Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda

Transcription

1 Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda Final Report from PATH to the World Bank s Water and Sanitation Program June Westlake Avenue Suite 200 Seattle, WA P.O. Box Seattle, WA >>PROJECT REPORT

2 THE REPUBLIC OF UGANDA Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda This report was prepared with financial support from WSP and research by PATH ii

3 Table of Contents Table of Contents... ii Acronyms... vi Executive summary Study background Research objectives and questions Methods Desk review Regulatory environment and stakeholder mapping Supply chain assessment and gap analysis Study limitations as they pertain to the analysis The sanitation value chain: A framework for analysis Country background Household demographics Household sanitation status Household segmentation Regulatory and policy environment for sanitation Key sanitation stakeholders Study findings: The sanitation value chain in Uganda Summary Research and development Current status Constraint: Lack of a standardized, culturally appropriate sanitation solution Opportunity: Documenting user input and feedback on latrine design and functionality Products Current status Constraints: Pit digging and latrine construction materials Opportunity: Standardized product offering Distribution and service delivery Current status Constraints: Disaggregation and lack of capacity Opportunity: Capacity building and supply chain integration iii

4 7.5 Marketing and behavior change communication Current status Constraint: Lack of an active sales and promotion culture Opportunities: Better coordination, local government involvement, and incentives Post-installation service Current status Constraints: Little awareness and demand for services Opportunity: Supportive peripheral services Financing Current status Constraints: Affordability, access, and attitudes Opportunity: Increased access to financing Macro- and local-environment issues affecting the development of a household sanitation market Current status Constraints: Alignment with market/local government needs, inflation Opportunity: Supportive regulatory and policy environment for sanitation market development Recommendations for strengthening/developing market delivery for the private-sector Focus on standardizing latrine requirements and components Target the right supply chain actors Enable and encourage financing mechanisms Align partners across the public-private-ngo spectrum Potential business model Design Roles Timeline and funding Other considerations for market-based approaches References Appendix A: Stakeholders interest and influence in community-led total sanitation (CLTS) and sanitation marketing (SANMARK) in Uganda Appendix B: Sample of Crestanks household sanitation products iv

5 Appendix C: Sample of available products and prices from Ugandan hardware shops Appendix D: Estimated costs (UGX) of two-stance latrines as quoted by masons in three districts v

6 Acronyms BOP Base of pyramid CLTS Community-led total sanitation DHI District health inspector DHO District health officer DHS Demographic and Health Survey DWD Directorate of Water Development GAR Gross attendance ratio ide International Development Enterprises JMP Joint Monitoring Program (UNICEF and WHO) MFI Microfinance institution MoH Ministry of Health MWE Ministry of Water and Environment NGO Nongovernmental organization NSWG National Sanitation Working Group PEAP Poverty Eradication Action Plan PPP Purchasing power parity SACCO Savings and credit cooperative organization SANMARK Sanitation marketing UGX Uganda shilling UNICEF United Nations Children s Fund UPE Universal Primary Education USAID United States Agency for International Development VHT Village health teams VIP Ventilated improved pit (latrine) WHO World Health Organization WSP Water and Sanitation Program (World Bank) vi

7 Executive summary Meeting the basic needs for millions of Ugandans to improve their household sanitation situation requires a combination of investment, innovative solutions, and business models that cannot be implemented by public-sector entities alone. It is the purpose of this study to begin to uncover some of the opportunities and potential for increased private-sector participation in delivering sanitation services to low-income populations throughout rural Uganda. In order to develop a clearer understanding of the current market for sanitation services in Uganda, PATH conducted a rapid, qualitative market assessment to provide a broad perspective of the rural and small town sanitation market and the key elements of the supply chain. Through a process of preliminary literature review, field assessments, and supply-chain analyses, the study generated a foundational overview, gap analysis, capacity assessment, and recommendations to help optimize market development opportunities and develop new business models to scale up sanitation products and services in rural Uganda. This research uncovered a series of constraints in the Ugandan household sanitation supply chain that have hampered the enabling, development, and sustaining of an efficient market environment. The biggest takeaway is that the market for household sanitation in Uganda is undefined and undeveloped. It appears that there is a lack of coordination along the sanitation supply chain and entities are acting in isolation; from manufacturers to distributors, sales, installation, and services, the players do not seem to be in communication. In addition, a lack of product and service delivery standardization inhibits the ability of the supply chain to gravitate towards an optimized (i.e., integrated and efficient) business model to deliver better sanitation products and services. As a result, a collection of improvised, makeshift latrines built through informal means exists in a market that does not acknowledge the presence of sanitation service provision as a subset of need or opportunity. Understanding what the consumer wants in design, function, and health/safety benefits serves as the first step to being able to offer a range of desirable technologies and services at various price points to meet the demands of households. Issues around affordability apply not only to the relatively high costs involved in latrine construction, but also reflect the current inability of households to break those costs into reasonable and manageable outlays of money. Households encounter constraints in the prices they must pay for labor and supplies, and seem to have disinterest in or lack awareness of consumer loans. Conversely, suppliers face constraints in their lack of connection to financial products to build their business or to offer to their customers. From the study findings, it appears that households have no one place where they can learn about all aspects of sanitation solutions from the construction process to what their options are for building materials to how to access service providers. Overall, it appears that low-income Ugandan households are not considered to be a revenue-generating market and therefore the supply chain has not invested in building appropriate sanitation solutions for this segment of the population. 1

8 This study underscores the significant opportunity to leverage the current basic latrine coverage to grow business opportunities for household sanitation provision and improvement. Many households in Uganda do not necessarily lack awareness about the need for a latrine, but do need better latrine products and services delivered through more efficient and cost-effective means. Thus, key stakeholders may wish to consider a shift from broad, generalized approaches to focusing on more catalytic activities to stimulate market development, alignment, and linkages to build stronger household sanitation delivery mechanisms. Moving forward, it will be important to attempt to implement a business model that can address the majority of constraints across the value chain, but at a small scale (i.e., in one or two districts) initially. Given the current fragmented nature of the supply chain, lack of an appropriate product, and financing barriers, targeting improvements to only one or two aspects of the existing supply chain would leave the system overall as constrained as before and, most likely, prove unsuccessful. Therefore, critical first steps for the household sanitation sector in Uganda are to focus on a specific product offering for the target market (i.e., households in rural and small towns) and a proper business model to support and ensure its success. Training local providers in the right techniques to deliver the product or service, however, is only one aspect of business model development. Market growth efforts must also equip providers with the knowledge and tools to actively market and sell their offering to potential consumers. Furthermore, small businesses cannot succeed without working capital, and consumers cannot hope to consider or prioritize important purchases that fall outside of their limited budgets without access to financing. Financial education and credit programs should be introduced to allow lower-income households or households with irregular income streams to purchase a latrine and to enable local entrepreneurs and others in the supply chain to maximize scale by ramping up production and distribution efforts more quickly and cost-effectively. Introduction of a sanitation financing program could help develop and test multiple ways to increase access to financial products for more formal sanitation products and services. While the constraints within the current value chain are significant, they are not insurmountable, and they point toward clear opportunities for laying a solid foundation for the development of the sanitation market (Figure 1). The fact that little market infrastructure currently exists in the household sanitation space allows for broad and potentially sweeping innovation across the entire value chain. The key will be integrating and aligning current and future efforts accordingly to ensure both scalability and sustainability. Such efforts would involve oversight from key organizations such as the Government of Uganda or the Water and Sanitation Program, as well as multiple in-country partner organizations, private-sector collaborators, financial institutions, and local government officials. Challenges exist in terms of supply chain integration, infrastructure limitations, lack of awareness of and demand for formal sanitation products and services, and inadequate financial resources, but the opportunities for market creation around household sanitation in Uganda remain quite promising. 2

9 Financing Policy & Regulation KEY CONSTRAINTS KEY OPPORTUNITIES POTENTIAL OUTCOMES Research & development Product Distribution & service delivery Marketing & behavior change Service Little user-centered design Lack of complete, affordable solution Households not viewed as a market No coordination within supply chain Disaggregated purchase process Passive promotion Low consumer awareness of sanitation solutions or suppliers No access to appropriate financing Standardized latrine design & components Targeted capacity building for supplychain actors Integrated links within supply chain to aggregate demand Enable & encourage financing mechanisms Supportive policy & regulation through public-private-ngo alignment Appropriate, affordable improved sanitation solution Coordinated and specialized efforts within the supply chain Increased efficiency Increased access Reduced costs Figure 1. Constraints, opportunities, and potential outcomes within the current sanitation value chain in Uganda. 3

10 1.0 Study background Every person, regardless of where they live or how much they earn, shares the same basic need for safe sanitation. Yet, much of the world s population lacks access to this key element of a healthy, productive life. Uganda is a nation of approximately 33.4 million people, approximately 87 percent of which reside in rural areas (World Bank 2012). The Joint Monitoring Program (JMP) for the World Health Organization and United Nations Children s Fund estimated improved sanitation coverage in rural areas at only 34 percent of households in 2010 (JMP 2012). 1 The Ministry of Water and Environment, however, estimates that 70 percent of rural households have access to improved sanitation facilities as of June 2010, while the Uganda Demographic and Health Survey from 2006 estimates that only 9.2 percent of rural households in the country have access to an improved toilet facility (WSP 2011, UBOS DHS 2006). While these variances may be due to each organization evaluating sanitation based upon different metrics, the numbers indicate that anywhere between 8.25 million and 25 million rural Ugandans lack access to improved sanitation facilities a significant shortfall regardless of which statistic one chooses. This gap represents a major opportunity for suppliers of sanitation products and services to assist households in adopting or improving their existing sanitation facilities. However, much of the demand for household sanitation products and services has been met only through the informal sector. Thus, there is a strong need for increased capacity building and coordination within the informal supply sector for household sanitation in order to increase access and availability of appropriate sanitation solutions in rural and small towns throughout Uganda. In response to this need, the World Bank s Water and Sanitation Program (WSP) contracted PATH to conduct a qualitative market assessment of the supply chain for household sanitation in rural and small towns in Uganda. The study engaged in a rapid assessment of the elements of the household sanitation supply chain to identify opportunities and constraints in the expansion of access to demand-responsive and affordable sanitation products and services aimed at low-income households in rural and small towns. The ultimate goal of the study was to provide WSP with a foundation for addressing gaps in the system and to suggest ways to move forward with future market development efforts. 2.0 Research objectives and questions Meeting the basic need for millions of Ugandans to improve their household sanitation situation will most likely require a combination of investment, innovative solutions, and business models that cannot be implemented by public-sector entities alone. Public-private partnerships as well as increased privatesector investment will be critical components of effective long-term solutions. It is the purpose of this study to begin to uncover some of the opportunities and potential for increased private-sector participation in delivering sanitation services to low-income populations throughout rural Uganda. 1 For Millennium Development Goal (MDG) monitoring, an improved sanitation facility is defined as one that hygienically separates human excreta from human contact (JMP 2012). 4

