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Emerging experiences with sanitation financing models & approaches, in lao pdr


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A research paper on the emerging experiences with sanitation financing approaches in Lao PDR. Providing a snapshot of the experiences and performance of a range of approaches, direct subsidies, revolving funds, private sector initiatives and indirect subsidies up to the end of 2011.

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Emerging experiences with sanitation financing models & approaches, in lao pdr

  1. 1. Page 1 of 15 Emerging Experiences with Sanitation Financing Models & Approaches, in Lao PDR. Declan O’Leary, January 2013, 1 This paper emerges from a research initiative commissioned by SNV the Netherlands Development Organization in 2011 and is linked to the first phase of the regional Sustainable Sanitation and Hygiene for All-SSH4A programme component in the Lao People’s Democratic Republic (Lao PDR), then funded by the Australian Government via the Australian Agency for International Development AusAID and the Directorate- General for International Cooperation (DGIS) of the Dutch Ministry of Foreign Affairs through SNV. The paper is intended to provide a snapshot of and insight into some of the sanitation financing models/approaches and results obtained (up to the end of 2011) in Lao PDR. The research field work was undertaken by an independent expert (Mr Khanthaly Seanvilayvong) with expertise in credit and saving programmes, supported by the SSH4A Project Manager under the guidance of the Water Sanitation and Hygiene (WASH) Sector Leader and other advisers in country2. The objective of the 2011 research was to gain a better understanding of, and into the mechanisms that had or were being used to finance and/or subsidise sanitation interventions and investments in country by identifying, documenting and focusing on some of the initiatives3 in Savannakhet province as representative examples of the country. Background & Context Setting Savannakhet province is the largest province in Lao PDR by area, covering 21,774 square kilometres as well as the most populated province, with over 916,984 4 people distributed across ~1,0155 ‘Bans’ (villages) in 15 districts making it up. The province is traversed by a number of designated regional highways running both north south (Asian Highway 11) and east west connecting Northern Thailand and Myanmar with Vietnam and the sea, this highway has also been designated part of the “Greater Mekong Sub-Region, East West Economic Corridor”. Issues Statement Improved sanitation coverage for Lao PDR in 2005 was reported at 48%, significantly below the regional average for South East Asian countries at 67%. Considerable progress has been made toward the national sanitation target of 70% in 2015 for the country’s commitments to the Millennium Development Declaration and it goals (MDGs) increasing sanitation coverage from 11% in 1990 to 48% in 2005. Nationally the economic impacts from the lack of sanitation have been calculated by the World Bank’s Water & Sanitation Program’s (WSP) supported Economics of Sanitation Initiative (ESI), which calculated in 2009, that the overall economic costs of poor sanitation in Lao PDR to be equivalent to US$193 million per year, with per capita (monetised) economic loss from the adverse impacts from sanitation equal to 345,653 Kip (~US$34) per person year7, equivalent to 2,073,918 Kip (US$204 per household (of six persons) per year! Thus showing a clear justification and economic benefit for households to have and invest in sanitation. Access to sanitation in Savannakhet province has been identified as continuing to lag behind other provinces in the country even though the majority of the province’s population (concentrated in the western part of the province) are more affluent that many provinces in the country. In fact, Savannakhet province was reported to have the third worst levels of sanitation coverage in the country (National Census Data 2005)8. Figure 2. District Distribution of Water Supply and Sanitation Coverage, Savannakhet Province (% of households WITHOUT Water and Sanitation 2010) 3% 0% 0% 2% 19% 45% 29% 5% 0% 0% 4% 40% 0% 4% 0% 7% 44% 67% 68% 78% 86% 86% 50% 56% 81% 44% 79% 69% 46% 86% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Kaysonphomvihane Outhoumphone Atasaphanhthong Phine Sepone Nong Thapangthong Songkhone Champhone Xonabouly Xaybouly Vilabouly Atasaphone Xayphouthong Phalanxay % of HH Without Sanitation & Water Supplies (Data source PDOH/Nam Saat 2010) Total HH % W/OWater Supply TotalHH % W/OSanitation Source: Provincial Department of Health Environmental Health & Water Supply (“Nam Saat”) section data. Overall sanitation coverage across the 15 districts in Savannakhet province was reported at 45% of households having a toilet in 2011, (with 83% in urban areas and 37% of rural areas). Provincial progress has been made over the previous five years where access to sanitation is reported to Figure 1 Districts of Savannakhet province, indicating the %’s of the population living below the national poverty line, red areas >60% poor6, with inset national map.
  2. 2. Page 2 of 15 have doubled, from just 22% of households in 2005 to ~45% in 2011, though considerable challenges exist to continue to increase coverage across the province. Table 1 Overall Water Supply and Sanitation coverage Savannakhet Province (2011) 2005 2006 2007 2008 2009 2010 2011* Sanitation 22% 23% 27% 33% 36% 43% 45% Water Supply 92% 98% 99% Source: Provincial Department of Health Environmental Health & Water Supply (“Nam Saat”) section data. From an international development perspective supporting and universally subsidising improving access to sanitation for the majority of households in Savannakhet was and is not a viable or recommended option and would be wasteful of the limited development resources available in country. As many households without sanitation are not poor and vulnerable and would appear to be unwilling and or reluctant to make the necessary investments required to obtain improved sanitation, possibly due to a number of reasons, including but not limited to:  Poor or limited awareness and understanding of the adverse impacts and costs from the lack of sanitation as mentioned above,  Limited access to information on cost effective sanitation and construction materials and approaches, and  The demand for sanitation is simply not a priority for many households who often have other competing demands for the financial resources available to them. Or put another way, the opportunity cost forgone in not choosing to invest in sanitation or its impacts was perceived as low. Additional research initiatives undertaken on sanitation demand and other issues in Laos9 identified a need for this research to gaining a better understanding into what types of projects etc. had been undertaken to contribute to closing the sanitation gap in the province and country, and what financing mechanisms were used to support these and how effective they had been. Research Approach The research approach was based on discussions with responsible provincial government offices and non- governmental organisation (NGO) development actors. This identified projects, gather available information and documented feedback on their experiences on sanitation financing approaches. Those consulted included the Environmental Health and Water Supply Office (commonly referred to as “Nam Saat”) of the Provincial Department of Health which is responsible for rural sanitation as well as its district offices, the provincial Urban Water Supply State Enterprise (“Nam Papa”) of the Provincial Department of Public Works and Transport, with the department which is now often taking the lead for urban sanitation as well as the Lao Red Cross. NGOs consulted included FIDA International, SNV, World Vision, NORMAI (Non- profit Association for Rural Mobilisation and Improvement) which is one of the localised entity of the CIDSE programme, and a number of emerging private sector actors, namely the owners of a number of involved private sector enterprises (construction material retailers/suppliers, and/or material fabricators) currently or in the recent past involved in sanitation provision and support in the province. ‘ 17 different programmes, projects and businesses were identified by interviewed stakeholders either being undertaken in different locations and or over different phases and available information was collected on these, namely on: Table 2 Sanitation Financing Actor/ Stakeholders and the Locations of Reported Project Interventions Involved Implementers, (may not mention all partners) #ofProjects Reportedon Reported Locations of Projects (district) (Note likely duplication as activities reported by project partners, Government & NGOs whose reviews have been combined in the analysis) Leading State Actors/ Stakeholders “Nam Papa” Provincial Urban Water Supply State Enterprise, of the Department of Public Works & Transport and its district offices. Support provided by UN-Habitat and ADB. Urban 5 Projects and or phases initiated or undertaken in (i) Outhoumphone, (ii) Phine, (iii) Atsaphangthong & (iv) Villabouly, Districts Centres. With the first project (i) reported on 2004, and the latest initiated in 2011. “Nam Saat” (NS) Environmental Health and Water Supply Section, Provincial Department of Health or its district offices (multiple donors and partners) As the responsible government agency for rural sanitation, Nam Saat is frequently the lead implementing partner in many of the reviewed projects. Rural 5 Districts where supported project were reported were; (i) Phine, (ii) Villabouly, (iii) Atsaphangthong, (iv) Phalanxai (v) Xaibouly, (vi) Nong, (vii) Sepone (viii) Xonabouly, (ix) Songkhong (x) Outhoumphone (xi) Atsaphone, and (xii) Thapangthong districts. Some districts had or have a number of projects implemented with different partners (see below). Provincial Government – Rural Development & Poverty Reduction Office, SNV Rural 1 Phine, Atsaphone, Xonabuly, and Phalanxai Lao Red Cross (Netherlands Red Cross) Rural 1 Phalanxai and Xaibouly Private Sector Private Sector/ Entrepreneurial Initiatives (The Nang Chouk Material Shop -NCMS, Southchay Construction Company -SCC) Pakorb Construction Materials Shop PCMS) Urban/ Rural 3 Atsaphongthong District Outhoumphone District Xonabuly District (in order respectively) Birla-Lao Farm and Plantation Company Rural 1 Phalanxai district Multilateral Agencies and Non-Governmental Organisations UNICEF Rural Nong, Sepone, Villabouly and Xonabouly districts UN-Habitat Urban Outhoumphone, Phine, Atsaphangthong & Villabouly Districts Centres Oxfam (Belgium) Rural 1 Xonabuly District World Vision International Rural 6 Outhoumphone, Nong, Atsaphone, Phalanxai, Atsaphone, Thapangthong (mainly through integrated areas development programs-ADPs) SNV Netherlands Development Organisation Rural 2 Sepone & Villabouly districts (Pro-Poor WASH), Atsaphone, Phalanxai Xonabouly, Phine (SSH4A)
