Building the market for sanitation with planned obsolescence

This guest blog comes from WaterSHED—one of SFF’s grantees that has been building the market for sanitation in rural Cambodia for the past six years, via its ‘Hands-Off’ programme. WaterSHED has now begun reducing its support to toilet producers and sales agents and believes that—while the rural sanitation sector in Cambodia continues to need strengthening—its partners no longer require direct facilitation.

In this blog (a version of which was originally posted on WaterSHED’s website for World Toilet Day 2017), WaterSHED’s co-founder Geoff Revell reflects on what this development means for sustainability of rural sanitation markets.

Beginning with an exit in mind

When the Hands-Off sanitation marketing programme began in 2010, it was designed to be a light touch approach that would eventually allow WaterSHED to exit seamlessly from its role as a market facilitator. Sustainability was at the forefront of our minds: our team had seen plenty of wasted interventions in rural sanitation (in the form of unused hardware and/or adopters reverting to open defecation) and we had no interest in creating another temporary fix.

We understood that several market components needed to be developed simultaneously for it to be viable: effective sales and marketing; accessible and affordable supply; appropriate financing; and engaged government agencies. In every area we applied our Hands-Off thinking, trying to be disciplined about working behind the scenes and not doing more than the absolute minimum necessary to facilitate the market. If we could avoid becoming integral, then we would have a solution that would endure beyond donor funding. An underlying premise was that becoming obsolete should be a fundamental goal of any aid programme. The target date for WaterSHED to ‘sunset’ direct market facilitation was the end of 2017.

Trade-off between results and sustainability

Part of our initial hypothesis was that generating demand for toilets was critical to market viability. Broadly speaking, we saw two options for how an NGO could support the sales effort: bring the sales team in-house and manage it directly; or support local businesses to generate demand. Given our Hands-Off approach, the choice was easy. Managing our own salesforce would generate orders quickly, but sales would come to a halt once our programme finished. On the other hand, building the local system would be slower, but it was more likely to last. For WaterSHED, achieving a sustainable outcome was well worth taking a patient approach. Fortunately, we partnered with donors that understood this vision.

To help local businesses generate demand, WaterSHED’s staff (called Facilitators) helped toilet producers recruit, train, and manage sales agents. The sales agents were contracted and paid by the construction business that built the toilets—not by WaterSHED.

Progress and learning

By 2011 and with growing sales, we were really motivated by the response from consumers and suppliers to buy and produce pour-flush toilets. For the next few years, many observers in the sanitation space were understandably excited by the results stacking up: the number of toilets purchased by consumers, the number of businesses entering the market, the programme cost-efficiency, and the rate of toilet usage by households. The WaterSHED team was learning a lot about the wider system that needs to be in place to make these transactions not only possible, but increasingly fluid over time. Globally we had not seen a programme like this before. By mid-2013, our local business partners exceeded 50,000 toilet sales. The rate of increase of sanitation coverage in target areas more than quadrupled. Across the whole country, the rate of increase jumped by 4.3 percentage points per annum between 2010 and 2014, compared to the previous long-term trend of only 1.2 percentage points.

During that time, we explored potential indicators of sustainability—not of the physical toilet, but of the market beyond the life of our project. We hoped that one metric, percentage of sales generated independently of our facilitator, would shed light on the likelihood that demand generation would be sustainable. This indicator tracked the percentage of sales in which a member of our staff was not present during the sale, and often seemed a bit perverse to potential donors and our staff.

Essentially, we were working to decrease the direct outcomes of WaterSHED’s work (and to increase the indirect outcomes through a stronger local system). At the same time, we were challenging our staff to step back and be true facilitators, linking incentives to facilitation behaviour. It was a tough process, not least because most people aren’t used to being penalized for taking initiative and doing the work directly by themselves. By 2015, this ‘independent sales’ metric had reached roughly 60% of total sales.

Hands-Off  was challenging in demand generation

Rural SMEs that produce concrete products are not typically strong at recruiting, training, and managing a professional rural salesforce. We saw that demand generation needed continued support. High turnover of non-salaried, commission-only sales agents meant WaterSHED staff had to keep helping with recruitment and training. Maintaining a knowledgeable, professional salesforce was difficult for rural SMEs. It was clear that finding a better way to enable ongoing demand generation would be a linchpin for sustainability.

