What can we learn from building commercial sanitation solutions in slums?

Blog: Toilet teachings: Strategies for success in inclusive business
Blog: The business of sanitation
Link: Business Innovation Facility

Do you prefer not to discuss toilets at work? I've learnt to dwell on them, because so much can be learnt from the challenges of toilet ventures that resonates in the wider world of inclusive business.

Should people pay for toilets? In an ideal world, not. But what if the alternative is open defecation and disease, and a private low-cost model is clean and sustainable? Sustainable commercial solutions will take time but may still be the quickest way of tackling disease-festering slum conditions at scale within some years.

How long does it take to create new markets? This is a key question for slum sanitation, nutritious food, improved stoves and much else. Does it take more than 5 or 7 years for consumers to understand the product, demand it, replenish it, and habituate it? Who pays for buiding that demand if it meets a clear social need and delivers public goods, such as reduced disease in slums.

How can sanitation businesses build a brand, bring in users, and create revenue models that sustain? Creativity is one part of the solution. Will inclusive toilet ventures ever work? I think so, but the challenges are immense.

Eight strategies being used by two slum sanitation businesses in Kenya and India, are highlighted in my new blog here.

You raise some good questions. I share your belief in the potential of market-led solutions as a way of making a sustainable impact on sanitation for low income families. These solutions must come from a deep understanding of the needs and aspirations of these consumers – this will drive the design of products and services which are appealing and affordable. Such innovation is much needed and is beginning to happen thanks to investments by the Bill & Melinda Gates Foundation and other organisations.

As well as product innovation we also need new thinking in terms of business models as you rightly suggest. For this we need more sanitation entrepreneurs, especially local ones who really understand their markets. They in turn need support and funding to pilot ideas and launch promising ventures.

How can this be enabled? One approach is to think in terms of building a venturing “eco-system” which will bring together a number of actors – donors, investors, entrepreneurs, sanitation experts, academics, NGO’s and large corporations- all aligned behind the goal of creating, launching and growing successful sanitation enterprises aimed at BOP consumers.

There is learning to be had from other sectors –for example a recent meeting at the Impact Lab in London in conjunction with FEMS3 and Lab Open Innovation highlighted key learning around creating and scaling pioneer social enterprises in India. See http://www.impact-lab.co.uk/events/wednesday-30-january-2013-role-enterprise-philanthropy-and-impact-investing .

Great piece Caroline. It seems like a lot of people are talking about water and sanitation these days. And it’s about time!

I believe that iDE’s (International Development Enterprises) experience of redesigning latrines and the supply chain to provide income opportunities to suppliers to sell affordable latrines in Vietnam and Cambodia can provide lessons that are applicable around the globe.

In 2003 iDE pioneered a sanitation marketing approach in Vietnam seeking to test whether such an approach could improve rural access to sanitary toilets in 30 communes.

The project was a success and has been empirically supported by an independent World Bank WSP Assessment. A WSP team researched the sustainability of the approach, finding not only that the approach worked but that “sanitation efforts were continuing in the community and sanitation marketing has enabled men who worked part-time in sanitation to move out of the agriculture and fishery sectors and obtain better jobs with more career prospects in small-scale enterprises”.

In 2009 iDE Cambodia drew upon this experience and began implementing its 21 month SanMark programme funded by the USAID Cambodia MSME Program and the Water and Sanitation Program of the World Bank.

In only a little over a year, the Sanitation Marketing Project reached a landmark of 10,000 latrines sold. This marked more latrines sold in the project areas in that year than in the previous four years combined, a tremendous step forward in public health for a country where only 18% of the rural population has access to a toilet.

Over 31,000 easy latrines have been sold in the last two years in Cambodia and we aim to sell 100,000 more in the next two years..

What is remarkable about the Sanitation Marketing Project’s success is that all the latrines were sold without any price subsidy. Instead, the Sanitation Marketing Project has applied market principles and world-class product design to the challenge of rural sanitation in Cambodia.

A common local latrine, which could run up to £100, was well beyond the means of the average rural Cambodian, whose average annual income is a mere £88. With help from IDEO designer Jeff Chapin, iDE redesigned the latrine to make it more user-friendly—easy to buy, easy to build, and easy to use. The resulting “Easy Latrine” costs only about £22 and can be assembled by the families themselves in a day.

According to Michael Roberts, Country Director for IDE Cambodia “the project began by treating people as customers rather than beneficiaries of charity. We have seen that many rural Cambodians are able and willing to pay for something that delivers real value.”

The latrine redesign is integrated with a social marketing campaign to stimulate demand. By marketing the latrine as a status product instead of lecturing people about the health woes of defecating in the fields, the Sanitation Marketing Project triggered people’s universal desire for “keeping up with the Joneses.”

Previously an unsexy product, the rapid growth in demand is now being met by local entrepreneurs in the latrine supply chain who have been trained by iDE in efficient production methods, business skills, and proactive methods for generating sales. There are now 25 Easy Latrine producers, who have inspired ambitious competitors to also join in the booming latrine market.