  3. 3. Page 3 of 15 Fida International Organisation Rural 1 Songkhong District CIDSE project now localised to the Non-profit association NORMAI. Rural 1 Phine District Christian Broadcasting Network-CBN Rural 1 Atsaphangthong district CIDA Rural 1 Phine District The consultations allowed for the identification of a number of variants of financing models/ approaches, though different names were sometimes use by organisations and agencies, those identified have been group together as the approaches in general were similar, and the reporting scale, performance and progress (table 4) is up to the end of 2011. The models/ approaches identified included: Table 3 Identified Sanitation Financing Models & Implementing/ Support Organisations Model Reported Implementers & involved partners/ funders  Direct Grants or Subsidies to cover all or parts of the cost of sanitation/toilet materials and super structures.  Commonly providing either as cash or more frequently materials, namely o Differing numbers and sizes concrete rings for single pit or dual pits o Ceramic pans/bowls, o Piping (usually PVC) o Cement (bags or set weight/volumes) o Other materials (bricks, sand etc....).  Nam Saat/Fida International Organisation  Nam Saat/ UNICEF.  Birla Lao Pulp and Plantation Co. (Corporate Social Responsibility model).  Nam Saat/ CIDSE, (Coopération Internationale pour le Développement et la Solidarité)  Nam Saat/ SNV with European Commission support.  Nam Saat/ CIDA-Canadian International Development Agency  Nam Saat/ Christian Broadcasting Network CBN. In some instances full subsidies were provided for poor and vulnerable targeted households and groups. Enabling those households to gain access to sanitation,  Revolving Fund Models, loans or credits to cover the costs of materials and or construction services which are repayable either with or without interest within a specified timeframe  Nam Papa Urban Projects with UN-Habitat and ADB-the Asian Development Bank, focusing on emerging Urban Areas/ District Centres.  World Vision’s through its Area Development Programs-ADPs  Oxfam Belgium Established Village Development Funds  There are well established village development funds in some villages across  Emerging Private Sector/ Entrepreneurial Innovative Credit Approaches Though similar in manner to credit models it was considered best to document these separately Three companies/ businesses in different districts, some now working through MoUs with state actors (Nam Saat, Nam Papas).  Indirect Subsidies for the likes of Community Led Total Sanitation (CLTS)/ Sanitation Marketing (Sanimart) Models, CLTS, and Sanimart was being piloted in a number of districts (6) and villages (~105) by projects. Led by the Provincial Rural Development & Poverty Reduction Office (‘PRD0’) in one project with SNV, with AusAID/DGIS support. Nam Saat/SNV in another project with European Commission support Overall Findings The following table summarises the estimated hardware investments made and reported unit costs for sanitation materials, as well as the reported delinquency rates in repayments on credit based approaches (revolving funds and credits) though noting that many of the projects are reported as ongoing. Additional findings were (following table) Table 4. Reported Impacts, Investment and Hardware Unit Costs of Supported Models # Model/ Approaches applied Households benefiting Villages Districts Estimated Investment (Only hardware /material costs usually reported ) Cost per Units (median values) Reported DelinquencyRate Reported Timeframe Lao Kip US$ Lao Kip US$ 1. Revolving Fund Model 1.1 World Vision 894 48 6 536,400,000 $ 67,050 600,000 $ 75 40% 2007- (ongoing end of 2011) 1.2 Nam Papa 587 39 5 864,000,000 $ 108,000 1,471,891 $ 184 65% 2005-(ongoing end of 2011)) 1.3 Nam Saat /Oxfam Belgium 23 3 1 14,996,000 $1,875 652,000 $ 82 100% 2004 2 Grants/Direct Subsidies Model 2.1 Nam Saat / FIDA International 1,190 39 1 1,792,900,000 $224,113 1,506,639 $ 188 1998-2010 2.2 Lao Red Cross 379 7 2 n/d 2000-2005 2.3 Nam Saat /CIDA 724 13 1 579,200,000 $72,400 800,000 $ 100 2002-2006 2.4 Nam Saat /CIDSE 121 8 1 n/a 2000-2005
  4. 4. Page 4 of 15 2.5 Nam Saat / SNV 296 8 2 74,000,000 $ 9,250 250,000 $ 31 2010- 2.6 Nam Saat/ UNICEF 990 14 4 n/a 2000-2009 2.7 Birla Lao Co. 238 2 1 n/a 2010- 2.8 Nam Saat / CBN- 304 6 1 109,440,000 $13,680 360,000 $45 2004- 3. Private Sector/ Entrepreneurial Model 3.1 NCMS 373 7 1 111,900,000 $13,988 300,000 $ 38 2009- 3.2 PCMS 300 14 1 203,000,000 $ 25,375 620,000 $ 78 9% 2007- 3.3 SCC 419 27 1 209,500,000 $ 26,188 500,000 $ 63 29% 2007- 6,838 235 4,495,336,000 $ 561,919 n/a = Not available or n/d =no reported data. 1. Sanitation intervention investments were reported to have been undertaken in a total of 235 of the ~1,015 villages in the province (23%) dispersed across 12 of the 15 districts of Savannakhet province by interviewed implementers. Though it should be noted that this does not exclude activities in the other three districts, just that they were not reported upon by interviewed implementers. 2. The timeframe covered by the reported projects stretched back over a decade to 1998, with associated sanitation investments by one organisation (FIDA International) in one district (Songkhong) which was reported as continuing up to 2009. The sanitation component of this evolving programme/ project enabled over 1,090 households to benefit with a reported investment in excess of US$220,000. Some of the units costs reported for early phases by this organisation where some of the most expensive quoted at 2,500,000 (US$250) per unit!10 3. Overall at least 6,838 households gained access to some form of “improved sanitation”, though a considerable number of sanitation options were provided and or supported by implementing partners and enterprises, in general allow would have allowed to the construction of an improved sanitation option11 . It is likely that a greater number benefited as some supported activities were ongoing at the time of the field work in late 2011, so the research and this paper only provide a snapshot of what was and is going on. 4. Over the ~13 year period which were reported upon by interviewed stakeholders (1998-2011), at least 4,495,336,000/4.5 Billion Lao Kip (equivalent to at least US$ 561,919) was reported invested by some though not all implemented projects with no investment costing from UNICEFs supported interventions between 2002-2009, Lao Red Cross’s, the NGO CIDSE or the Corporate Social Responsibility (CSR) approach of the Birla Lao company. 4.1. Averaged supported investments across those implementers both grant and credit based reporting, were 744,503 Kip (~US$93) per household investment, and ranged from 250,000 Kip (~US$25) for one project (by Nam Saat/SNV in 2011) to a reported averaged high of 1,506,639 Kip (~US$188), across the various investments made by Fida International, between the late 1990’s- 2009 with significant high investment costs reported in the early 2,000s. 4.2. The investment figures generally only report the costs of the supporting hardware/sanitation materials and not the process or support cost involved? It is reasonable to speculate that at least the same amount of 4,000,000,000 Kip (~US$500,000) was investment by beneficiary households in additional materials and efforts to construct or improve on the sanitation supported by development partners. As most of the reported investments/ credits only supported sanitation related components (ceramic pans, concrete rings, covers, some cement and associated pipe-work) but not the necessary investments for superstructure. 5. One of the most interesting findings was the reported scale of private sector sanitation financing initiatives reported in some (3) of the province’s districts. Those private enterprises interviewed, usually initially got involved through supplying development projects but in a number of instances have scaled up their own support, now often working in/ through cooperation agreements with responsible local authorities in the districts (possible examples of public private partnerships). The three enterprises consulted with in three districts provided nearly a fifth (17%) of the supported toilets, most reported operating credit base systems for materials with flexible payment often aligned (but not always) with households’ ability to make repayments usually post-harvest. 5.1. The sanitation material set options provided by the private sector enterprises were usually more flexible in nature and appeared to be more cost effective, averaging at 472,000 Kip (US$53), in general ranging between 300,000 Kip (US$38) – 620,000 (US$78) though one did mention willing to provided financing for “full latrine kits” including all sanitation and superstructure materials which was ‘costed’ at 1,230,000 Kip (US$154) per set. 5.2. As a credit model, the private enterprises did have some difficulties with an averaged reported repayment delinquency rate of 19% across two of the three enterprises interviewed. This appears to be significantly lower than the urban and rural development partner (Nam Papa, World Vision, Oxfam) revolving fund models where delayed repayment rates (the preferred terms used by interviewed responsible respondents) was 68%. 5.2.1. In many instances development partner (Aid) provided funds were either (i) not repaid, (ii) were significantly behind the agreed/ contracted repayment plans, (i.e. three -12 months behind)m or (iii) were paid into an existing village development (credit) fund (i.e. as reported in World Vision supported areas) and then never reallocated for sanitation financing again. As it appears that the village development fund (VDF) manuals used and their committees did not allow for or consider sanitation loans as being a listed option for loans from the fund.
