The Water and Sanitation Program is an February 2005 international partnership for improving water and sanitation sector policies, practices, and capacities to serve poor people Field Note 33067 Private Sector Sanitation Delivery in Vietnam Harnessing Market Power for Rural Sanitation Making Sanitation Attractive and Accessible for the Rural Poor In two Vietnam provinces, an international NGO 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 Field Note outlines lessons learned in the process of creating the demand for sanitation and meeting this demand locally. Subsidy-based, supply-driven intervensions have been painfully slow in bringing sustainable sanitation in developing countries, especially among the rural poor. Executive Summary effectiveness of use, efficiency of investments, sustainability of services, and scaling up access. In 2003, the international NGO International Development Enterprises (IDE) launched a project to stimulate the acquisition and use of hygienic Alternative models are now emerging, sanitation in villages in two provinces in Vietnam. IDE developed a range which challenge the efficacy of these subsidy-based and construction-driven of options that were affordable and appealing to potential customers. IDE approaches to sanitation and hygiene then developed, through capacity building, business development improvement. These alternatives offer a support, and credentialing, a local network of masons to deliver these market-based approach, which can be options. To better understand the drivers of sanitation demand, IDE and more sustainable, cost-effective, and easier to scale up. This Field Note looks at the the masons assessed the consumers' willingness to pay for and recent application of such an approach perceived benefits of sanitation and then used the assessment results to in Vietnam. promote the benefits and availability of the sanitation options through appropriate media channels and tailored messages. Within a year of the Rural Poor As project, there was a 100 percent increase in sanitation access compared Customers, Not to the pre-project access rate. Unlike traditional sanitation projects, no Beneficiaries capital cost subsidies were employed to stimulate demand. Households of all income levels accessed sanitation, which was greatly facilitated by Emerging evidence from Vietnam suggests the masons offering flexible household financing terms. The project that when using a market-based approach, highlights the importance of never underestimating a population's it is possible to not only accelerate access to sanitation for the unserved in rural areas willingness to pay for sanitation, provided that quality products and and enhance the sustainability of the services are offered and are effectively communicated. sanitation services delivered, but also deliver services more efficiently than when using a non-market approach. Scaling Up Sanitation: Most developing countries continue to rely on external aid for achieving From September 2003 to December 2004, A Global Stalemate? national targets for sanitation. For various the international NGO International reasons, they also continue to give greater Development Enterprises (IDE) implemented In 2002, the endorsers of the Water priority to increasing people's access to a rural marketing project1 targeting about Supply and Sanitation Declaration water supply rather than to sanitation and 54,000 households in the provinces of (WSSD) pledged to halve the proportion improved hygiene. Standardized Thanh Hoa and Quang Nam on the central of people without access to sanitation by government or donor-sponsored models coast. According to the government's the year 2015. However, existing are the most prevalent models for criteria, nearly one-fifth of the households interventions have been painfully slow in sanitation interventions. Such models, in the two provinces are "poor"2 and thus bringing sustainable sanitation to which are infrastructure-focused and receive social assistance. This poverty developing countries, especially among dependent on subsidies for latrine situation poses a significant challenge to the rural poor. construction, have a poor record in delivering sanitation services in the area. 1 The Support to Small-Scale Private Sector Development and Marketing for Sanitation in Rural Areas project, funded by Danish International Development Assistance (DANIDA). 1 "Poor" currently means households that are able to demonstrate a monthly income of less than VND100,000 (US$6) per head per month. See also footnotes 5 and 6. 2 Harnessing Market Power for Rural Sanitation The project examined two research questions: (a) whether rural families will Box 1: TIMELINE OF PROJECT ACTIVITIES invest in latrines when a range of low-cost models are available from local private sector suppliers; and b) to what extent (1) Perform situational assessments targeted promotional campaigns can influence consumers' decisions to invest and change sanitation practices (See (2) Perform market assessments Box 1 for the project timeline). Project preparation: 8 months Unlike the conventional approach normally (3) Formulate marketable solutions (January 2003 to applied in Vietnam, the piloted approach August 2003) was fully market-driven, offering customers no capital cost subsidies and using (4) Build local (5) Develop an advertising external resources for catalyzing market supply network and promotion campaign improvements for sanitation and promotion for low-cost of improved hygiene behaviors. Briefly, it sanitation focused on stimulating weak rural sanitation markets and helping these markets become viable (Box 2). Project (6) Link supply (7) (8) implementation: and demand Implement Broadcast 16 months The Potential of promotion communication (September 2003 activities campaign to December 2004) a Dormant Rural Market facilities were poor, leading to increased latrines. Seventy-seven (77) percent of In spite of an enormous potential to deliver transaction costs, and small-scale sanitation those without a latrine said that they had sustained service improvements, the operators lacked access to support services "other spending priorities," such as a existing rural market for sanitation services to run their businesses profitably. television or a karaoke set. Yet, by the end in 2003 in the two provinces remained of 2004, after 1 year of project undeveloped. IDE conducted its IDE's initial market assessment showed implementation, more than 37 percent of preparation phase