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Supply Chain Analysis for Rural Sanitation Products and Services in Lao PDR Final Report July 2014 Prepared by

Lao PDR National Rural Sanitation Products Supply Chain Study

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Page 1: Lao PDR National Rural Sanitation Products Supply Chain Study

Supply Chain Analysis for Rural Sanitation Products and Services in Lao PDR

Final Report

July 2014

Prepared by

Page 2: Lao PDR National Rural Sanitation Products Supply Chain Study

FINAL REPORT

Contents Acknowledgements ........................................................................................................................................... 6

Executive Summary ........................................................................................................................................... 2

1 Introduction ................................................................................................................................................. 25

2 Methodology ................................................................................................................................................ 33

3 Possible limitations of the data .................................................................................................................... 36

4 The Sanitation Supply Chain ......................................................................................................................... 37

5 The Latrine.................................................................................................................................................... 52

6 The Consumer .............................................................................................................................................. 63

7 Market structure, environment and reach .................................................................................................. 65

8 Government and Development Partners are part of the chain ................................................................... 76

9 Finance ......................................................................................................................................................... 79

10 Business constraints ................................................................................................................................... 82

11 Summary of Findings .................................................................................................................................. 86

12 Recommendations ..................................................................................................................................... 87

Appendix 1: Selected Sanitation Data from Lao Social Indicator Survey ........................................................ 98

Appendix 2: Material Suppliers Questionnaire ............................................................................................... 99

Appendix 3: Concrete Producers Questionnaire ........................................................................................... 120

Appendix 4: Masons Questionnaire .............................................................................................................. 138

Appendix 5: Microfinance Questionnaire ..................................................................................................... 156

Appendix 6: Focus Group discussion Guidelines ........................................................................................... 160

References ..................................................................................................................................................... 165

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List of Figures

Figure 1: GDP per capita at purchasing power parity (PPP), 2012 .................................................................. 25 Figure 2: Households Using Improved Sanitation Facilities, by Wealth Quintile, 2012 .................................. 26 Figure 3: The impact of improved sanitation .................................................................................................. 27 Figure 4: Seven provinces for field work ......................................................................................................... 31 Figure 5: Supply chain flow for building materials – Northern Provinces (n=20) ........................................... 41 Figure 6 Supply chain flow for building materials – Central Provinces (n=19) ............................................... 41 Figure 7 Supply chain flow for building materials– Southern Provinces (n=29) ............................................. 42 Figure 8: Average percentage of concrete producers’ business related to latrine construction (n=37) ........ 43 Figure 9: Masons who have received training (% of total per region/province) (n=71) ................................. 46 Figure 10: Supply Chain Map (conceptual) ..................................................................................................... 49 Figure 11: Do you know about these different latrine options? (n=71) ......................................................... 52 Figure 12: Cost drivers for commonly-built latrine (LAK and cumulative % of total costs) ............................ 55 Figure 13: Cost drivers for core structure (LAK and cumulative % of total costs) .......................................... 55 Figure 14: Poor rural households’ stated monthly income, by region ........................................................... 62 Figure 15: How much are you willing to pay for a latrine? (rural poor, non-latrine owners) ......................... 63 Figure 16: Comparing costs with consumer expectations and willingness to pay (LAK) ................................ 63 Figure 17: Proportion of actors reporting no competitors in latrine products/services ................................ 65 Figure 18: Construction material shops reporting more than one main upstream supplier (n=68) .............. 67 Figure 19: Percent of actors offering credit (delayed payment) to customers .............................................. 73 Figure 20: Percent that have worked for Government or Development Partner project .............................. 76 Figure 21: Estimated sanitation and hygiene financing, 2008-09 ................................................................... 78 Figure 22: ACLEDA Bank – Credit conditions................................................................................................... 81 Figure 23: Business constraints (percent of actors reporting each as a main constraint) .............................. 82 Figure 24: Potential rural latrine market size (number of latrines) ................................................................ 87

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List of Tables

Table 1: Lao PDR sanitation coverage ............................................................................................................. 26 Table 2: Characteristics of the research districts ............................................................................................ 32 Table 3: Field work methodology overview .................................................................................................... 33 Table 4: In-depth Interviews – Total Sample .................................................................................................. 34 Table 5: Owner and Self Employed Material Suppliers – Distribution by gender (n=68) ............................... 38 Table 6: Other business activities – material suppliers (n=68) ....................................................................... 39 Table 7: Types of other businesses owned by material suppliers (n=68) ....................................................... 39 Table 8: Source of capital – material suppliers (% of total) (n=68) ................................................................ 40 Table 9: Gender of the person who manages the business’s accounts/finances (% of total) (n=68)............. 40 Table 10: Owner and Self Employed Concrete Producers – Distribution by Gender (n=37) .......................... 43 Table 11: Types of other businesses activities by concrete producers (n=37) ............................................... 44 Table 12: Source of capital – concrete producers (% of total) (n=37) ............................................................ 44 Table 13: Customers of concrete producers (average of reported %) (n=37) ................................................ 45 Table 14: Concrete producers who have received training (n=37) ................................................................. 45 Table 15: Pit lining options (% of total) (n=71) ............................................................................................... 47 Table 16: Type of latrines masons able to build (% of total) (n=71) ............................................................... 48 Table 17: Ability of masons to repair and upgrade a latrine and average per year (n=71) ........................... 48 Table 18: Most common improvements made (% of total, multiple choice allowed) (n=71) ........................ 49 Table 19: Construction materials – Country of origin ..................................................................................... 50 Table 20: Type of latrines owned by the rural poor ........................................................................................ 52 Table 21: Latrine superstructures of the rural poor ....................................................................................... 53 Table 22: List of materials to build a typical latrine ........................................................................................ 53 Table 23: Latrine core and superstructure costs for a commonly-built latrine (LAK) ..................................... 54 Table 24: Materials prices in different provinces (average of suppliers’ selling price), LAK .......................... 56 Table 25: Price paid by concrete producers for cement (LAK per ton) ........................................................... 56 Table 26: Price of concrete rings in different provinces (average of producers’ selling price) ...................... 57 Table 27: Labor required to build the “most commonly built” latrine, as quoted by masons (n=71) ............ 57 Table 28: Average daily cost per person for latrine construction (n=71) ....................................................... 58 Table 29: Transport costs for large loads between major centers ................................................................. 59 Table 30: Examples of local transportation costs ........................................................................................... 60 Table 31: Commonly-built latrine total costs (materials + labor) ................................................................... 61 Table 32: Relationship between masons and other stakeholders (% of total) ............................................... 68 Table 33: Suppliers’ gross margins on selected materials (n=68) ................................................................... 68 Table 34: Availability of skilled and knowledgeable masons in poor rural villages ........................................ 70 Table 35: Business or Marketing Plan – Positive Respondents (% of total) (n=68 and 37) ............................ 74 Table 36: Branches interviewed that have lent to households for toilet construction and to supply chain) 80 Table 37: Plans to expand operation in the district (% of total) ..................................................................... 80 Table 38: Current Import Tariff and VAT Rates in Lao PDR (%)....................................................................... 85 Table 39: Potential finance approaches for onsite sanitation ........................................................................ 92

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Acronyms & Abbreviations

ADB

ASEAN

BCC

CLTS

Asian Development Bank

Association of South-East Asian Nations

Behavior Change Communication

Community-Led Total Sanitation

DHS

DP

EMC

Demographic and Health Survey

Development Partner

Emerging Markets Consulting

GoL Government of Lao PDR

FGD

IMF

JMP

Laos /Lao PDR

LECS

LRC

LSIS

MDG

Focus Group Discussion

International Monetary Fund

Joint Monitoring Programme

Lao People’s Democratic Republic

Lao Expenditure and Consumption Survey

Lao Red Cross

Lao Social Indicator Survey

Millennium Development Goal

MICS

MFI

MoH

MoIC

Nam Saat

Multiple Indicator Cluster Survey

Micro-finance Institution

Ministry of Health

Ministry of Industry and Commerce

Center for Environmental Health and Water Supply, Department of Hygiene, Lao Ministry of Health (literally “clean water”)

NSC

NGO OD

ODF

SRF

National Statistics Center

Non-Government Organization

Open defecation

Open-Defecation Free

Sanitation Revolving Fund

UNDP

UNICEF

United Nations Development Program

United Nations Children’s Fund

WASH

WHO

Water, Sanitation and Hygiene

World Health Organization

WSP Water and Sanitation Program (World Bank)

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Acknowledgements

Special thanks to all the stakeholders, development agencies and local associations, and local and national

government officials for their time and invaluable support during the project.

The research teams would especially like to thank all the supply chain actors for their time and cooperation

in participating in this study.

We also extend our sincere gratitude to all the project’s partners including, but not limited to: for Hygiene-

Health Promotion Department, Ministry of Health, Dr. Phat; for National Center for Environmental Health

and Water Supply (Nam Saat), Dr. Soutsakhone; for UNICEF, Bishnu Timilsina, Chief WASH Section of

UNICEF; for Plan International, John McGown, WASH Manager; for SNV, Thea Bongertman, WASH Sector

Leader. A number of other people provided comments on presentations during the project and on a draft

of this report. We particularly thank Susanna Smets from WSP.

Last but not least, we thank Viengsamay Vongkhamsao, WSP Country Coordinator, and Bounthavong

Sourisak, WSP Social Development Specialist.

Emerging Markets Consulting supply chain analysis team

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1

ບດສະແດງຄວາມຮບນຄນ

ຂຂອບໃຈເປນພເສດມາຍງຜມສວນຮວມ, ອງການພດທະນາ ແລະ

ສະມາຄມທອງຖນກຄເຈາໜາທລດຖະບານ

ທງສນກາງ ແລະ ທອງຖນທໄດສະຫະເວລາອນມຄາປະກອບສວນ

ຕະຫອດໄລຍະໂຄງການ.

ທມງານການຄນຄວາຍງຂຂອບໃຈພາກສວນຫກຂອງຕອງໂສການສະໜອງທ

ສະຫະເວລາ ແລະ ໃຫການຮວມມ

ເຂາຮວມໃນການສກສາຄນຄວາຄງນ.

ພວກເຮາຍງຂສະແດງຄວາມຮບນຄນຄຮວມໂຄງການທງໝດລວມທງແຕບ

ຈຳກດສະເພາະ: ກມສງເສມສຂະພາບ-ສຂະສກສາ, ກະຊວງສາທາລະນະສກ, ທານດຣ.

ພດ; ສນນຳສະອາດ ແລະ ສງແວດລອມແຫງຊາດ , ທານດຣ. ສດສາຄອນ; ອງການ

UNICEF, Bishnu Timilsina, ຫວໜາວຽກງານຮກສາ

ຄວາມສະອາດປະຈຳ UNICEF; ອງການ Plan International, John McGown, ຜຈດການວຽກ

ງານຮກສາ

ຄວາມສະອາດ; SNV, Thea Bongertman, ຫວໜາທມຂະແໜງຮກສາຄວາມສະອາດ.

ມບກຄນຈຳນວນໜງທໄດປະກອບ

ຄຳເຫນໃນການນຳສະເໜຕາງໆຕະຫອດໄລຍະໂຄງການ ແລະ ໃນການຮາງບດລາຍງານສະ

ບບນ. ພວກເຮາຂຂອບໃຈໂດຍສະເພາະ Susanna Smets ຈາກອງການ WSP.