  5. 5. Page 5 of 15 6. Grant subsidy models were the most commonly implemented approach reported for the period 1998-2010 in the province. This “conventional” approach has been found deficient in delivering significant improvements and progress in improving sanitation coverage, in that; 6.1. Rarely did grant/ subsidy models provide significant increased village sanitation coverage in term of the number of households in villages gaining access to sanitation. The most frequently reported level of sanitation increase was 12% of village households gaining access to improved sanitation through subsidy based approaches. Reported increases ranged from 3% of households in 2 villages to 100% in three villages where such information was made available 6.1.1. Limited data, apart from overall outputs figures (the total number of sanitation material sets provided and the number of villages covered) was frequently all that was available, making it difficult to qualify the actual sanitation coverage percentage increased in villages. 6.1.2. It had also been observed that what was reported were outputs, in terms of the number of sanitation sets delivered to a villages and may not actually reflect on the actual number of toilets constructed as in some case provided materials were horded till households had the financial resources to build proper though costly toilets structures with brick, plaster and tiling. 6.1.3. The researcher was informed that available data sets by village, of sanitation coverage may have been available at district levels (at the District Health Offices), as the provincial level only received consolidated figures. The researcher then found (from the district offices) that village data sets were often only available for villages where district Nam Saat personnel were directly involved, indicating a deficiency in the current monitoring system which did not provide adequate resources for minimal monitoring levels in terms of being able to visit/or obtain information from every villages in a district at least once per year. 6.1.4. Quantities of sanitation material sets distributed was also difficult to qualify ranging from six sets in a couple of villages, to 230 sets for a village in Xonabouly (“Ban Kongpathoumvan”) with UNICEF support through Nam Saat, which reportedly increased sanitation coverage by 73%. The annexed table attempts to summarise and document the reported processes, approaches, achievements and challenges as seen from the implementers’ perspectives. It should be noted that a number of the projects/ approaches were reported completed/ended (e.g. UNICEF 12 , Oxfam, CIDSE’s, Lao Red Cross, FIDA, and CIDA,) while other projects and marketing initiatives were reported as ongoing at the end of 2011. Levels of and quality of information provided varied considerable Discussions on the Findings The research found that a wide range of organisations and the private sector actors were or had been active in the sanitation sector and had utilised a variety sanitation financing models and approaches with varying degrees of success and impacts. By far the most commonly practiced approach were grants and subsidies, followed by the revolving funds and credits though it was interesting to find that this was found to be an emerging area for private sector participation and initiatives. Most recently (2010/2011), indirect subsidy approaches through community led total sanitation-CLTS and sanitation marketing have been tried, encouraging and increasing sanitation demand, and getting households onto the sanitation ladder as well as developing the sanitation supply chain and local governance, and all be look at briefly in turn below. In general what was being financed (through grants and or credits) were usually sets of sanitation materials, though this varied considerable in terms of the type and quantities of materials supported as there appeared to be little or no guidance and or a lack of consensus on what the basic requirements for improvement sanitation were. Even though national materials on this had been developed over a decade ago (by the National Centre for Environmental Health and Water Supply- Nam Saat Central); these materials appeared to be poorly disseminated and or not available to current or involved sanitation actors. The varied sets also appeared to have resulted in significant cost variations for their provision, though one would rather not advocate for compulsory standardised sanitation packages. Subsidy/ Grant Funds These are commonly considered the most conventional approach for contributing to making improvements in and across the water and sanitation sector. Decades of experience have been gained in providing sanitation with questionable results often been obtained particularly in relation to the coverage of and sustainability of sanitation interventions. In a few instances complete toilet units were reported provided including superstructures (in the early days of FIDA, and some demonstration models in targeted villages (usually at poor household who might not be able to afford to sanitation investments.) for SSH4A as part of the construction training. By far the majority of sanitation interventions supported the provision of some materials, usually for the sanitation components with the households and community provided the additional materials and labour inputs to construct the latrines and superstructures. Reporting on performance of this approach was in some instances questionable, as what was reported (e.g. Nam Saat /UNICEF) was the distribution of material sets (as the output) and not the actual number of latrines constructed. Further in the majority of cases the quantities of material sets provided at village levels usually only covered a percentage of the households in need of sanitation. In some cases materials were provided for shared latrines which may not contribute to the national Commitments to the Millennium Development Goals (MDGs) or were captured by elite/powerful social and economic groups in villages who obtained the materials first often leaving the most vulnerable households without sanitation, though in later years actors stated that they were making better efforts to target the sanitation materials at poor and vulnerable communities and households. Regardless of this, the overall improvements in sanitation coverage by providing a limited number of sanitation units in villages, generally did not contribute significantly to reducing
  6. 6. Page 6 of 15 incidence of sanitation related illnesses in villages as the residents were still being exposed to faecal contaminants because of ongoing open defection by the unserved population. The grant subsidy approach often makes reasonable project rationale and justification; in that projects and programmes could claim to be contributing to making improvements in (access to) sanitation, by provided X number of sanitation units to Y numbers of villages in a project area. Rarely was overall / universal coverage in or for villages or projects being considered, usually because of the lower prioritisation of sanitation in general against water supplies, also because of the likely significant cost implications of such as approach. Regardless of this evident exists that simply providing access to sanitation may not result in reducing adverse health impacts if sanitation usage and hygiene behaviours don’t change or increase, as numerous actors globally have often observed and found that supported and supplied sanitation materials inputs often uninstalled and or unused, because of a lack of improved knowledge and or changing behaviours It is partly because of these limitations of grant / subsidy approaches that alternative models have developed to encourage and seek greater commitment from beneficiary groups and households being targeted for sanitation. One of the more increasingly advocated approaches is revolving funds and credits. Revolving Funds Global experience with Sanitation Revolving Funds has been ongoing since at least the 1990’s if not before where they have been increasingly used to encourage sanitation improvements more frequently in urban areas often through upgrading of existing sanitation facilities. There are cases where funds have encouraged and expanded sanitation coverage by deferring the investment cost thus making it a more encouraging option for some households. However there are risks that credit based approaches have of excluding the poor, vulnerable groups and those on low incomes (below or near national poverty lines) in that they can create or contribute to increasing the debt burden on such households. In the urban case in Savannakhet the district water and sanitation schemes which have been progressively implemented since 2005 developed their own poverty targeting approach based on three categories (which does not appear to be aligned with the national poverty criteria) to identify what they considered eligible households, who were targeted with sanitation loans, these were generally taken up. Community management committees (community based organisations-CBOs) were then given the responsibility to collect the loans for re-issuing and the performance of which has been marginal to date, with an average of 37% of the provided loans being repaid by the end of 2011, as report by DPWT, ranging from 31%-50% of loans made. It is worth noting that many of these schemes were reported as ongoing at the end of 2011. Those projects reporting on were initially started in Outhoumphone District Centre 2004 (with 31% of loans reportedly repaid), Phine DC 2007 (50%) and Atsaphongthong, Villabouly & Xepone DCs 2010 (30%) respectively. Two other project phases for Atsaphonthong and Villabouly also reported underway, but no sanitation loans reported on, which had started in 2010 and 2011. In recent years the application of sanitation funds have followed a mixed approach in that some households “the very poor” receive