from January to August demand constraints--the lack of reliable the households had each invested up to 2003. The situational survey conducted at product information to influence spending VND1 million in building or upgrading their the beginning of this phase showed that decisions as well as the lack of desirable household latrines. only 16 percent of the rural households in product options and suppliers. Less than the project area owned hygienic latrines, 10 percent of the respondents in the Supply-side constraints were more demonstrating a potential market for baseline survey were aware that sanitation numerous. The community had few sanitation. However, the demand for facilities could cost less than VND1 million competent and reliable masons to build sanitation was undeveloped and highly (approximately US$65). Even if they knew safe and hygienic latrines. IDE's initial seasonal, varying with agricultural income the price, less than 10 percent were assessment of private sector suppliers flows. Communication and transportation willing to spend that amount to acquire (including 541 masons) revealed that most 2 Provincial health records showed that the rate of construction of sanitation facilities was relatively stagnant in both the experimental and the control group communes during the 4 years preceding the IDE project. of the baseline survey, IDE matched both Box 2: DIFFERENCES BETWEEN CONVENTIONAL AND types of communities by key socio- MARKET-BASED APPROACHES economic characteristics and environmental features (Table 1) and selected communities Conventional Approaches Market-based Approaches sufficiently isolated from one other so that marketing campaigns could not contaminate Heavy subsidies for capital costs Subsidies for market development the control group. In addition, neither the government nor any other source in the Full capital cost recovery from users experimental and control group areas provided capital cost subsidies for Standardization of models A range of affordable options household sanitation facilities during the project timeframe. Decision making by external agencies Users decide what and how to buy Increased Access to Improved Focus on infrastucture targets Focus on behavioral targets Sanitation Focus on centralized service provision Focus on diversified local service Provincial health records showed that the provision rate of construction of sanitation facilities was relatively stagnant in both the village masons could not accurately small-scale enterprises in rural sanitation, experimental and the control group estimate the material costs and the time characterized on their part by short-term communes during the 4 years preceding needed to build a double-vault or a semi- vision and decision-making and a the IDE project. Between 2000 and 2003, septic tank latrine, the most popular reluctance to take risks. As a result, the a total number of 5,985 new latrines were choices in the local communities. Villagers emerging small-scale private sector did not built in the experimental group, with an used community health workers and offer product experimentation, advertising average number of 1,496 latrines built each members of mass organizations such as of product information, or specialized year. At this rate of annual increase, it would the Vietnam Women's Union as the primary technical assistance of any kind. Masons, have taken more than 30 years to achieve sources of information regarding latrine therefore, seemed unable to capitalize on total sanitation in the 30 communes. designs and hygiene improvement because or stimulate market demand. There were they saw village masons as lacking also no other private or public sector Project implementation began in credibility in this area. agencies that were willing to undertake September 2003. In the next 14 months, these efforts on behalf of the local network 7,715 new latrines were built, entirely from Few incentives existed for village masons to of sanitation service providers. household investments. Of these, 6,251 enter the sanitation business in the project were built during 2004, representing more areas. Sanitation was a profitable seasonal Awakening the than a fourfold increase over what was the opportunity but not a regular source of annual average until 2003 (Figure 1). income for them. Soon after the project Market: The Results started, it became clear that small-scale A comparison of the experimental and private sector operators were running their control groups shows that household sanitation businesses with very thin profit To examine the project's research questions, access to hygienic latrines grew in both margins. The lack of profits and incentives IDE selected experimental and control groups, but the increase was more created a "subsistence environment" for communities at the outset. Using the results dramatic in the experimental group. Using 3 Harnessing Market Power for Rural Sanitation Table 1: Key socio-economic and sanitation-related indicators in the project areas Communities Number of Poor Households as Annual Income % of Total Households Households % of Total Population per Capita (US$) Owning Safe Laterine Experimental Group3 53,886 19.1 125.7 16.0 Control Group4 5.440 19.7 141.6 18.3 Source: Population Monitoring Records, District People's Committee and District Health Centre, December 2004 (Ministry of Health of Vietnam). "Poor" as defined by the Government, see footnotes 5 and 6. the December 2002 access rate as the average per capita annual income in the Reaching the Rural Poor baseline, by December 2004, the project area (US$126, December 2002) experimental group communities achieved was appreciably lower than the national Global experience shows that the affluent more than a 100 percent increase in average (Vietnam's Gross National Income tend to be the first investors in sanitation household access, whereas the control per capita was US$480 in 2003, using the improvements and the poor often gradually group achieved only a 41 percent increase Atlas method). Yet, with locally available follow their lead. Yet, this project found that (Figure 2). market innovations that suited their even within the first year of intervention, lifestyles, and most importantly, demand just over half of the "poor" population did No Subsidies Needed for created through effective communication, invest in sanitation. While the poor Capital Costs rural households in the experimental group households constituted 19.1 percent of the did not need subsidies