11 The objective of this study was to conduct a diagnosis of the rural and small town supply chains for household sanitation, focusing on the commonly found or most preferred technologies for improved sanitation in Uganda. Key questions the study aimed to address included: What factors and players enable or inhibit the environment in which sanitation service providers operate? Who are the stakeholders in the sanitation ecosystem and what incentives are necessary to motivate them to support the environment? What types of sanitation solutions are low-income households currently utilizing, and to what degree are sanitation elements purchased versus fashioned from local materials/sources? What are the categories and characteristics of business models that currently provide sanitation services to low-income households through sanitation product and service providers in Uganda? How effective are these business models and providers in reaching low-income consumers, and what are the determinants and/or constraints to expanding their operations, especially compared to business models for certain other widespread products in Uganda? To what degree is the current level of service-provider activity in the sanitation sector viable and sustainable, and what is the likelihood of scaling up the provision of sanitation products and services through these providers? What are the barriers to and key leverage points for expansion of sanitation products and services by providers alone or through public-private partnerships? 3.0 Methods In order to develop a clear understanding of the current market for sanitation services in Uganda, the study undertook a multipronged approach under the guidance and advisement of WSP to provide a broad perspective of the rural and small town sanitation market and the key elements of the supply chain. Through a process of preliminary literature review, field assessments, and supply-chain analyses, the study generated a high-level foundational overview, gap analysis, capacity assessment, and recommendations to optimize market development opportunities and develop new business models to scale up sanitation products and services in rural Uganda. Non-probability sampling, specifically purposive sampling was used in the selection of the population used in the study. The sample of the study covered a total population of approximately 50 individuals. These included masons, hardware shop owners, heads of households which had traditional pit latrines, managers of major Micro Finance Institutions and a SACCO, managers for major plastic industries, pit emptiers, and District Health Inspectors. The population consisting of the masons, hardware shop owners, and households was selected from the small and rural towns of five districts in Uganda. Two individuals of each category (masons, hardware shop owners and heads of households with traditional latrines) were selected from each district. Data collection methods used were: Literature review Face to face interviews using semi structured questionnaires Observation Phone interviews using semi structured questionnaires 5

12 The study included three main activities: 3.1 Desk review The initial phase of the study involved a preliminary review of current information on sanitation provision and the sanitation value chain in Uganda from available resources to extract specific intelligence related to the sanitation market. The study began by pulling demographic, economic, and sanitation-related data from various data sets including World Development Indicators, World Bank Country Indicators, Joint Monitoring Program country data, the Demographic and Health Survey, Uganda Bureau of Statistics census reports, and World Health Organization (WHO) statistics. Furthermore, the desk review involved a study of multiple documents and reports specific to sanitation activities, research, and policy in Uganda provided directly from WSP or sourced through government of Uganda, development agency websites and publications, and sanitation-focused consortium websites on the internet. A desk segmentation exercise was also conducted based upon analysis of secondary demographic and geographic data collected in order to identify characteristics of the consumer market for and provide a rough estimate of the market opportunity for household sanitation solutions among low-income households in Uganda. The study made attempts, whenever possible, to obtain all possible resources to inform the study. However, our search was neither systematic nor comprehensive. Therefore, certain key publications or data sources were inevitably missed that might have contributed further to the analysis. 3.2 Regulatory environment and stakeholder mapping Understanding the environment in which both providers and consumers of sanitation products and services operate is important to designing programs and implementations that have the greatest likelihood of sustainable impact. The study pulled and reviewed multiple sanitation policy and regulatory documents and reviews from the United States Agency for International Development (USAID), WSP, and the Uganda Ministry of Health (MoH). Structured interviews were also conducted with a small sample of sanitation experts and policymakers to solicit guidance and insight regarding key regions/sites of service-provider activity, key organizational relationships within the sector, and barriers encountered by the experts to understand the state of the regulatory and policy environment within Uganda for a market approach directed at low-income households. Desk review of policy and regulatory documents along with the small sample of structured interviews were combined to develop an understanding of critical donor, government, implementation, and pilot partner roles within the sector. In addition, these activities helped supplement a previous stakeholder mapping exercise by WSP, as well as make recommendations for ways these stakeholders could be brought together in a complementary and synergistic way for eventual business-model implementation. 6

13 3.3 Supply chain assessment and gap analysis The study performed an initial household sanitation product scan via available secondary data, sanitation program implementation reports, and a few local sanitation manufacturer websites to detail and categorize the various sanitation products and services currently available in rural areas of Uganda. This was further supplemented by additional product scans and documentation via observations during field visits and interviews with supply chain actors in each district. The product scan and categorization identified available products and services, as well as aided in assessing their positioning against one another on critical components such as price/affordability, consumer preference, safety, and effectiveness. The study also attempted to gather a limited amount of information on related products (e.g., plastic buckets/basins or bagged cement) to gain context on business models and supply chains for more ubiquitous products in rural areas. WSP and the Ugandan Ministry of Health provided input for the selection of appropriate study sites and respondents for field visits and supply-chain discussions based on the study timeline and budget (Figure 2). Primary data was collected through interviews and site visits with approximately existing sanitation service providers in five regions of rural Uganda. Specific supply chain interview guides were developed to gather details about the extent of supply chain respondents operations and collect their perspectives on interactions with other elements and actors within the sanitation value chain. The study also observed, interviewed, and assessed several formal private-sector supply-chain actors working to finance, manufacture, distribute, install, service, and/or maintain sanitation products. These included entities such as plastics and cement manufacturers, pit emptying companies, and microfinance institutions (MFIs). Through the development of detailed profiles of each actor and outlined both their roles in the supply chain as well as the relative strengths and weaknesses of their operations. 7

14 Figure 2. Selected districts for study field visits (Arua, Amuria, Tororo, Mpigi, and Bushenyi). In addition, given the interest of WSP and the MoH in gaining some perspective from households within the study, the study conducted a limited number of qualitative, contextual discussions with low-income households that interface with sanitation providers in local communities. These discussions helped to gauge the extent of their interaction with sanitation service providers and understand the benefits and challenges households face in accessing sanitation solutions. Specific discussion guides were developed for households which covered such topic areas as current household sanitation solutions, access to latrine construction materials and services, and willingness/ability to pay for sanitation products and services (including issues of financing for household sanitation). However, it should be noted that the study was originally designed to be an examination of the supply chain, particularly the elements that are offering products and services to rural households, and not an exploration of household needs, beliefs, or practices related to sanitation. Therefore, these qualitative household discussions were merely meant to serve as supplemental information to the supply chain interviews. The study focused a significant portion of the survey sample on supply chain entities most directly involved in product or service provision at the household level across five districts in Uganda selected in consultation with WSP and the MoH (Table 1). The goal was to gather general perspectives from as many different supply chain entities as possible who are currently operating in different parts of the country. 8

15 Table 1. Sample of supply chain interviews for the study. District Role Entity Number of respondents Arua Supplier Hardware shop 2 Service provider Mason 2 Service provider Pit emptier 1 Manufacturer WE Concrete 1 Consumer or purchaser Individual household head 2 Amuria Supplier Hardware shop 2 Service provider Mason 2 Household Individual household head 2 Tororo Supplier Hardware shop 2 Service provider Mason 3 Household Individual household head 2 Mpigi Supplier Hardware shop 2 Service provider Mason 2 Household Individual household head 2 Bushenyi Supplier Hardware shop 2 Service provider Mason 2 Household Individual household head 2 Kampala Service provider Pit emptier 1 Other (primarily located in/around Kampala) Nongovernmental Organization Plan International 2 Business support Captiva 1 Manufacturer Crestanks 1 Manufacturer Tororo Cement 1 Financial institution Microfinance institutions (BRAC, 3 UGAFODE, FINCA) Stakeholder MoH, Ministry of Water and Environment 3 The study aggregated data from these various activities to create a high-level review of the market situation and potential in Uganda for the expansion of sanitation services. Furthermore, the study analyzed the limitations and level of interconnectedness of the various supply chain elements to initiate the process of identifying and addressing gaps in the system and suggest focus areas for future capacity building and market-development efforts. 4.0 Study limitations as they pertain to the analysis It should be noted that this study was designed as a rapid, qualitative assessment of the market for household sanitation in rural and small towns in Uganda. The study was not designed to be representative of the entire country in terms of geography, population, sanitation solutions, or supply chain entities. The findings reflect high-level conversations with an extremely small sample of value chain actors and households across multiple districts, complemented by past studies carried out by the Hygiene Improvement Project/Plan International Uganda in Tororo and a demand driver study by Nuwagaba. Most, but not all, of the individuals and organizations in our originally proposed sample fell into our final sample of respondents (Table 1). Thus, the analysis and recommendations incorporate 9

16 reasonable assumptions based upon the themes of information expressed by respondents and may not fully represent the market situation in every region or community in the country. As mentioned above, the original terms of reference from WSP were to examine the supply chain actors and business models for providing sanitation goods and services to rural households. The study was not meant to focus on gathering extensive, quantitative data from the household perspective. Therefore, the inclusion of limited information from qualitative household discussions is merely meant to provide additional perspective on supply chain findings rather than serve as representative characteristics of low-income, rural households across Uganda. In addition, not all respondents were completely forthcoming with information asked of them during the field surveys. Some reasonable assumptions were made, and gaps in information and analysis were filled in some areas of the study based on comparisons to similar market conditions in other regional settings in East Africa. While many commonalities exist between countries such as Uganda, Kenya, and Tanzania, it is understood that underlying socioeconomic and cultural factors play differing but substantial roles in shaping behaviors and perceptions around sanitation, and those factors affect market conditions in unique ways in each setting. Finally, the design and timeline for the study allowed for a limited exploration of select issues related to household sanitation in Uganda. The findings from the study point to certain recommendations but are not meant to indicate a finite set of solutions to addressing the need for improved sanitation at the household level. Any approach to solving the challenges of increased access to sanitation requires an extensive examination of multiple complex and interwoven issues, and this report attempts to address only a subset of issues related to leveraging better market mechanisms for household sanitation provision in rural and small towns in Uganda. 5.0 The sanitation value chain: A framework for analysis Understanding the elements of the value chain begins with examining the interactions among the system players involved in the distribution and delivery of sanitation products and services. Entities such as product designers, manufacturers, distributors, retailers, and service providers all serve as individual links in an interdependent system (i.e., value chain ) of service provision, which can function under a variety of public-sector, private-sector, or combined approaches (Figure 3). The efficiency and effectiveness of the value chain, however, depends upon the strength of the connections between each link. Figure 3. Value chain framework for the study. The initial link in the chain, and one of the most critical factors for uptake by the consumer, is product or service research and development. If a product or service aimed at households at the base of the pyramid (BOP) does not easily integrate into their daily ecology of surroundings and routines, product 10