free materials while some others are also partly subsidised, so some aspects of these projects could be considered as subsidy model as well In rural areas, the World Vision International (WVI) supported revolving fund approach covered one now ended project and four ongoing areas development programmes (ADPs) in the province. WVI initially provides village sanitation funds which were likely used by better off households in targeted villages to construct sanitation with responsibilities given to local community management groups (CBOs_ to recoup the funds invested. Overall reported revolving rates by WVI were just 13% ranged from 10%-18% across the project and ADP though there were reported to be villages with up to 60% of sanitation fund rolling over. One of the identified deficiencies was collected repayment funds were generally not reissued for sanitation loans again in most villages, simply bundled into existing Village Development Funds and used for other purposes. While the third small example reported upon initiated by Oxfam in the mid 2,000s at the end of a programme was not reported to have revolved at all. All the supported revolving funds reported confronting similar challenges in that (a) the repayment plans and contracts were not adhered to by households, or (b) the repayment periods were reported either not sufficient to make the repayments, (c) households and communities were aware that other development organisations provided (some) free sanitation in certain villages and felt that they should have free sanitation as well, and the organisations, local government and established community structure made little or no effort to encourage or compel repayments to be made, which likely deprived other households in targeted villages from benefiting. Most of the projects provided at least 12 months or more for the repayments to be made, which equated to monthly repayments ranging between 50,000-90,000 Kip per month (US$6.25-11.20). However even if repayments were being made they were frequently reported as not being completed in a consecutive manner, or with delays and deferments often being asked for, to enable borrowing households to either; (i) Pay off their sanitation loans during period of financial surplus usually post-harvest (December-February), or (ii) Utilise the household’s available financial resources for other purposes, possibly indicating the low prioritisation of sanitation in general, and (iii) There were also reported (a limited number) of instances of households simply refusing to make repayment, with little the local community/village collectors could do. Likely reasons for some of these challenges were, poor explanation and understanding by client households and established CBOs of the, revolving funds mechanisms (requirements and conditions), poor capacities and governance of the CBOs. Through the reviewed Lao language loan documentation, usually a single or double page document was considered reasonably clear though it may be difficult to understand in communities with higher rates of adult literacy exist. Most communities were familiar with micro-financing/ credit provisions through village development funds and other saving
  7. 7. Page 7 of 15 and credit approaches as these have been an ever expanding concept across the districts in the province over the last decade. This also raises questions about the existing capacities of the support organisations (frequently state agencies) that provided the training and support to facilitate the establishment of revolving funds. In that once established they appear to do little to ensure the overall performance of the funds, with limited inputs or support to follow up on repayments possibly indicating a low prioritisation of sanitation revolving funds. This is likely as usually, there were often limited resources available either committed by the state or through the projects for following up on the performance of the established revolving funds. The performance of revolving funds is debatable in that even though the repayment terms were ‘reasonable’ with repayment periods averaging at least 12 months and reported ranging from three-18 months, often with little or no interest (just repaying the capital). Most if not all only achieve partial repayments of the amounts invested to varying degrees. A resulting impact from the delayed and deferred repayments is that the number of additional sanitation loans is hindered in either being delayed further or not taking place at all. Additionally there is little or no information available on the “rolling over” of revolving funds for sanitation, as project have often end or the funds continuation is not adequately monitored. In some instances, the transfer of repayment responsibilities to community based groups and or to existing village funds “Village Development Funds” has resulted in the sanitation funds never being reused for additional sanitation loans or not being adequately followed up on for repayments. This appear to be due to the lack of (official) instructions/ guidance to village committees to consider loans request and or make available funds specifically for sanitation improvements... Private Sector Credit Provision One of the interested findings from the study was the expansion of credit services being provided by the emerging private sector in Lao PDR to enable households and communities to access sanitation materials. These initiatives were initially highlighted by the provincial Nam Saat Office who made reference to the credit activities in Atsaphone district, but which on later inquiry were found to be replicated or in existence in other districts as well. Those enterprises making credit available usually got involved through providing supplies and materials to previous projects and saw potential business opportunities. In some cases in what could be considered as ‘public private partnership model’ was involved, based upon an agreed and signed Memorandum of Understanding (MoU) between the supplier and the District Health Office. Whereby (a) a supplier provided credit for materials to villages/ or groups of households, (b) based on household lists generated by district Nam Saat, (c) household loan contracts would then be generate detailing conditions and terms etc.. Which when signed and witnessed (by the village authorities and the district) would (d) allow for the delivery of materials. This model was identified by the Provincial Health Department for follow up and possible replication across other districts as it was seen as a potential “win –win” for those involved. The private sector enterprises saw some advantages with the approach in that for those interviewed, it appeared to give them favoured position in supplying sanitation materials, though they carried the investment risks. They did report having some difficulties in that up to a fifth (19%) of sanitation credits provided were reported in arrears, though this reported averaged rate across two of the three enterprises was three to four time better than the reported repayment rates of revolving funds supported by development projects and NGOs consulted with. In some cases the owners knew there were delays, as the household contracts terms generally had a (too) short three to four month repayment period and if issued mid-year most households could not build toilets at that time as it was monsoon season. In many instances the owners said they were flexible to this but one also mentioned that they had experience of taking back some material sets from some households who had not made an effort to pay for the materials. This ‘independent’ initiative has great potential and could be seen as the model that could contribute to picking up the pace for delivering on increasing sanitation coverage in the province. Indirect Subsidies In this type of approach efforts are made to not directly subsidise materials for sanitation interventions, but rather to look at the overall sanitation supply chain identifying barriers and opportunities to increase the pace of sanitation provision. Working at creating sanitation demand from households and communities and also addressing supply side issues, enhancing supply actors with sanitation marketing support, improving products quality and options, reduce production costs etc... As well as facilitating other actors and stakeholders to provide better support. The experience with this type of approach is relatively new in Laos, with just one example the Sustainable Sanitation and Hygiene for All project so far, which was still being piloted at the end of 2011. And the project supported the research initiative upon which this paper is based. This approaches initially applied a variant of community led total sanitation – CLTS to encourage households and communities in 80 villages across four districts to build toilets and strive to achieve open defecation free (ODF) status, with an expectation of getting households and communities onto the sanitation ladders. The project also engaged with other sanitation actors and stakeholders (construction material retailers, materials fabricators, micro and small scale construction contractors) involved in the sanitation supply chain. Actual field implementation of the project was just over 12 months, and had resulted in 729 household toilets being constructed by the end of 2011, with 457 others toilets reported as still under construction, with post December being identified as being the main construction period. 17 private sector enterprises across the four districts (mainly retailers and material fabricators) were involved with the project and benefiting from a target revolving fund for fabrication moulds (for a pan stand and rings) to reduce production costs. To date (December 2011) just three of the 80 villages had declared ODF status with sanitation coverage between 90- 100% with three other villages closing on ODF status with over 80% sanitation coverage.