ສດທາຍນ, ພວກເຮາຂຂອບໃຈມາຍງ ທານ ວຽງສະໄໝ ວງຄຳຊາວ,

ຜປະສານງານອງການ WSP ປະຈຳລາວ ແລະ ທານ ບນທະວງ ສຣສກ,

ຊຽວຊານດານການພດທະນາສງຄມອງການ WSP.

ທມງານວເຄາະຕອງໂສການສະໜອງຂອງບລສດທປກສາ Emerging Markets

Consulting

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Executive Summary

Background

Around 42% of those in rural communities in Lao PDR practice open-defecation (OD), compared to only 4% in urban areas. However, there has been significant improvement in rural communities – 73% of rural households practiced OD as recently as 2000 (WHO-UNICEF 2014).

Lao PDR sanitation coverage estimates

Urban (%) Rural (%) Total (%)

1995 2012 1995 2012 1995 2012

Improved facilities 62 90 12 50 20 65

Shared facilities 3 4 0 1 1 2

Other unimproved 9 2 10 7 10 4

Open defecation 26 4 78 42 69 29

Source: WHO-UNICEF JMP 2014.

Supply chain study

This supply chain study is a diagnostic of the rural sanitation supply and value chain in distinct physical and market environments. It focuses on the commonly found or most preferred products and services for improved sanitation in rural Lao PDR.

Two hundred structured interviews were conducted with supply chain actors in seven provinces, including construction material suppliers, producers of prefabricated concrete products and masons. Local finance organizations were also interviewed. Also, over 100 people participated in 17 focus group discussions.

The supply chain

Supply Chain Map (conceptual)

Different regions and districts have different supply chains, with different sources of products. The supply chain for sanitation is influenced by the nearest neighboring countries as well as by the presence of international check points. Raw materials (e.g. latrine pan, cement, steel and zinc sheets) often begin in Thailand, but China and Vietnam play an important role as well. Many construction material suppliers act as importers, wholesalers and retailers (some are just importer and retailer).

Importers

WholesalersRetailers

Retailers

Retailers

Supply Chain Actors Location

• Provincial capital

city

• Provincial district

• Remote district

Co

nc

rete

pro

du

ce

r

Ma

so

ns

• In remote

districts, masons

and concrete

producers are

often not

available/work

only on request

base

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Construction materials – Country of origin

Region – Province Latrine Pan Cement Steel PVC pipe Zinc sheet

Northern Thailand (100%) China (16%),

Thailand (84%) China (67%),

Thailand (33%) China (8%),

Thailand (92%) China (9%),

Thailand (91%)

Bokeo Thailand (100%) Thailand (100%) Thailand (100%) Thailand (100%) Thailand (100%)

Luangnamtha Thailand (100%) China (25%),

Thailand (75%) China (100%)

China (11%), Thailand (89%)

China (16%), Thailand (84%)

Central Thailand (64%), Vietnam (36%)

Laos (44%), Vietnam (56%)

Thailand (67%), Vietnam (33%)

Thailand (71%), Vietnam (39%)

Thailand (47%), Vietnam (53%)

Bolikhamxay Thailand (8%), Vietnam (92%)

Vietnam (100%) Vietnam (100%) Thailand (63%), Vietnam (37%)

Vietnam (100%)

Savannakhet Thailand (100%) Laos (78%),

Vietnam (22%) Thailand (100%)

Thailand (78%), Vietnam (22%)

Thailand (88%), Vietnam (12%)

Southern Thailand (98%), Vietnam (2%)

Laos (76%), Thailand (14%), Vietnam (10%)

Thailand (47%), Vietnam (53%)

Thailand (83%), Vietnam (17%)

Thailand (63%), Vietnam (37%)

Attapeu Thailand (100%) Laos (88%),

Thailand (12%) Thailand (43%), Vietnam (57%)

Thailand (100%) Thailand (83%), Vietnam (17%)

Salavan Thailand (95%), Vietnam (5%)

Laos (57%), Thailand (14%), Vietnam (29%)

Thailand (8%), Vietnam (92%)

Thailand (65%), Vietnam (35%)

Thailand (28%), Vietnam (72%)

Sekong Thailand (100%) Laos (83%),

Thailand (17%) Thailand (100%) Thailand (100%)

Thailand (86%), Vietnam (14%)

Note: other products such as tiles have a similar source as zinc sheet

Margins are higher on some products and in some areas than others but they range from 3% up to 45% on certain products. These margins are not unreasonable given the high costs of distribution in rural areas. Gross margins of 25% to 35% are not unusual for products successfully reaching the bottom of the pyramid. In the focus groups, supply chain actors indicated that margins for latrine products and services are less than their other activities.

For all building material suppliers interviewed, latrines are a small part of their overall business – but estimating how small is not possible. Many of them do not know how important latrines are to their business (since they do not always know for what purpose materials are bought). Latrine pans alone are likely to account for less than 5% of revenues for most suppliers.

Concrete producers estimate that the percentage of their businesses related to latrines (for example, concrete rings for the pit) is on average 36% but there is wide variation across the provinces

The masons interviewed estimate that they built 6.4 latrines per mason during last year. On average, masons stated that 69% of the latrines they build are as part of a new house.

Around 43% of the concrete producers surveyed have other business activities; along with 52% of material suppliers outside district and provincial capitals (and 39% of those in the capitals). Construction materials suppliers and concrete producers on average employ 4 staff.

Overall, there appears to be more competition among material suppliers than concrete producers and masons. One-third of material suppliers (33.8%) reported facing no competition, compared with more than half of concrete producers (about 60%) and masons (52%).

The majority of the owners and the sole traders of material supply businesses were female, 57% and 67% respectively, and women tend to manage the finances of most material supply businesses (58%). Concrete producers are much more likely to be men (70%), and all masons interviewed were men.

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Latrine models and costs

In general, the supply chain actors present a latrine that is beyond the means of most rural target households. However, there is no “typical” or common latrine. A wide variety of options, sizes and materials were suggested by interviewees. Generally, most said it was a pour-flush squat latrine with ceramic pan and offset pit.

The cost of materials varies considerably (depending on size as well as location). Based on estimated prices and designs provided by supply chain actors, the commonly built latrine costs around 2.8 million LAK (US$3501). This is the cost for materials only (including superstructure) but excludes labor and any transport charges (though some transport cost is already embedded in materials prices). Such a latrine includes: a ceramic pan, basic slab, three 1m rings and lid, 250 concrete blocks, 1m3 sand, 1m3 gravel, 10 bags cement, 2 PVC pipes (1 large, 1 small), zinc sheeting, and wood door. The superstructure is estimated to account for 69% of the total cost of materials.

The cost of materials for a commonly built latrine, as conceived by supply chain actors

Region – Province Core Superstructure Total materials

cost (LAK) Superstructure %

of total cost

Northern 815,389 1,697,331 2,512,720 68%

Bokeo 788,023 1,606,745 2,394,768 67% Luangnamtha 842,756 1,787,917 2,630,673 68%

Central 869,642 1,949,535 2,819,177 69%

Borikhamxay 898,714 1,750,917 2,649,631 66% Savannakhet 840,569 2,148,153 2,988,722 72%

Southern 968,382 2,060,500 3,028,882 68%

Attapeu 981,109 1,901,071 2,882,181 66% Salavan 913,992 2,099,467 3,013,458 70% Sekong 959,833 2,246,083 3,205,917 70%

Total sample 889,285 1,934,336 2,823,621 69% Excludes labor and transportation fees.

Cement and bricks contribute the most to the materials cost of such a latrine. The door, wood and concrete rings are also significant.

Cost drivers for commonly built latrine (LAK and cumulative % of total costs)

WSP (2012a) found that, of 10,360 households surveyed in Oudomxay and Savannakhet, three-quarters built latrines costing an average of 2.3 million LAK (US$287), and one-quarter spent an average of 5.5 million LAK (US$687) on “high-cost prestige latrines”. The WSP - Sanitation Consumer Behavior Study

1 Throughout this report, US$1 = 8,000 kip.

0%

25%

50%

75%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Cement ConcreteBricks

Wooddoor

Woodpieces(#10)

ConcreteRings(#3)

Gravel PVCPipes(#2)

Sand Zincsheet

Lid CeramicPan

Other

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found that more than 75% of those rural households who were able to state an estimated latrine cost gauged that they need to spend over 1 million LAK (US$125). Around 29% of households without a latrine state that they are prepared to pay 200,001 to 700,000 LAK for one, while 29% are willing to pay more than 700,000 LAK.

Comparing costs with consumer expectations and willingness to pay (LAK)

Note: Excludes labor and transport costs. SS = superstructure. Low-cost design with SS: assumes 635,000 LAK (US$80) superstructure. Consumer perceived cost: more than 75% of poor rural households without a latrine, who knew the amount one would cost and the days required to build, believed that it will cost at least 1 million LAK. Consumer willingness to pay: 40% of poor households are willing to pay at least this much.

Masons report that it takes two to three workers almost two weeks to build a latrine, with a total labor cost of around 3 million LAK (US$375) — an average daily labor rate of 134,000 LAK per person (US$17). Hence using masons can double the total price of a latrine. The superstructure takes the longest, reflecting that masons are used to building substantial structures (hence the high cost of latrines above). Lining a pit with bricks (which actors report is becoming more common) requires more labor than using concrete rings, partly because such pits are usually larger, adding to the total cost of the latrine.

Transport cost in the sanitation supply chain take two forms: as explicit prices for the delivery of products, and as an embedded cost in the price of products and services. Unit transport costs between major centres are lower than local transportation costs. Transporting large loads between major centers costs around 400 LAK per ton per km where the road conditions are good and the area is not mountainous and 750 LAK per ton per km where roads are bad and the terrain is mountainous. However, distributing from major towns to smaller towns and villages, particularly those that are more remote or are in mountainous areas, significantly increases transport costs. Reaching towns with smaller trucks can cost as much as 5,500 LAK per ton per kilometer. Given that only 3 to 4 basic latrines can fit on a truck capable of reaching some remote areas, transport can add around an additional 136,000 (US$17) per latrine (34% of the cost of a basic latrine core), depending on geography and distance.

Affordability

Poor rural households cannot afford a latrine that costs 2.8 million LAK. For households at the official rural poverty line (180,000 LAK (US$22.50) per person per month, which equates to 900,000 LAK (US$112.50) for the typical five-person household), the commonly-built latrine would cost at least three months’ income. Many target households earn even less: 85% of poor rural households surveyed in the South have a monthly income of less than 500,000 LAK (US$63); and transport costs make the latrine even more expensive. The commonly-built latrine would cost these households more than six months’ income.

The potential market for a lower-cost latrine is around 150,000 to 200,000 latrines, depending on the latrine price and assuming there were no problems in distribution to households. The basis for this estimate is that 414,000 rural households in Lao do not use an improved facility and 46% of rural

2,823,621

1,035,000 1,000,000 878,892 500,000 400,000

Actor's estimate- total

Low-cost designwith SS

Consumerperceived cost

Actor's estimate-core

Consumerwillingness to

pay

Low-cost design,no SS

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households without a latrine are willing to pay 500,000 kip (US$62.50) to obtain one (WSP – Sanitation Consumer Behaviour Study), which is 190,500 households.

