Poor people can, and do, pay for toilets
Building momentum toward 100 percent coverage in Cambodia
Public health experts recognize that the safe disposal of sewage is one of the most important medical advances in history—more important, many say, than the discovery of antibiotics, vaccines, or the structure of DNA. The “sanitary revolution” gained traction in Western countries more than 150 years ago but it has yet to reach much of the developing world. And the consequences are terrible. In rural Cambodia, poor sanitation is the largest single contributor to the deaths of ten thousand small children each year.
After 150 years, the simple practice of minimizing human contact with feces is still not benefiting everyone on the planet.
A new way of looking at an old problem
The traditional way to improve sanitation has been to build latrines for poor families as a gift. But progress with this approach is achingly slow compared to the enormity of the problem and often the latrines are not used by the recipients.
When iDE applied our market-based thinking to this problem, we started by asking “what would happen if we treated latrines as something that people would buy for themselves?” The results have been amazing. Since 2011, well over a million rural Cambodians have purchased—and are actually using—sanitary latrines. iDE Cambodia’s sanitation marketing program is unprecedented worldwide with its combination of scale, cost effectiveness, and sustainability.
Starting in 2006, iDE conducted supply and demand studies to better understand sanitation markets in Cambodia. A pilot project followed, which showed that rural households—even poor households—would purchase latrines that met their aspirations. The pilot also demonstrated that local businesses were willing to invest their own money to address the burgeoning demand.
Building a market for sanitation
In scaling up these results, our strategy has been to remove as many barriers to latrine purchase as possible. iDE worked with partners—donors, NGOs, and government—to introduce product innovations that made latrines more affordable and easier to buy. We introduced business model innovations that encourage proactive demand creation, better order management, and greater profitability. Sanitation sales agents conduct group meetings and door-to-door presentations that help rural households weigh the costs of buying a latrine versus continuing to defecate in open fields. Latrine orders are directed to local manufacturers who build and install the latrines.
Today, unsubsidized latrines are delivered through rural market channels at a rate four times greater than the installation rate before the program began. And iDE’s market-building activities alone are expected to account for nearly half of the Government of Cambodia’s nationwide sanitation targets for 2014-2018.
iDE is actively distilling principles, methods, and tools to support the expansion of sanitation marketing in Cambodia and globally. Many results and lessons are captured in a special website created with the hope that it will inform the design, implementation, and cost-effectiveness of future sanitation marketing projects.
Using technology to streamline production and delivery
Working with markets requires a flexible management style that can respond to market conditions and solve challenges on the fly.
One such instance arose when iDE noticed a high number of cancelled orders, mostly because customers had to wait too long for their latrines to be delivered. Delays were caused by some latrine manufacturers being overwhelmed with orders or too busy with other demands. Other manufacturers were not getting enough orders to keep them busy, leading them to drop out of the program. Delays also affected the sales agents, who rely on sales commissions for their livelihood and were forced to quit if there were too many cancellations.
iDE’s solution was to bring the latrine supply chain into the digital age. Working with our partner, TaroWorks, we built a custom app that records the customer’s order, assigns it to a manufacturer with free capacity, and tracks it to ensure that it is delivered on time.
Business Performance Metrics
Average Profit Ratio: $0.26 (A latrine business operator earns 26 cents of profit for every dollar of sale.)
Average Selling Price of Latrine Unit: $55 (installation included)
Average Cost of Production of Latrine Unit: $36
Average Monthly Net Profit:
Highest Tier: $1,323
Middle Tier: $157
Lowest Tier: $22
The cost-effectiveness of the project is $17:$1 based on a three year rolling average.