  8. 8. Page 8 of 15 The project reported significant challenges during its implementation in that apart from confronting flooding (reportedly the worst flooding since 1962) which resulted in 25% of the target villages being listed by the government as disaster affect villages, while the majority of other villages suffered varying degrees of damage and destruction of economic infrastructure and food supplies. The approaches (CLTS and sanitation Marketing) and implementation structures were based upon a multistakeholders approach involving a range of six diverse government institutions (including two mass organisations the Lao Women’s Union and the Lao Youth Union)13 were also completely new, so took longer to sensitise and train to deliver the project inputs to communities and other stakeholders. Further a number of the participatory identified target villages were later found not to be compliant with the agreed selection criteria in having previous subsidise approaches which make CLTS difficult to implement. The scale of the project and wide dispersion of the target villages did not contribute to frequent and effective following up in the beginning, though progress was being made by the end of December 2011. Conclusions So what can we concluded from the research? As mentioned it only provided a snapshot of what was and is going on in the country up to the end of 2011. It is felt that it is reasonably representative of the range of sanitation financing models and approaches being utilised in the country at that time. Some of the approaches are embryonic in nature, namely experiences with indirect subsidies through either stand-alone interventions or blended approaches involving CLTS and/or sanitation marketing. As are the experiences with the corporate social responsibility (subsidy) model being implemented by the Birla Lao Company. The research was considered challenging in that it endeavoured to obtain information on a range of sanitation financing models and approaches and primarily relied on a mix of key informants from involved, responsible and implementing agencies and organisations as well as limited fact finding and validation from on the ground from direct beneficiaries in villages where approaches had been applied. Other potential stakeholders were also consulted, including a number of the emerging micro financing institutions and banks operating in the province and districts to see if they had provided or were aware of providing loans and credits for sanitation, to which all responded none of aware of loans being provided specifically for sanitation. Information from key informants was often inconsistent, and incomplete, evident by some of the projects informants made reference to, with some being quiet small in nature, or undertake and or initiated nearly a decade previously for example the referencing of the Oxfam, CIDSE and Lao Red Cross supported projects, though this may have come about because they were some of the few projects in a district that had sanitation components. Additionally it was observed that one of the biggest WASH projects undertaken in the province and some of the visited districts with a Belgian supported project between 2004-2008 through Nam Saat, which was not referred to though this project sanitation approach was a grant subsidy model? All the projects approaches and models have contributed to increasing the overall sanitation coverage in the province to some degree with 6,838 households (~41,000 people) in 235 villages likely benefiting from improved sanitation, through an investment of at least 4.5 billion Lao Kip, ~US$562,000, with roughly the same amount again likely being investment by households in additionally building materials and labour. In terms of the three broad grouping of models, direct subsidies, revolving funds/credit based approaches and indirect subsidies. All are likely useful though their application needs to be better targeted. Direct Subsidies There is likely a continued need for some direct subsidies for sanitation, but these needs to be better focused and effectively applied, targeting only poor and vulnerable households and remote communities with limited access to district centres, as sufficient information is now available through the Department of Planning and Investments information system to better target interventions. It was reported that some approaches were poorly targeted resulting in some of the supported project activities being implemented in predominately none-poor villages; even after a participatory multistakeholders consultation process on targeting using a reasonable set of criteria. So supporting organisations may need to consider independently verifying proposed locations where projects and interventions are suggested for to go before proceeding. Additionally because of the limited financial resources being made available, which is also likely to decrease in the coming years as grant/subsidy based approaches are increasingly being called into question, because of their limited results and sadly all too frequently being poorly targeted and generally benefitting non-poor and needy households, who could actually afford the necessary investments if they prioritised and valued the benefits that improved sanitation provide more. Subsidies should possibly only come into use after households and communities have committed to making sanitation improvements through either developing and implementing hygiene and sanitation plans (possibly developed through the use of Participatory Hygiene and Sanitation Transformation- PHAST approach14) or getting onto the sanitation ladder and communities making progress to being and maintaining open defecation free (ODF) status villages. This is likely to have time factor implications for projects in terms of a number of years rather than the reported experience from the Pro-Poor WASH project which appear to have telescoped this approach into a far too shorten timeframe, with little evidence or opportunity for CLTS to succeed or make progress. Revolving Funds Revolving funds are increasingly becoming a prevalent and favoured approach because they cater to households willing and wanting to making sanitation improvements but lacking the immediately available financial resources. They can also leverage additional financing from households, and because funds’ are theoretically revolved they have the potential to increase coverage through multiple applications. Reported experiences in the province indicate some complications with the current application of the revolving funds models across both urban and rural areas. In that there are difficulties in recoup repayments to the ‘central fund’ in targeted areas. In urban areas an average of 37% of the provided funds for sanitation loans between 2005-2010 had been repaid. While in rural areas the district averaged repayments/ revolving was just 10% though it was noted that
  9. 9. Page 9 of 15 there were some exceptional villages in the 51 villages where it was applied between 2005-2010, where a high percentage of the provided funds had been repaid and revolved. The average value of loans in urban areas across all phases was 950,000 Kip/~US$119 and ranged from 700,000-1,070,000 Kip (US$88-US$134), while in rural areas, revolving fund loan averages were 538,000 Kip/US$67 and ranged from 400,000 to 652,000 Kip (US$50-US$82) areas. Across both urban and rural areas, reported repayment terms generally appear to have no interest or penalty clauses applied for their operation or late and the repayment terms ranged from four months to 18 month across different organisations or projects, with longer terms now being applied in response to delayed repayments. It appears that repayment plans associated with the household contracts/ agreements are frequently reneged upon, or delayed even through reported average month repayment were reasonable. Sometimes this deficiency was compounded by the agencies and organisation providing and supporting the model in establishing weak local/ community based structures with limited ability to recoup the funds to revolve, while the implementing agencies may have issued the loans in the first place. Credit Based Approaches It was evident that private sector sanitation provision and financing is increasing across the province with a number of innovative entrepreneurs/businesses taking the lead in some of the districts which needs to be encouraged and supported. They have some challenges. The repayment rates for credit funds were significantly higher with 81% of used funds (the reported combined amount of 524 million Kip (~US$65,500) across three enterprises) being repaid. It repayments are made within the agree timeframe no interest or penalty is charged if delayed or beyond the fixed term an average of a 10% monthly charge is applied. Overall revolving funds are not optimally implemented, even though repayment terms were reasonable. While credit based approaches appear to be working reasonably well. There is little or no incentive or motivate for locally involved community stakeholders to ensure that funds are repaid on time and made available for further sanitation loans. Indirect Subsidies Experience with these approaches, namely Community Led Total Sanitation-CLTS and Sanitation Marketing was very new with only about a year’s worth of experience gained by the end of 2011. Being a wholly new set up, involving a diverse multi stakeholder approach, the set up and training of provincial and district teams took longer than expected and resulting capacities were still quite limited. The applied CLTS approach ran into difficulties in that the timing and follow up of triggering was limited due to the dispersed nature of the villages and the actual targeting of 80 the villages, in that, in some of the districts the targeted villages, already had some sanitation interventions (usually subsidy based approaches) from other actors even though the selection criteria had asked for these to be avoid, targeted villages were also often widely dispersed across the districts, requiring far long travelling times. Further the province and some of the targeted districts suffered their worst flooding in forty years and 25 were design disaster affected villages and the resulting economic impacts set back the progress as sanitation slipped down household priority list. The sanitation supply chain component was also innovative and identified supply issues in that the supply of sanitation materials was partly limited because of the lack of ring moulds both in number and quality due to wear and tear’, as well as transportation issues. The indirect subsidy approach financed a revolving fund to enable suppliers to purchase additional quality moulds. It also developed and rolled out an innovative sanitation pan stand which reduced the overall sanitation construction costs, as the pan stand replaced the need for larger structures to hold the ceramic pan. The approach also piloted the use of cast in situ moulds for use in more remote villages which enabled the communities to install and case rings in place rather than transporting them. Lastly the approach support a marketing initiative, training the suppliers and piloting the joint development and usage of simply sanitation communication materials (leaflets) which could communicate material needs and costs directly to households which was starting to have an effect at the end of 2011 with demands starting to pick up. The innovative sanitation pan stand, prior to and after installation (photos RD) The cast-in-situ mould three panel version, (photos RD. Overall, all the models have some strengths and weaknesses, and it is clear that how and where they are applied and how they are followed up on is critical for them to have an impact. The private sector credit model probably has greater potential as it is a commercial model, with the interviewed owners feeling it provides opportunities for them. It should be noted that most of the other development assistance models have additional (“hidden) support costs which are not evident, and on which little or no comparative information was made available. There is also a need to better understand where progress is being made or not, regardless of how, as self-supply is and will increasingly be an important but as yet unmonitored driver of sanitation progress in the province and country. About the Author D. O’Leary holds a M.Sc. in Rural Regional Resources Planning with over 20 years of professional experience, including extensive involvement in the water sanitation and hygiene sector across both urban and rural areas in South East Asia. A proven innovator and facilitator in targeting basic services, as well as a practiced capacity development professional across a range of sectors. Contact details though LinkedIn: b_profile