17 adoption often suffers. Thus, user-centered research and development that takes into account consumer preferences, practices, and beliefs lays the foundation for establishing the rest of the valuechain elements. Appropriate design then leads to products or services, preferably sourced through local means in order to ensure low-cost delivery and market sustainability. Products or services must also be of a high enough quality to withstand the challenging conditions in which most BOP households live, while maintaining a simplicity of elements that accommodates easy transport, assembly, repair, replacement, or upgrading. In addition, products or services must allow for reasonable manufacturing scale in order to ensure volumes necessary for sufficient profitability. Distribution provides the access to meet consumer demand for products or services. However, this link is often the weakest in market-based value chains in low-resource settings. Poor infrastructure, disaggregated groups of potential consumers, and a lack of specialized training are some of the numerous challenges to successful service delivery that can reach large numbers of BOP consumers. Marketing and behavior change communication serve as the bridge to bring demand from consumers together with product or service supply. Demand generation must balance between providing sufficient general education and information about a product or service (i.e., category-level promotion or behavior change communication), while emphasizing the appealing aspects and features of a specific product (i.e., branded promotion). This is particularly important in the context of BOP markets, where consumers may be inexperienced purchasers but still have aspirations for products or services that improve their quality of life. In low-resource settings, NGOs and other public-sector entities often shoulder the burden of demand generation and behavior change communication. Private-sector players must also find ways to tie into these efforts or conduct independent marketing campaigns in order to ensure success for market-based approaches. Product purchase or service acquisition occurs at the point where demand generation meets access, but after-sales service is essential for sustaining the connections between value-chain elements. Service may involve simple follow-up visits from salespeople to gauge consumer satisfaction, or more extensive interactions with individual or groups of consumers to provide further education, repairs, or upgrades. Finding ways to enable the consumer to continue to interact with the product or service aids in weaving it more completely into their daily lives, and it builds a relationship between the customer and each piece of the value chain. The need for access to business capital and other financing mechanisms underlies every link in the value chain. Small entrepreneurs must have the ability to develop their products and build their stocks from adequate working capital, while BOP consumers require access to financing in order to afford products or services amid their often fluctuating income streams. Financing for low-resource settings involves risks on both the supply and demand side of BOP markets (e.g., informal, unregistered small enterprises; small loan amounts with long-term borrowing horizons for consumer purchase), but catalyzing the growth and sustainability of market-based value chains cannot flourish without it. 11

18 6.0 Country background 6.1 Household demographics Across Uganda, the current average population density is nearly 170 people per square kilometer (as of 2010), but density varies fairly widely across many of the districts, especially those covered in this study (Table 2). Table 2. Population statistics for study districts. (UBOS 2002) Region NORTHERN EASTERN EASTERN CENTRAL WESTERN District Arua Amuria Tororo Mpigi Bushenyi Urban households 12,241 1,286 8,004 2,571 8,196 % urban population 8% 2% 7% 3% 6% Rural households 139,610 63, ,279 86, ,774 Total housholds 151,851 64, ,283 88, ,970 Population density (per sq. km) Mean household size (persons) Uganda is one of the world s poorest countries in terms of per capita income. In 2010, it was ranked 196 th out of 215 countries with a gross national per capita income of US$490 via the World Bank s Atlas analysis, and 190 th out of 215 countries by purchasing power parity (PPP) at 1,230 international dollars (World Bank 2010). At international poverty line standards, 65 percent of the population was below the $2 per day (PPP) poverty line, while 38 percent of the population was below the $1.25 per day (PPP) poverty line (World Bank 2012). The mean household monthly income in 2006 for all of Uganda was approximately UGX 170,891 (US$69). In Kampala the mean was UGX 347,918 (US$140) and in rural areas it was UGX 142,778 (US$57) (UBOS 2006). In rural areas, the main source of income was agricultural income followed by wage employment and non-agricultural enterprises, whereas in urban areas, the primary source of income was wage employment followed by non-agricultural enterprises. Average monthly household income across the four regions in which the five study districts are located varied from approximately UGX 117,200 (US$47) to approximately UGX 336,800 (US$135) as shown in Figure 4. 12

19 700, , , , , ,000 Urban Rural 100,000 0 NORTHERN EASTERN CENTRAL WESTERN Figure 4. Average monthly household income (UGX) by region. (UBOS 2010) The data reveal a higher proportion of poorer households residing in the Northern and Eastern regions, whereas more middle- and higher-income households are found in the Western and Central regions (Table 3). Table 3. Monthly household income classes (percentage of households). (UBOS 2010) Region NORTHERN EASTERN CENTRAL WESTERN >500,000 UGX >300, ,000 UGX >200, ,000 UGX >100, ,000 UGX >50, ,000 UGX <50,000 UGX The average household size throughout Uganda is five members, and living conditions across much of the country remain rather basic. Standard housing in rural areas typically consists of earthen floors, walls made from local materials (e.g., mud, poles, stones), and roofs made of grass, leaves, or metal sheets; more permanent building materials such as cement, tiles, and bricks are more commonly found among urban households. Although somewhat dated, household construction data from 2002 across the five districts further speaks to these norms as well as highlights the differences in income classes across the study sites (Table 4). Table 4. Construction material used for housing (percentage of households). (UBOS 2002) Region NORTHERN EASTERN EASTERN CENTRAL WESTERN District Arua Amuria Tororo Mpigi Bushenyi Roofed with iron sheets Grass-thatched roof Walls made of mud and poles Floor made of rammed earth

20 Even so, the vast majority of households across the study districts own their dwelling unit, and paying rent seems to be more prevalent only in Mpigi district (Figure 5). This is an especially important characteristic in regard to household sanitation as it speaks to the level of freedom that ownership provides to individual families to make decisions about latrine installation and usage Arua Amuria Tororo Mpigi Bushenyi Owner occupied Free Rented Figure 5. Percent of households by tenure of dwelling unit. (UBOS 2002) Given its vast rural population, Uganda is primarily an agrarian society. Agriculture serves as a key support to the economy, providing over 22 percent of the nation s GDP and the majority of its exports, including coffee, tea, and cotton. Subsistence farming accounts for 70 percent or more of how each study district s population makes their livelihood (UBOS 2002). The fact that rural households rely upon subsistence agriculture, however, leads not only to low incomes but also to minimal spending each month. Overall, mean monthly expenditures per adult equivalent in 2006 were UGX 39,746 (approximately US$16), with 45 percent going to food, drink, and tobacco (UBOS 2006). In rural areas, an average of 50 percent of all household expenditure goes to food while only 6 percent and 5 percent go to health-related expenditures and household and personal goods respectively (Table 5). Not all household expenditures are in cash, and in-kind payments are fairly common. Table 5. Percent share of total rural household expenditure by region. (UBOS 2010) Region NORTHERN EASTERN CENTRAL WESTERN Food, beverage, tobacco Clothing and footwear Rent, fuel, and energy Household and personal goods Transport and communication Education Health Other consumption expenditure Non-consumption expenditure

21 Household ownership of durables throughout the country is rather mixed, with most households in the Central region having access to key assets such as household appliances and electronic equipment, but much lower ownership levels throughout the rest of the country as seen in Table 6 (UBOS 2006). 2 Table 6. Percent of household ownership of selected assets. (UBOS 2006) Region NORTHERN EASTERN CENTRAL WESTERN House Furniture Household appliances Electronic equipment Bicycle Mobile phone Savings account Education levels were extremely low, and literacy rates especially among females varied widely across each of the study districts in Far less than half of the population (15 years and older) had completed primary school, and fewer than 45 percent of females were literate in three of the five study districts (Table 7). Table 7. Education and literacy rates by study district. (UBOS 2002) Region NORTHERN EASTERN EASTERN CENTRAL WESTERN District Arua Amuria Tororo Mpigi Bushenyi Education (%) Population (15+ years) completed primary school Population (20+ years) completed secondary school Literacy rate (18+ years, %) Male Female Total The introduction of the Universal Primary Education (UPE) program in 1997 has had positive effects on school attendance at the primary level over the past several years. The most recent figures show a gross attendance ratio (GAR) for the entire country at 123 percent, with the Eastern region having the highest ratio at 133 percent and the Northern region having the lowest at 73 percent (UBOS 2012). 3 Secondary school attendance, however, continues to lag with an overall GAR of 23 percent; the Northern region has the lowest GAR, at only 8 percent (UBOS 2012). Ease of access to financial and market outlets in each of the study regions remains limited given the large rural population. In particular, rural households face significant access barriers to key facilities such as public transport, banks, and markets (Table 8). 2 Low ownership levels of appliances and electronics may be attributed to the lack of connectivity to the electrical grid in rural areas further from main cities such as Kampala. 3 Gross attendance ratio is defined as the total number of primary or secondary school students, expressed as a percentage of the official primary- or secondary-school-age population (UBOS 2012). 15

22 Table 8. Access to selected social and economic outlets. (UBOS 2006) Region NORTHERN EASTERN CENTRAL WESTERN Access to transport facilities (% of communities) All season feeder roads Bus stop Taxi/matatu stop Access to banking facilities (% of communities) Bank branch office Microcredit institution Distribution of markets in communities Consumer products markets Furthermore, regardless of household access to banking facilities, the overwhelming majority of people in each of the study regions have never opted to borrow money through formal or informal means (Table 9). Table 9. Percent of households that have ever applied for a loan. (UBOS 2010) Region NORTHERN EASTERN CENTRAL WESTERN Formal Semi-formal Informal For the few Ugandan households that have applied for a loan, most of them utilized it to purchase inputs or working capital for a business, as seen in Figure 6. Pay for building materials Pay for health expenses Pay for education expenses Buy consumption goods Purchase inputs/working capital Figure 6. Purpose of loan by percent of households having applied (all Uganda). (UBOS 2010) 16