to access improved total population in the project area, they Perhaps the most important finding was sanitation. During project implementation, represented 10.7 percent of all the latrine that the acceleration of demand among the rural households bought 7,715 improved buyers during IDE's project implementation experimental group was achieved without latrines from local small-scale service period. They even spent a marginally the use of capital cost subsidies. The providers at full market cost. greater proportion of their annual income on sanitation than did their more affluent neighbors (Table 2). Figure 1: Latrines constructed in the project area For project monitoring purposes, IDE Number of Latrines Built classified the poor according to the Vietnam government's definition of households 2,000 4,000 6,000 8,000 eligible to receive social assistance from the government5, and identified as such by Yearly Average 2000-2003 1,496 their communities. To be eligible to receive Total 2000-2003* 5,985 this assistance, a household had to show a monthly income per head of less than 2004 6,251 VND100,0006 (about US$6). All latrine buyers in the project area Source: Population Monitoring Records, District Health Centre, December 2004 (Ministry of Health of Vietnam). *IDE's project implementation phase began in September 2003. invested an average of US$66 (about Thirty (30) communes distributed evenly among six districts (five communes each) in Quang Nam and Thanh Hoa. 3 Three communes in three districts in Quang Nam province. 4 "Decision of the Prime Minister approving the National Strategy for Hunger Eradication and Poverty Reduction for the period 2001-2005" 4 5 (Decision number 143/2001/QD -TTg - 27th September 2001). "Decision of the Minister of Labor, Invalids and Social Affairs (MOLISA) on adjusting the criteria for identifying poor households for the period 6 2001-2005" (Decision number 1143/2000/QD-LDTBXH). For project monitoring purposes, IDE classified the poor according to the Vietnam government's definition of households eligible to receive social assistance from the government, and identified as such by their communities. the households in the project area Figure 2: Household access to hygienic latrines applied for loans from these official sources since these were for a minimum % of Households with Access to Sanitation amount of approximately US$200 and 10 20 30 40 entailed much paperwork. Rural households often regarded these formal 16 credit sources as better suited for income- 2002 18.3 generating investments such as a fishpond or livestock. 21.1 2003 21.4 Approximately two thirds of the poor latrine buyers used their own savings from 32.7 agricultural earnings. The rest borrowed 2004 25.8 from affluent relatives and friends dwelling in the cities. The poor buyers also Experimental Group Control Group routinely deferred payments to the village Source: Population Monitoring Records, District Health Centre, December 2004 (Ministry of Health of Vietnam). mason, paying 50 to 70 percent of the mason's dues over a period of about 6 11 percent of their average annual (composted feces) as fertilizer, the type of months. In addition, many of them household income) per household in soil, and the availability of a nearby reliable purchased or progressively upgraded their improving their sanitation facilities. Among water source. latrines with phased investments. The those, the poor households invested an project allowed for phased upgrading of average of US$11 less. Their investment of Making Sanitation Affordable latrine facilities when cash was available US$55 represented 15 percent of their from seasonal agricultural earnings. annual household income (Table 2). While Reportedly, latrine costs ranged from Women formed voluntary groups to this may suggest that the poor chose US$32 to US$97. Loans were available encourage members to maintain their cheaper technologies, in reality the factors from the Vietnam Bank for the Poor payments and assist one another in that influenced choice of latrine types were through the Farmers' Union and the mobilizing funds from informal sources the family's need to use night soil Vietnam Women's Union. Yet, none of when necessary. Table 2: Investment in sanitation in relation to annual household spending Population Category Per Capita Annual Household Annual Average Household Investment as % of Income (US$) Income (US$) Investment in Annual Household Sanitation (US$) Spending All Latrine Buyers 126 592 66 11.1 Poor Latrine Buyers 77 362 55 15.2 Source: Population Monitoring Records, District Health Centre, December 2004 (Ministry of Health of Vietnam). 5 Harnessing Market Power for Rural Sanitation Figure 3: Project investment in relation to the household investment leveraged US$ `000 100 200 300 400 500 600 Ratio 1: 1.5 Project Funds 142 194 336 Ratio 1: 3.6 Market Value of Total Latrines Built 122 386 508 Marketing/Promotion Program Support Labor Invested Capital Invested Source: Population Monitoring Records, District Health Centre, December 2004 (Ministry of Health of Vietnam). It is important to mention that the leveraging ratio of 1:1.5 (Figure 3). For time business development expenses latrine costs stated above reflect the every external dollar (US) spent for using professional marketing expertise, costs of demonstration models business development support and which is often costly but essential constructed during the formulation marketing, US$1.50 of household for sustainable market development. phase of the project. In reality, the investment was generated, of which, However, once the market is set up, costs of building a latrine were US$0.36 went to the local network of such a subsidy is no longer needed significantly reduced, as households masons and the remaining US$1.14 to since only the promotional costs contributed their own labor to the rural construction material retailers. If only continue, and even local service construction of the facility or managed the marketing and promotion costs providers can absorb these costs as to recycle construction materials (US$142,243) are considered, the the market grows. from other sources. The village household investment leveraging ratio was masons worked with prospective as high as 3.6. Marketing and promotion Use of external subsidies for buyers to explore all such avenues costs are more indicative of the costs of business development and promotion to reduce costs. replicating or scaling up the program, is often more sustainable