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Sanitation
their decisions about increasing investment in their business. Specifically, the study seeks answers to the following questions: • Is lack of interest by the domestic private sector a rational response to weak market potential, or are lack of enterprise viability and the use of inappropriate business models preventing the private sector from taking advantage of market opportunities? • Are investment climate factors increasing the (actual or perceived) costs and risks associated with doing business?
Market Potential for On-Site Sanitation Services The current market for improved on-site sanitation services in the four countries is large: supplying new systems and replacing old ones is conservatively estimated to be worth $300 million a year. But the potential market is much larger: one-time sales of improved sanitation facilities to the 228 million people without access are worth at least $2.6 billion. Poor people alone would account for sales of about $700 million. New customers would increase the replacement market to about $550 million a year. Private sector activity associated with the market is not limited to the installation of latrines and toilets. The domestic private sector in these countries is engaged in a range of activities, including wholesale and retail sales of materials and components, the manufacture of prefabricated cement products used to build latrines and toilets, and the provision of advice on and the design of latrines and toilets. Some enterprises also offer financing facilities or are engaged in related services, such as repairs, pit emptying, and septage disposal, which could represent sizable business opportunities (the potential market for truck-based pit emptying in Indonesia is about $100 million a year, for example).
Constraints to Serving the Market The main constraint to the scaling up of private sanitation to the poor and realization of the market’s potential is the fact that enterprises are not offering households products and services they want to buy. Many poor (and not-so-poor) people are unwilling to pay for the kinds of improved sanitation solutions currently available. As currently structured, the supply chain delivering these solutions appears unable to offer better value.
Weak Demand for Existing Options Sanitation is a low expenditure priority for poor households. Cost is an important factor, but it is not necessarily an insurmountable barrier. The improved on-site sanitation options currently available cost between 3 percent (Bangladesh) and 7 percent (Peru) of the annual income of poor households. Many poor households spend considerably more on consumer durables such as mobile phones. In Bangladesh, for example, 100 percent of poor families living on between $62 and Tapping the Markets • http://dx.doi.org/10.1596/978-1-4648-0134-1