Finance

Many supply chain actors are able to obtain formal credit. Around 50% of material suppliers interviewed have had a bank or MFI loan. The average interest rate is around 13% per year (ranging from 6% to 15%) and the term is 1 or 3 years. About 22% of concrete producers interviewed have had a bank loan, typically paying 14% interest for a term of 1 year. Masons do not access formal credit, perhaps because they need it less but also because they may not be able to provide collateral. If masons borrow, it is likely to be from informal money lenders.

Constraints

Material suppliers cited bad roads as a constraint more often than any other (31% of suppliers reported this was a main constraint). It was also a significant issue for concrete producers (19%).

Problems with labor availability and quality are particularly acute for concrete producers and masons because their business is more labour-intensive than material supply: Nearly 40% of concrete producers and masons face problems with labour availability. Also, 21% of masons cited staff and training problems (many also citing absenteeism and wage costs as issues). Labor constraints are not a problem unique to the sanitation supply chain problem. It is not unusual for businesses in Lao to face labor constraints. For example, in 2011 18% of businesses in Lao PDR reported inadequate skills as a primary constraint (World Bank 2011).

Customers not paying (30% of materials suppliers) and insufficient demand (35% of concrete producers and 41% of masons) are important constraints limiting the financial attractiveness of the sanitation businesses. Access to finance is reported as a problem by 28% of material suppliers and 38% of concrete producers. It is quite common for small businesses to cite access to finance as a constraint. In 2011, 20% of all Lao companies reported access to finance as a primary constraint (World Bank 2011), and 57% of micro businesses and 45% of small businesses said that lack of capital is a “big” or “very big” constraint (GIZ 2012).

Summary of Findings

The actors

1 No actor sells a complete latrine (except in some pilot programs such as PSI/WSP) – the chain is fragmented. 2 Businesses rely on other sources of income – they don’t view themselves as part of the sanitation supply chain.

3 Female ownership rates for material suppliers appears high (62%) but is consistent with other micro businesses.

4 Most businesses are small and unregistered (and much less likely to be registered outside of capital districts). 5 One-quarter of concrete producers report having a marketing plan, which appears high. 6 Masons can be transient, travelling far to work for extended periods. 7 Concrete producers are busier in wet season, the opposite of masons and material suppliers. 8 Businesses do very little marketing (and there is almost no use of sales agents). The consumer 9 Masons are better informed about household requirements. 10 Households prefer to use their own labor. 11 Consumers (83% of non-owners) are happy to pay more for brick superstructure. 12 Most (82%) non-latrine owners do not want to borrow to obtain a latrine. 13 68% of households travel to buy materials for a latrine (to a district capital or bigger cities). Latrine options and costs

14 Latrines most commonly built by the supply chain are very expensive – costing six months’ income for poor households.

15 Labor can double the cost of a latrine.

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16 Pit lining with bricks instead of rings is becoming more common. 17 The potential rural market for low-cost options is 150,000 to 200,000 latrines. Competition and margins 18 Actors have multiple upstream sources, and face local and foreign competition. 19 Gross margins of 15% to 40% are not excessive for such products in rural markets. 20 Some actors think latrine product margins are less than those for other activities. Transport costs 21 Roads are a major constraint 22 Many villages are very difficult to access, and large numbers are not accessible for deliveries in wet season. 23 Suppliers provide delivery for larger orders but not smaller orders. 24 Transport costs – for multiple orders to remote areas – can add up to 34% to cost of a latrine 25 Mason report that concrete producers that can deliver are preferred Finance 26 Actors report access to finance reported as a constraint, but no more than elsewhere, plus many have loans. 27 Businesses have concerns about customers’ late or non-payment. Labor 28 Labor availability is a constraint, consistent with businesses throughout the Lao economy. Government 29 Government and NGO programs are part of the chain. 30 Government officials may view all rural latrine supply as part of government programs (when only 24% is). 31 No actors suggested the government could improve the business or investment environment.

In addition to the above overall findings, the following region-specific findings were identified: The supply chain in the north 32 Some evidence of collusion among two material suppliers in Phaoudom. 33 Import tariffs and fees, as well as VAT, appear to be a bigger concern in the North.

The supply chain in the center 34 Concrete producers and masons have less training than the North and South. 35 Daily labor costs for masons are higher than in the North and South The supply chain in the south 36 Concrete producers in the South report much lower sales of products for latrines than in the north and center 37 Businesses in south much more likely to rely on other business activities 38 Businesses in the south are less likely to have business plans

Recommendations

Market intelligence dissemination

The potential rural market for a lower-cost latrine (below 700,000 LAK) is around 150,000 to 200,000 latrines, assuming there were no problems in distributing the latrines. The fact that entrepreneurs are not taking steps to serve this demand suggests that it is either not profitable or there is some form of market failure, such as information asymmetries. Government and its development partners should seek to overcome any such information gaps by publishing market information (potential size, etc) to encourage more investment or the entry of new actors, as well as informing the market that demand-side interventions are being undertaken in order to encourage actors about the possibility for demand growth.

Information should be disseminated about the types of latrine options that can satisfy currently unmet demand. These more affordable designs should also be quicker and easier to install. More affordable designs already exist such as the low-cost latrine (costing around US$50 excluding superstructure) that WSP, through its implementing partner PSI, is attempting to scale in Champasak and Sekong provinces.

Financing arrangements

Direct subsidy should be discouraged but other financing arrangements are possible such as instalment schemes with MFI and/or other financial institutions.

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Being able to pay in instalments makes latrines more affordable for many. However, the businesses in the supply chain are unlikely to be able to manage instalment schemes themselves. By partnering with a bank or MFI, actors are able to supply latrines on formal credit with the payments spread over time (which is attractive to consumers) and do no bear credit risk from non-payment (attractive to the businesses). Households agree to buy a latrine and apply for a loan at the same time, the MFI approves the loan and pays the business, and the household repays the MFI over time. This tactic would have to overcome the hesitancy of consumers to incur debt for latrines, and lenders to take on potential non-performing loans. This resistance can be addressed by a combination of stakeholders, the Government, donor partners, and NGOs who all have an interest and participated in the supply chain study. In particular, the involvement of village chiefs (see below) can help limit loan default.

Village chiefs as champions and coordinators

Village chiefs should have a role as local sanitation champions. They can play a role in coordinating bulk orders. Bulk purchases can increase the size of the market and take advantage of any scale benefits. This helps reduce the problem of high transport costs – although transport costs are still significant for bulk orders.

Direct bulk purchases by government or donor partners are discouraged however, because they create distortions and remove the relationship between the supplier and the consumer. Bulk purchasing might also enable on-site casting. On-site casting of bulk orders helps reduce transport costs (and breakage).

Marketing and sales

Supply chain actors do very little, or no, marketing of their products and services — not only sanitation marketing but any kind of marketing. By making village chiefs champions of sanitation, they can take on some of the role of promoting latrine products, and recommending suppliers. One option is to work with businesses so that they become comfortable with paying village chiefs a commission for the sale of latrine products. Village chiefs would then be incentivised to promote latrine use.

Capacity Building

There could be a role for capacity building through business mentoring to help rural businesses with planning and financial management. Improving the efficiency of businesses in the supply chain could help lower their production costs, allowing cheaper latrines to be produced while maintaining margins.

Furthermore, workshops hosted and/or sponsored by large private sector providers (such as Lao Cement), or visits to other businesses can increase market and technical knowledge while also fosterer links through the supply chain. Closer links to larger actors could also result in agency, distribution or sub-contracting networks, helping address some capacity and commercial challenges.

The complete latrine

Latrine costs are dominated by material costs and transport. Bundling (having all materials available as a package from a single location) may be one way to lower the cost of a latrine. This reduces transaction costs for households (who currently often have to visit at least two actors to obtain necessary materials). It reduces the fragmentation of the supply chain by providing a single-priced final latrine product, rather than a collection of materials. When combined with a cheaper latrine design (provided it is a design that is still appealing to consumers), this model can provide a product that satisfies more of the potential market.

Reinventing supply chain businesses such that selling a bundled latrine becomes their primary (or only) activity may address some of the supply chain problems. However, the main problem is not the businesses themselves. Changes to businesses (such as changing their product offering to include a complete latrine, or changing their sales approach to include marketing or sales agents) may achieve incremental

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improvements in the supply chain, but some major issues will not be resolved. For example, delivery of latrines to some areas will still be difficult and expensive.

How can businesses do better with a product (latrines) that is a slow-moving consumer durable (i.e. low-frequency, lumpy sales) in an environment with high transport costs? There is no simple solution. Change will take time. Letting businesses grow organically – in response to demand-side initiatives – may not deliver large immediate results, but will be more sustainable and will involve much lower per-latrine government and DP program costs.

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ບດສະເໜໂດຍສງເຂບ

ຄວາມເປນມາ

ປະມານ 42% ຂອງຊມຊນຊນນະບດໃນ ສ.ປ.ປ ລາວ ມການຖາຍຊະຊາຍບເປນລະບຽບ

(open-defecation ຫ OD) ເມອສມທຽບກບ 4% ເທານນໃນເມອງ. ແນວໃດກຕາມ,

ກເຫນວາໄດມການປບປງຢາງພນເດນໃນຊມຊນ

ຊນນະບດຄ – 73% ຂອງຄວເຮອນຊນນະບດແມນມການຖາຍເທຊະຊາຍໃນໄລຍະປ

2000 (WHO-UNICEF 2014).

ຄຳນວນການປກຄມດານສຂະອານະໄມໃນ ສ.ປ.ປ ລາວ

ໃນເມອງ

(%)

ໃນຊນນະບດ

(%) ລວມ (%)

1995 2012 1995 2012

199

5

201

2

ສງອຳນວຍຄວາມສະດວກທໄດຮບການປບ

ປງ 62 90 12 50 20 65

ສງອຳນວຍຄວາມສະດວກທໃຊຮວມກນ 3 4 0 1 1 2

ອນໆທຍງບໄດຮບການປບປງ 9 2 10 7 10 4

ການຖາຍຊະຊາຍ 26 4 78 42 69 29

ແຫງຂມນ: WHO-UNICEF JMP 2014.

ການສກສາລະບບຕອງໂສການສະໜອງ

ການສກສາລະບບຕອງໂສການສະໜອງແມນເພອສກສາລະບບຕອງໂສການສະໜອງ

ແລະ ຄນຄາຕອງໂສການສະ ໜອງໃນສະພາບແວດລອມຕວຈງ ແລະ

ຕະຫາດທແຕກຕາງກນ. ການສກສາເນນໃສຜະລດຕະພນ ແລະ ການບລ

ການທເຫນໄດທວໄປ ຫ ເປນທຕອງການທສດເພອປບປງສຂະ

ອານະໄມຢເຂດຊນນະບດໃນ ສ.ປ.ປ ລາວ ໃຫດຂນ.

ໄດດຳເນນການສຳພາດກບພາກສວນຫກໃນຕອງໂສການສະໜອງສອງ

ຮອຍລາຍຢເຈດແຂວງ, ລວມທງຜສະໜອງ

ວດສະດກສາງ, ຜຜະລດຜະລດຕະພນສມງສຳເລດຮບ ແລະ ຊາງກ.

ອງການການເງນທອງຖນກໄດໃຫການ

ສຳພາດ. ພອມກນນນ, ມ 100 ກວາຄນທໄດເຂາຮວມການ

ສນນທະນາປກສາຫາລເປນກມ, ໃນນນແບງເປນ

17 ກມ.