  10. 10. Page 10 of 15 Annex 1 Process Summaries, Achievements and Identified Challenges by Implementers Locations and Implementers Provided supported Reported Process Performance and Identified Challenges & Issues REVOLVING FUNDs “NamPapa”,UrbanWaterSupplyStateEnterprise Outhoumphone, Phine, Atsaphangthong & Villabouly Districts Centres Revolving funds for villages making up Districts Centres, progressively covering at least four District Centres (DCs) by 2011 Latrine revolving funds stated in 2004 under the Community Access Water Supply and Sanitation Programme for small town development and later Small Towns water and Sanitation Projects Reported average cost of sanitation material sets 1,070,000 Kip (US$ 134). Reported to follow a six step process: i. Undertaking hygiene education to increase awareness and create demand. ii. Conducting needs assessment and choosing /agreeing on three toilet designs/options15. iii. Assess household potential and generate project name list based on the (projects agreed) poverty criteria16. iv. Household and community contracting (materials to be provided, repayment terms varying from 1-2 years. v. Provision of materials sets17 vi. Provide village fund committees with repayment lists for follow ups Achievements 587 Households latrines provided across 39 ‘urban villages’ making up five district centre by late 2011 Note activities reported as still in progress. 1st batch, Outhoumphone DC (2004) 19 villages 164 households 2nd batch, Phine DC (2007), 5 villages 46 households 3rd, batch, Atsaphangthong & Villabouly DC (2010), 5 villages 146 households through two cycles 4th batch Atsaphangthong (2011) five villages 176 HHs so far , as started in 2011 Total reported investment (to date end of 2011) for sanitation in the province was 864,000,000 Kip (~US$108,000) over six years through various urban projects and phases of projects. Reported Challenges i. Repayment rates of sanitation loans across all project villages running at an average of 35% (end of 2011) due to a. The reported “inability of households to repay due to being poor”? b. Households consider the loans as free money from development aid projects ii. Limited or no revolving of funds due to high levels of repayment delinquency iii. No resources for local village fund committees to functions so limited follow up iv. Inadequate training to village fund committee WorldVision Savannakhet People’s Livelihood Improvement Project (SPLIP) 2005- 2008 (with sanitation revolving funding (SRFs) started in 2007) ADPs, in four districts, namely Nong (1 village), Phalanxai (5), Atsaphone (17) Thapangthong (4) Ongoing and recent Integrated rural development model “Area Development Programmes (ADPs)” since 2008- ongoing SRFs since the beginning For household toilets an allocation of between 400,-600,000 Kip (US$50- 75) per set for supported materials. Currently Following a seven-step process: i. Awareness raising on sanitation ii. Assessing village sanitation needs, and informing on “improved Sanitation” iii. Establishing Community Structure (1-2 person committee + “Maiban”-Village Leader) iv. Community Contracting involving all parties (village representative , District offices, “Kumbaans”) with provision of a. 100% grants for Government identified Poor Families 18 b. Other (non-poor) households, loans from fund for 100% of material cost repayable over 12 months with payment of 33-50,000Kip/ per month (~US$4-6/p.m.), upon complete repayment funds transfers to Village Development Fund (VDF) v. The provision of a set of sanitation and construction materials19 . vi. Following up on constructions vii. Monitoring of repayment collection and submission of borrower accounts to management committee Achievements Based on five years of implementation  894 households toilets constructed across 48 villages, in five districts  Total reported investment (to date end of 2011) ~536,400,000 Kip (~US$67,050) over five years. Reported Challenges i. Elevated delinquency (non-repayment) rate, with an average of 40% of investments not being repaid per village fund, due to : a. Competing demand for household funds (sanitation not a priority), resulting in extended repayment periods. b. Awareness of other villages who had received free toilets, so reluctance to repay. Identified Issues i. No interest/ penalty provisions for delayed or prolonged repayments. ii. No remuneration/motivation for management committees to follow up on repayment delinquency. iii. Even though sanitation material sets were provided or purchased for some households, units remained uninstalled or materials provided used for other purposes. iv. Once repayments made, limited or no reissuing/revolving (by the villages development funds) for sanitation purposes. Though VDF representative stated that were “no demands for sanitation loans”? Xonabuly District 2004-2006 Oxfam Belgium (OxB) support funds The district Nam Saat reported a revolving fund initiative supported by OxB, in the mid 2000’s Conducted technical training on toilet construction. Provided toilet construction material sets20 cost ~652,000 kip, (~US$82) Repayment period was within 12 months, no interest Achievement 23 HH toilets were constructed across three village as the first round of the fund
  11. 11. Page 11 of 15 Locations and Implementers Provided supported Reported Process Performance and Identified Challenges & Issues but depended on market value, Reported Challenges The funds were reported to have never revolved, so just 23 HH benefiting. VillageDevelopmentFunds-VDF Atsaphon District Phine District (Interviews with specific village development funds in these district, but existing in all districts in the province ) Department of Industry and Commerce supports the establishment of VDFs as do some of development organisation such as World Vision, who mentioned that repayments from revolving were paid to the VDF Many villages have been supported by the Department of Industry and Commerce and others in districts to establish village development funds utilising saving and credit based approaches. These funds collect monies from members and (DIC officials met with listed some of the standard requirement they promoted through their model  A Minimum of monthly savings, usually 10,000 kip / member /month  Initial loan sizes limited 100,000 - 5,000,000 kip, with a maximum period of 6 months,  Variable interest rates: (i) For Member for agricultural activities 2% per month (p.m.); and (ii) for small business activities 3%; and a flat 6% p.m. for non-members,  All loans require collateral and based on income calculations All the village development funds met by the researcher with stated that they had not provided any credit and loans for sanitation to their knowledge. Reported capital funds potentially available were significant. The lack of reported sanitation financing from this sources was due to the lack of official guidance to VDFs to allow for the issuing of loans for sanitation and other purposes. As available manuals only listed three purposes for (i) agricultural, (ii) business and (iii) Emergency purposes and management committee were reluctant to go outside what they felt were the permitted boundaries. PRIVATE SECTOR CREDIT INITIATIVES A number of emerging private sector entrepreneurs were identified as being active in different districts in the province. Often operating through Public Private Partnerships Memorandums of Understanding (MoUs) The following are examples of those reviewed. Atsaphongthong District, 2009- The Nang Chouk Material Shop (NCMS) NCMS provided two sanitation packages (mid 2011) which were being promoted one costing 265,000 Kip (~US$33 )(but no transportation and the other costing between 290,000- 310,000 Kip (~US$36-39) with the supplier transporting the materials to the village depending on the distance / accessibility The NCMS stated that they developed their approach by working closely with the district health and its Nam Saat offices with whom they have a Memorandum of Understanding (MoU). They collaborated with the DHO/Nam Saat who are responsible for promoting sanitation in rural villages and disseminate information about the model to villagers and village authorities. The owner summarised the process as follows i. Following the signing of the MoU the DHO/Nam Saat staff identified villages where households were interested in obtaining sanitation. ii. Based on a simple household contract drawn up by NCMS in consultation with the DHO and other district offices. iii. The households contracts is signed and endorsed/ witnessed by village leader and DHO, iv. Once enough households have agree a consignment of material set21s is prepared and either collected by villagers or delivered. The terms of the contract were described as followed, a) All credit paid within three months b) If late an interest charge of 10% per additional month, and possible loss of collateral, c) Al household contracts witnessed and agreed to by village leaders and DHO and each has a copy of the contract Achievements to date by CNMS  Activities in seven villages with 373 household obtaining material sets across the seven villages by mid-2011.  Ongoing activities and expansion plans as per the MoU to be active in 22 villages with good road access and 26 villages with difficult or in remote locations in the district to cover 48 villages in all. Reported Challenges i. Differences in the list of households who agreed to borrow for sanitation. ii. Delinquency and delays in repayments and or construction of toilets, and the reasons given were: a. Borrowers did not have enough money to make repayments on time, asked for (and usually given) extensions in repayment period. b. The quantities of materials delivered/received were less than the quantities described in the contract. c. The construction has not yet started due to ongoing livelihood demands on households, farmers waiting for post-harvest period. d. Borrowers have other debt commitment which they prioritise before the sanitation loan and so have not made repayments. iii. When sanitation materials are deliver to a village only to one location so can be difficult to distribute throughout dispersed villages. iv. No remuneration/motivation for village/ district personnel to effectively monitor or resolve issues v. The field researcher felt that the approach lacked an effective assessment of household ability to pay which contributed to repayment issues. The business has taken back some unused and unpaid for materials due to being unable to find suitable solutions with some households because of a refusal to pay. This calls into question how the borrower agreed lists were facilitated and generated in the first place. Outhoumphone District, 2007- SCC provides support for Sanitation credit explained as, Achievements