23 6.2 Household sanitation status The Joint Monitoring Program (JMP) for the World Health Organization and United Nations Children s Fund estimated in 2010 that just over a third (34 percent) of the Ugandan population was using improved sanitation, with as many as 10 percent (primarily rural inhabitants) still resorting to open defecation (JMP 2012). The number of households using open defecation as their sanitation solution has dropped significantly since 1990, when the proportion was 28 percent. Some of this drop may be the result of large-scale integrated rural water and sanitation programs, many of which offered subsidized latrine platforms, as well as the enforcement by various local governments of the Public Health Act to mobilize communities to end open defecation practices (WSP 2011). For the most part, however, Uganda remains a country reliant upon traditional pit latrines, especially across the four regions of the study (Table 10). Table 10. Percent of households by type of toilet facility. (UBOS 2010) Region NORTHERN EASTERN CENTRAL WESTERN Flush toilet VIP latrine Pit latrine Bush/no toilet Many of the households with access to a latrine share that facility with other households, which equates to unimproved sanitation access under JMP standards. JMP data from 2010 estimated that 20 percent of the total population shared their sanitation facility with at least one other household (JMP 2012). The Demographic and Health Survey (DHS) in 2006 revealed that 43 percent of all respondents (37.3 percent in rural areas) indicated they used a latrine facility that was shared with at least one other household (Uganda 2007). Little data exists on the quality of latrines found throughout the country. While DHS data collection indicated that 40.8 percent of rural households utilized a pit latrine without a slab, no delineation is given regarding the shared facilities, and few other studies have been conducted to extensively assess the status of traditional latrines across Uganda. 4 It is reasonable to assume from statistics related to household facilities and the overall rural nature of Ugandan society, however, that most latrines are constructed with simple materials. These basic-style latrines often have makeshift walls and roofs, but rarely are the superstructures made from permanent materials, and few latrines offer full doors for privacy. Grass, mud, dirt, wood, fabric, and other improvised materials that can be cheaply and locally sourced are common building elements, particularly in rural areas. However, even these materials are becoming increasingly scarce due to poor land-use methods, unsustainable harvesting of materials, and deforestation (USAID 2009). Bricks, cement or plastic, and metal may also be utilized for walls, slabs, and roofs respectively, but are much more expensive and difficult to access for low-income households. 4 For example, a qualitative study of 30 households by the United States Agency for International Development Hygiene Improvement Project in Tororo district revealed that of the 16 households using latrines, 14 latrines were of a traditional style with mud slabs and grass-thatched roofs (USAID 2009). 17

24 Unimproved sanitation Improved sanitation Movement toward the initial rungs of the sanitation ladder (Figure 7) has seen some positive progress in Uganda over the past several years. Between 1990 and 2005, an average of 3.96 percent of the population per year reported a change in sanitation coverage to a traditional latrine (Morella 2009). Improvements beyond traditional latrines, however, have been extremely limited with only 0.2 percent of the population annually moving to an improved latrine (Table 11). Table 11. Annualized change in sanitation coverage (percent of population) from (Morella 2009) Septic tank Improved latrine Traditional latrine Urban Rural Total Household segmentation The country background data begins to paint a picture of some key characteristics of the target market for potential demand-responsive business approaches to household sanitation provision. Overall, the market appears somewhat homogeneous, but there are particular nuances that may be critical to ensuring the success of certain approaches. Improved sanitation facilities: Ensure hygienic separation of human excreta from human contact. Such facilities include: Flush or pour/flush latrines to piped sewer, septic system, or pit latrine; ventilated improved pit latrine; pit latrine with slab; or composting toilet. Shared facilities: Sanitation facilities of an otherwise acceptable type shared between two or more households. Only facilities that are not shared or not public are considered improved. Unimproved facilities: Do not ensure hygienic separation of human excreta from human contact. Unimproved facilities include pit latrines without a slab or platform, hanging latrines, and bucket latrines. Open defecation: When human waste is disposed of in fields, forests, bushes, open bodies of water, beaches, or other open spaces, or disposed of with solid waste. Figure 7. The sanitation ladder. The majority of the population in these districts consists of rural, low-income households dependent upon agriculture for their way of life. The level of sophistication in their daily life is rather limited. Most households live in primarily temporary dwellings constructed of basic materials and rely upon basic sanitation solutions such as pit latrines or open defecation, and they have limited access to market infrastructure and the tools necessary to engage in market activity either as suppliers or consumers. Furthermore, there has been little progression toward improved latrines over the last several years, and the status and quality of the current traditional pit latrines remains questionable. This might indicate that the market need may not necessarily be a new latrine design, especially for a population with constrained income and limited access to finance. Piecemeal latrine upgrades and retrofitting of what households currently have in place could be more appropriate approaches in the near term. All of these factors must be taken into account for any market development activity, and all speak to the need to design relatively basic interventions that can aid the majority of the population in gaining familiarity with both improved sanitation and market mechanisms that might increase access to it. Beyond the broad characteristics across all study sites, there are some differences between districts that are particularly important to highlight for any future sanitation market development opportunities. The data show higher average monthly incomes and a greater proportion of households in the higher 18

25 income classes in both the Central and Western regions (where Mpigi and Bushenyi districts respectively are located). Mpigi and Bushenyi also display higher rates of education (percent of population having completed primary school) and literacy from the 2002 data. These factors may indicate a population not only better able to consider market-based interventions requiring parting with their expendable income, but also one better able to connect with marketing efforts for new household sanitation product offerings. Lower average monthly household incomes and household income classes are found in the Northern and Eastern regions (where Arua and Amuria/Tororo districts respectively are located). Only one-quarter of the population in Arua and Amuria have completed primary school, and only 36 to 43 percent of females in Arua, Amuria, and Tororo are literate (UBOS 2002). Furthermore, approximately 25 percent of the population still resorts to open defecation in the Northern region, and over 10 percent defecate in the open in the Eastern region. These factors point to the need for a very different approach than that applied in other locations of Uganda. A low-cost, basic improved sanitation solution communicated through simple means may be the most appropriate approach. 6.4 Regulatory and policy environment for sanitation The Government of Uganda has committed to achieving the Millennium Development Goals to address issues related to the high poverty rates within the country and has incorporated many of these targets into the 2010 National Development Plan. The government s current policy objectives for the water and sanitation sector are to address poor sanitation and hygiene to move households up the sanitation ladder to facilities that can be cleaned and have hand-washing facilities next to them. The specific target is to increase the proportion of households in Uganda with pit latrines from the current 70 percent in 2011 in rural areas to 77 percent by the year 2015 (UMoH 2010). The government s approach has progressed through several policy development and iteration processes including: 5 Kampala Declaration on Sanitation of 1997 Ministerial Memorandum of Understanding of 2001 Formation of the National Sanitation Working Group of 2003 Environmental Health Policy of 2005 Improved Sanitation and Hygiene Financing Strategy of 2006 Each policy has incorporated a stronger focus on bridging existing gaps in sanitation access and provision; however, it should be noted that Uganda still has no specific national sanitation policy. Instead, sanitation is managed under a broad network of laws, regulations, by-laws, and policies spread among numerous agencies and governing bodies. While there is no single institution with a direct mandate to authoritatively deal with all aspects of sanitation in Uganda, the MoH is widely viewed as the acknowledged lead, especially in the realm of policy development, but continues to be hampered by a lack of resources (Table 12). Furthermore, local governments struggle with sanitation law enforcement due to political interference at various levels and difficulty in getting by-laws approved which causes 5 Several other policy documents have also been written and are at various levels of implementation such as the 1 st Health Sector Strategic Plan in 2005, the National Health Policy and 2 nd Health Sector Strategic Plan in 2010, and the Improved Sanitation and Hygiene Promotion Financing Strategy in

26 increased difficulty in the improvement of access to safe sanitation services at the household level. Stakeholders under the National Sanitation Working Group have supported different aspects of the sector, with WSP supporting policy development and nongovernmental organizations (NGOs) such as Plan International Uganda introducing new methodologies. Table 12. Institutional responsibilities in the Uganda sanitation sector. (The Water Dialogues 2008) Institution Responsible department/division Specified role Ministry of Health Environmental Health Promote household hygiene and sanitation. Ministry of Water and Environment Ministry of Finance, Planning, and Economic Development Ministry of Gender, Labor, and Social Development Directorate of Water Development and National Water and Sewerage Corporation N/A Community Development Department Plan investments in sewerage services and public toilet facilities in urban areas. Allocate sanitation sector budget. Develop policies and guidelines with respect to community mobilization and empowerment, gender responsiveness, coordinating and mentoring community development workers, and coordinating crosscutting development areas. Ministry of Local Government N/A Inspect, monitor, advise, and provide technical assistance to local governments. Local governments District Health Inspectorates Enforce laws and provide sanitation services at the local level. National Sanitation Working Group N/A Coordinate ministries responsible for sanitation and sanitation promotion activities. District Water and Sanitation Working Groups N/A Coordinate sanitation-promotion activities at the district level. Setting funding priorities for water supply, sanitation, and primary health care interventions has largely been ceded to local governments, with budget-making and control designated at the district levels. However, the central government retains the roles of policymaking, standard setting, technical oversight, and overall program supervision (USAID 2007). Funding for rural sanitation activities at the district level depends on national-level allocations from within ministerial budgets, known as on-budget funding. Districts decide how to spend these allocated funds, within guidelines and restrictions imposed from the national level. Off-budget funding from nongovernmental sources can be provided directly to districts, but more often bypasses district budgeting and expenditure mechanisms, going directly to pay for implementation activities designed and run by NGOs themselves, often at the sub-county or village levels (USAID 2007). At the national level, government funding for sanitation still lags far behind funding for the water supply. A key funding problem has been the general marginalization of sanitation and hygiene activities at the district level, particularly the general lack of district-level attention to rural household sanitation (USAID 2007). 20