Civic Champions for community-wide sanitation

Instead of relying solely on rural construction businesses learning to manage direct sales, WaterSHED looked to an experimental programme as a way to leverage existing mechanisms for additional demand generation.

Since our first foray into markets, we had seen the value of involving local government—especially in behaviour change promotion, results-based monitoring, and honest brokering. Recognising their importance, in 2013 we piloted a leadership development programme, Civic Champions, to activate commune-level elected officials in the drive towards universal sanitation.

The latent potential of this group to influence their communities to adopt sanitary behaviours is significant. Importantly they are: i.) present in every commune across the country, and ii.) they have a mandate to support community development and increased sanitation coverage).

As a result of ratcheting up the Civic Champions programme, the ‘independent sales’ metric lurched higher. The figure reached 94% for the first half of 2017. That means nearly all of the toilets installed under WaterSHED’s sanitation marketing programme during the first six months of the year were sold without direct assistance by WaterSHED.

For our team, with the target to sunset efforts by end of 2017 in mind, it’s gratifying to see signs that a long-term bet is paying off. While it would’ve been great to see an increase in toilets, with high sustained usage rates, and a very low programme cost, it would not have been worth it if all came to a grinding halt when WaterSHED’s involvement ended. Our hope, buoyed by the latest results, is that the programme’s legacy will be a vibrant network of lenders, sales agents, local authorities, small businesses and consumers working together like gears in a machine that continues running while programme support recedes.

We’re cautiously optimistic about a potential bonus: that the trade-off mentioned earlier between volume and sustainability may not be as stark as we assumed. As the percentage of independent sales has increased, we have not seen a commensurate drop in volume. Albeit at various times there were ups and downs. But, as an example, when independent sales reached 94% during the first six months of 2017, we tracked an average of 4,000 units sales per month. This is equivalent to sanitation coverage climbing 4.6 percentage points per year – much higher than the previous long-term trend rate of 1.2 percentage points.

It’s the system, not the programme

Since the beginning of our work to build the market for sanitation, the results that consistently garnered the most attention have been i) the very low cost of implementation and ii) the relatively high volume of toilets purchased by consumers. Though important, these two indicators are merely programme implementation metrics. It’s important to step back and consider what we’re learning and changing about the wider system that can enable sustainable rural sanitation.

I remember a conversation with an anchor funder of this program, who had long been a supporter of our low-cost model. There was an ‘aha’ moment when he saw the Civic Champions programme first hand. He said, “So this is how your costs are so low. Local officials do all the work”.

He was exactly right. The lower programme cost was partly a by-product of people in the system doing their jobs. While our programme costs fell, the true cost of delivering this important service was being partly reallocated to other local system actors. What looked like increased cost-efficiency could be more accurately described as improved sustainability and government ownership.

For our team, the Civic Champions programme exemplifies how strengthening a complex market system can make it more sustainable. By enabling commune officials to rally their communities, set a vision for development, and execute against it, we were able to address a gap in the system that had previously manifest as difficulties in sustained demand generation.

The ultimate Hands-Off

Whenever you invest time and resources in a new enterprise—especially one that represents a new model or approach—it can be a long time before you know if it will really work. Certain metrics and data points may serve as leading indicators of success, but it’s still an agonizing period of uncertainty before you know if it will pay off in the long run.

There are still many challenges we plan to address and more we have to learn about the sustainability of our approach. Barriers that continue to prevent new businesses from entering the market and that prevent certain consumer groups from adopting improved behaviours should be tackled. Aligning and integrating market systems development with other approaches, such as engaging women in the market, enabling safe management of faecal sludge and safe disposal of children’s faeces, are critical. In early 2018, after phasing out our direct market facilitation efforts, WaterSHED will continue monitoring how consumers and suppliers progress.

We are eager to see how it plays out in 2018 and to sharing those results with the wider sector. We hope that delivering on our planned obsolescence will be, as one funder called it, the “ultimate Hands-Off”.