Project description / objective
To create sustainable business models for increasing the supply of sanitation products and services through the private sector. It also aims to increase demand for improved sanitation products and services, including faecal sludge management.
Market system focus
1. Weak sanitation supply chains
The highly fragmented supply chain makes accessing a latrine both cumbersome and expensive in Bihar. The people who want a latrine must engage with multiple product and service delivery providers in the private sector.
This model is not sustainable without public subsidy/incentive and is complicated for consumers.
2. Lack of consumer focus on campaigns for improved sanitation
Demand-creation activities are often inconsistent with what drives households to make a capital investment in toilet construction.
Studies have shown that consumers interested in improved toilet facilities are typically not thinking about health issues but rather cleanliness, convenience, prestige and improved property value.
3. Poor access to credit
Entrepreneurs often do not have the capital to launch or expand sanitation businesses. Meanwhile, poor households are not linked to a sustainable source of credit to invest in improved sanitation.
For weak sanitation supply chains
Develop and support sustainable business models for increasing supply of sanitation products and services through the private sector.
1. Strengthen private sector ability to respond to consumer demand
Launch an in-depth analysis of actors, barriers, market segments etc. - designed to provide insights on consumer needs and preferences.
Business models, communication messages, and new sanitation products will be developed with knowledge gained from the study.
2. Engage entrepreneurs
Identify and support opportunities for profitable investment in the sanitation sector in collaboration with relevant financial institutions.
3. Balancing sustainability with reaching the poor
Work closely with the Government of Bihar to ensure that funds such as the Swachh Bharat Mission (SBM) are available and better targeted toward the two poorest wealth quintiles and used for private sector interventions that increase consumer choice and build commercial markets.
For lack of consumer focus on campaigns for improved sanitation
Increase demand for improved sanitation products and services offered by the private sector.
Use consumer insight to inform marketing and demand creation activities
Use results from existing studies on latrine ownership and use, and new research from the target districts, to design marketing campaigns to stimulate demand for sanitation among rural households in Bihar.
For poor access to credit
Expand access to credit
1. Negotiate with financial institutions to develop credit options
The 3SI team will negotiate with financial institutions to develop credit options based on different consumer and business needs identified during the landscaping study. These options include:
- linkages with microfinance institutions for loans
- a revolving fund through seed capital
- linkages to TSC subsidies
- partnerships with development banks for loans
2. Leverage market finance with project funds
The 3SI team will leverage market finance with project funds to increase investments in sanitation businesses and work closely with finance institutions to increase their confidence to lend to entrepreneurs.
Notable results (systemic change, poverty impact)
As of June 2017, PSI has provided support to 776 sanitation enterprises in the form of quality control, and capacity development to improve customer engagement and readiness to take out loans from MFIs.
PSI has also engaged with MFIs to show them the benefits of providing financial services for the sanitation market.
As of June 2017, more than 220 thousand toilets have been sold, 46 per cent of which to people living below the poverty line.
The mean time to delivery a toilet has decreased from 69.74 days in Q1 of 2014 to 14.26 days in Q3 of 2016.