPRENEUR ENTERPRISE

Lack of awareness

Lower priority accorded to sanitation

Lack of savings/seasonal incomes limiting ability to make upfront payments

Inadequate income to afford available products

Target Market Delivery Model Product System Sales & Marketing

CUSTOMER

Affordability SANITATION MARKET

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Low liquidity can limit the customer’s ability to make an upfront payment to purchase a toilet, which can be overcome with credit

End Q2 2017 ~33,000 End 2016 ~21,000 End 2015 ~2,600

Growth in sanitation loans in Bihar, India (No. of loans issued) 17

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Customer participation can be limited by low affordability, which can be overcome in part with market-compatible subsidies

MBS + CHOBA (2016) 53% MBS only (2016) 32% CHOBA

  • nly (2016)

44% Baseline Coverage (2012) 23%

Sanitation coverage among ID-poor 1 and 2 villages in Cambodia

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 Cambodia.”

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MBS interventions face barriers to scale across the sanitation market system―Entrepreneur

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BROADER CONTEXT BUSINESS ENVIRONMENT

CUSTOMER

Affordability

ENTERPRISE

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 sanitation enterprise

Target Market Delivery Model Product System Sales & Marketing Availability

ENTREPRENEUR

SANITATION MARKET

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Interventions can engage entrepreneurs with complementary or related businesses to bridge the gap in availability of entrepreneurs in sanitation markets

Mi Baño Peru Hands off SanMark Cambodia SMSU Cambodia 3Si Bihar STS Nigeria PHA Benin Examples Examples

  • Masons
  • Pit diggers
  • Hardware retailers
  • Cement retailers
  • Sand / gravel suppliers
  • Concrete products

suppliers

  • Cement
  • Sanitary hardware
  • Door fabricators
  • PVC pipes
  • Roofing materials

Proximity to customer in the sanitation context

Raw material / component manufacturers / importers Raw material / component suppliers Skilled labor

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Sanitation enterprises may lack adequate access to capital, which if addressed could help enterprises grow

Distribution of SMSU Cambodia entrepreneurs availing a loan by performance2 Quintiles based on average monthly sales performance

Source:1. Sy, Jemima, and Robert Warner. 2014. “Tapping the Markets: Opportunities for Domestic Investments in Water and Sanitation for the Poor. Directions in Development.” World Bank. 2. Produced from Wei, Yi, Tamara Baker, Michael Roberts, Stu Taylor, and Veasna Toe. 2014. “Sanitation Marketing Scale-Up (SMSU 1.0) - End of Project Report.” iDE.

Enterprises’ assessment of inadequate access to finance as an obstacle to overall operations in Bangladesh, Indonesia, Peru, and Tanzania1 24% 13% 18% 25% 27% 29% 16% 28% 16% 221 108 T

  • ok a loan 6%

Did not take a loan Lowest 2nd 3rd T

  • p

4th Quintile 21

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Entrepreneurs can improve the viability of operating sanitation enterprises by expanding their target market or seeking cross- selling opportunities

Expand geographic coverage Cross-sell products Lower price

Image credits: iDE Cambodia website (left); FSG (middle)

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BROADER CONTEXT

MBS interventions face barriers to scale across the sanitation market system―Business environment

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SANITATION MARKET BUSINESS ENVIRONMENT

CUSTOMER

Affordability Availability

ENTREPRENEUR ENTERPRISE

Lack of public goods (e.g. customer insights, product designs)

Poorly penetrated associated supply chains (e.g. , cement)

Lack of credit for customers or entrepreneurs

Inhibitory market rules (e.g., policy)

Target Market Delivery Model Product System Sales & Marketing

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Intervening in business environment can accelerate interactions between customers and entrepreneurs, or reduce their barriers to participation

Public goods Associated supply chains Market rules

Raw materials for toilets (e.g., cement, gravel) Legislation, policies, and regulations Open-source product designs, demand generation

Capital

Availability of credit providers / penetration of FS providers 24

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MBS interventions face significant barriers to scale across the sanitation market system―Broader Context

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BROADER CONTEXT SANITATION MARKET BUSINESS ENVIRONMENT

CUSTOMER

Affordability Availability

ENTREPRENEUR ENTERPRISE

Unsupportive social norms

Long history of subsidies reducing demand

Poor transport infrastructure—roads etc.

Challenging geographical context— population dispersion, terrain, etc.

Target Market Delivery Model Product System Sales & Marketing

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MBS alone might not be adequate in all markets because of broader contextual factors that are beyond the control of an intervention

Social norms Terrain, soil conditions Population density and dispersion Transport infrastructure

Favorable conditions for MBS

OD acceptable OD unacceptable Favorable Low density, dispersed High density, concentrated Weak Strong Challenging 26

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MBS interventions face barriers to scale across the sanitation market system

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Poll #2: What do you believe is the most important barrier to scaling market- based sanitation?

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The context continually evolves and while interventions typically lead to outputs, desired outcomes depend on the way the intervention is designed, implemented, and evaluated

Outputs

Macroeconomic Factors Infrastructure Social Norms Environmental Factors

  • BROADER CONTEXT

Systemic change

Relationships • Power Dynamics Norms & Behaviors

  • No Systemic change

Prior state Intervention Potential Outcomes

SANITATION MARKET BUSINESS ENVIRONMENT

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To overcome the barriers, funders, implementers, and governments should intervene at different points in the system

Implementers

 Develop a flexible, learning

approach to implementation

 Consider the broader sanitation market

and intervene to solve barriers with public goods and associated value chains

 Identify and support entrepreneurs

from across the system

 Design interventions for sustainability

in order to ensure that the market functions, as donors exit – Actively built in self- redundancy

 Iterate between elements of

enterprise and types of entrepreneurs available in order to reach a locally relevant MBS

Government

 Invest in demand generation to

change prevailing social norms

 Improve the availability of public

goods such as product design, market insights, etc.

 Shape market rules to promote

private sector participation – Use subsidies to improve rather than distort market activity – Address fiscal barriers to improve sanitation market attractiveness for entrepreneurs

Funders

 Recognize that MBS alone cannot

work in all contexts – Understand local context; be a part

  • f the system

– Ascertain latent demand – Consider social norms

 Take a system-wide view and solve

for barriers, not only within the sanitation market but also in the business environment

 Invest in long term change to

maximize potential of the scale up phase

 Adopt MLE systems that encourage

learning and measure systems change

MLE: Monitoring, Learning, and Evaluation

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Q & A Q & A

FSG

Contacts: Jesse Shapiro, Senior WASH Advisor, USAID jeshapiro@usaid.gov Rishi Agarwal, Managing Director, FSG rishi.agarwal@fsg.org Contacts: Jesse Shapiro, Senior WASH Advisor, USAID jeshapiro@usaid.gov Rishi Agarwal, Managing Director, FSG rishi.agarwal@fsg.org Learn more in the desk review available at Globalwaters.org (https://www.globalwaters.org/resources/assets/washpals/rural-mbs-desk-review) Morris Israel, Project Director, WASHPaLS morris.israel@washpals.org Jeff Albert, Deputy Project Director, WASHPaLS jeff.albert@washpals.org Morris Israel, Project Director, WASHPaLS morris.israel@washpals.org Jeff Albert, Deputy Project Director, WASHPaLS jeff.albert@washpals.org