The provision of sustainable sanitation for all is one of the world’s most important development priorities, yet 4.5 billion people lack access to a safe toilet. Past efforts to provide greater sanitation access, such as direct government provision and full, blanket subsidies for toilets, have proven to be ineffective or unsustainable in many developing countries, prompting some to focus on market-based sanitation (MBS) as an alternative. However, market-based approaches have proven difficult to scale up.
Subhash Chennuri explores some of the barriers to scaling up MBS in “Designing Effective Sanitation Enterprises,” a recent webinar based on findings from a desk review of MBS development interventions from USAID’s Water, Sanitation and Hygiene Partnerships and Learning for Sustainability (WASHPaLS). The review provides a new, more specific framework for understanding some of these barriers to scaling market-based sanitation.
Chennuri, an associate director at FSG and a co-author of the desk review, focused his presentation on a key component of the framework—the design of a successful sanitation enterprise. He began the webinar with a recap of an earlier WASHPaLS’ webinar to help participants understand the key role of sanitation enterprises in an MBS framework, saying, “The design of the enterprise is crucial to... the success of MBS interventions.”
The purpose of this webinar was to delve into the four components of a sanitation enterprise—target markets, product systems, sales & marketing, and delivery models—and discuss the barriers associated with each. This framework was developed based on the WASHPaLs global review of MBS interventions. (For more details read the full desk review.)
Entrepreneurs identify their target market as the group of people they want to sell to. Chennuri points out that defining a target market isn’t as straightforward as one might think. For example, one market segment might be able and willing to pay for a toilet, but other factors, such as safety from floods, terrain or road conditions, or distance of customers from suppliers might require adapting products to such geographic conditions. These and other factors, such as the size of different market segments, influence target market selection as well as other elements of the enterprise, such as the product system.
The second component of a sanitation enterprise, the product system, refers to the design of a product—not just the physical product, but features that add value for the customer, such as ease of delivery and installation. The product system must also consider the supply chain and availability of parts to manufacture at scale. These factors, in turn, are influenced by the defined target market, but should not be restricted by it. Thus, a flexible design is important for scalability and reaching different markets.
The third component, sales & marketing, also plays a key role in reaching different markets. The mass marketing of toilets may not be effective in the same way it is with other commercial products, especially given the complex cultural norms that can exist in different communities. The marketing of toilets may require two-way engagement to understand customers’ problems and overcome their objections before persuading them to purchase. Chennuri explains that some entrepreneurs are unwilling to self-market, so they might have to enlist so-called “demand activators,” such as professional sales agents who require a commission, or community leaders and influencers, who might be motivated by nonfinancial incentives such as the pride and betterment of their community.
The fourth component enterprise is the delivery model. Chennuri names four types of delivery models that can be used depending on the context. The first three—network, one-stop shop, and turnkey—provide customers with varying degrees of added service when receiving and installing the product, but can increase the transaction costs. The fourth model, mason/DIY (do-it-yourself), does not require a critical mass of customers to succeed, unlike the other three, but it does require more work on the part of the customer. Chennuri notes that not all sanitation enterprises fit exactly in these four archetypes, but are a mix of them.
At the conclusion of the presentation, a panel of sanitation experts (Anddy Omoluabi, WaterAid Nigeria; Geoff Revell, WaterSHED Cambodia; Sanjay Singh, PSI India; and Rishi Agarwal, FSG) discussed the issues raised in the webinar and desk review, informed by their collective experiences with MBS and sanitation enterprises, and opened up the webinar to a Q&A session. Participants submitted more than 20 questions to the panel.
More than 119 participated in the webinar. The high-level of audience engagement reflects the growing interest in market-based approaches to sanitation within the WASH sector. Clearly, the barriers to scaling up a sanitation enterprise are complex, but the WASHPaLS MBS framework provides a valuable tool in understanding and surmounting these barriers.
By Chris Holt, Communications Specialist for the USAID Water Office’s Water CKM Project