Not only has the Sanitation Marketing Project made tremendous strides in improving rural sanitation in Cambodia, it has done so by leveraging the market and improving the livelihoods of local entrepreneurs. The program has been recognized internationally for its success, winning the International Design Excellence Award and recently being inducted to the World Toilet Organization’s Hall of Fame.

Thank you Sam for sharing this. The Cambodian and Vietnamese experience sounds an excellent example of how to make toilets sellable, desirable and affordable. It seems that this model too relies on local entrepreneurs, although 25 sounds a fairly small number so far. Do you know how easy it is to go to scale through this entrepreneur route?

While I am sure this is a commercial opportunity for the entrepreneur, is the overall programme reliant on grants or could it break even and generate a commercial return? It may be that to deliver sanitation services for the true base of the pyramid we need a mixture of development funding in set-up and commercially driven action in operation and roll-out, and the key is to find the best mix.

This example is all the better for having had external validation. Can you provide a link for further resources on this? I would like to share this further, back on the Practitioner Hub too. Caroline

Thanks Walter. Your point about the eco-system is very valid, as a few businesses on their own will not achieve scale.

Thanks for sharing the Impact Lab discussions. I am intrigued that the strategy of local entrepreneurs to drive distribution at the BOP is so popular and pervasive, and yet in discussions with those who have tried it, it seems a more challenging route to scale than first imagined. Indeed I think Sanergy would acknowledge that their Fresh Life Operators are critical drivers, but recruiting and training an expanding team is a slow process, so until that process itself is somehow speeded up, scale cannot explode. My colleague Nisha Dutt, BIF Country Manager in India, has written an excellent Insider on the strengths and limitation of the village entrepreneur model (equally applicable to the slum entrepreneur model) for the "Last Mile Challenge' which is available from here. If there are specific tips that emerged from Impact Lab discussions, do highlight them! thanks, Caroline

Hi Caroline and BFP Community,

We can share some insights from Clean Team - our social business in Ghana that makes it easy for low-income families to have a toilet in their home. The number of people without sanitation is staggering. The UN puts it at 2.5bn. But if you include those without a toilet at the home, the number must be billions more. At Clean Team, we believe that every family deserves a toilet. So we're building a scalable business - starting in Kumasi, Ghana - that gives families an attractive toilet in the home when they pay a monthly service charge for regular emptying of the toilet.

By fundamentally changing the payment model from a one-time upfront investment to a regular ongoing service charge, it has opened the flood gates of demand.

Here's a few lessons we've learnt along the way:

1. Don't start with the neediest -

It may make some people uneasy, but if you're intent on setting up a sustainable business that can bring about sustained social impact, then you need to start with the most profitable segment of the un-served market. Once business systems are functioning well, then innovate to serve lower down into the BoP.

2. Grow a great local team

Experts are commonly considered to be from Europe or America, but local knowledge in business norms and customer relations is an essential part of a strong team. Cultivating internal business capability is an essential part of building a sustainable social business.

3. The poor are consumers too

People in slums pay for convenience just like we do when paying a higher cost for groceries from a local shop, as compared to a supermarket. Our customers say that they perceive our service to be more expensive than public toilets (even though we're not) but once they experience the life changing in-home toilet, it's an expense they choose to prioritise.

4. It takes time

Running a pilot is relatively easy. Scaling that pilot means scaling all the associated touch points with the market too. In Ghana, our service requires new policy and regulatory considerations; our toilet is the first iteration of a toilet that manufacturers have never previously designed for; the chemical we put in our toilets to reduce odour and make the toilet smell nice has never been designed before.

All this illustrates that the challenge is indeed immense. But equally, its an incredible opportunity for enterprise around the world to profitably supply products and services to this huge consumer segment.

Thanks Andy, that is really interesting. The fact that changing the pricing structure is key to unlocking demand, and that new design and chemicals are critical, just show how far the market has to move. You leave me with a host more questions: what scale are you operating at and hoping to grow to? Can you give us an idea of what people pay for this service in their home,or at least how this compares to other 'necessity/luxury choices, such as food, sim or coke? What regulatory change was needed? And where can those who are interested read more about this model? Thanks very much, Caroline

This is an important discussion. No matter how cool the technology or service is, we can't expect any one sector - government, nonprofit, for profit, or families themselves - to solve the sanitation problem alone. It is unlikely to expect anyone but governments to deal with urban sewerage or other large scale waste treatment. Many otherwise successful private sector options that involve latrine pit emptying fall apart when it comes to removing and responsibly dealing with the pit contents. Even if they are disposed in the city's sewers, those are untreated and lead to the nearest river. Composting options in slums often fall apart because of difficulties removing, storing, and "cooking" the fecal matter. And the time frame is forever, not just for the period of the pilot or the grant. Latrines fill up, and if the family who couldn't afford the latrine in the first place can't afford to replace the pit the second time around, the problem is not solved sustainably.

Another challenge in slums is that landlords must be persuaded to buy/install toilets or latrines. They are driven more by bottom lines than "bottom health".

More about these challenges and opportunities can be found in the links below (not intended as endorsement):





This is great, Caroline—thanks for starting the conversation!