27 The Ugandan government has attempted to use innovative approaches including incentives and competition to encourage districts. Potential sources of off-budget financing (decided at national and district budgets) for household sanitation and hygiene promotion have included household investment in sanitation facilities, microfinance available to communities and consumers (thus far fairly minor, but increasing), grants and subsidies from NGOs and donor projects, and private-sector investments (also very limited to date). However, neither microfinance nor private-sector investments have been mobilized directly for rural sanitation thus far (USAID 2007). Uganda s rich policy context with various regulations, declarations, and legal instruments intended to achieve its health and sanitation objectives, however, has not translated into substantial progress in provision of improved sanitation especially in rural and small towns or tangible health outcomes. Inadequate resources, high levels of poverty, inadequate awareness and poor enforcement of public health by-laws are major challenges that have affected the implementation of environmental health strategies (UMoH 2010). According to a 2008 report published by The Water Dialogues: Perhaps the biggest obstacle to progress in improved sanitation in Uganda is the lack of a specific sanitation policy under the current institutional and policy arrangements. Implementation of interventions relies on inferences from other policies like the national Environmental Policy and the Water Policy, which are not adequate to address the needs of the sanitation sector. This explains why even progressive strategies like the Improved Sanitation and Hygiene Financing Strategy, which is championed by the National Sanitation Working Group (NSWG) as the preferred approach to sanitation improvement, remains difficult to implement and monitor, as they have no institutional home, but largely rely on the goodwill of various agencies and persons, and often the short-term pressure of development partners, especially through the NSWG. Unfortunately such goodwill does not provide an adequate anchor for private sector participation or a guarantee of security for their investments (The Water Dialogues 2008). Uganda primarily follows a private-sector-led economic system, with the government serving to provide policy and regulatory support. Private provision of sanitation services in Uganda has a long history stemming from the Public Health Act of 1964 (and refreshed in 2000), which places the responsibility for obtaining sanitation facilities with individual households. 6 Still, a substantial proportion of the development programs stemming from the Poverty eradication Action Plan (PEAP) are financed by donors. This has consequently distorted the potential for market development and prohibited privatesector entry into sectors such as sanitation by creating unrealistic expectations, most likely within the supply chain, that services will be provided to households for free or via subsidies through government, donor, or NGO funding (The Water Dialogues 2008). 7 6 Furthermore, the Public Health Act provides that any dwelling without proper sanitation facilities should be closed down and or its owner prosecuted (The Water Dialogues 2008). 7 While the Environmental Health Policy states that no subsidies shall be offered for household sanitation, the funding of development programs by donors can foster a discouraging signal to private-sector players that they might not be able to obtain a profitable return on their participation in the sector. 21

28 Low High 6.5 Key sanitation stakeholders While local government entities, donors, international NGOs, civil society organizations, private-sector players, and individual communities all play an important role in health, the Ministry of Health has overall authority over the household sanitation sector in terms of promulgating regulations and implementing programs. According to a 2011 study in which stakeholders were ranked according to influence, the MoH/Environmental Health Department was said to be the most powerful and influential with regard to community-led total sanitation (CLTS) and sanitation marketing (SANMARK) (J. Birungi, unpublished data, 2011). The Ministry of Water and Environment (MWE)/Directorate of Water Development (DWD) was said to be the second most powerful due to its responsibility for urban sanitation and hygiene promotion among safe water user communities. The MWE allocates funds to local governments for sanitation under the District Water and Sanitation Conditional Grant and provides capacity building through Technical Support Units. District local governments were identified as key in the implementation of CLTS/SANMARK as they are responsible for service delivery including sanitation, formulating policies and by-laws, and planning and locating resources for sanitation at the district level. The study attempted to visually represent a continuum of influence based upon the interpretation of the major actors within the sanitation sector (Figure 8). The continuum illustrates some of the key issues currently contributing to the development of better mechanisms for delivering household sanitation within Uganda. Government entities maintain high influence, but without particularly clear lines of coordination and few resources. International and local organizations find themselves clumped somewhere in the middle, all experiencing various levels of success amid different implementation efforts. Meanwhile, the private sector and media sit at the lowest levels of influence within the sector, either through circumstance or by choice. A separate, similar mapping exercise was carried out by WSP to assess the level of influence of each stakeholder based upon its amount of resources, policy mandate, and/or authority to make decisions. The full table of stakeholders can be found in Appendix A. The results were fairly similar in that it displayed the various degrees of influence and support across the sector, and seems to point towards the need for consolidation of sanitation policy and alignment of key contributors for pursuing market provision of sanitation. MoH MWE Districts MoFPED World Bank/WSP, DANIDA, AfDB, UNICEF Plan, Water Aid, NETWAS, SNV, Technical Support Units, UWASNET Media Private sector Figure 8. Continuum of influence of sanitation sector actors in Uganda. (J. Birungi, unpublished data, 2011) 22

29 7.0 Study findings: The sanitation value chain in Uganda 7.1 Summary Secondary data reflect a population generally aware of the need for household sanitation solutions, but unable to meet the proper threshold for improved latrine designs due to any number of reasons. Households may choose to construct everything themselves or hire a local laborer to assist with portions or all of the construction. The building process and materials, however, most often do not comply with any sort of specifications or regulations for ensuring a safe and improved sanitation solution. A collection of improvised, makeshift latrines built through informal means has resulted from a market that basically does not acknowledge the presence of sanitation service provision as a subset of need or opportunity. The market for household sanitation in Uganda is undefined and undeveloped. At the most basic level this is evident in the fact that Crestanks a local manufacturer of ready-made, plastic latrine components does not sell directly to the consumer. 8 As for the actors within the supply chain that do interact directly at the household level (e.g., masons), they do so in a one-off, disaggregated fashion and do not currently possess the correct training, tools, or approaches to take their operations to scale in any meaningful way. Instead, they focus on easy win opportunities such as government and school contracts for latrines and other construction projects. Households are not seen as consumers for improved latrines and this philosophy appears to permeate the small service providers within the supply chain, from hardware stores who sell traditional latrine components to the masons who build them. At this point in time, many low-income Ugandan households are not considered to be a revenuegenerating market and therefore the supply chain has not invested in building appropriate sanitation solutions for this segment of the population. However, a USAID study from 2009 posited that if demand were stronger and year round, the development of specialized latrine contractors may be viable (USAID 2009). It appears that there is a lack of coordination along the sanitation supply chain in Uganda and entities are acting in isolation. From manufacturers to distributors to sales, installation, and services, the players do not seem to be in communication or have aligned incentives. This creates gaps that unnecessarily increase the financial and time resources needed to deliver a complete solution to the end user, therefore further constricting the development of a sophisticated household sanitation market. Until gaps along the entire value chain are addressed, the household sanitation industry will remain immature and will inhibit the creation of safe, culturally-relevant solutions for low-income markets. This endeavor will take great coordination and investment in order to strengthen supply, build demand, and sustain a competitive business environment that fosters synergies and innovation and allows for expansion. 8 This supports findings from a 2007 study by USAID that found that while Crestanks remains hopeful and believes sales to households is ultimately where it wants its market to develop, the company currently has neither the market reach, distribution, capacity, nor the ability to invest in direct promotion and sales to households (USAID 2007). 23

30 While the constraints within the household sanitation value chain in Uganda are significant, they are not insurmountable, and they point toward clear opportunities for laying a solid foundation for the development of the sanitation market. The fact that little market infrastructure currently exists in the household sanitation space allows for broad and potentially sweeping innovation across the entire value chain. Certain aspects of any household sanitation market creation effort will present much more complex challenges than others, and will require coordination, partnership, and patience. Still, some initial components for high-potential market-based approaches to household sanitation in Uganda are already in place, and stakeholders appear to be engaged and established within the sector. The key will be integrating and aligning current and future efforts accordingly to ensure both scalability and sustainability. For example, organizations such as Plan International Uganda have begun to build a foundation for improved access to better household sanitation through training masons, behavior change communication, community-led total sanitation (CLTS), and hand washing initiatives. However, the next step is to create an environment that encourages efficiency as well as building and delivering marketbased solutions at scale. Properly establishing a household sanitation industry will require specialization and vertical integration. 7.2 Research and development Current status Broad research and development efforts around household sanitation in Uganda appear to be virtually non-existent, apart from a few targeted efforts such as the Network for Water and Sanitation Uganda (NETWAS) Action Research Project carried out with a few designs in four districts. While some manufacturers have worked with local and international NGOs on targeted (primarily in terms of geographic locations and specific populations) sanitation-related projects, few have taken the initiative to design sanitation products or latrine elements geared toward broad acceptance by low-income households across the country. Organizations such as Plan International Uganda have instituted projects around new styles of latrine slabs and other organizations have introduced Ecosan technologies, but these efforts have been limited to a small number of districts and have shown little success in terms of uptake. 9 Evidence exists within Uganda of multiple household sanitation-related products (primarily in the plastics category), but there appears to be no proactive effort on the part of manufacturers or other product design entities to better understand user needs and desires for acceptable and affordable household sanitation solutions Constraint: Lack of a standardized, culturally appropriate sanitation solution The study encountered a wide range of definitions of what materials are needed to construct an improved latrine. Of all the groups interviewed, masons seem to have the clearest idea of what they require, but there were discrepancies in the exact materials, the amount of materials, and the time 9 Plan noted in an interview that since inception, 90 Plan-sponsored masons have sold only about 40 to 50 latrines over a three-year timeframe. 24