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ລະບບຕອງໂສການສະໜອງ

ແຜນວາດ (ແນວຄວາມຄດ) ຕອງໂສການສະໜອງ

ເມອງ ແລະ ພາກພນທຕາງໆມລະບບຕອງໂສການສະໜອງທແຕກຕາງກນ,

ພອມດວຍແຫງຜະລດຕະພນທ

ແຕກຕາງກນ.

ລະບບຕອງໂສການສະໜອງແມນໄດຮບອດທພນຈາກບນດາປະເທດເພອບານທ

ໃກທສດກຄການ

ຈດກວດກາລະຫວາງປະເທດທມຢ. ວດຖດບ (ເຊນ: ຫວວດ, ສມງ,

ແຜນເຫກ ແລະ ແຜນສງກະສ) ສວນໃຫຍ

ແມນມາຈາກປະເທດໄທ, ແຕຈນ ແລະ ຫວຽດນາມກມບດບາດສຳຄນຄກນ.

ຜສະໜອງວດສະດກສາງຫາຍລາຍເປນຜນຳເຂາ, ຜຂາຍສງ ແລະ

ຜຂາຍຍອຍເອງ (ບາງລາຍກເປນພຽງຜນຳເຂາ ແລະ ຜຂາຍຍອຍ).

ວດສະດກສາງ – ປະເທດຕນກຳເນດ

ພາກພນ –

ແຂວງ ຫວວດ ສມງ ເຫກ ທ PVC

ແຜນສງກະ

ພາກເໜອ ໄທ (100%) ຈນ (16%),

ໄທ (84%)

ຈນ (67%),

ໄທ (33%)

ຈນ (8%),

ໄທ (92%)

ຈນ (9%),

ໄທ (91%)

ບແກວ ໄທ (100%) ໄທ (100%) ໄທ (100%) ໄທ (100%) ໄທ (100%)

ຫວງນຳທາ ໄທ (100%) ຈນ (25%),

ໄທ (75%) ຈນ (100%)

ຈນ (11%),

ໄທ (89%)

ຈນ (16%),

ໄທ (84%)

ພາກກາງ

ໄທ (64%),

ຫວຽດນາມ

(36%)

ລາວ (44%),

ຫວຽດນາມ

(56%)

ໄທ (67%),

ຫວຽດນາມ

(33%)

ໄທ (71%),

ຫວຽດນາມ

(39%)

ໄທ (47%),

ຫວຽດນາມ

(53%)

ບລຄຳໄຊ

ໄທ (8%),

ຫວຽດນາ

(92%)

ຫວຽດນາມ(10

0%)

ຫວຽດນາມ

(100%)

ໄທ (63%),

ຫວຽດນາມ

(37%)

ຫວຽດນາມ

(100%)

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ສະຫວນນະເຂດ ໄທ (100%)

ລາວ (78%),

ຫວຽດນາມ

(22%)

ໄທ (100%)

ໄທ (78%),

ຫວຽດນາມ

(22%)

ໄທ (88%),

ຫວຽດນາມ

(12%)

ພາກໄຕ

ໄທ (98%),

ຫວຽດນາມ

(2%)

ລາວ (76%), ໄທ

(14%),

ຫວຽດນາມ

(10%)

ໄທ (47%),

ຫວຽດນາມ

(53%)

ໄທ (83%),

ຫວຽດນາມ

(17%)

ໄທ (63%),

ຫວຽດນາມ

(37%)

ອດຕະປ ໄທ (100%) ລາວ (88%), ໄທ

(12%)

ໄທ (43%),

ຫວຽດນາມ

(57%)

ໄທ (100%)

ໄທ (83%),

ຫວຽດນາມ

(17%)

ສາລະວນ

ໄທ (95%),

ຫວຽດນາມ

(5%)

ລາວ (57%), ໄທ

(14%),

ຫວຽດນາມ

(29%)

ໄທ (8%),

ຫວຽດນາມ

(92%)

ໄທ (65%),

ຫວຽດນາມ

(35%)

ໄທ (28%),

ຫວຽດນາມ

(72%)

ເຊກອງ ໄທ (100%) ລາວ (83%), ໄທ

(17%) ໄທ (100%) ໄທ (100%)

ໄທ (86%),

ຫວຽດນາມ

(14%)

ໝາຍເຫດ: ຜະລດຕະພນອນໆເຊນ: ກະເບອງແມນມາຈາກບອນດຽວກນກບສງກະສ

ບາງຜະລດຕະພນ ແລະ ໃນເຂດຕາງໆແມນມກຳໄລຫາຍກວາກນ ຊງເລມຈາກ 3%

ໄປເຖງ 45% ສຳລບຜະລດຕະພນຈຳນວນໜງ.

ອດຕາກຳໄລດງກາວແມນສມເຫດສມຜນຍອນວາຄາແຈກຢາຍຢເຂ

ດຊນນະບດສງ. ອດຕາກຳໄລ

ລວມຍອດແມນເລມຈາກ 25% ຫາ 35% ຖວາທຳມະດາສຳລບຜະລດຕະພນທ

ໄປເຖງສວນລມສດຂອງສາມລຽມຂອງຕອງໂສການສະໜອງ. ໃນກມເປາໝາຍ,

ພາກສວນຫງຂອງຕອງໂສການສະໜອງໄດຊໃຫເຫນວາອດຕາກຳໄລ

ສຳລບຜະລດຕະພນ ແລະ ການບລການຫອງວດແມນຕຳ

ກວາກດຈະກຳອນໆຂອງພວກເຂາ.

ສຳລບຜສະໜອງວດສະດກສງທງໝດທໄດສຳພາດນນ,

ຫອງວດເປນພຽງສວນນອຍໆຂອງທລະກດພວກເຂາ – ແຕ

ການຄຳນວນວານອຍຂະໜາດໃດນນແມນເປນໄປບໄດ. ຫາຍ

ຄນບຮວາຫອງວດນນແມນມຄວາມສຳຄນແນວໃດ

ຕທລະກດຂອງພວກເຂາ (ເນອງຈາກວາພວກເຂາບຮວາຈດປະສງຂອງການ

ຊວດສະດຕາງໆແມນຫຍງ). ລາຍຮບທໄດຈາກຫວວດພຽງຢາງດຽວແມນຕຳ

ກວາ 5% ຂອງລາຍຮບທງໝດສຳລບຜສະໜອງສວນຫາຍ

ຜຜະລດສມງຄຳນວນວາອດຕາສວນ

ທທລະກດພວກເຂາກຽວຂອງກບຫອງວດນນ (ຕວຢາງ, ທສ

ມງທໃຊເຮດ

ຂມວດຖາຍ) ສະເລຍປະມານ 36% ແຕກແຕກຕາງກນໄປຕາມແຂວງຕາງໆ

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ຊາງກທໄດໃຫສຳພາດຄຳນວນວາຕນສາມາດກໄດປະມານ 6.4 ຫອງວດຕ

ຄນໃນປທຜານມາ. ໂດຍສະເລຍ, ນາຍຊາງໄດບອກວາປະມານ 69%

ຂອງຫອງວດທພວກເຂາ

ໄດສາງນນແມນເປນສວນໜງຂອງເຮອນຫງໃໝ.

ປະມານ 43% ຂອງຜຜະລດສ

ມງທໄດໃຫສຳພາດນນແມນມທລະກດປະເພດອນ; ພອມທງ 52%

ຂອງຜສະໜອງ

ວດສະດແມນຢນອກເທດສະບານເມອງ ແລະ ແຂວງ (ແລະ ໃນນນ 39%

ແມນຢໃນເທດສະບານແຂວງ).

ຜສະ ໜອງວດສະດກສາງ ແລະ ຜຜະລດສ

ມງໂດຍສະເລຍແມນຈາງພະນກງານ 4 ຄນ.

ໂດຍລວມ, ປະກດວາມການແຂງຂນກນລະຫວາງຜສະໜອງວດສະດກ

ສາງຫາຍກວາຜຜະລດສມງ ແລະ ຊາງກ. ໜງສວນ

ສາມຂອງຜສະໜອງວດສະດກສາງ (33.8%) ໄດລາຍງານວາ

ຕນບໄດປະເຊນກບການແຂງຂນ, ເມອສມທຽບກບຫາຍກວາເຄງໜງ

ຂອງຜຜະລດສມງ (ປະມານ 60%) ແລະຊາງກ (52%).

ເຈາຂອງ ແລະ ຜປະກອບການຄາສວນບກຄນໃນການສະໜອງວດສະດກສາງ

ແມນແມຍງ 57% ແລະ 67% ຕາມລຳດບ, ແລະ ສວນໃຫຍຜຍງຈະເປນ

ຜຄມຄອງດານການເງນ ສຳລບທລະກດການສະໜອງວດສະດກສາງ (58%).

ຜຜະລດສມງສວນຫາຍຈະແມນຜຊາຍ (70%) ແລະ ຊາງກທໄດໃຫສຳ

ພາດທງໝດແມນຜຊາຍ.

ລາຄາ ແລະ ແບບຂອງ ຫອງວດ

ໂດຍທວໄປ, ພາກສວນຫກຂອງລະບບຕອງ

ໂສການສະໜອງໄດສະເໜຫອງວດທຢເໜອຄວາມສາມາດຊຂອງຄວ

ເຮອນໃນຊນນະບດສວນໃຫຍໃນກມເປາໝາຍ. ແນວໃດກຕາມ, ບມວດ

ທເປນ “ແບບຢາງ” ຫ ຫອງວດທວໄປ. ຜໃຫສຳພາດໄດແນະນຳທາງເລອກ,

ຂະໜາດ ແລະ ວດສະດທຫາກຫາຍ. ໂດຍທວໄປ,

ຜໃຫສຳພາດສວນໃຫຍກາວວາ

ວດເປນລກສະນະຫອງສວມທໃຊການເທໃຊຫວວດເຊລະມກ ແລະ ຕງອດຂມ.

ຄາຂອງວດສະດຕາງໆແມນມຄວາມແຕກຕາງກນຫາຍ (ອງຕາມຂະໜາດ ແລະ

ທຕງ). ອງຕາມລາຄາຄາດຄະເນແລະ ການອອກແບບໂດຍພາກສວນຫກຂອງລະບບຕອງ

ໂສໃນການສະໜອງນນ, ຄາຂອງວດທວໄປ ແມນປະມານ 2.8 ລານກບ (ຫ 350

ໂດລາສະຫະລດອາເມລກາ2). ນແມນສະເພາະຄາວດສະດເທານນ (ລວມທງໂຄງສາງ

2 ຕະຫອດໄລຍະການລາຍງານນ, 1 ໂດລາ = 8,000 ກບ.

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ເໜອຖານ) ແຕວາບລວມຄາແຮງງານ ແລະ ຄາຂນສງໃດໆ (ເຖງ

ແມນວາຄາຂນສງບາງສວນຈະຖກລວມເຂາ

ໃນລາຄາວດສະດແລວກຕາມ). ຕວຢາງວດດງກາວປະກອບດວຍ: ຫວວດ,

ຝາອດປາກຂມພນຖານ, ສາມທວດ ແລະ ຝາທຍາວ 1 ມ , ດນບອກ 250 ກອນ,

ດນຊາຍ 1 ແມດກອນ, ຫນ 1 ແມດກອນ, ສມງ 10 ເປາ, ທ PVC 2 ທ

(ທໃຫຍ 1 ອນ, ທນອຍ 1 ອນ), ແຜນສງກະສ, ປະຕໄມໜງປອງ. ຄາສຳ

ລບໂຄງສາງເໜອຖານແມນປະມານ 69% ຂອງຄາລວມຂອງວດສະດ.