In my work with IDEO.org I've worked on several commercial sanitation projects, including the development of Clean Team with WSUP (which Andy mentioned above), a recent project with Sanergy, and another current project with WSUP in Zambia. Each experience designing commercial sanitation approaches has brought new learnings, but here are a few reasons I'm excited about the potential for the private sector to play a bigger role in improving sanitation.

People already pay for toilets

Both Clean Team and Sanergy offer their customers a service that's priced competitively with public toilets in their area. Public toilets are very rarely free, even when government- or charity- operated, so the question of whether or not people should be expected to pay for commercial sanitation should really be, "Shouldn't people have the option to choose which toilet they're paying for?"

Sanitation is about more than health

With IDEO.org's human-centered design approach, we always start with developing an understanding of our end-users—what do they aspire towards? what do they need? how do they want to feel?—and design solutions accordingly. Although most people are aware of the health benefits of improved sanitation, that's rarely what motivates them to take action. In our work with Sanergy, for example, we found that convenience—not price or quality— was the primary factor in a person's decision of which toilet to use. And with Clean Team, the aspirational ideal of an in-home toilet is what makes it an easy sell. Designing products, services, and marketing around what motivates end-users—not just the public health benefits—is an approach that businesses like Clean Team, Sanergy and iDE, mentioned above, have done well at.

Commerce offers direct feedback

I'm sure we've all seen many abandoned government- or charity-built toilets in our travels—when they break down there's often nobody to report it to, and no clear incentive for anyone locally to maintain or repair them. Commercial solutions, on the other hand, have a direct feedback loop with their customers— a Clean Team customer who cancels their service (there have been very, very few of them, I'm proud to say) sends a clear signal that something wasn't working for them, and the team on the ground seeks to remedy it when possible and integrate the customers' feedback into further refinements of the service.

People trust businesses

Just a couple of weeks ago, as we were discussing brand names and logos with potential customers of the pit latrine emptying business we're designing in Zambia, an older man let us know how excited he was that a business was coming to help. He had received help from NGO's many times before but the NGO ran out of funding and had to end their program, leaving him stranded and frustrated with a full pit latrine that he didn't know how to empty. This man implicitly trusted branded businesses to follow through where NGO's and governments had let him down before—something that I've seen across many projects in many industries.

Ultimately, of course, business isn't the only answer to sanitation challenges, but I'm excited to continue designing human-centered commercial sanitation solutions wherever they make sense. It's proven very fruitful so far, and there's a big, big market still to address...

Caroline you can find the independent World Bank WSP Assessment here for sharing on the practitioners hub. I will respond to the other questions shortly. Thanks, Sam

Hi Caroline. Those are great questions! I'll leave you with some links to follow where you can read more about Clean Team.

Clean Team website http://www.cleanteamtoilets.com/ where you can sign-up to receive regular updates

Facebook page: http://www.facebook.com/WeAreCleanTeam where you'll find regular pictures and links from around the web

Flickr: http://www.flickr.com/cleanteamghana for photos that document our journey

And an article I wrote for Forbes and a Q&A with me on Next Billion.

Caroline, sorry for taking so long to get back to you – but I promised I would so here it is:

The model does indeed rely on local entrepreneurs to drive it forward, however the Easy Latrine ‘producers’ referred to are in fact small business enterprises of varying size comprised of local entrepreneurs and workers, not individual entrepreneurs. The 25 entrepreneurs refers to the 25 that were engaged during the 16-month pilot phase. Additionally there were several "copy cat" or "self-starter" businesses, who were not officially trained by iDE, but noticed the burgeoning business opportunity in the sanitation market and started producing and marketing latrines themselves. Since November 2011, we have been scaling the program across 7 provinces of Cambodia, and have to date engaged 124 businesses who produce latrines. They are generally SMEs who do vary greatly in size, capacity, and motivation. Both the pilot and the scale up efforts are showing that generally there are a few "super star" businesses who account for the majority of the sales. The project is always iterating on how to best engage businesses and culling best practices for training and coaching of these businesses to improve their motivation, capacity, and impact.

This entrepreneur route shows great promise for effectively scaling up and each business is involved due to a clear profit opportunity - however of course it is not without significant challenges. One of the issues we face is that the latrine producers have tended to be great at making the product, however they have often struggled with marketing the toilets effectively, generating local demand and distribution to the end consumer.

iDE Cambodia have been exploring several options in response to this, and have been training the producers to take on a radical shift in their business model to actively doing sales and marketing, distribution/transportation. Another option for greater outreach that is currently being explored is to create a network of sales agents employed by iDE who act on behalf of the producers.

In the end of course the success is dependent on the entrepreneur, it is not up to iDE or any other supporting NGO to ensure they succeed.

Whilst grant funding has been used to set-up the project - carrying out the process of human centred design process and helping businesses get into the easy latrine market, the fact that these businesses are attracting profit means that they will continue to produce and sell ‘easy latrines’ in the future.

The average profit margin is $5 on a $42 latrine. These businesses produce other concrete products as well as latrines which definitely compete for their attention. The project has learned that businesses, albeit sometimes smaller ones, for whom the latrines constitute a large portion of their revenue are more motivated to dedicate time and energy to latrines.