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
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
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
5-year (2016–2021) research and technical assistance project
programmatic foundations needed to achieve the SDGs and strengthen USAID’s WASH programming at the country level
What is WASHPaLS?
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2Key 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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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
T
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
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
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
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
10BROADER 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
11BROADER CONTEXT BUSINESS ENVIRONMENT
CUSTOMERAffordability 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
ENTERPRISETarget 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
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
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
“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
16BROADER 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
CUSTOMERAffordability 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
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
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
19BROADER CONTEXT BUSINESS ENVIRONMENT
CUSTOMERAffordability
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
ENTREPRENEURSANITATION 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
suppliers
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
Did not take a loan Lowest 2nd 3rd T
4th Quintile 21
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
23SANITATION MARKET BUSINESS ENVIRONMENT
CUSTOMERAffordability 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
MBS interventions face significant barriers to scale across the sanitation market system―Broader Context
25BROADER CONTEXT SANITATION MARKET BUSINESS ENVIRONMENT
CUSTOMERAffordability 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
MBS interventions face barriers to scale across the sanitation market system
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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
Systemic change
Relationships • Power Dynamics Norms & Behaviors
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
– 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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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