  12. 12. Page 12 of 15 Locations and Implementers Provided supported Reported Process Performance and Identified Challenges & Issues Southchay Construction Company (SCC) Initially gained credit/ sanitation funding experience through cooperating with World Vision in 2007 a sanitation package22 priced at 500,000 Kip (~US$62.5) i. All household sanitation credit contracts signed by village leaders and witnessed district planning and investment office, and district health office before being passed to the business, ii. The materials are delivered to the households based on this contract which usually has the following conditions a. A repayment period of up to four months with no interest b. Late repayments charged 20% interest per month or risk having collateral taken. iii. Interested communities should develop a sanitation plan for multiple houses to obtain materials, which according to the owners the facilitation and development of the plan is through the district health office / Nam Saat unit. A total of 419 sanitation loans provided across 27 villages. Initially provided credit for 300 toilets distributed across 21 villages between 2007/8 linked to the activities of World Vision. This was followed up with additional credit in 2009 for 50 toilets. In 2011 currently had a portfolio of sanitation loans valued at 48,560,000 (~US$6,090) of which has been ~ 29% were significantly delayed loans as well as the 69 recent sanitation loans across six villages. Reported Challenges i. The owner indicated ongoing difficulties in ~29% of loans made which were considered ‘difficult’. ii. Mentioned a lack of support from local authorities in resolving difficult loans, as no support for local officials. Xonabuly District Pakorb Construction Materials Shop (PCMS) Stated has been providing “sanitation credits” since 2007 also has and is also involve in some development projects such as SSH4A PCMS provide a wide range of ‘tailored options’, sanitation pack price ranged between 400,00023-1,230,000 (~US$50-154) The credit process described by the business owner was i. The owner and district health office signed agreement together ii. Owner develops a simple household contract to be backed by the village leader “Maiban” and the DHO/Nam Saat. a. Repayment period 3-5 months b. No interest if repayment within time but up to 20% per month if delayed c. Also has an option for the use of collateral to guarantee loan. iii. Following dissemination of information to villages and the generation of signed contracts iv. The business delivers sets of materials to villages which it is received and checked by the village leader Achievement by PCMS  300 households across 14 villages have benefits from sanitation credits from the business.  Total reported investment of 203,000,000 Kip (~US$25,375) of which 19,000,000 Kip (US$2,375) roughly nine per cent (9%) is still outstanding (at the end of 2011). Reported Challenges Similar issues with other models such as delays in repayments etc... DIRECT GRANTS/ SUBSIDIES Nam Saat Phine District CIDSE (Coopération Internationale pour le Développement et la Solidarité- Project, 1990-2005 Sanitation component of an integrated rural development program undertaken with CIDSE coordinated(CARITAS) support Grant subsidy funds with 50% contributed by the program sanitary/ construction materials for selected households with 50% contributed by beneficiaries (labour and local materials, sand gravel wood etc…). Sanitation material sets24 supported Achievement 122 households toilet constructed in 8 of 17 villages where activities were targeted, On average the project increased village sanitation coverage by 26% ranging from 3%-85% HH coverage. Phalanxai district 2010 Birla-Lao Farm and Plantation Company A Corporate Social Responsibilities (CSR) component of a large agro/ industrial forestry projects Because the land concessions provided to the company, these may result in exclusion from certain areas and access to previous natural resources for some villages. The company is providing ‘some’ mitigation through improved access to basic services, including sanitation. Identified and agreed households and village will be provided with a set of sanitation materials 25 Achievement Reported to be providing 238 sanitation materials kits to households in two villages in Nalai (210) and Nalainoy (20) villages. Reported Challenges i. Inability to obtain sufficient quantities of sanitation materials in one go to support the intention, so phased delivery required. ii. Once material delivered household don’t always install the toilet, many HHs waiting for opportune time while others are waiting till they have additional resources to provide the superstructure.
  13. 13. Page 13 of 15 Locations and Implementers Provided supported Reported Process Performance and Identified Challenges & Issues NamSaat Sepone and Villabouly districts 2010-2012 Pro-Poor WASH Project supported by SNV Netherlands Development Organisation The intended approaches encouraged and sought an equal contribution from targeted households across 25 villages in the two districts. Nam Saat covered the cost of 250,000 Kip ($US31.5) Awareness raising on sanitation and hygiene in villages and schools. Including community led total sanitation –CLTS to sensitise people to the priority need for sanitation and hygiene and training on toilet construction. Followed up by promotion of cost sharing approach and toilet construction training to move households up the sanitation ladder. Households and the project each providing 250,000 Kip (~US$31.5) for the sanitation components combined to 500,000Kip (~US$64). Achievements to date By the end of 2011, 296 toilets reported constructed in eight out of the 25 target villages Reported Challenges i. The DHO/Nam Saat faced significant difficulties in sourcing adequate quantities of materials in the target districts, as local (district) producers either did not have the capacities to produce the materials or demand higher prices. ii. In the end materials were sourced in the provincial capital some 200km to the west of the districts and transported to the districts! Resulting in higher (20%) sanitation set costs borne by the project. iii. The sanitation approach was partially build on a variant of community led total sanitation-CLTS, in enabling following up and support to move up the sanitation ladder. iv. However the ability of provincial and district Nam Saat personnel to facilitate community dialogue post CLTS process in a timely manner and later follow up was weak, in that the activities were often telescoped together with limited discernable separation, indicating a need for further capacity building. NamSaat Atsaphangthong district Supported by the Christian Broadcasting Network-CBN Activities ongoing since 2004 but sanitation component initiated since (2009) Providing water and sanitation interventions on a household member pro-rata basis at 60,000 Kip for sanitation per person per households. So ~360,000 Kip per HH. The objective of the approach is to contribute to advancing villages to be “Model Healthy Villages- MHVs” in line with the Government of Lao’s Ministry of Health criteria26. The financial contributions were used to bulk purchase materials for distribution to target households with households providing labour and other materials inputs usually for superstructure construction. Achievements 304 household toilets constructed in three village completed and three villages ongoing (Nov. 2011) Reported Challenges i. Obtain sufficient quantities of sanitation materials in a timely manner. ii. Construction of toilets after material deliver is often delayed, as families do not prioritise sanitation issues LaoRed Cross(LRC) Phalanxai and Xaibouly district 2000-2005 Netherlands Red Cross The LRC in cooperation with other red cross affiliates had undertaken some sanitation activities in the province in the past. On recollection they provided sanitation materials to households in targeted villages Achievement 79 household toilets constructed in seven villages across two district Phalanxai district: 75 toilets constructed in two villages Xayabouly district 304 toilets were constructed NamSaat Phine District, 2002-2006 Canadian International Development Agency CIDA) As part of an integrated district development project of which sanitation became one component. the project provided sanitation material sets27 to households with an average cost of 800,000Kip (~US$100) Achievement 724 households toilets constructed covered 37% of total number households across 13 villages. NamSaat Nong, Sepone Villabouly and Xonabouly districts 2000-2009 A rolling water and sanitation program with UNICEF support The program provided sanitation material sets to selected villages increasingly integrating poverty based/ equity approaches This rolling program with UNICEF support, saw the end of the then ‘conventional approach’ of providing a (limited) number of material sets for toilets per village. In the latter years it was ‘being considered for phasing out’ due observed limited impacts in villages. Household selection was reported based on village authority information, households’ readiness and beneficiary contribution. Achievement 990 toilets (sanitation sets for) provided to households, across 14 villages in 4 districts. Nong (3 villages-58 HHs), Sepone (2villages, 124 HHs) Villabouly (2 villages, 75HH) and Xonabouly (7 villages, 690 HHs) Reported challenges Material sets provided were not always installed, and were often kept for years till families had sufficient surplus resources to build the superstructures
  14. 14. Page 14 of 15 Locations and Implementers Provided supported Reported Process Performance and Identified Challenges & IssuesFIDAInternational Songkhong District Ongoing District Development Approach focused mainly on one district, where sanitation supported activities were implemented between 1998-2010 through various phases of the programme. Reported average investment cost varied by phase since staring in the late 1990’s ranged between Reported to have followed a seven step process in later years up to 2010, namely: i. Provided community training to increase basic knowledge on hygiene and sanitation. ii. Conducted village assessments (PRA) with village authority and promoted two sanitation options28 iii. Provided construction training to village volunteers iv. Poverty and vulnerability assessment of targeted households to assess ability to pay.29 a. For identified poor and vulnerable households 100% support for sanitation. b. Other household supported up to 50% of set amount of materials. v. Prepare Project Agreement/ Contract for village authorities vi. Monitored the delivery of supplied materials. vii. Construction and usage monitoring Achievements Over the 12 years of sanitation support (predominately in one district) 1,190 households were reported to have gained access to sanitation. Total reported accumulative Investment was an astonishing 1,792,900,000 Kip, (~US$224,113) Report Challenges i. The organisation used partial coverage approaches provided a limited number of toilets to some households in villages, but were unable to provide for others households in targeted villages (may have created unrealistic expectations for free latrines). ii. There was a reported lack of ownership of the provided latrines to ensure they were well used and maintained. So the approach was found to be unsustainable by the organisation. iii. Not all the sanitation material sets provided were effectively use, reasons given were a. “Households too busy to construct latrines” b. “Never used a toilet before” so did not know how to use one c. Waiting on other households to build and use one first, before starting. INDIRECT SUBSIDISE Atsaphone, Phine Phalanxai and Xonabuly districts Sustainable Sanitation& Hygiene for All (SSH44A) Project Led by the Provincial Rural Development & Poverty Reduction Office (PRDO) leading a provincial and district multistakeholder process, with SNV Netherlands Development Organisation (Financed by AusAID and the Dutch Government 2010-2011) Piloting between mid- 2010 and the end of 2011. Providing a Community Led Total Sanitation approach targeting 80 villages across four districts Subsidies for a limited number (3) of demonstration models targeted at identified poor households built as part of the technical training i. Sanitation demand creation using a variant of Community Led Total Sanitation (CLTS) approaches ii. Support and capacity building to sanitation supply chains actors and stakeholders including; micro, small or medium sized enterprises (MSMEs), material fabricators, retailers and building contractors iii. Establishing a sanitation materials equipment revolving fund managed by the provincial/district authorities for the private sector. iv. Targeted hygiene behaviour change on washing hands with soap, toilet using, improving local development approaches (Governance- pro- poor and business friendly approaches). Achievements 729 additional toilets built during one year, January to December 2011, (and ongoing at the time of the research) which benefited an addition 839 households (110 families) decided to share sanitation usually with extended family members in separate households in their villages. Approach attempted to target 20 villages per districts, Reported Challenges i. CLTS triggering was required to be undertaken on a number of occasions as levels of participation at events varied. ii. Later identified reluctance of facilitators and teams to use some of the CLTS tools “walk of shame” and faecal transmission route demonstration because of a lack of confidence. a. Performance varied significant across villages and districts and range from zero improvement to 100% iii. Many of the targeted villages were adversely impacted by monsoon flooding in 2011 which affected households and community commitments’ to sanitation. iv. The scale of the pilot at 80 villages was beyond the capacities of the provincial and district team to take on, when starting from scratch within the timeframe, as provincial and district teams needed to be trained up first. v. Originally agreed village targeting criteria was not adhered to by district teams with some activities in villages where other sanitation approaches had also being applied.
