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

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Intervention – Hook the entrepreneurs to provide easy access

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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?

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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  

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Summary

Thank You!

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