31 needed for construction. The study was unable to discern a widely-used, standard package of latrine construction materials (e.g., cement, iron bar, wire mesh, etc.), and therefore, was unable to get an accurate idea of the total price of an improved household latrine. 10 The lack of standardization inhibits the ability of the supply chain to gravitate toward an optimized business model to deliver better sanitation products and services. Understanding what the consumer wants in design, function, and health/safety benefits serves as the first step to being able to offer a range of desirable technologies and services, at various price points, to meet the demands of households. At the current time, there are no consumer brands for household latrine products or complete solutions. When a household approaches a mason or hardware store to inquire about latrine construction, there is no one set of materials that serves as a reference point. Variable inflationary price fluctuations and product stock-outs across hardware suppliers also make estimating a guaranteed total cost for a latrine extremely difficult once a household attempts to assemble the necessary materials. The result is a convoluted and confusing latrine construction decision and purchase process for the household. The simple addition of a single, bundled product/service solution at the point of sale could make all the difference in generating increased consumer demand for improved household latrine solutions. While the MoH has design standards for latrine pits, these do not seem to be followed on a wide scale at the household level. Pits depths can vary from 15 to 40 feet, and any official guideline for optimization, safety, or compliance does not seem to be recognized by the majority of informal service providers. The dimensions of the pit partially dictate the amount of materials needed to construct the remaining components of the entire latrine, and so from the very beginning, there are variances, which further complicate the industry. With no standard for either materials or construction pricing, coupled with inflation and stock-outs, the task of quoting the exact total cost of an improved latrine to a household is difficult. The inability to clearly communicate aspects of materials, labor, and total cost to households affects the overall perception of improved sanitation and makes access and uptake even more challenging. Once a common solution set to meet demand for household sanitation products and services is established, the natural forces of competition and specialization can smooth out issues of pricing and eventually lay the foundation for a package of solutions aimed at various niche markets Opportunity: Documenting user input and feedback on latrine design and functionality The critical gap in the initial link of the value chain is a lack of knowledge of what households might desire for their sanitation solutions. There appears to be little to no investment on the part of plastics or cement manufacturers on specialization, innovation, or product development related to household sanitation. Although plastics manufacturers currently produce products that can be used in household sanitation settings as well as engage in small-scale, coordinated product development, most of this activity appears to be tied to NGO initiatives and distribution efforts. Such efforts, however, do little to drive a market for household sanitation forward. Without competition from elsewhere in the sector, 10 However, cost estimates from the Network for Water and Sanitation (NETWAS) estimate slab construction with a similar set of materials at a cost of approximately between UGX 40,000 and UGX 50,000 (NETWAS 2012). 25

32 manufacturers have little incentive to explore lower-cost product designs or broaden their distribution channels. That type of market structure means that consumers will never have the opportunity to provide their input and feedback to market actors, especially in critical areas such as product design and functionality. The opportunity exists for better understanding of household sanitation needs and desires in Uganda, and then introducing or developing a latrine that fulfills that need. The Ugandan Network for Water and Sanitation (NETWAS) is already helping to address this opportunity through the Action Research subcomponent if the Learning for Policy and Practice in Rural Household and Primary School Sanitation and Hygiene (LeaPPS) project (Box 1). The project has taken current basic, improved latrine designs and has worked with communities to adapt them for the local context. This iterative process continues, and challenges remain especially in terms of cost of construction, but findings thus far indicate that the potential is high for replication in other locations over time. Box 1. Action Research with latrine designs under the LeaPPS project. Since 2008, Simavi has supported SNV, IRC and NETWAS to implement the Action Research for Learning for Policy and Practice in Rural Household and Primary School Sanitation and Hygiene (LeaPPs) project which focuses on local learning around cost-efficient and effective sanitation and hygiene programs, sustainable facilities, and behaviors in primary schools and households (NETWAS 2012). This initiative aims at synthesizing sanitation and hygiene issues derived from the previous action research to streamline further learning towards more effective and pro-poor sustainable sanitation technologies and approaches in households and primary schools in the districts (NETWAS 2012). Under LeaPPS, the Action Research sub-component brought four sanitation technology solutions (the fossa alterna, spiral fossa alterna, two-in-one fossa alterna, and arborloo latrine designs) to communities with poor soil formation and termite infestation that did not favor construction of the commonly used traditional pit latrines (NDCL 2012). The technologies are also a deterrent to wastage of arable land and promote organic farming through provision of compost manure in predominantly agriculture areas. The latrine designs were meant to address specific geological difficulties faced by certain communities in Uganda. For example, the latrines incorporate shallower pit designs and composting strategies to alleviate the difficulty of having to dig a deep pit in rocky soil. However, the designs for each latrine have been altered over time to suit individual community and socio-economic needs. These adaptations have resulted in improved perception of the latrines and increased interest in how to construct them by community members. Overall, many stakeholders are also satisfied with the designs, but challenges related to the cost of construction remain. Households seem unwilling to invest their own money in sanitation despite being interested in the technologies, and the initial costs of construction (UGX 248,400 for a fossa alterna latrine, and UGX 117,450 for an arborloo latrine) have discouraged local community uptake (NETWAS 2012). In addition, there is limited access to non-local construction materials such as cement, iron bars, and iron sheets. Still, the project continues to work with the local communities to incorporate their ideas and concerns into additional improvements to the design to bring down construction costs and increase access and uptake. The project plans to undertake pilot construction of fossa alterna sub-structures with locally-sourced soils and treated logs to test for appropriateness and durability. The project acknowledges that further time is required to continue to build awareness about the different technologies and educate the communities about the design aspects. However, current recommendations point towards extending the project in order to continue to learn from current progress and better determine the best course for future replication. 26

33 An additional opportunity lies at an even more basic level of gathering more insight into more specific user preferences related to sanitation at a broad, country-wide level (Box 2). Similar to the process of tweaking current designs as done in the LeaPPS Action Research, more can be done to completely understand the nuances of sanitation practices and preferences to ensure those details are considered in the initial design of new sanitation solutions (or redesigns of old ones). Box 2. PATH s user-centered design approach and latrine user-needs assessment in Cambodia and Kenya. To date, there has been limited involvement of end-users in the design of improved sanitation solutions in spite of evidence demonstrating higher uptake and sustained use of technologies that incorporate user experience through iterative feedback loops based on human-centered design theory. Factors such as attitudes about human feces including those of very young children or women s needs for privacy and security are often mentioned, but they are poorly understood and rarely considered in design. Furthermore, few designs for high-volume production currently exist that focus on user experience or include input from users themselves. Locally designed and site-constructed latrines that involve communities and users provide an important starting point for additional learning and research. To that end, PATH conducted qualitative user-needs assessments in Cambodia and Kenya focusing on the preferences and priorities of low-income latrine users. The objective of the assessments was to explore how users norms, preferences, and priorities around sanitation may impact their use and demand for an improved, upgradeable latrine platform. The study consisted individual interviews with opinion leaders, service providers, and users, as well as hardware inventories in multiple communities in each country. The structured interviews explored the current behaviors, preferences, priorities, and barriers to healthy sanitation practices for users of latrines and covered topics such as desired ideal profile-specific features, comparative standards, motivation to change behavior, and hygiene. Findings from the research highlighted critical issues for user acceptability related to latrine design in Kenya, which may impact the uptake and continued use of latrines. The research also revealed the importance of pairing the platform component of the latrine with a structurally sound enclosure and weather/flood resistant collection pit. In Cambodia, the large amount of user-feedback data generated from focus groups allowed for the drafting of initial engineering design plans for a latrine slab or platform. These designs incorporate user preferences such as ease of cleaning, material composition, and layout of slab features with production requirements for interoperability with standard construction processes, structural requirements, and ventilation. The end result was an alpha design that meets baseline criteria for the target audience and is ready to be transitioned to physical prototyping and testing in a forthcoming PATH project. The availability of this prototype opens the door to end-user experience research, the crucial next step in ensuring that the product can combine effectiveness, appropriateness, and desirability. The challenge is not necessarily to design the cheapest latrines and superstructures possible, but to create designs that fit the reality and desires of the target audience, to make valued latrine products, including superstructures that can be a major part of the cost (USAID 2007). In-depth research and development with users (i.e., households) to move toward lower-cost designs and production of improved latrine components should be encouraged in order to aid in building a brand and business model to deliver that product, increasing local production of latrine components, eliminating the need to transport supplies or products over long distances, and driving down costs across the entire value chain. 27

34 7.3 Products Current status The supply chain interviews make it fairly apparent that households view certain aspects of a latrine as completely separate entities, whether due to costs, labor, or other factors. Pits seem to be thought of as a facet of the latrine construction process that is independent from slabs and/or superstructures. Therefore, while usually not requiring physical materials, the pit can be considered an individual product in the household latrine value chain. From the field work, it appears that most pits are dug to an impressive and expensive depth, and then usually left unlined, which can make them susceptible to collapse, especially during the rainy season. References were made by several respondents to formal pit regulations that are broadly known by households and often followed for fear of financial penalties. Households appear to hire informal laborers to dig pits and pay cash upon completion, or in increments as able with the laborer digging in a meter-by-meter fashion upon payment. For households that choose and are able to invest further resources in building a latrine over a newlydug pit, or improving a current latrine, the options to do so through the commercial market are fairly limited and usually revolve around either the slab or the superstructure components. Cement slabs are a common route for improved pit coverings for households in rural and small towns. Mass-produced, ready-made, pre-cast cement slabs are virtually nonexistent (however, the study did speak with one small, independent cement manufacturer in Arua district making cement slabs for purchase; see Box 3). Thus, households who choose the option of investing in a cement slab sacrifice the investment of time and energy, in addition to the cost, to obtain and transport the necessary materials on their own and then hire a mason to construct it for them. No common set of cement slab materials appears to be established either through regulatory means or from manufacturers, which means households are left to determine on their own what they think is necessary or simply what they can afford to fashion a cement latrine slab. 28

35 Box 3. WE Concrete in Arua District. Major manufacturers such as Tororo Cement and Hima Cement primarily produce bagged cement for distribution throughout Uganda, but PATH found little evidence of broad availability of pre-cast cement products for household sanitation. One notable exception is WE Concrete in Arua District. WE Concrete sells multiple concrete products, including pre-made cement latrine slabs of various sizes. They have been in operation now for seven years and also have an additional branch in Gulu District. WE Concrete currently offers three different sizes of slabs: 80cm x 100cm for UGX 45,000 80cm x 120cm for UGX 60,000 90cm x 120cm for UGX 65,000 They sell the slabs through passive efforts by placing them by the roadside, where customers come to purchase and transport them on their own. Even so, WE Concrete mentioned that all three sizes of slabs sell a lot and there are weeks when their stock of slabs sells out. The company came up with the idea of pre-casting latrine slabs because they realized other materials that households were using for latrines (e.g., wood and mud) easily deteriorated. Pre-fashioned cement slabs provided a cost-effective, durable, and portable solution that could even be re-used if a new latrine became necessary. WE Concrete currently employs seven laborers who assist in slab production, and one marketing manager. The majority of their customers come from within Arua as well as neighboring districts, but some come from as far away as Kampala, the Democratic Republic of the Congo, and Sudan. The company estimates that 60 percent of their customers are from urban areas, and households that purchase are primarily from middle and upper income classes. WE Concrete believes that the pre-fabricated slabs are one of their most popular and profitable products. They estimated that sales of the slabs account for an average of 70 percent of their overall monthly business, and they are interested in exploring ways to expand their business. Multiple major cement manufacturers exist in Uganda, including Hima Cement and Tororo Cement, but findings from the study indicate that these manufacturers are not currently offering any specialized product for use in latrine facilities. They focus their business on large industrial projects such as roads and simply meeting the increasingly high demand for bagged cement within Uganda as well as in neighboring countries. None of them are specifically gearing any of their production toward use in the construction of sanitation facilities. Plastic slabs are much lighter, more conducive to centralized production, and easier to distribute given their lighter weight, higher durability, and nesting ability for shipping. Both plastic slabs and superstructures are produced locally in Uganda and come ready-made, but low-income households have little access to them due to either their relatively high price or lack of commercial distribution. 11 One local company currently manufacturing household sanitation components is Crestanks, a subsidiary of AquaSan Tec and headquartered in Kampala. The company currently manufactures a full catalog of sanitation products; however, most of these items seem to be geared primarily toward the needs of and use by NGOs. In addition, the cost of their products is quite prohibitive to the typical rural household (WSP 2011). Their products include latrine platforms of various sizes and styles, modular latrine 11 It should be noted that a few of the households from the field survey also mentioned that they did not prefer the look of currently available plastic latrine slabs. Thus, an additional issue may be lack of appeal. 29