ຄາວດສະດສຳລບສາງວດທວໄປ, ຕາມຄວາມຄດ

ຂອງພາກວສວນຫກຂອງລະບບຕອງໂສການສະໜອງ

ພາກພນ – ແຂວງ ຫກ ໂຄງ

ສາງເໜອຖານ

ລວມຄາວດສະດ

(ກບ)

ໂຄງ

ສາງເໜອຖານ

% ຂອງຄາລວມ

ພາກເໜອ 815,389 1,697,331 2,512,720 68%

ບແກວ 788,023 1,606,745 2,394,768 67%

ຫວງນຳທາ 842,756 1,787,917 2,630,673 68%

ພາກກາງ 869,642 1,949,535 2,819,177 69%

ບລຄຳໄຊ 898,714 1,750,917 2,649,631 66%

ສະຫວນນະເຂດ 840,569 2,148,153 2,988,722 72%

ພາກໄຕ 968,382 2,060,500 3,028,882 68%

ອດຕະປ 981,109 1,901,071 2,882,181 66%

ສາລະວນ 913,992 2,099,467 3,013,458 70%

ເຊກອງ 959,833 2,246,083 3,205,917 70%

ລວມຕວຢາງ 889,285 1,934,336 2,823,621 69%

ຍກເວນຄາແຮງງານ ແລະ ຂນສງ.

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ສມງ ແລະ ດນຈເປນສວນປະກອບຫກຄາວດສະດກສາງວດດງກາວ.

ປະຕ, ໄມ ແລະ ທສມງກສຳຄນເຊນດຽວກນ.

ສງຂບເຂອນຄາສຳລບການສາງວດທວໄປ (ກບ ແລະ ເພມຂນ % ຂອງ

ຄາລວມ)

WSP (2012a) ພບວາ, ໃນຄວເຮອນ 10,360 ທໄດສຳຫວດໃນແຂວງອດມໄຊ ແລະ

ສະຫວນນະເຂດນນ, 3/4 ໄດສາງວດທມຄາໂດຍສະເລຍ 2.3 ລານກບ (287 ໂດລາສະ

ຫະລດອາເມລກາ), ແລະ 1/4 ໄດໃຊຈາຍໂດຍສະເລຍ 5.5 ລານກບ (687 ໂດລາສະຫະລດອາ

ເມລກາ) ໃນການສາງ “ວດທແພງ ແລະ ຖເປນລນດ”. ບດລາຍງານຂອງ WSP ກຽວ

ກບການສກສາພດຕກຳຜບລໂພກດານສຂະພບານໄດພບວາຫາຍກວາ 75%

ຂອງຄວເຮອນຊນນະບດທສາມາດປະເມນຄາໃຊຈາຍ

ສຳລບວດນນໄດກາວວາຕນຈຳເປນຕອງໃຊຫາຍກວາ 1 ລານກບ (125 ໂດລາສະ

ຫະລດອາເມລກາ). ປະມານ 29%

ຂອງຄວເຮອນທບມວດກາວວາຕນພອມທຈະຈາຍປະມານ 200,001 ຫາ

700,000 ກບສຳລບວດໜງ, ໃນຂະນະທ 29% ພອມທຈະຈາຍຫາຍກວາ 700,000

ກບ.

0%

25%

50%

75%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

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ເມອສມທຽບຄາໃຊຈາຍກບຄວາມຄາດຫວງຂອງຜບລໂພກ ແລະ

ຄວາມພອມທຈະຈາຍ (ກບ)

ໝາຍເຫດ: ຍກເວນຄາແຮງງານ ແລະ ຂນສງ.

SS = ໂຄງສາງເໜອຖານ.

ອອກແບບຕນທນຕຳດວຍ SS: ໄດຖເອາຄາສຳລບໂຄງສາງເໜອຖານແມນ 635,000 ກບ (80 ໂດລາສະຫະລດອາເມລ

ກາ).

ຄາໃຊຈາຍຄາດຄະເນຂອງຜບລໂພກ: ຫາຍກວາ 75% ຂອງຄວເຮອນຊນນະບດທທກຍາກແມນບມຫອງ

ຖາຍຜທຮວາຄາໃຊຈາຍທກຽວຂອງ ແລະ ຈານວນວນທໃຊໃນການກສາງຫອງໜງນນເທາ

ໃດ, ເຊອວາຈະໃຊຈາຍບຕຳກວາ 1 ລານກບ.

ຄວາມພອມທຈະຈາຍຂອງຜບລໂພກ: 40% ຂອງຄວເຮອນຜທກຍາກແມນພອມທຈະຈາຍຢາງໜອຍຕາມ

ຄາດງກາວ.

ຊາງກກາວວາຕອງໃຊກຳມະກອນ 2 ເຖງ 3 ຄນໂດຍໃຊເວລາເກອບສອງອາທດໃນ

ການສາງຫອງວດໃຫສຳເລດ, ແລະ ຄາແຮງງານລວມແມນປະມານ 3 ລານກບ (375 ໂດລາ)

— ສະເລຍອດຕາແຮງງານລາຍວນປະມານ 134,000 ກບຕຄນ (17 ໂດລາ). ດງນນ, ການ

ໃຊຊາງກສາມາດເພມລາຄາຫອງວດຂນເປນສອງເທາຕວ. ໂຄງ

ສາງເໜອຖານໃຊເວລາຍາວທສດ,

ຊງສະທອນໃຫເຫນວາຊາງກລງເຄຍໃນການສາງໂຄງສາງທໃຫຍ

(ດວຍເຫດນຄາຂອງການສາງຫອງສວມຂາງເທງຈງສງ).

ການກຂມຫອງສວມໂດຍໃຊດນຈ (ເຊງຜດຳເນນການ

ລາຍງານວາເປນວທທປະຕບດທວໄປ)

ຈຳເປນຕອງໃຊແຮງງານຫາຍກວາການໃຊທສມງ ຊງເຫດຜນສວນໜງ

ແມນວາຂມດງກາວມຂະ ໜາດໃຫຍ

ກວາຈງເພມຄາໃຊຈາຍລວມຂອງຫອງສວມ.

ຄາຂນສງໃນລະບບຕອງໂສການສະໜອງສຂະອານະໄມມຢສອງຮບແບບຄ:

ເປນລາຄາທຊດເຈນສຳລບນຳສງ

2,823,621

1,035,000 1,000,000 878,892

500,000 400,000

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ຜະລດຕະພນ ແລະ ລາຄາບມຊອນທລວມຢໃນລາຄາຂອງຜະລດຕະພນ ແລະ

ການບລການ. ຫວໜວຍຄາຂນ

ສງລະຫວາງຢສນກາງແມນຕຳກວາຄາຂນສງຂອງທອງຖນ.

ຄາຂນສງຈຳນວນຫາຍລະຫວາງສນກາງຕາງໆແມນປະມານ 400 ກບ/ໂຕນ/ຫກ

ບອນທມສະພາບເສນທາງທດ ແລະ ບເປນພຜາແຕຖາເສນທາງບດ

ແລະ ເປນພຜາ

ນນແມນ 750 ກບ/ໂຕນ/ຫກ. ແນວໃດກຕາມ, ການກະຈາຍສນຄາຈາກຕວເມອງໃຫ

ຍໄປຫາຕວເມອງນອຍ ແລະ ໝບານ, ໂດຍສະເພາະໄປຍງເຂດຫາງໄກສອກຫກ ຫ

ເຂດພຜາ, ເຫນໄດວາຄາຂນສງສງຂນຢາງຫວງຫາຍ.

ຄາຂນສງໄປຕວເມອງດວຍລດຂະໜາດນອຍແມນປະມານ 5,500 ກບ/ໂຕນ/ຫກ.

ຍອນວາລດບນທກຄນໜງທໄປເຂດຫາງໄກສອກຫກສາມາດບນຈ 3 ຫາ 4

ວດແບບພນຖານເທານນ, ຄາວດໜງຈະເພມຄາຂນສງປະມານ 136,000

ກບ (17 ໂດລາ) ຕຊວດ (34% ຂອງຄາໂຄງຫກຂອງວດພນຖານ),

ໂດຍຂນກບພມປະເທດ ແລະ ໄລຍະທາງນຳອກ.

ຄວາມອາດສາມາດຈາຍ

ຄວເຮອນຊນນະບດຜທກຍາກບສາມາດຈາຍສຳລບຫອງວດໃນລາຄາ 2.8

ລານກບ. ສຳລບຄວເຮອນທຢໃນເສນ

ຄວາມທກຍາກທາງການຂອງຊນນະບດ (180,000 ກບ (22.50 ໂດລາ)/ຄນ/ເດອນ,

ເຊງເທາກບ 900,000 ກບ (112.50 ໂດລາ) ສຳລບຄວເຮອນທມ 5 ຄນ), ຄາ

ຂອງຫອງສວມທວໄປຈະເທາກບເງນລາຍຮບສາມເດອນ.

ຫາຍຄວເຮອນເປາໝາຍມລາຍໄດຕຳກວານນອກ: 85%

ຂອງຄວເຮອນຊນນະບດທກຍາກທໄດສຳຫວດໃນ

ພາກໃຕມລາຍຮບປະຈຳເດອນຕຳກວາ 500,000 ກບ (63 ໂດລາ); ແລະ

ຄາຂນສງຍງພາໃຫລາຄາວດແພງ

ຂນກວາເກາ. ຫອງສວມທວໄປຈະເທາກບລາຍຮບຫກເດອນຂອງຄວເຮອນ

ເຫານ.

ທາແຮງຕະຫາດສາລບວດຖາຍຕນທນຕາແມນປະມານ 150,000 ຫາ 200,000

ຕຊດໜງ, ຂນກບລາຄາຂອງ

ວດແລະ ເມອການແຈກຢາຍໃຫບນດາຄວເຮອນບມບນຫາ. ການຄາດຄະເນດງ

ກາວແມນບນພນຖານທວາຄວເຮອນ

ຊນນະບດຢລາວປະມານ 414,000 ຄວເຮອນບໃຊສງອຳນວຍຄວາມສະດວກທໄດ

ຮບການປບປງແລະ 46%

ຂອງຄວເຮອນໃນຊນນະບດທບມວດຖາຍພອມທຈະຈາຍ 500,000 ກບ

(62.50 ໂດລາ) ສຳລບວດຖາຍໜງ (WSP – ການສກສາພດຕກຳດານສຂະອາ

ນະໄມຂອງຜບລໂພກ), ຊງເທາກບ 190,500 ຄວເຮອນ.

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ການເງນ

ຜດຳເນນການໃນຕອງໂສການສະໜອງຫາຍລາຍແມນສາມາດຂສນເຊອໃນລະບບ.

ປະມານ 50% ຂອງຜສະໜອງ

ວດສະດທໄດສຳພາດມບນຊທະນາຄານ ຫ ເງນກຈາກ MFI. ອດຕາດອກເບຍສະ

ເລຍແມນປະມານ 13% ຕປ (ແຕ 6% ຫາ 15%) ແລະ ໄລຍະການກແມນແຕ 1 ຫ 3

ປ. ປະມານ 22% ຂອງຜຜະລດສມງທໄດສຳພາດແມນໄດ

ກຢມເງນຈາກທະນາຄານ, ໂດຍເສຍຄາດອກເບຍ 14% ສຳລບໄລຍະກ 1 ປ.

