Shankar NarayananPSI IndiaUNC Water & Health Conference 201529th October 2015
Learnings from Bihar, IndiaAn evolutionary process and the impact of a market development program to create a functioning sanitation market
Divider SlideAbout Us
Market Failures
§ Market failures– When self-‐interested choices in markets do not result in socially efficient allocation
§ Examples– Markets for goods and services are lacking– Externalities and common pool resources – Principal agent problems and moral hazard– Factor immobility– Inequalities
Construction Companies
Government agencies
NGOs
Product Designers
Manufacturers
Donors
CommunityHealth
Workers
Construction Companies
Government agencies
NGOs
Product Designers
Manufacturers
Donors
CommunityHealth
WorkersMFIs
Local Artisans
Product Design
Manufacturing Aggregation Construction Financing
3SI Bihar -Gaps in the Sanitation Ecosystem
1.Construction & Aggregation -‐ Fragmented supply chain for toilets
2.Product design -‐Toilet that are affordable are not aspirational and those aspirational are not affordable.
3.Financing -‐ Liquidity and affordability across population segments; limited / no access to credit for toilet
Getting a toilet is cumbersome -‐Impacts time to delivery and cost for a household toilet
Market Failure 1: Construction and aggregation
page 11
Intervention – Hook the entrepreneurs to provide easy access
page 12
209 Supply chain enterprises catalyzed
Business Training and access to finance
722
50
7688
112
161
209
6 1626
38 4054
84
113
Oct-Dec 2013 Jan-Mar 2014 Apr-Jun 2014 Jul-Sep 2014 Oct-Dec 2014 Jan-Mar 2015 Apr-Jun 2015 Jul-Sep 2015
# of Enterprises # of Blocks
Toilet enterprises/aggregators : 196MFI : 3 Mould Manufacturer : 9Door producer: 1Door Supply chain -‐ 1
Scaling a broken supply chain ecosystem
69.74
55.47
37.89
28.24
20.14 21.79
13.57
96
30
15
512
5 50
20
40
60
80
100
120
Q1 (2014) Q2 (2014) Q3 (2014) Q4 (2014) Q1 (2015) Q2 (2015) Q3 (2015)
Mean Mode
Building a toilet is a lot more easier for Households now
Data source : 3Si Program - Helpline
N : 6626
Costly toilets that do not solve HH problems or negate public health concerns.Quality assurance is nobody’s concern.
Gap 2:What is the product?
page 15
Intervention – Offer choice and experience
PAGE 16
Standard Super DeluxeDeluxe
Intervention – Low touch quality assurance
PAGE 17
Quality assurance
At household levelAt production center
46%
40%44%
47%
41%
45%
43%
49%
37%
41%44% 44%
11% 11%
19%
12% 15%
11%
0%
10%
20%
30%
40%
50%
60%
Q1 (2014) Q2 (2014) Q3 (2014) Q4 (2014) Q1 (2015) Q2 (2015)
Above 30ft 10ft - 30ft Less than 10ft
Distance of Pit from Water Source- Remains a challenge
Data source : 3Si Program – Technical Associate
N : 1305
82%
1%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1 (2014) Q2 (2015)
Above 10ft
Pit Depth – Its no longer a deep hole in the ground
Data source : 3Si Program – Technical Associate
N : 1274
Hard to Convert
Easy to Convert
OP$P$
O Cannot afford a toiletP Can afford a
toilet $ May need financing to purchase toilet
May need subsidy to purchase toilet
6-8%110-12%2 40-45%3 35-40%4
P
Gap 3 – Access to toilet credit
• Approx. 80% households required financial facilitation to construct basic toilet costing $150-‐200
• No MFIs has any experience in sanitation financing in Bihar.• MFIs are not interested to get into sanitation financing due
to lack of exclusive funding for sanitation.
Intervention – Catalysing private sector credit supply
Investors Wholesale Lending
Institution
MFI Consumer
Consumer
Consumers
MFI
MFI
3 3066
223144
268327
401
3 21 22
15391
250 229273
0
100
200
300
400
500
600
700
800
900
1000
Oct-Dec 2013 Jan-Mar 2014 Apr-Jun 2014 Jul-Sep 2014 Oct-Dec 2014 Jan-Mar 2015 Apr-Jun 2015 Jul-Sep 2015
Applications Raised
Loans Disbursed
: 1462
: 1042
Trends of toilet credit over time
29
201
985
1981
2764
3340
4093
1418
13 102
406
784 899 960
1758
630
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Oct-Dec 2013 Jan-Mar 2014 Apr-Jun 2014 Jul-Sep 2014 Oct-Dec 2014 Jan-Mar 2015 Apr-Jun 2015 Jul-Sep 2015
Toilets Cancelled
Toilets Sold to BPL Families
: 14811: 5525 (37%)
Are we reaching the poor?
Strategic Framework
Health Impact
More poor people access improved sanitation(and use it)
More poor people have access to improved sanitation
Better performance of enterprises
More efficient and inclusive sanitation market system for poor
Reform of supporting functions (Financing, Coordination and
Innovation)
Increased demand and supply
(product, price, place and promotion)
Advocacy on rules, regulations, tariffs and
public-private partnerships
Impact at Household Level
Impact at Enterprise Level
Market System Change
Interventions
§ Market failures are not treated as final, but rather become the target of programs or policies to improve them
• Patience and Time: Markets failures take time
• Market understanding: No one size fits all model
• Complementarity: Partners, sectors, interventions
• Systems approach: Players and Functions
page 25
Summary
Thank You!
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