36 superstructures, waste storage tanks for latrines, and large septic tanks. More about these products can be found in Appendix B. Prices for these products range from US$35 for a small latrine platform to US$250 for a septic tank or US$400 for a complete modular latrine including superstructure and slab (but not including any below-ground storage). Production capacity in the Kampala facility is fairly robust, but it is not fully utilized at the moment for sanitation-related products due to low demand. 12 Mr. N. Suresh, Crestanks General Manager, confirmed that the overall demand for their sanitation products is low, with the company only having generated approximately US$750,000 to US$1 million in sanitation-related revenue over the past five years. The majority of Crestanks sales of latrine products are to government, NGOs, or religious organizations, while almost none are to consumers. Mr. Suresh noted that he has been selling to NGOs for eight years now. Crestanks only real outlet for products that get close to end users are small hardware shops in rural towns. The sales volume to these outlets, however, is extremely low. Predominant customer groups in order of size are: 1. Schools 2. Refugee camps 3. Domestic customers (through commercial distribution channels; however, sales in this group are virtually nonexistent) Constraints: Pit digging and latrine construction materials Households independently hire a porter to dig the pit and then hire a separate mason to construct the latrine. Digging the pit is the first step in the construction process and seemingly the easiest to obtain due to a large supply of porters. Since this process is not performed by the mason who builds the latrine, there is a natural break in the momentum of the sales and construction process. One household in this study, which was considered to be middle class, cited that they had dug a pit but then too much time elapsed before construction started. The homeowner was concerned with the dangers of an open pit and having children on site, and therefore decided to have the hole covered, stopping the installation process. A lack of funds contributed to the decision to halt the process and led to the gap from pit digging to latrine construction. It is possible that if she had known the total cost up front, she might have not taken that first step. Alternatively, if a more reasonable pit standard were established, it might have freed up enough funds to cover both pit digging and subsequent latrine construction. Tangential to this, masons expressed concern with coming into the construction process and not knowing the details of the pit digging. If a pit is not reinforced in a timely manner, and depending on the season, masons face the danger of a pit collapsing. This is especially the case given that the standard guidance on pits across much of the country stipulates a preferred depth of 15 feet or more. Thus, better pit standardization and guidance could provide benefits from both a demand and supply perspective. After the pit is dug, construction of the foundation and slab can commence once the household has hired a mason and the materials are on site. Our interviews with masons demonstrate that households do not trust them to buy their materials and therefore go directly to the hardware stores and other 12 Mr. Suresh noted that they can produce as many as 750 large latrine platforms per day, but the volume they currently produce is only a fraction of that. 30

37 suppliers for their latrine construction materials, cutting the mason out of the purchase process. 13 This situation is not ideal because in our observations, the mason is the only entity in the supply chain that possesses accurate knowledge of what materials are needed in the appropriate quantity, yet is rarely the one who make the purchases. Occasionally, a mason will give the household a shopping list, but the household relies on the hardware store to give advice and guide the ultimate material decisions. However, hardware stores are unable to always clearly and consistently articulate to the consumer what items are needed to build the latrine, which can lead not only to missed sales opportunities, but to a delay in the construction process. It can also contribute to households over-purchasing supplies depending on whose advice they trust, or simply as a result of the overall lack of knowledge within the supply chain. Masons cited frustrations with having to wait for the household to buy the materials before they could start construction, often running into issues with not having the correct amount or type of materials they need, or being unsatisfied or uncomfortable building with low-quality products. Thus, the resulting quality of a finished latrine may depend more on the materials made available to the service provider, rather than the service provider s skills (USAID 2009). Moreover, if a household purchases the materials in batches or pays in installments, this delays the construction process even more. As an added complication, most latrine materials such as cement, wire mesh, and nails are purchased at the hardware store, but brick, sand, and stones must be purchased separately, and the study did not uncover any mention of formal or informal connections between these entities. When considering the total cost of installing an improved latrine, households may easily take into account the sales prices of the components, but additional hidden cost barriers (e.g., time, effort, and risk) can disrupt their purchase process. In the case of the current household latrine industry, a decisionmaker may become disconcerted with the process when they realize that they will need to hire a porter and a mason, buy the materials themselves, and find a way to transport them to the worksite despite the limited mobility and access they have to modes of transport as noted in Table 8. When the sales process is disaggregated, a consumer is forced into too many decision points, which may progressively discourage them from moving toward completion Opportunity: Standardized product offering A critical first step for the household sanitation sector in Uganda is to focus on a specific product offering for the target market (i.e., households in rural and small towns). While some evidence exists of specific, complete latrine solutions such as Ecosan latrines offered through NGOs and Crestanks Ekoloo, no simple all-in-one latrine package is currently available for low-income households. Thus, actors within the supply chain, including households, masons, and hardware shops, must resort to unsystematic means to resolve the challenges of constructing a latrine. 13 This was also the finding from a USAID study in 2009 in Tororo District, in which it was found that most clients currently purchase the materials themselves, paying the contractor for labor only (USAID 2009). 31

38 As noted above, product development research need not produce something that is overly complex, is technologically advanced, or offers an endless array of options. For example, through iterative product development research and design utilizing locally sourced materials, International Development Enterprises (ide) in Cambodia was able to develop the Easy Latrine as a simple, affordable household latrine option (Figure 9). Developed through a collaboration between ide and multiple partners including WSP, it consists of a squat pan, concrete slab, prefabricated concrete chamber, PVC pipe, and concrete rings to line the pit. Key inputs into the design have helped to Figure 9. ide Cambodia Easy Latrine. drive down costs and make it easier for suppliers to purchase the necessary materials and manufacture and transport at-scale. The result has been a three-fold increase in the number of rings a local, small-scale concrete producer can make in a day (ide 2011). The Easy Latrine retails at under US$35 and offers poor households even those in remote, rural settings a simplified solution without having to procure or transport any materials themselves. Limiting the complexity of the design helped ide simplify the product marketing, sourcing, distribution, and training, as well as reduce consumer decision paralysis about which materials to use for each part of the latrine. Households may choose to upgrade their latrine with a superstructure on their own, but the critical elements of safe waste containment are already accounted for in the Easy Latrine design. Most importantly, it allows for a single product that can be branded, marketed, and sold. This allows producers to create brand awareness and identity, and then sell that brand. This currently cannot be done in Uganda since no latrine brand yet exists. Development of a complete solution sourced from locally-made materials, such as the Easy Latrine, along with a range of upgrade products for household latrines means that families would have the option to consider incremental upgrades as well as more immediate ways to progress up the sanitation ladder depending on their willingness and ability to invest in latrine improvements. Offering all of these items under a single brand would help to increase awareness of sanitation solutions for low-income consumers and build their confidence in being able to seek out appropriate products for their individual needs and budget. 7.4 Distribution and service delivery Current status Materials for latrine construction, whether they are individual components or prefabricated products, move through a relatively disaggregated supply chain to reach retail outlets and, ultimately, households in rural and small towns. Stronger, more reliable linkages between supply chain actors currently only exist within or around larger urban settings within the five study districts, which creates obstacles of 32

39 logistics, lost time, and transport costs for small retailers, masons, and households further afield to obtain materials for household sanitation. 14 Small, local hardware shops basically serve as the primary outlet for all construction-related materials, including those used for latrines. Most of these shops are located near established small towns or settlements and operate on an independent basis, although the study found two instances of shops operating as small franchises in Tororo and Arua districts. The majority of hardware shops surveyed carry various permutations of inventory and charge differing prices for each type of product. It should be noted, however, that no hardware shop within the study sample carried any plastic household latrinespecific (e.g., plastic latrine slabs) products. More information regarding products found in the various hardware shops from the sample and the corresponding prices of materials can be found in Appendix C. In addition, nearly every hardware shop owner from the field survey indicated that prices they must pay for materials often fluctuate, sometimes multiple times a day (e.g., for cement), which further complicates their overall business operations. About half of the hardware shops in the sample owned their own vehicles and used these to transport materials to their shop for sale. The others either rented vehicles or found other means to transport supplies to their shop. There were only a few instances in which hardware shops referenced suppliers delivering products to their shops, and in those instances, it was only select products rather than entire inventories. The shops must pay transport costs for products that are delivered. Some hardware shop owners also mentioned purchasing stock from roving salesmen who sell products on the side of the road. These close-in suppliers help them save transport costs but appear to be used on an irregular basis. Most hardware shops did not reference whether specific products were more difficult to source than others, but a few noted that high demand for cement makes obtaining sufficient supplies rather challenging. Several hardware shops expressed concerns over appearing to have stock-outs of certain supplies and admitted to purchasing additional materials at retail price from other nearby hardware shops just to maintain a minimum level of products for which they had sold out. Delivery of materials from a hardware shop to a work site is only covered by the hardware shop for large orders (e.g., for school or industrial sanitation projects and to a few wealthier households). Thus, masons or individual households must assume the burden of arranging and paying for any transport of latrine construction materials from hardware outlets to their plot. This is often done via boda-boda motorcycle taxis for various rates and in stages as materials are often purchased piecemeal rather than all at once. Table 13 provides a sample of rates quoted by hardware shops for the transport of cement via boda-boda taxi. 14 This mirrors findings from WSP indicating that, although there are points of sale for sanitation facilities, they are mostly found in urban areas or small towns and not in rural areas (WSP 2011). 33