than once initial business development has subsidizing sanitation hardware, A Cost-effective Approach been completed. because once demand is stimulated and the market is established, A characteristic of the market-based model At the end of the first year of suppliers take over promotion even if is its ability to leverage private sector intervention, the external funds used to external funds are gone. This also means resources and stimulate local economic launch the local industry and begin the that the consumer does not have to activity. Within the first year of the private investment process stood at 40 experience a sudden price shock from intervention, the market value of capital percent of the investment generated. unsubsidized hardware, which has led to cost investments from rural households This can be considered as a 40 percent the collapse of many past sanitation (US$508,353) already well exceeded the external subsidy that will fall further programs. Prior to the project, IDE total funds utilized to catalyze the local with emerging economies of scale as encountered this and other negative effects sanitation market (US$336,625), more buyers (and also sellers) enter the of subsidizing sanitation hardware in representing a household investment- market. Such a subsidy covers the one- Vietnam (Box 3). 6 Use of external subsidies for business development and promotion is often more sustainable than subsidizing sanitation hardware, because once demand is stimulated and the market is established, suppliers take over promotion even if external funds are gone. The Process and 1. Promoting the availability of a range benefits at affordable costs through of desirable and affordable sanitation standardizing the choice, affordability, Lessons Learned improvements of dependable quality and quality of sanitation options. It identified a range of options that were The project chose to develop the sanitation · Identifying and standardizing a conducive to local livelihoods, appealing market in the project areas through three range of options: Standard options for to potential customers, and that could main sets of activities: rural latrines existed in Vietnam before be manufactured locally. IDE made these 1. Promoting the availability of a range of IDE's project. However, the price of options affordable through material desirable and affordable sanitation latrines varied significantly according to substitution, design adjustments, and improvements of dependable quality the local availability of construction promoting the upgradeability of latrine 2. Stimulating the demand for sanitation materials and building services and the models (allowing consumers to improve improvements and adoption of related suitability of specific technologies. The their facilities incrementally, in hygiene practices initial assessments also found that the accordance with what and when they 3. Facilitating linkages between demand majority of the prospective customers could afford). Finally, IDE systematically and supply. believed the costs of latrines to be transferred these solutions to the local much higher than what the local market network of small-scale private providers The following section further outlines actually offered. through workshops, training, and the actions that IDE took related to printed material. each of the three sets of activities In response, IDE developed sanitation (Figure 4). options that could offer competitive IDE constructed several latrines as on- site demonstration models in the project areas. These on-site trials enabled IDE to gather customer feedback and assess BOX 3: NEGATIVE EFFECTS OF SUBSIDIZING SANITATION social acceptability. These on-site HARDWARE OBSERVED IN VIETNAM facilities provided tangible evidence to the public of achievable cost reductions, · Hardware subsidies created severe distortions in vulnerable markets. They which helped dispel myths about high killed potential demand by eliminating user choice and promoting unwillingness costs. There was a risk of overly positive to pay for sanitation because they created the perception that sanitation customer feedback from households should be fully or partially free of payment. who may have participated in the on-site · Agencies supplying subsidized technologies often had procurement rules trials to gain a free latrine facility. requiring multiple quotations, which excluded the possibility of highly localized However, by involving local community suppliers from participating. leaders and local institutions in assessing · When the subsidized technologies were not procured from local suppliers they the sustainability of the latrines, the were inevitably more expensive, and the exclusion of local suppliers prevented project was able to minimize this the growth of local service provision capacity. potential bias. · Hardware subsidies often stigmatized recipients and took away the status- enhancing benefits of sanitation. Recipients were marked in the community as Pour-flush, semi-septic tank, and septic the poorest members in need of charity. tank were the three different latrine · Hardware subsidies promoted misallocation of scarce resources. Subsidies technologies finally chosen for marketing covering a fixed percentage of capital costs created incentives to purchase the with variations in design. The options most expensive option to maximize the subsidy. ranged in price from US$32 to US$97. 7 Harnessing Market Power for Rural Sanitation (IDE) Enterprises Table 3 presents the cost breakdowns and how the consumers responded to Development the final menu of sanitation options. national Inter · Increasing the availability of competent service providers: Under the conventional approach employed before the project, beneficiaries lost the right to choose what to buy, when to buy, and how to buy, as an externally specified supplier gave subsidized materials to them. Under this approach, once construction was over, further service and spare parts were unavailable. IDE found that the rural businesses were trying to respond to this situation once sanitation projects had ended by serving new customers eager to acquire Walls can wait -- poor buyers appreciate being abble to upgrade in phases sanitation facilities and providing owners of existing latrines with services such as upgrading or repairs. These businesses, motivated new operators to enter the · Building the capacity of service however, were not commercially viable market and increased the confidence of providers: The