  15. 15. Page 15 of 15 References and End Notes 1 Photograph sourced from Deutsch, R., and O’Leary, D. 2 Deutsch, R., (SSH4A project manager) O’Leary, D., (WASH Sector Leader) with additional inputs and support from Siliphong, P., (provincial WASH Adviser) then at SNV-Netherlands Development Organisation. 3 The list of projects is not considered complete, as it was based on reported projects by responsible officials from involved government agencies and other development actors in the province. It was observed that some sanitation projects undertaken in the province were not mentioned by interviewed agencies and partners which may have related to the focus districts identified and nominated for the fieldwork. However the approaches covered by the research are likely to be representative of all the approaches being applied in the province up to 2011. 4 Updated figures from the Provincial Department of Planning and Investment, Statistical office, previous figure of 825,879 from National Statistics Centre, Ministry of Planning and Investment (2005) National Population Census, 5 This is an indicative number of villages in the province, as the provinces was going through a process of village consolidations in the mid to late 2000s that saw the number of villages reduced through mergers 6 Source, Poverty Reduction Fund 2012- incidence-map-cover.jpg , based on the Ministry of Planning and Investments “Decree on Poverty and Development Standard 2010 to 2015”- # 285/PO (13/10/2009) for rural populations. 7 Hutton G, Larsen B, Leebouapao L, Voladet S., 2009, Economic Impacts of Sanitation in Lao PDR, the World Bank, Water and Sanitation Program (WSP). 8 Behind Phongsaly and Saravane provinces, source data on “Access to Sanitation", National Census Data 2005, National Statistic Centre, Ministry of Planning and Investments. 9 Ryan, P., (2009) Research on Innovative Policies, Practices and Approaches for Improved Basic Sanitation and Hygiene in Laos PDR, IRC- the International Water and Sanitation Centre for SNV. 10 It should be borne in mind the exchanges rates between the Lao Kip and the US dollar varied during the reporting period of projects starting in the late 1990s till 2011, efforts have been made to ensure that reasonable correct exchange rates have been used 11 Various sanitation and water options, that are considered improved can be found at categories/ 12 UNICEF’s supported approach was reported ‘as ended’ as it “was as transitioning from a grant/ direct subsidies” model for limited number of sanitation sets, to supporting more indirect subsidy model, that allowed for a more equity targeting and holistic approaches (Community Applied Total Sanitation) for future funding and support. 13 The decentralized implementing structure involved the Provincial Government through the Provincial and district offices of (i) Rural Development and Poverty Reduction, (ii) Nam Saat/Health, (iii) Lao Women's Union, (iv) Lao Youth Union, (v) Education Offices, (vi) Planning and Investment Offices 14 PHAST based approach manual can be found at and a ‘review’ of the approach at 15 The three options available were (i) pour flush with single pit (direct drop), (ii) Pour flush with two pits, (iii) Pour flush with three pits. 16 The urban projects utilised their criteria which do not appear to have followed the official poverty criteria set out in various Government Poverty Decrees, as below. 17 (i) Pan, (ii) 5 concrete rings, (iii) PVC pipes (iv) Roof sheeting (v) bag of cement. 18 Based on the official criteria in the Decree on Poverty and Development Standard 2010 to 2015”- # 285/PO (13/10/2009) for rural populations. 19 Each sanitation set was reported to contain (i) Ceramic toilet pan (squat plate) (ii) 3 Concrete rings (iii) Concrete ring cover (iv) PVC pipes (v) 1 bag of cement (vi) gravel & sand (vii) 100 blocks. 20 The material sets were reported to comprised of (i) 3 rings, (ii) 1 concrete covers, (iii) 1 Ceramic toilet pan (squat plate), (iv) PVC18 mm, (v) 2 cement bags 21 Each set in 2011 was described as (i) three 80cm concrete rings, (ii) a ring cover, (iii) a squat plate, and (v)a bag of cement 22 The SCC sanitation kit composes of (i) squat pan (ii) three concrete rings, (iii) cover, (iv) PVC piping 23 The generic PCMS sanitation package consisted of (i) ceramic squat pan, (ii) 3-6 80cm concrete ring, (iii) ring cover, (iv) sections of PVC pipes (v) bag(s) of cement. With additional quantities of blocks and brick for superstructure added. 24 Sanitation material set were reported to be made up of (i) squat plate, (ii) rings (iii) ring cover (iv) 3 cement bags, (iv) 26 meters rebar steel 6mm, (v) 2 meters PVC20mm 25 Providing toilet construction materials included (i) 3 rings 100 cm, (ii) 1 Concrete ring cover, (iii) 1 Ceramic toilet pan (squat plate), (iv) 3 cement bags and (v) PVC piping  20 mm while the with beneficiary households contributing labour, 26 GoL/ MoH Model Healthy Village Primary Health Care requirement criteria; (a) 3 cleans (personal hygiene behaviours’) villages with water supply, (b) village health volunteer, (c) village drug kit, (d) sleeping under impregnated bed net, (e) fully immunized, (f) having latrine and use, (g) Birth and infant child care (birth spacing, breast feeding, ante natal care), (h) risk case referral and decease or birth reporting 27 The sanitation material set comprised of (i) 1 Ceramic toilet pan (squat plate), (ii) 4 rings100cm, (iii) 1 Concrete ring cover, (iv)1.3 meters PVC100 mm and 2 meters PVC20mm, (v) 2 cement bag and 30 concrete blocks) 28 Options promoted in later years 2009-2010 were pour flush with single pit and pour flush with double pits 29 Two sets of sanitation materials made available: A for 100% subsidised households they received (i) squat pan (ii) concrete rings, (iii) ring cover, (iv)PVC piping (v) Concrete blocks (vi) bag(s) of cement, (vii) reinforcing bars (viii) gravel and sand. B , while other received (i) pan, (ii)concrete rings (iii) Ring cover (iv) bag of cement. The view expressed in this paper are those of the author only and are not intended to reflect on or be attributed to any of the actors, organisations or institutions mentioned in the paper.