Government subsidised interventions have failed to provide rural poor people with sanitation. In Vietnam evidence is emerging that a market-based approach can be both more sustainable and cost-effective. A project has shown that willingness to pay for sanitation should not be underestimated, provided that quality products and services are offered and effectively promoted.

A report from the World Bank’s Water and Sanitation Program for East Asia and the Pacific looks at how a non-governmental organisation, International Development Enterprises (IDE), has worked to stimulate the purchase and use of hygienic sanitation in villages in two provinces in central Vietnam.

IDE’s initial survey found that only 16 percent of households in the project area were using hygienic latrines. Few masons knew how to build them or could give customers accurate quotes. Householders did not consider masons to be reliable sources of information and the masons did not regard latrines as a regular source of income.

The survey found that households lacking a latrine prioritised buying a television set or a karaoke player, assets commonly found in rural households in Vietnam. The challenge for sanitation programmes is to persuade potential customers to reorient their priorities so that improved sanitation also becomes an important asset to have for every household.

People in the project area are appreciably poorer than most Vietnamese – their average per capita annual income is only US$ 126. However, within a year of the project’s commencement half of those officially classified as poor had invested in sanitation – on average US$ 55 per household, 15 percent of their annual household income. None applied for loans available from state agencies because of the paperwork involved and because the minimum amount of US$ 200 was more then they needed. Most used savings from agricultural earnings or borrowed from relatives living in urban areas.

Within a year of project intervention there was a 100 percent increase in sanitation access compared to the pre-project access rate. Unlike traditional sanitation projects no capital cost subsidies had been employed to promote sanitation facilities.

Among activities undertaken by IDE to increase buyer’s awareness and stimulate demand were:

• constructing demonstration models to show the variety of latrines available at a range of costs and possibilities for people to reduce costs by contributing labour and recycling existing materials
• helping small-scale operators to understand the size of the market and develop business strategies in response
• training village masons in technical and business skills, understanding customer behaviour and the importance of offering quality and service guarantees
• encouraging local government’s health service institutions to endorse the masons’ new credentials, thus boosting customers’ confidence in their abilities
• working with advertising professionals to design a public information and demand creation campaign
• collaborating with community leaders to spread hygiene improvement messages.

The private sector can now continue to serve rural communities after IDE departs. The masons have shown that they can supply spare parts, provide post-sale services and expand their customer base. The experience shows that:

• It is wrong to automatically assume that low-income families cannot afford improved sanitation on their own.
• When households spend a sizeable proportion of their annual budget and have themselves chosen the kind of latrine, it is more likely they will look after it than if they were given subsidies.
• Using subsidies to develop business is more efficient than subsidising sanitation hardware: once demand is stimulated and the market is established, local suppliers will take over promotion.

Contributor(s): Jaime Frias and Nilanjana Mukherjee

Source(s):
‘Private sector sanitation delivery in Vietnam: Harnessing market power for rural sanitation’, Field Note, Water and Sanitation Program, World Bank, by Jaime Frias and Nilanjana Mukherjee, February 2005 More information.

Funded by: Water and Sanitation Program

id21 Research Highlight: 27 July 2005

Further Information:
Jaime Frias
International Development Enterprises
House No 102 Linh Lang Street
Cong Vi, Ba dinh
Hanoi
Vietnam

Tel: +84 4 4664249/7664245
Fax: +84 4 7664240
Email: jaime@idevn.org

International Development Enterprises (IDE)

Water and Sanitation Program East Asia and the Pacific
Jakarta Stock Exchange Building
Tower 2, 13th Floor.
Jendral Sudirman Kav. 52-53
Jakarta 12190
Indonesia

Tel: + 62 21 5299 3003
Fax: + 62 21 5299 3004
Email: wspeap@worldbank.org

Water and Sanitation Program - East Asia and the Pacific

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