project offered training to beyond a very small scale and not existing ones to tap the market more masons to increase the numbers of competitive enough to offer products of fully. This was done both by initiating trained masons in a given community. dependable quality. links between consumers and service IDE assessed masons' existing skills to providers and between service providers design affordable, safe sanitation The project facilitated supporting and manufacturers. Through the project, options, and their interest in receiving mechanisms for start up, expansion, and masons gained social recognition as further training. Almost four-fifths of the operation of businesses for local service contributors to a better environment for screened participants chose to pursue providers. Among the supporting the community. This prompted them to IDE training for sanitation masonry and mechanisms, stimulating consumer not only enter and stay in the sanitation promotion. IDE ensured that at least demand for sanitation options was business but also work for low profits in three masons per village from different crucial. Without external support from the remote areas where low population teams (latrine-building teams usually IDE, private operators would never have density meant low demand. Another consisted of two masons) participated in been able to develop a marketing motivating factor for masons to enter the the training. campaign, which involved significant sanitation business proved to be the research undertakings, communication additional construction business IDE trained village masons in technical professionals, and multi-media strategies. associated with sanitation. For example, and business skills, including assessing the hygiene promotion campaign consumer preferences and promotion, IDE helped small-scale private operators prompted investments in other which enhanced the capacity of private to understand the market size and adjust construction projects such as pens for operators to cater to and further develop their enterprise accordingly. This domestic animals. their own customer bases. 8 IDE helped small-scale private operators to understand the market size and adjust their enterprise accordingly. Figure 4: Three main implementation strategies and associated activities 1. Promoting the availability of a range of (IDE) desirable and affordable sanitation improvements of dependable quality Enterprises a) Identifying and standardizing a range of options b) Increasing the availability of competent service providers Development c) Building the capacity of service providers d) Endorsing service providers national Inter 2. Stimulating the demand for sanitation improvements and adoption of related hygiene practices a) Gaining an understanding of customer behavior and drivers of consumer demand Material from the "Mr. Latrine" media campaign featuring the tagline b) Developing, testing, and delivering the marketing "Hygiene, Civilization, and Health" and the slogan "Be an exemplary campaign person in a cultured village" c) Mobilizing the community for behavior change 3. Facilitating linkages between demand and supply a) Linking market players b) Monitoring the quality and cost through competition IDE learned that capacity building corrective action to retrain masons with a capabilities of village masons as needed to emphasize learning by doing. focus on building practical skills in competent providers of hygienic At the beginning of the project, sanitation masonry. sanitation facilities. Exploratory research instruction was provided through revealed that villagers saw the flipcharts of sanitation models, · Endorsing service providers: Providing community health station as the most engineering construction plans, and trained village masons with credentials credible authority in matters of health latrine mock-ups. During post-training and an endorsement from relevant health and hygiene. By getting the health monitoring of the masons' work, IDE institutions at the local level was also authorities to formally recognize village realized that a significant portion of the critical. Before the project started, masons who had received training latrines performed poorly or were prospective customers had expressed through the project, potential customers' overpriced. IDE immediately took concerns regarding the technical concerns were significantly allayed. 9 Harnessing Market Power for Rural Sanitation Table 3: Technology choices made by the total market compared with choices by the poor Technology Options Cost of Latrines at Market Value (in US$) % of All Latrine % of Poor Latrine Buyers Choosing Buyers Choosing Labor Cost Material Cost Total Cost This Option This Option Double Vault 15 43 58 17 39 Pour Flush 16 49 65 5 8 Septic Tank 24 73 97 18 5 Semi-septic Tank 16 55 71 48 28 Other (1) 10 22 32 - 1 Upgrades (2) 4 6 10 12 19 All 100 100 (1) "Other" refers to any facility that did not fall into the other technology categories, for example, an improved pit latrine. (2) Investment to transform an unhygienic latrine into a safe system. 2. Stimulating the demand for 1 in 5 households had a latrine when the various concepts of benefits with target sanitation improvements and the project started, prospective customers audiences, identifying what attracted adoption of related hygiene practices found it difficult to gather reliable them most, what was not relevant to information about costs and benefits them, what complied with local beliefs · Gaining an understanding of from neighbors or markets and compare and aspirations, and what obstacles customer behavior and drivers of alternatives. Moreover, existing latrines in needed to be overcome to make consumer demand: The demand for the community usually belonged to the behavior change possible. The results sanitation was constrained by several most affluent members and were thus identified the most compelling reasons factors. First, the local population did not likely to be more expensive. IDE focused for local families to want an improved prioritize sanitation. There were other on removing these barriers through a sanitation facility or wish to adopt a things that they wanted to acquire first, communication campaign and rural specific hygiene practice. such as a TV, karaoke set, or even promotional activities. furniture. Secondly, they lacked access · Developing, testing, and delivering to dependable service providers who Using the baseline research, the the marketing campaign: A multi- could