ຊາງກບສາມາດເຂາເຖງແຫງເງນ

ສນເຊອໃນລະບບ, ອາດເປນເພາະວາພວກເຂາມຄວາມຕອງການໜອຍກວາ ຫ

ອາດຈະເປນເພາະພວກເຂາບມຫກຄຳປະກນກເປນໄດ. ຖາຊາງກຢມ, ສວນ

ໃຫຍຈະແມນການຢມເງນນອກລະບບ.

ຂຫຍງຍາກ

ຜສະໜອງວດສະດໄດກາວວາສະພາບຖະໜນທບດເປນຂຫຍງຍາກ

ຫກ (31% ຂອງຜສະໜອງລາຍງານວາເຫດຜນດງກາວເປນຂຫຍງຍາກຫກ).

ມນຍງເປນບນຫາໃຫຍສຳລບຜຜະລດສມງ (ປະມານ 19%).

ບນຫາກຽວກບການຂາດແຮງງານ ແລະ ແຮງງານທມຄນນະພາບແມນບນຫາທຮາຍ

ແຮງສຳລບຜຜະລດສມງ

ແລະ ຊາງກຍອນວາທລະກດຂອງພວກແມນອງ

ໃສແຮງງານຫາຍກວາຜສະໜອງວດສະດ: ເກອບ 40% ຂອງຜຜະລດສມງແລະ

ຊາງກແມນປະສບກບບນຫາແຮງງານບພຽງພ. ພອມກນນນ, 21% ຂອງຊາງ

ກາວເຖງບນຫາກຽວກບພະນກງານ ແລະ ບນຫາການຝກອບຮມ (ຫາຍຄນໄດ

ກາວເຖງບນຫາພະນກງານທຂາດວຽກ ແລະ ຕນທນສຳລບຄາແຮງງານ). ຂຈຳກດ

ດານແຮງງານບແມນບນຫາສະເພາະສຳລບລະບບຕອງໂສການສະໜອງໃນຂະແໜງການ

ສຂະອານະໄມ. ມນເປນເລອງປກກະຕສຳລບທລະກດໃນລາວທປະສບກບແຮງງານ

ທຈຳກດ. ຕວຢາງໃນປ 2011, 18% ຂອງທລະກດໃນ ສ.ປ.ປ ລາວໄດລາຍງານວາແຮງ

ງານທຂາດທກສະເປນຂຈຳກດຫກ (ທະນາຄານໂລກ 2011).

ລກຄາບຈາຍ (30% ຂອງຜສະໜອງວດສະດ) ແລະ ຄວາມຕອງການບພຽງພ (35%

ຂອງຜຜະລດສມງແລະ 41% ຂອງຊາງກ) ແມນຂຫຍງຍາກສຳຄນທຈຳກດ

ການດງດດທາງດານການເງນເຂາສທລະກດສຂະອານະໄມ. 28%

ຂອງຜສະໜອງວດສະດແລະ 38% ຂອງຜຜະລດສມງລາຍງານ

ວາການເຂາຫາແຫງທນເປນບນຫາ. ການເຂາເຖງທນເປນບນຫາທວໄປ

ຂອງທລະກດຂະໜາດນອຍ. ໃນປ 2011, ປະມານ 20%

ຂອງບລສດລາວລາຍງານວາການເຂາຫາແຫງທນເປນຂຈຳກດຫກ

(ທະນາຄານໂລກ 2011) ແລະ 57% ຂອງທລະກດຈລະພາກກຄ 45%

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ຂອງທລະກດຂະໜາດນອຍກາວວາການຂາດຕນທນເປນບນຫາ “ໃຫຍ” ຫ

“ໃຫຍຫາຍ” (GIZ 2012).

ສະຫລບຜນການຄນຄວາ

ຜດຳເນນການ

1

ບມຜດຳເນນການໃດທຂາຍຫອງສວມຄບຊດ

(ຍກເວນບາງໂຄງການທດລອງເຊນ PSI/WSP) – ລະບບຕອງໂສແມນແຍກກນ.

2 ທລະກດຕາງໆແມນອາໄສແຫງລາຍຮບອນໆ – ພວກເຂາບຖວາ

ຕນເປນສວນໜງຂອງລະບບຕອງໂສການສະໜອງສນຄາສຂະອານະໄມ.

3 ປະກດວາເຈາຂອງທລະກດສະໜອງສນຄາທເປນຜຍງມອດຕາສງ (62%)

ແຕສອດຄອງກບທລະກດຈລະພາກອນໆ.

4 ທລະກດສວນໃຫຍແມນມຂະໜາດນອຍ ແລະ ບໄດລງທະບຽນ (ແລະ ຍງບໄດ

ລງທະບຽນຫາຍກວາສຳລບທລະກດທຢນອກເທດສະບານເມອງ).

5 1 ໃນ 4 ຂອງຜຜະລດສມງລາຍງານວາມແຜນການຕະຫາດ, ຊງປະກດວາສງ.

6 ຊາງກເຮດວຽກຊວຄາວ, ຊງເດນທາງໄກໄປເຮດວຽກ ແລະ ໄລຍະແກຍາວ.

7 ຜຜະລດສມງມວຽກຫາຍກວາໃນລະດຝນ, ຊງກງກນຂາມກນກບຊາງກ

ແລະ ຜສະໜອງວດສະດ.

8 ທລະກດເຮດການຕະຫາດໜອຍ (ແລະ ເກອບວາບໃຊຕວແທນຂາຍ).

ຜບລໂພກ

9 ຊາງກຮບຮຄວາມຕອງການຂອງຄວເຮອນດກວາ.

10 ຄວເຮອນມກໃຊແຮງງານຂອງຕນເອງ.

11 ຜບລໂພກ (83% ທບແມນເຈາຂອງ) ແມນພອມທຈະຈາຍຫາຍກວາສຳ

ລບໂຄງສາງຖານທໃຊດນຈ.

12 ຜທບມວດສວນຫາຍ (82%)

ບຕອງການຢມເງນເພອທຈະມາສາງຫອງສວມ.

13 68% ຂອງຄວເຮອນແມນເດນທາງໄປຊວດສະດເພອມາເຮດຫອງສວມ

(ໄປຍງເທດສະບານເມອງ ຫເມອງທໃຫຍກວາ).

ລາຄາ ແລະ ທາງເລອກສຂະພນຫອງສວມ

14

ສວມສວນໃຫຍທສາງຈາກລະບບຕອງໂສການສະໜອງແມນແພງຫາຍ –

ທຽບເທາກບລາຍຮບຫກເດອນຂອງຄວເຮອນ

ທກຍາກ.

15 ຄາແຮງງານສາມາດເພມລາຄາສຂະພນຫອງສວມທບເຄງ.

16 ການກດວຍດນຈແທນທສມງໄດກາຍເປນທນຍມ.

17 ຕະຫາດຊນນະບດບມຊອນສຳລບຕວເລອກຕນທນຕຳແມນ 150,000 ຫາ 200,000.

ການແຂງຂນ ແລະ ອດຕາກຳໄລ

18 ຜດຳເນນການມຫາຍແຫງຈາກຂນເທງຂອງຕອງໂສການສະໜອງ ແລະ

ປະສບກບການແຂງຂນພາຍໃນ ແລະ ຕາງປະເທດ.

19 ລວມຍອດອດກຳໄລສະເລຍ 15% ຫາ 40% ແມນບຫາຍເກນໄປສຳລບຜະລດຕະພນດງ

ກາວໃນຕະຫາດຊນນະບດ.

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20 ຜດຳເນນການຈຳນວນ

ໜງຄດວາອດຕາກຳໄລຈາກການຂາຍວດແມນຕຳກວາກຳໄລຈາກກດຈະກຳອນໆ.

ຄາຂນສງ

21 ຖະນນແມນຂຫຍງຍາກຫກ

22 ການເຂາຫາໝບານຫາຍແຫງແມນຫຍງຍາກຫາຍ ແລະ

ໝບານຈຳນວນໜງແມນບສາມາດເຂາເຖງໃນລະດຝນ.

23 ຜສະໜອງສວນໃຫຍຈະສງແຕສະເພາະສນຄາທສງຊຫາຍແຕບ

ສງສນຄາທສງຊຂະໜາດນອຍ.

24 ຄາຂນສງ – ສຳລບການສງຊໄປຍງເຂດຫາງໄກສອກຫກ – ອາດຈະເພມເຂາ 34%

ຂອງລາຄາສນຄາ

25 ຊາງກລາຍງານວາຜຜະລດສມງທບລການສງສນຄາເປນທນຍມ

ການເງນ

26 ຜດຳເນນການລາຍງານວາການ ການເຂາເຖງແຫງທນເປນຂຈຳກດ.

27 ທລະກດຕາງໆມຄວາມກງວນກຽວກບລກຄາທຊຳລະເງນຊາ ຫ ບຊຳລະ.

ແຮງງານ

28 ການຂາດແຮງງານແມນຂຈຳກດ,

ຊງສອດຄອງກບບນດາທລະກດຕາງໆໃນເສດຖະກດຂອງລາວ.

ລດຖະບານ

29 ແຜນງານຂອງລດຖະບານ ແລະ ອງການທບສງກດກບລດຖະບານ (NGO)

ເປນສວນໜງຂອງຕອງໂສການສະໜອງ.

30

ເຈາໜາທລດຖະບານອາດຈະຖ

ວາການສະໜອງສນຄາສຂະພນທງໝດນນເປນສວນໜງຂອງແຜນ ງານລດຖະບານ

(ເມອມພຽງແຕ 24% ເທານນ).

31 ບມໃຜທແນະນຳລດຖະບານໃຫປບປງສະພາບແວດລອມສຳລບທລະກດ ຫ

ການລງທນ.

ນອກຈາກຜນການຄນຄວາໂດຍລວມຂາງເທງນນ, ຜນການຄນຄວາພາກພນມດງ

ຕໄປນ:

ລະບບຕອງໂສການສະໜອງພາກເໜອ

3

2

ມຫກຖານວາມການສມຮຮວມຄດລະຫວາງສອງຜສະໜອງວດສະດໃນເຂດຜາອດ

ມ.

3

3

ປະກດວາພາສນຳເຂາ ແລະ ຄາທຳນຽມກຄອດຕາອາກອນມນຄາເພມເປນບນໃຫ

ຍກວາຢພາກເໜອ.

ລະບບຕອງໂສການສະໜອງພາກກາງ

3

6

ຜຜະລດສມງ ແລະ ຊາງກໄດຮບການຝກອບຮມໜອຍກວາທາງພາກເໜອ ແລະ

ພາກໄຕ.

