Sanitation Marketingin Rural VietnamIDE’s Experience

Quang Van NguyenCountry Director

IDE|VIETNAM

Brussels, July 5-7, 2010

About IDE

• An international NGO: Asia, Africa, Latin America• Best known for disseminating low-cost appropriate

products and services (treadle pumps, drip irrigation…)• Market-based approach:

– Treat poor people as potential customers, rather than recipients of charity No material subsidy or handout

– Use business principles to facilitate unsubsidized market systems in which the poor can participate Project to be implemented through profitable private sector

The case• ? – 2002: A DANIDA-funded sanitation project

implemented by government in Vietnam, with subsidy, didn’t meet targets

• 2003 – mid 2006: A DANIDA-funded sanitation project implemented by IDE without subsidy– 54,000 HHs (19% poor) in 6 coastal districts, 2 provinces– (1) Rural HHs would invest in latrines when a range of low-

cost options are available? (2) Promotional campaigns can influence rural HHs’ decisions to invest in latrines?

• 2009: WB WSP’s ‘Three-year-after-the-fact’ study done by IRC to find out about project sustainability

Conventional vs. market-based approaches

Conventional Approaches Market-based ApproachesHeavy subsidies for capital cost Subsidies for market

development. Full capital cost recovery from users

Standardization of models A range of affordable optionsDecision making by external agencies

Users decide what and how to buy

Focus on infrastructure target Focus on behavioral targetsFocus on centralized service provision

Focus on diversified local service provision

Conventional Approaches Market-based ApproachesHeavy subsidies for capital cost Subsidies for market

development. Full capital cost recovery from users

Standardization of models A range of affordable optionsDecision making by external agencies

Users decide what and how to buy

Focus on infrastructure target Focus on behavioral targetsFocus on centralized service provision

Focus on diversified local service provision

What is Sanitation Marketing• Marketing: Not about selling things they don’t want,

but finding what they want, then making it available• Sanitation Marketing: Public investment to create

poor households’ demand for improved sanitation and simultaneously catalyze private sector market-based supply of sanitation products/services to satisfy that demand at scale

Sanitation Marketing approach

Paying full costs, no subsidy

Building latrines for profit

Private sector masons

Poor households as customers

SUPPLY DEMAND

MARKET

1. Find out what they would want

2. Design / choose latrine options

3. Build market-based supplying capacity for private masons 4. Create demand

thru marketing5. Facilitate market

transactions

Sanitation Marketing processesPerform situational analysis

Perform market assessments

Formulate marketable solutions

Develop an advertising and promotion campaign

Build local supply network of low-cost sanitation

Implement promotion activities

Link supply and demand

Broadcast communication

campaign

Supply development• Select/design

latrine options• Select masons• Train on low-cost

latrine construction• Train on how to do

business• Get endorsement

from local government

Demand creation• Selling dreams, not latrines –

Emotional triggers, rather than functional

• Person-to-person communication – Local promoters (Women Union members, Community Health workers, Village Heads)

“Mr. Latrine” representing “Hygiene, Civilization, and Health”Slogan: “Be an exemplary person”

Supply

MasonMason

MasonMason

MasonMasonDemandHHHH

HHHH

HHHH

HHHH

HHHH

HHHH

HHHH

HHHH Household without a hygienic latrine

Implementation structureDistrict Steer. Com.

Commune Steer. Com.

Commune Steer. Com.

VP VPVP

VPVP

VP Village Promoter

• Rural HHs do demand and purchase latrines

• Private sector masons do respond to HHs’ demand

Project results

Under government Under IDE pilot

Latrine coverage increase from 16% (2003) to 46% (mid 2006) ■ 16,000 latrines (per year: ~4 times compared w/ avg previous 4 years) ■ >$1M invested by households (leverage Donor : HH = 1:2, Marketing cost : HH pay = 1:5) ■ 90 masons making $250,000 profit

WB WSP’s “3-Year-Later” study• Latrine coverage sustained• Rural marketing and promotion continued• Supply services further developed• “Spillover” effect: nearby areas

Scale-up – in progress

Coastal pilot

2003 2004 2005 2006 2007 2008 2009

District

District

Upland pilot

Provincial

Scale-up

Regional

Scale-up

2010

The further from peri-urban areas, the more challenging

Scale-up – challenges

• High degree of segmentation requiring tailored strategies and designs

• Limited buy-in from highest level government• Limited ground level implementing capacity

Lessons learned

• Sanitation Marketing effectively stimulates unsubsidized demand• Never underestimate the poor’s willingness to pay• Sanitation Marketing could be sustainable with local promoters