build improved latrines. Finally, project focused on identifying what disciplinary team of advertising they lacked sources of accurate could be the most powerful motivating professionals and project personnel information about sanitation facilities-- factors for prospective customers to designed and implemented a behavior- what to buy, how much it would cost, invest in sanitation and hygiene changing communication campaign, and whom to buy from. Since fewer than improvements. This involved testing carefully developing messages 10 The project found that the status and convenience benefits associated with having a latrine held a far stronger appeal for customers than did disease- prevention benefits (upon which sanitation programs have traditionally based their promotional efforts). containing the concepts that seemed to The project found that the status and Communication was not the only overcome existing barriers to purchasing convenience benefits associated with dimension in which social status improved sanitation or changing hygiene having a latrine held a far stronger became a central strategy. Promotional behavior, and conveyed these through appeal for customers than did disease- efforts targeted opinion leaders to lead appropriate rural channels to repeatedly prevention benefits (upon which change within communities. Respected reach a substantial part of their sanitation programs have traditionally villagers who belonged to either the intended audience. based their promotional efforts). local government network or the Consequently, improved social status mass organization network were the Although this approach is common in and a more convenient lifestyle became first people to acquire a latrine in the private sector promotion and is effective central to the strategy to engage target community, thus serving as a in changing consumer behavior, the audiences and persuade them to social benchmark for the rest of project staff found that it was quite alien acquire and use latrines. The project the community. to development practitioners in Vietnam. used mass and interpersonal media Prevailing modes of sanitation channels in a planned and coordinated To address the problem of competing communication in Vietnam were still manner to carry the campaign household priorities, promotional based on health education or the simple messages. Alliances were forged with strategies deliberately reframed the one-way transmission of information the organized private sector for value of sanitation in relation to other meant to increase recipients' knowledge sustaining the hygiene communication potential household purchases. but not necessarily change their behavior. campaign (Box 4). Vietnamese households in the project area prioritized investment in housing and education followed by income- BOX 4: BEHAVIOR CHANGE CAMPAIGN LINKED TO SOAP generating investments. The key project MARKETING strategy was to first understand what type of purchases a latrine competed As part of the situation assessment, IDE learned that despite high public with and then appeal specifically to the awareness of preventive practices to break the fecal-oral transmission chain, competing benefits derived from these women's hand-washing practices were far from desirable. IDE thus developed a purchases. For example, a strategic behavior change communication framework focused on hand washing in tandem message on a popular radio soap opera with a communication campaign to stimulate demand for sanitation. capitalized on the concept of social status and family priorities when Through focus groups, spot checks, and structured observations, IDE identified households owned a TV set, but did not behavior gaps that became the foundation for the campaign. To sustain desired have a hygienic latrine. behavior changes brought about by the campaign, the manufacturers of antibacterial soap and IDE forged an alliance for hygiene promotion. Besides · Mobilizing the community for aiming for improvement in hygiene behaviors, the initiative also aimed to convince behavior change: Central to the the organized private sector in Vietnam that targeting the rural customer base marketing campaign was hygiene means good business. Unilever Vietnam has now mobilized its own resources to promotion and community mobilization. pilot a school hand-washing program with IDE. The alliance is based on strategic Given the prominence of the community resource sharing between the partners. Unilever provides funds for promotion and the political structure, mobilizing and in-kind contribution of soap samples while IDE contributes consumer local leadership proved critical for research information and advice on rural outreach strategies. delivering the marketing campaign and for building consensus on environmental 11 Harnessing Market Power for Rural Sanitation (IDE) Enterprises Development introduced the latrine options and their national variable prices and prospective buyers Inter obtained cost quotations. This exchange allowed transparency of information flow between demand and supply. The promotion network also served as a mechanism to encourage, supervise, and guide the households during the latrine acquisition process. Village promoters often belonged to mass organizations such as the Women's Union of Vietnam. They targeted potential customers, organized the meeting venues, performed household follow-up visits, served as links between A local mason explains latrine options to prospective customers at a village promotional meeting the household and the mason, supervised the construction process, sanitation as a priority community 3. Facilitating linkages between and monitored progress against the goal. The project incorporated hygiene demand and supply initial community target. The project promotion and community monitoring offered incentives to village promoters of performance against targets as part · Linking market players: The process of based on their performance as sales of the community management acquiring a sanitation facility can be long promoters for sanitation. and development plans. Peer pressure and requires several steps, starting from was a powerful force for the consumer exposure to initial information · Monitoring the quality and cost achievement of behavioral goals to the final construction. To influence through competition: The quality that among households. sanitation-related decision making by providers can offer to customers households, IDE initiated ways to link depends on both