3

7 ຄາແຮງງານລາຍວນຂອງຊາງກແມນສງກວາທາງພາກເໜອ ແລະ ໄຕ

ລະບບຕອງໂສການສະໜອງພາກໃຕ

3

8

ຜຜະລດສມງທາງພາກໃຕລາຍງານວາການຂາຍຜະລດຕະພນສຂະພນແມນ

ຕຳກວາພາກເໜອ ແລະພາກກາງ

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9 ທລະກດທາງພາກໄຕມແນວໂນມທຈະເພງພາກດຈະກຳທລະກດດານອນໆ

4

0 ທລະກດໃນພາກໄຕສວນໃຫຍບມແຜນການຕະຫາດ

ຂສະເໜ

ການເຜຍແຜຂມນຂາວສານດານການຕະຫາດ

ຕະຫາດໃນຊນນະບດສຳລບສຂະພນສວມຕນທນຕຳ (ຕຳກວາ 700,000 ກບ)

ແມນປະມານ 150,000 ຫາ 200,000 ວດ, ຖາຖ

ວາບມບນຫາໃນການແຈກຢາຍສນຄາສຂະພນສວມ.

ຄວາມຈງທຜປະກອບການບມມາດຕະການເພອຮອງ

ຮບຄວາມຕອງການນຊໃຫເຫນວາມນເປນທລະກດທບໄດກຳໄລ ຫ

ເປນຮບແບບການລມເຫວ

ຂອງຕະຫາດໃດໜງ, ເຊນ: ການຮບຮຂມນທບສະເໝພາບກນ.

ທງລດຖະບານ ແລະ ຄຮວມພດທະນາຄວນແກໄຂບນຫາຊອງວາງດານຂມນດງ

ກາວໂດຍການເຜຍແຜຂມນດານການຕະຫາດ (ຂະໜາດບມຊອນ, ອນໆ)

ເພອສງເສມ

ໃຫມການລງທນຫາຍຂນ ຫ ເພອດງດດຜປະກອບການໃໝໆ,

ກຄການແຈງຕະຫາດວາມການແຊກແຊງດານຄວາມ

ຕອງການເພອເປນການສງເສມການຂະຫຍາຍຕວດານຄວາມຕອງການທເປນໄປ

ໄດ.

ຄວນເຜຍແຜຂມນກຽວກບປະເພດສຂະພນສວມທຍງບສາ

ມາດຕອບສະໜອງຕາມຄວາມຕອງການໃນປະຈບນ. ແບບສຂະພນສວມທສາມາດເຂາ

ເຖງໄດເຫານຄວນຕດຕງໄດງາຍ ແລະ ໄວກວາ. ແບບທສາມາດເຂາເຖງ

ໄດແມນມຢແລວເຊນ: ວດຕນທນຕຳ (ລາຄາປະມານ 50 ໂດລາບລວມຖານ)

ທທາງ WSP, ໂດຍຜານການດຳເນນການ

ຂອງຄສວນ PSI, ແມນໄດພະຍາຍາມຂະຫຍາຍໄປແຂວງຈຳປາສກ ແລະ ເຊກອງ.

ການຈດວາງດານການເງນ

ບຄວນສງເສມການສະໜອງທນໂດຍກງແຕຄວນສງເສມການຈດວາງດານການ

ເງນວທອນໆເຊນ: ແຜນການຜອນເປນງວດກບ MFI ແລະ/ຫ

ສະຖາບນການເງນອນໆ.

ການຈາຍເປນງວດຈະເຮດໃຫຫາຍຄນສາມາດຊສຂະພນສວມ. ແນວໃດກຕາມ,

ທລກດໃນລະບບຕອງໂສການສະໜອງບອາດຈະຈດການແຜນການຜອນສຳລະເປນ

ງວດດວຍຕນເອງ. ໂດຍການຮວມມກບທະນາຄານ ຫ MFI,

ຜດຳເນນການແມນສາມາດສະໜອງສຂະພນສວມດວຍສນເຊອໃນລະບບ

ໂດຍການສຳລະເງນທກະຈາຍເປນເວລາໃດໜງ (ຊງເປນການດງດດຜບລໂພກ)

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ແລະ ບມຄວາມສຽງດານສນເຊອທມາຈາກຜທບຈາຍຄນ (ເປນ

ການດງດດທລະກດ). ຄວເຮອນຕກລງທຈະຊຊດຫອງສວມ ແລະ ຍນ

ຂເງນກ

ໃນເວລາດຽວກນ, MFI ອະນມດເງນກ ແລະ ຈາຍໃຫທລະກດ, ແລະ

ຄວເຮອນຈາຍຄນກບ MFI ຕະຫອດໄລຍະໃດໜງ.

ກນລະຍດນຈະຕອງເອາຊະນະຄວາມລງເລໃຈ

ຂອງຜບລໂພກທຈະຕດນຊຊດສຂະພນສວມ, ແລະຜໃຫຢມທ

ສຽງບໄດຮບເງນຄນ. ຄວາມຕານທານນແມນສາມາດແກໄຂຮວມກນໂດຍຜ

ມສວນຮວມທກຽວຂອງ, ລດຖະບານ, ຜໃຫທນ ແລະ NGOs

ທມຄວາມສນໃຈ ແລະ ໄດເຂາຮວມໃນການສກສາລະບບຕອງໂສການສະໜອງ.

ໂດຍສະເພາະມສວນຫວຂອງນາຍບານ (ເບງຂາງລມ) ສາມາດຊວຍຈຳກດເຫດການ

ບຈາຍຄນເງນກ.

ນາຍບານເປນຜນຳໜາ ແລະ ຜປະສານງານ

ນາຍບານຄວນມບດບາດເປນຜນຳໜາດານສຂະອານະໄມ. ພວກເຂາສາມາດເຮດບດ

ບາດຜປະສານງານສຳລບການສງຊຈຳນວນຫາຍ.

ການສງຊຈຳນວນຫາຍສາມາດເພມຂະໜາດຂອງຕະຫາດ ແລະ ສງຜນໃນທາງທ

ດເພອການຂະຫຍາຍກຳໄລ. ນຈະຊວຍຫດ

ຜອນບນຫາດານຄາຂນສງທສງ – ເຖງວາຄາຂນສງຍງສງຢສຳ

ລບການສງຊຈຳນວນຫາຍ.

ບຄວນສງເສມການສງຊຈຳນວນຫາຍໂດຍກງຂອງລດຖະບານ ຫ ຜໃຫທນ

ເພາະຈະເປນການບດເບອນ ແລະ ລບຄວາມສຳພນລະຫວາງຜສະໜອງ ແລະ ຜບລ

ໂພກ. ການສງຊຈຳນວນຫາຍອາດຈະນຳສງເຖງສະຖານທ.

ການສງຊຈຳນວນຫາຍທສງຮອດສະຖານທຈະຊວຍຫດຄາຂນສງໄດ

(ແລະ ການແຕກຫກຕາງໆ).

ການຂາຍ ແລະ ການຕະຫລາດ

ຜດຳເນນການຂອງລະບບຕອງໂສການສະໜອງດຳເນນການຕະຫາດສຳລບຜະລດຕະ

ພນ ແລະ ການບລການທໜອຍ ຫ ວາບມເລຍ —

ບພຽງແຕການຕະຫາດດານສຂະອານາໄມເທານນແຕບວາການຕະຫາດ

ອນກຕາມ. ໂດຍການໃຫ

ນາຍບານເປນຜນຳໜາດານວຽກງານສຂະອານາໄມ, ພວກເຂາສາມາດເຮດໜາ

ທສງເສມຜະລດຕະພນສວມ ແລະ ແນະນຳຜສະໜອງ. ວທການໜງແມນ

ການເຮດວຽກຮວມກບທລະກດເພອວາໃຫພວກເຂາສະດວກໃນການຈາຍ

ຄານາຍໜາໃຫນາຍບານສຳລບການຂາຍຜະລດຕະພນສວມ.

ນາຍບານກຈະມແຮງຈງໃຈໃນການສງເສມການ

ໃຊວດຖາຍ.

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ການສາງຂດຄວາມສາມາດ

ການສາງຂດຄວາມສາມາດແມນສາ

ມາດຜານການໃຫຄຳປກສາທາງທລະກດເພອຊວຍໃຫທລະກດໃນຊນນະບດ

ໄດມການວາງແຜນ ແລະ ການບລຫານດານການເງນ.

ການປບປງປະສດທພາບຂອງທລະກດໃນລະບບຕອງໂສການ

ສະໜອງສາມາດຊວຍໃຫຕນທນການຜະລດຫດລງໄດ,

ຊວຍໃຫລາຄາສວມທຜະລດຫດລງໃນຂະນະທຍງຮກສາ

ອດຕາກຳໄລໄດ.

ນອກຈາກນ, ການຈດກອງປະຊມໂດຍການເປນເຈາພາບ ແລະ/ຫ

ການສະໜບສະໜນຈາກຜໃຫບລການຂະໜາດ

ໃຫຍຂອງພາກເອກະຊນ (ເຊນ: ບລສດສມງລາວ), ຫ ການຢຽມ

ຢາມທລະກດອນໆສາມາດເພມຄວາມຮດານການຕະຫາດ ແລະ

ດານວຊາການໃນຂະນະທຍງຊກ

ຍການເຊອມໂຍງກບລະບບຕອງໂສການສະຫນອງ.

ການເຊອມໂຍງກບຜດຳເນນການຂະຫນາດໃຫຍກວາສາມາດສງຜນໃຫມເຄອ

ຄາຍຕວແທນ, ການແຈກຢາຍ ຫ ການຮບເໝາລາຍຍອຍ, ຊງຈະຊວຍແກໄຂສງ

ທາທາຍດານຂດຄວາມອາດສາມາດ ແລະດານການຄາ.

ສຂະພນຫອງສວມແບບສຳເລດຮບ

ຄາຂອງວດສວນຫາຍແມນມາຈາກຄາວດສະດ ແລະ ຄາຂນສງ. ການຂາຍເປນຊດ

(ທມວດສະດທງໝດເປນຊດ

ຈາກສະຖານທດຽວ) ນນເປນວທທາງໜງເພອຫດຕນທນຂອງວດຖາຍ.

ວທການດງກາວຈະຊວຍຫດຄາໃຊຈາຍ

ໃນການດຳເນນທລະກຳຂອງຄວເຮອນ (ເຊງປະຈບນພວກເຂາຕອງເຂາຫາຜດຳ

ເນນການສອງບອນເພອຊ

ວດສະດທຈຳເປນ). ຈະຊວຍຫດການກະຈາຍຕວຂອງລະບບຕອງໂສການສະໜອງ

ໂດຍ ໂດຍການສະໜອງ

ຜະລດຕະພນສວມເປນລາຄາດຽວ, ດກວາວດສະດຈາກຫລາຍບອນ.

ເມອລວມກບການອອກແບບຫອງສວມ

ທຖກກວາ (ໂດຍທການອອກແບບຍງເປນທໜາສນໃຈຕກບຜຊມໃຊ),

ແບບນສາມາດສະໜອງຜະລດຕະພນ

ທເປນທພໃຈກວາເກາສຳລບຕະຫາດ.

ການປະຕຮບທລະກດລະບບຕອງໂສການສະໜອງ

ແບບການຂາຍຊດສວມເປນຊດຈະກາຍເປນທລະກດຫກ (ຫ ອນດຽວ)

ທຈະຊວຍຫດບນຫາຕາງໆໃນລະບບຕອງໂສການສະໜອງໄດ. ແນວໃດກຕາມ,

ບນຫາຫກບໄດຢທທລະກດ. ການປຽນແປງທລະກດ (ເຊນ:

ການປຽນແປງຜະລດຕະພນຂອງພວກເຂາໂດຍການຂາຍແບບເປນຊດສຳເລດຮບ ຫ

ການປຽນແປງວທການຂາຍຂອງພວກເຂາເພອໃຫລວມການຕະຫາດ ຫ

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ຂາຍຜານຕວແທນ) ສາມາດປບປງລະບບຕອງໂສການສະໜອງໄດຢາງຫວງຫາຍ,

ແຕບນຫາທສຳຄນບາງອນກຈະບສາມາດແກໄຂໄດ. ຕວຢາງ, ການສງ

ມອບສວມໃນບາງພນທຍງຄງລຳບາກ ແລະ ມລາຄາແພງ.