40 Table 13. Quoted rates from hardware shops for materials transport via boda-boda taxi. District Capacity Distance Rate Bushenyi respondent 1 4 bags of cement 4 5km 1,000 UGX Bushenyi respondent 2 Not given 1km 3,000 5,000 UGX Amuria respondent 1 Not given 1km 2,000 UGX One reason why latrine construction materials are purchased in stages is that there is no known standardized suggestion of necessary supplies among hardware shops, masons, or households. Masons seem to hold a bit more knowledge about which materials are most useful for building a latrine platform, for instance, but households seem to be much less aware and usually resort to asking masons or hardware shop owners for advice. Meanwhile, hardware shop owners do not currently suggest any package of latrine materials as most insist that every customer s need is different and because demand is currently so low. Hardware shop owners also noted that it can be difficult to tell what customers plan to build with the materials they purchase as the supplies needed for a latrine are similar to those required to construct a house or a grave. Regardless of the reasons behind a lack of promotion of a package of latrine materials, the result is an inefficient process of obtaining supplies for latrine construction at the household level. Individual household owners seem to overwhelmingly assume the responsibility of transporting materials for latrine construction. The majority of masons interviewed for the field survey noted that while households may ask for advice from masons about which materials are needed, the household owners purchase and transport the materials themselves. There were one or two masons who referenced buying a portion of the materials for households, but only one mason recalled purchasing all the construction supplies for a latrine he built an instance he even noted as rare. Households were noted as being suspicious of masons either buying cheaper, sub-standard materials and pocketing some of the money, or simply running off with the cash. Such inefficient linkages and accountability within the supply chain lead households to shoulder additional expenses of time and effort beyond costs of labor and materials once they have made the decision to improve their latrine. Hardware shops appear to have no current involvement in service delivery related to household sanitation. Given that most shops are small and independently-owned operations, few have the capacity to consider such an offering. Some shop owners do offer customers informal referrals to known contractors; however, there is no established system that links hardware shops to local masons or construction workers to provide efficient sourcing of labor for households looking to build a latrine. In addition, only one hardware shop from the field surveys mentioned having sales agents to help them sell products. Thus, service delivery related to household sanitation seems to be handled entirely through independent laborers or masons in local communities. However, labor prices do not appear to hold to any uniform rate whether it comes to pit digging or latrine construction. As noted above, latrine pits are a distinct consideration within a household s latrine-building decision process. Pits are dug by laborers with no connection to the mason who might build the latrine slab, and with little consideration of the latrine slab construction process. Thus, while there may be some basic instruction given to a pit digger in terms of depth and width of the pit, there appears to be no formal coordination of the pit digger s labor 34

41 Total pit depth (feet) 6,000 / ft 5,000 / ft 7,000 / ft 8,000 / ft 6,000 / ft 5,000 / ft 4,000 / ft 5,000 / ft 3,000 / ft 4,000 / ft 3,000 / ft Arua respondent 1 Amuria respondent 1 Amuria respondent 2 Tororo respondent 1 Mpigi respondent 1 Mpigi respondent 2 Bushenyi respondent 1 Bushenyi respondent 2 with the latrine construction process, which can lead to both cost and labor inefficiencies for the remainder of the steps necessary to complete the latrine. Furthermore, there seems to be no standard labor rate for pit digging (Figure 10). 15 The relatively high rates of labor per foot with some rates even varying as the pit is dug deeper and the total suggested depth of the pit lead to an expensive initial financial burden for any low-income household to begin building a latrine, especially given that approximately 65 percent of the population lies below the $2 per day (PPP) poverty line (Table 3) ,000 90, , , , , , , Figure 10. Total pit digging costs (UGX) and labor rates per foot as quoted by masons from field survey. For those masons that do provide household latrine building services, they seem to do so on an infrequent and informal basis. The majority of masons in the field survey focus their work on building houses. When called upon to build latrines, they are usually either more expensive improved latrines for middle-income households, or large latrine projects for local government or school projects. Household latrine construction was noted to be more of a seasonal opportunity, occurring primarily during harvest seasons and once school fees were paid (i.e., usually between the months of November and February). Masons noted having the ability to construct both latrine slabs and superstructures, with the slabs being the most difficult portion to construct. Latrine repair services and latrine emptying are not typically provided by masons. 15 Rates and depths quoted from the field survey were for two-stance latrines. 35

42 As with pit digging, masons labor rates for latrine construction seem to vary quite widely, as seen in Table The two masons who were trained by Plan International Uganda charge UGX 10,000 (about US$4) per day for labor, but others quoted UGX 300, ,000 (about US$ ) or more. A 20 percent charge of the total materials cost seems to be the historical average, but some masons cite being unable to charge this to households lately due to ever-increasing prices of materials. These costs can be extremely high when compared to the mean monthly income in rural areas as noted in Figure 4, and are in addition to the costs of materials as well as transportation to the construction site. A sample of full estimated costs of two-stance latrines as quoted by masons from the field survey can be found in Appendix D. Table 14. Sample of quoted labor rates (UGX) by masons for latrine construction (exclusive of pit excavation costs). District Arua Arua Amuria Tororo Tororo Mpigi Bushenyi Bushenyi Rate (UGX) 420,000 flat rate 400,000 flat rate 450,000 flat rate 159,000 estimate 250,000 for recently completed latrine 300,000 flat rate 500,000 flat rate 500,000 flat rate Masons in the field survey almost all noted having other employees under their supervision implying a somewhat organized approach to their construction work. In addition, most mentioned having received training (non-specific to sanitation) from NGOs, technical institutions, or apprenticeships. Most masons find new opportunities by word-of-mouth and based upon their reputation for doing high quality work. None were engaged in active promotions, particularly related to household sanitation Constraints: Disaggregation and lack of capacity The hardware stores interviewed in the study said that they only deliver to customers who purchase very large orders. Therefore, individual household latrine supply purchases do not qualify, and a client (i.e., an individual household) must arrange for their own transportation. Most hire the local boda-boda taxis to transport their materials, but the general maximum capacity is only four bags of cement, which adds both cost and complication for transferring the entire set of materials to the job site. This is a particular burden because many households must travel far from rural areas, as well as from other countries such as Sudan, in order to access hardware materials that need that are not available in their local areas. The result is a disaggregated network in which the household has to serve as the primary link in the supply chain (Figure 11). 16 It is critical to note that the majority of cost estimates provided by masons in the field survey centered around two-stance latrines, which are primarily suited for school or community (i.e., higher-use) settings but often built for household latrines due to limited knowledge and skills of pit diggers on how to safely and properly dig (and reinforce, if necessary) a single-stance latrine pit. Thus, the labor rates found in Table 14 and estimated costs for supplies found in Appendix D are most likely higher than those required for a well-designed, single-stance household latrine. 36

43 Figure 11. Current nature of procurement of supplies and services for household latrines. Further up the supply chain, materials distribution and transportation are a constraint for the hardware stores themselves. Many do not own vehicles and since many suppliers only deliver large orders, they have the added expense and aggravation of arranging transportation themselves; even those suppliers that do offer delivery will charge for fuel. There is an opportunity for demand to be aggregated at both the distributor and the household level; this would combat increased transportation costs, thus reducing the total cost of the latrines. When speaking about the household latrine building process, masons and hardware stores only mentioned using concrete slabs, and masons consistently say that the slab construction is the most difficult and tedious process. A few said this part of construction takes anywhere between 12 and 28 days; however, little information was gathered as to why the process seems so lengthy and inefficient. Up to a four-week timeframe to complete the construction of a cement slab for a household does not seem to indicate an optimized process or set of materials and may encourage further second-guessing by consumers. It seems that significant efficiency gains could be made by either verifying proper cement structural engineering, simplifying the cement slab construction process, or redesigning the inputs to allow for increased production capacity by masons and improved customer service. Crestanks has a large portfolio of ready-made plastic slabs and other latrine products that could dramatically reduce construction time by replacing slabs altogether or integrating into cement slab designs to reduce the need for a four-week slab production process. According to Crestanks, households have little demand for them, yet no direct marketing or sales to households through commercial channels has been done. Thus, a gap in awareness of products from the household perspective and a gap in knowledge of household demand from the supplier perspective has resulted in sanitation service providers employing unspecialized and inefficient techniques to build latrine components. 37

44 7.4.3 Opportunity: Capacity building and supply chain integration A well-designed product or service cannot be successful without the proper business model to support and ensure its success. Other studies, such as the USAID analysis of sanitation marketing in Uganda in 2007, have concluded that sanitation marketing is both a viable and needed approach to increase sanitation uptake among rural households (USAID 2007). Training local providers in the proper techniques to deliver the product or service, however, is only one aspect of business model development. Market growth efforts must also equip providers with the knowledge and tools to actively market and sell their offering to potential consumers. Few businesses, and especially any business concept focused on sanitation, can expect to survive simply on passive strategies for obtaining customers, such as word-of-mouth advertising. Business development and sales necessitate very different skills than those for labor and construction, and not every individual has the same inherent entrepreneurial capabilities. Thus, any market development effort in household sanitation should provide for identification and selection of individuals best suited for each role (e.g., sales, manufacturing, delivery, or service) within the business model. Small-scale operators would then be able to focus on their areas of expertise and connect with other providers via vertical integration to increase efficiency, drive down costs, and expand their reach (Figure 12). One example where this could be possible in Uganda is in slab production. For example, one of the lowest quoted rates for slab construction in our field survey was by a mason in Mpigi district. He quoted material costs for a single slab at a total of UGX 86,000, exclusive of any associated labor (see Appendix D). However, this falls more than 20,000 UGX above the highest retail price for a pre-made latrine slab offered by WE Concrete, and almost double the retail price of their cheapest latrine slab (see Box 3). By recognizing a need, creating a limited set of solutions to that need, and specializing in delivering those solutions (i.e., latrine slab construction and sales only), WE Concrete provides a useful example of how much costs to consumers can be lowered through specialization. Alternatively, additional gains could be made by creating better links between masons and pit diggers. As pointed out in a USAID supply assessment in 2009, masons and pit diggers could be linked in such a way that the pit diggers are placed under the supervision of masons who determine and offer technical guidance on specifications appropriate for the type of slab the masons intend to offer to a household. This will not only keep the existing pit diggers in business, but will allow for specialization and supply chain linkages, completeness, and sustainability (USAID 2009). Figure 12. A more optimized, vertically integrated supply chain for household sanitation in Uganda. 38