their masonry skills Village contests, which were paid for consumers and services providers, and and their ability to adjust their services by community funds, proved to be a thus promote the flow of information according to customer's needs. Some of persuasive way to mobilize community- between them. the masons took the initiatives to provide wide action. Villages created songs and guarantees for their services and games on the issue of improved hygiene. The village mason, as the promoter, products for a specified future period. The winning villages from each retailer of construction materials, and IDE helped build credibility for their commune competed at the final district- service provider, is the most critical link in guarantees by monitoring customer level competition, where the commune the sanitation supply chain. The masons' satisfaction, collecting testimonies, and health workers judged the contest. network built almost all of the new assessing the quality of the systems built They awarded VND200,000 sanitation systems under the project, by the masons in relation to the costs. (approximately US$13) to the winning while the households themselves Two factors were found to reduce the village at the commune level and VND1 upgraded their existing latrines. IDE potential risk of poor masonry services: million (approximately US$65) at the connected the two parties at promotional 1) the mason was often a member of district level. village meetings, where masons the local community and needed to 12 Linkages among players in the supply chain have improved the flow of market information, which is bringing in increasingly more benefits to all stakeholders. protect his reputation; and 2) male BOX 5: THANH SANG, ENTREPRENEUR WITH A FUTURE householders usually monitored progress of construction. Thanh Sang lives in a village in Thang Binh district, Quang Nam province. Of his eight children aged 3 to 29 years, three work in Saigon. Before the IDE project, Market Developments Resulting Sang and his wife farmed, and he made cement rings for dug wells. With many from Linking Market Players are children to feed and farming land that was sandy and barren, combating hunger Benefiting All Stakeholders was a perennial struggle. Then the market changed. People stopped buying well rings as drilled wells became available. Sang migrated to find wage work like Linkages among players in the supply cutting forest wood and mining sand from riverbeds and beaches. However, chain have improved the flow of market wage work was seasonal and failed to provide sustenance for his family. information, which is bringing in increasingly more benefits to all Since he was known as a former ring maker, IDE's sanitation project invited him stakeholders. Examples in the project to attend a workshop on how to build hygienic latrines. Sang learned about areas include customer referrals. building rings for low-cost semi-septic tanks, a technology that his fellow villagers Cement shops provide customers with preferred. Sang now felt confident enough to start his own business making such referrals to specific village masons, rings. He registered with the local network of masons started by IDE and who refer business to the same shops. advertised his availability. This has enabled one-stop shopping by households who simply have to contact Sang faced initial difficulties in building name recognition and reputation among the mason who will take on design, his potential customers. He sold only 3 sets of rings per month (a semi-septic procurement, and building tasks. tank needs 1 set of 6 rings), earning approximately VND270,000 (US$18) in profits. Cement often serves as working capital since it represents approximately 60 Sang then decided to attend the promotion meetings organized by the Vietnam percent of the entire direct cost of a Women's Union, where he found people very interested in discussing hygiene latrine. The mason contracted to build the and environmental sanitation matters. Moreover, the commune health workers latrine for a household may also refer the treated IDE's network of trained masons with respect and recommended him to customer to another mason who the villagers. After these meetings, people came to him with orders directly or specializes in making cement rings. through the Women's Union. Customers bought the construction materials. Sang Box 5 features an example of the impact took the mold to their houses and made the cement rings at their doorsteps. He of such arrangements on the local started making 10 sets a month, earning VND900,000 (US$60) monthly. economy and entrepreneurs. In June 2004, IDE and the local government organized another workshop in Binh Sa These relationships have improved the commune for upgrading latrine-building techniques. After that, Sang started making mason's capacity to respond promptly and selling the rings from his home, which enabled him to produce more. He also to customer demand, and due to worked out new payment terms with the retailers of construction materials. By getting competition among masons, also 50 percent of the cement on credit, he was able to extend credit to his customers. generated cost reductions for the customer. Service providers in the project With his "new way of doing business," Sang now makes 16 to 17 sets of rings area estimate that the final retail price for a per month, earning about VND1,300,000 (US$87) every month, an income that septic tank is reduced by 10 to 15 percent has lifted him out of poverty and hunger. when a local producer is available in the local value chain. 