In two Vietnam provinces, an international NGO (IDE) developed a range of low-cost sanitation options and stimulated a network of local masons to market and deliver them to the rural population. As a result, the sanitation access rate increased markedly in the area, even among the poor. This report outlines lessons learned in the process of creating the demand for sanitation and meeting this demand locally. Implementation experience and a recently completed project evaluation suggest that a market-based model was an appropriate strategy for bringing about rapid increases in rural household access to safer latrines and improved hygiene practices in the selected provinces in Vietnam.
- IDE's project successfully stimulated both the consumers' demand for improved sanitation and the capacity of the local market to supply services in response. Within a year of project implementation, rural entrepreneurs were able to recognize the potential of the market and expand. The private sector providers can now continue to serve rural communities beyond the project duration. The masons have shown that they can now supply spare parts and provide post-sale services to existing customers, cater to the demands of new customers, and even expand their customer base and business through innovative local promotional strategies.
- The project's experience shows that simply assuming, without carrying out proper consumer research, that the poor cannot afford improved sanitation may lead to inappropriate program strategies, such as subsidizing relatively high-cost latrines. Household priorities greatly influence demand for sanitation. Though rural households in Vietnam often lack a hygienic latrine facility, they may still be able to afford a TV set or a karaoke player. Both the poor and the more affluent can experience constraints in accessing sanitation that are varied due to individual motivations and priorities, which, as this project experience shows, are fundamentally influenced by the extent to which the local sanitation market is developed. The challenge for sanitation programs is to offer both the poor and the non-poor a range of desirable and affordable options while persuading customers to reorient their priorities, if necessary, so that improved sanitation becomes an attractive "must have" for every household.
- Many poor countries now rely on foreign assistance for scaling up access to sanitation to meet the Millennium Development Goals (MDGs). Full capital cost recovery under the market-based approach addresses the gap in sanitation financing by drawing in resources from the private sector and consumers. The market-based approach may represent the only viable solution for developing countries to move beyond the stalemate of poor sanitation access and reach the MDG targets.
- Full cost recovery also offers better hope for sustainability of sanitation investments. When customers consciously choose to purchase a facility representing more than 10 percent of their household annual budget, the likelihood that they properly use and maintain the facility is high. It is not surprising that post-sale services have now emerged in the local market in the project areas. Consumers making such an important investment tend to demand increased accountability from the service providers. Full capital cost recovery may thus finally end the embarrassing legacy of dysfunctional and abandoned latrines that top-down conventional approaches had delivered free of cost or at subsidized costs.