13 Harnessing Market Power for Rural Sanitation (IDE) Enterprises The relationships forged between households and masons have led to a Development number of informal financial arrangements. national Frequently the rural household, after having Inter decided to invest in a sanitation facility, invites the mason to the construction site and requests his technical opinion. The mason in turn designs the facility, purchases all the necessary direct inputs for building the latrine, and builds it before asking for payment. Another common approach is for householders to buy the construction inputs or pay an advance for the materials to the mason. This injects working capital into the value chain. Another arrangement is local construction A local mason turned sanitation entrepreneur material retailers providing working capital to the masons in the form of materials. shown that they can now supply spare are fundamentally influenced by the Conclusions parts and provide post-sale services to extent to which the local sanitation existing customers, cater to the market is developed. The challenge for demands of new customers, and even sanitation programs is to offer both the Implementation experience and a expand their customer base and poor and the non-poor a range of recently completed project evaluation business through innovative local desirable and affordable options while suggest that a market-based model was promotional strategies. persuading customers to reorient their an appropriate strategy for bringing priorities, if necessary, so that improved about rapid increases in rural household · The project's experience shows that sanitation becomes an attractive "must- access to safer latrines and improved simply assuming, without carrying out have" for every household. hygiene practices in the selected provinces proper consumer research, that the poor in Vietnam. cannot afford improved sanitation may · Many poor countries now rely on foreign lead to inappropriate program strategies, assistance for scaling up access to · IDE's project successfully stimulated such as subsidizing relatively high-cost sanitation to meet the Millennium both the consumers' demand for latrines. Household priorities greatly Development Goals (MDGs). Full capital improved sanitation and the capacity of influence demand for sanitation. Though cost recovery under the market-based the local market to supply services in rural households in Vietnam often lack a approach addresses the gap in response. Within a year of project hygienic latrine facility, they may still be sanitation financing by drawing in implementation, rural entrepreneurs able to afford a TV set or a karaoke resources from the private sector and were able to recognize the potential of player. Both the poor and the more consumers. The market-based approach the market and expand. The private affluent can experience constraints in may represent the only viable solution for sector providers can now continue to accessing sanitation that are varied due developing countries to move beyond serve rural communities beyond the to individual motivations and priorities, the stalemate of poor sanitation access project duration. The masons have which, as this project experience shows, and reach the MDG targets. 14 East Asia and the Pacific Jakarta Stock Exchange Building Tower 2, 13thFloor. Jendral Sudirman Kav. 52-53 Jakarta 12190 Indonesia Phone: (62-21) 5299 3003 Fax: (62-21) 5299 3004 E-mail: wspeap@worldbank.org · Full cost recovery also offers References Website: http://www.wsp.org better hope for sustainability of Cairncross, Sandy. 2004. The Case for sanitation investments. When Marketing Sanitation, Water and Sanitation customers consciously choose to Program, Africa. (WSP-AF). purchase a facility representing Frias, Jaime. 2003. Improving Health more than 10 percent of their Standards in Rural Thanh Hoa and Quang household annual budget, the Nam: Creating a Health Promotion likelihood that they properly use Marketing Framework for Sustainable Rural and maintain the facility is high. It Sanitation, International Development is not surprising that post-sale services Enterprises, Hanoi Vietnam. have now emerged in the local February 2005 market in the project areas. Consumers Heierli, Urs, Hartmann, Armon, and making such an important investment Munger, Francois. 2004. Sanitation is a WSP MISSION: tend to demand increased To help the poor gain sustained access to Business, Approaches for Demand- improved water and sanitation services. accountability from the service Oriented Policies, Swiss Agency for providers. Full capital cost recovery Development and Cooperation (SDC) and WSP FUNDING PARTNERS: may thus finally end the embarrassing Water and Sanitation Program. The Governments of Australia, Belgium, legacy of dysfunctional and Mehta, Meera, and Knapp, Andreas. 2004. Canada, Denmark, Germany, Italy, Japan, abandoned latrines that top-down Luxembourg, the Netherlands, Norway, The Challenge of Financing Sanitation for conventional approaches had Sweden, Switzerland, and the United Meeting the Millennium Development delivered free of cost or at Kingdom, the United Nations Development Goals, Water and Sanitation Program, Programme, and The World Bank. subsidized costs. Africa. (WSP-AF). ACKNOWLEDGMENTS: Mukherjee, Nilanjana. 2000. Myth vs. This publication is based on the work done Reality in Sanitation and Hygiene by the International Development Promotion, Water and Sanitation Program, Enterprises (IDE) in Vietnam. Special thanks ABOUT THE SERIES: East Asia and the Pacific (WSP-EAP). are due to Nghiem Thi Duc, Nguyen Dong, and Tran Quoc Binh from IDE and The WSP Field Notes describe and Mukherjee, Nilanjana. 2001. Achieving District Health Centre staff from Quang analyze projects and activities in Sustained Sanitation for The Poor, Policy Nam and Thanh Hoa provinces for water and sanitation that provide and Strategy Lessons from Participatory generously sharing data and insights from lessons for sector leaders, Assessments in Cambodia, Indonesia, project implementation records and administrators, and individuals Vietnam, Water and Sanitation Program, surveys. We are grateful to peer reviewers Peter Kolsky, Caroline van den Berg, Dan tackling the water and sanitation East Asia and the Pacific (WSP-EAP). Salter, Chris McGahey, and Richard Pollard challenges in urban and rural Oyo, Anthony. 2002. Creating Successful for their incisive queries and thought- areas. The criteria for selection of Private Sector Supply Chains: A Resource provoking comments. Sincere thanks are stories included in this series are Guide for Rural Water Supply and due to Elisa Knebel for copyediting. For all large-scale impact, demonstrable Sanitation Practitioners (Draft), Water and remaining errors and omissions, the sustainability, good cost recovery, Sanitation Program. authors claim responsibility. replicable conditions, and Water and Sanitation Program, East Asia leadership. PREPARED BY: and the Pacific (WSP-EAP). 2002. Selling Jaime Frias Sanitation in Vietnam, What Works? Nilanjana Mukherjee The findings, interpretations, and conclusions expressed are entirely those of the author and should not be attributed in any manner to Cover Photo by Tran Quoc Binh and Nguyen Dong The World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the companies they represent. Layout by 2+3 visual communication Printed at Subur Jaringan Cetak Terpadu