ທລະກດຈະປບປງແນວໃດເພອໃຫການຂາຍຜະລດຕະພນ (ສຂະພນສວມ) ທມ

ການບລໂພກໃນຈງວະທຊາ (ຄການຂາຍທຄວາມຖຕຳ, ຊາ)

ໃນສະພາບແວດລອມທມລາຄາຂນສງແພງ? ບມວທການງາຍ.

ການປຽນແປງຕອງໃຊ

ເວລາ. ການປອຍໃຫທລະກດຂະຫຍາຍຕວເອງ –

ໂດຍຕອບສະໜອງຕການລເລມດານຄວາມຕອງການ – ອາດຈະ

ບສງຜນຂະໜາດໃຫຍທນທ, ແຕຈະມຄວາມຍນຍງຫາຍກວາ ແລະ ມຄາ

ຕນທນຕວດຂອງແຜນງານລດຖະບານ ແລະ ຄຮວມພດທະນາທຕຳກວາ.

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1 Introduction

1.1 Lao PDR Overview

Lao PDR’s economy has grown by around 8% per annum over recent years, making it one of the fastest-growing economies in ASEAN. The International Monetary Fund (IMF) forecasts growth of 8.2% in 2013, and 7.5% to 8.0% over the following five years (IMF 2013).

Despite this strong economic growth, Lao PDR remains one of the poorest countries in the region (Figure 1). Furthermore, the average data in Figure 1 masks considerable poverty. In 2012, 33.9% of Laotians lived on less than 1.25 International Dollars per day (World Bank 2012) and about 11% of Lao PDR’s 1.1 million households live under the official poverty line3. Life expectancy at birth is 67.8 years. In 2010, nearly one-third of children under age five were moderately or severely under-weight for their age (UNICEF 2012).

Figure 1: GDP per capita at purchasing power parity (PPP), 2012

Note: Current international dollars. PPP adjusts GDP for relative differences in living costs. Source: IMF, World Economic Outlook Database, October 2013.

The Lao PDR economy is largely agrarian, with agriculture accounting for about 26% of GDP and employing 77% of the population.4 The total population of rural communities currently exceeds 4.4 million. In many remote areas road quality is an issue – around 81% of villages are accessible year-round. Nearly one-third of households do not have access to improved sanitation (see below).

Despite still being a least developed country (LDC), Lao PDR has made significant progress in poverty alleviation over the past two decades. The country is on course to achieve the Millennium Development Goal (MDG) target of halving poverty by 2015. According to the outcomes of 11th high level round table meeting regarding the progress of the MDGs, Development Partners welcomed the commitment of the Government to strengthen health systems and improve health governance, as well as commitments to ensure free access to Maternal and Child Health services (UNDP 2013).

3 Source: Results of poverty reduction for 2011-2013, Poverty Reduction Committee, Prime Minister Office. 4 National Statistic Center, Ministry of Planning and Investment, 2014, www.nsc.gov.la.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Myanmar Bangladesh Cambodia Lao P.D.R. Vietnam India Philippines Indonesia China Thailand Malaysia

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1.2 Sanitation in Lao PDR

Sanitation coverage in Lao PDR is strongly correlated with wealth: while 99.7% of households in the richest quintile have access to improved sanitation facilities, only 12.6% of those in the poorest quintile do (Figure 2).

Figure 2: Households Using Improved Sanitation Facilities, by Wealth Quintile, 2012

Source: LSIS 2012.

Since households in rural communities tend to be poorer than urban households, it is rural regions that have the lowest access to improved sanitation. Around 42% of those in rural communities in Lao PDR practice open-defecation (OD), compared to only 4% in urban areas (Table 1). However, there has been significant improvement in rural communities – 73% of rural households practiced OD as recently as 2000 (WHO-UNICEF 2014). The most common improved facilities in rural areas are flush toilets to a pit (33%) and to a septic tank (14%) (WHO-UNICEF 2014).

Table 1: Lao PDR sanitation coverage

Urban (%) Rural (%) Total (%)

1995 2012 1995 2012 1995 2012

Improved facilities 62 90 12 50 20 65

Shared facilities 3 4 0 1 1 2

Other unimproved 9 2 10 7 10 4

Open defecation 26 4 78 42 69 29

Source: WHO-UNICEF JMP 2014.

Rural households with road access are more than twice as likely to use improved facilities as those without road access (LSIS 2012). Road quality is important in the sanitation supply chain. It effects the costs of materials for constructing latrines – and hence the affordability of latrines – and also whether the supply reaches certain communities at all. Many businesses in the sanitation supply chain cite road quality as a constraint (see Section 10 below).

Similarly, there are geographic differences in sanitation coverage: residents of the South region are much less likely than others to have access to improved facilities: 35% of households using improved sanitation facilities compared with 61% in the Northern region, and 68% in the Central region (LSIS 2012).

%

20%

40%

60%

80%

100%

Poorest Second Middle Fourth Richest

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Poverty and vulnerability are strongly tied to ethnicity and gender in Laos, with rural ethnic minority women experiencing the greatest disadvantages with respect to livelihoods, education, health and participation in society. Studies have found remote ethnic groups represent one-third of the population but over half of the poor (ADB/NSC, 2006) and the great proportion of the population with no access to improved sanitation. While 74% of households have access to improved facilities where the household head is from the Lao-Tai ethno-linguistic group, access is only 30% where the head is Mon-Khmer, 46% where the head is Hmong-Mien, and 30% where the head is Chinese-Tibetan (LSIS 2012).

Yet the benefits of improved sanitation are significant, extending beyond the individual household and village. WSP found that poor sanitation costs Lao PDR the equivalent of 5.6% of GDP — around US$34 per person per year (WSP 2013). The majority of these losses are health-related costs. WSP evaluated the economic costs and benefits of a variety of latrine options in rural and urban sites. All options were found to have a net benefit. Shared wet pit latrines in rural areas were found to have the largest net benefit, but private wet and dry pit latrines also deliver significant economic benefits.

Figure 3: The impact of improved sanitation

Source: WSP 2008a.

These benefits include averted diseases (treatment and medication costs, lost productive time for the sick and their careers, and premature death); averted water pollution (obtaining water from more expensive sources, hauling costs and time, and treating water); and access time savings (time travelling to place of open defecation, queuing for shared facilities, and accompanying children to place of defecation). Other sanitation benefits not measured by WSP include the impact on the environment, tourism, business as well as intangibles such as comfort, prestige, privacy and safety. All these benefits are summarised in Figure 3.

In terms of just the health benefits, WSP found that “for rural households that initially practiced open defecation, the projected gain from an intervention that provides access to basic improved sanitation facilities was slightly more than 720,000 LAK (US$90) per household [per year]” (WSP 2013). On top of this, annual time losses in rural areas were estimated to be 31 days per household.

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The Government of Lao PDR recognises the benefits of improved sanitation. The Lao PDR National Plan of Action for Rural Water Supply, Sanitation and Hygiene proposes targets which include:

By 2015, access to improved sanitation in rural areas increased to 60% (was 50% in 2012, see Table 1); and

By 2015, access to improved sanitation among poor populations (lowest quintile) in rural areas increased to 32% (lowest quintile was 12.6% in 2012, see Figure 2).

However, these targets will be difficult to achieve. “Nam Saat has responsibility for rural sanitation, but is reported to have few resources to meet them. Ministry of Health funding accounted for just 1% of total government spending in 2007-08 and within this sanitation wasn’t treated as a priority.” (WSP 2012a). Furthermore, “sanitation has received little attention from government and continues to take a low priority compared to water supply” (WSP 2013). Limited funding combined with unclear responsibilities and poor coordination contributes to these institutional weaknesses.

The World Bank’s Water and Sanitation Program (WSP), UNICEF, SNV and Plan International support the Government in improving rural sanitation access. To that end two studies are being undertaken: one on consumer behavior and practices; and this analysis of the sanitation supply chain. Some data from the consumer behavior study is used to in this report (cited as “WSP – Sanitation Consumer Behavior Study”), but has not as yet been published.

1.3 Study background

WSP, UNICEF, Plan International and SNV are facilitating a collaborative process among Government, development partners and NGOs to create synergies and efficiencies in program methodologies, combining CLTS, Behavior Change Communications and Sanitation Marketing. As a result, WSP, UNICEF, Plan International and SNV have joined forces to fund this national supply chain study. The Department of Hygiene and Health Promotion and the Center for Environmental Health and Water Supply (“Nam Saat Central”) within the Lao PDR Ministry of Health provided overall leadership for this study.

WSP

WSP is a multi-donor partnership administered by the World Bank to support poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. WSP provides technical assistance, facilitates knowledge exchange, and promotes evidence-based advancements in sector dialogue. WSP is supporting the Government of Lao PDR in scaling up rural sanitation and hygiene through a five-year program, based on a two-pronged approach:

1. Supporting the enabling environment (sector coordination, policy and program guideline development and advocacy efforts), and

2. Supporting the development of at-scale program implementation models, using Community-Led Total Sanitation (CLTS), Sanitation Marketing, and Behavior Change Communications (BCC).

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UNICEF

UNICEF’s Water, Sanitation and Hygiene (WASH) Program supports Lao PDR to achieve Millennium Development Goal 7, which specifically targets children’s right to survival and development through increased, equity and sustainable access to safe water and basic sanitation services and improved hygiene.

The Water Sanitation and Hygiene Program will address the challenge of wide disparities in access to and use of safe drinking water and basic sanitation facilities. It will support the national strategy for rural water supply and environmental health that places emphasis on the off-road, rural communities. It will operate within government schemes and seek to leverage these and other resources to scale up decentralized WASH approaches.

Areas of cooperation through Multi-Year Work Plan (2014-2015) include:

a. Continuation of upstream advocacy and dialogue for overarching WASH Sector Policy, Policy Implementation Guidelines and National Sanitation Strategy to materialize the National Plans of Action (NPA) and Lao PDR’s Sanitation and Water for All High Level Meeting.

b. Scaling up Rural Sanitation and Hygiene Promotion through demand driven (CATS) approach in select provinces to contribute to reduction of stunting and malnutrition.

c. Sustainable water supply facilities in the target communities of selected provinces d. Sustained behavior change through the provision of WASH facilities in schools including daily group

hand washing, toilet use and maintenance etc. e. Continuation of support for WASH in emergency including the sector coordination and building

community resilience through CBDRR. f. Capacity building at national and sub national level, and g. Evidence generation through survey studies and best practices to support to informed decision

making

Plan International

Plan International in Laos’s chief aim is to help Lao children realize their rights and assist them through programs in early childhood development and education, primary education and child protection, health and nutrition, and water, sanitation and hygiene promotion (WASH). As part of its country strategic plan, Plan’s WASH Program aims to contribute to improved health standards in communities (starting with their schools) by eliminating open defecation practices, encouraging proper hygiene behaviour and supporting water and sanitation infrastructure and management. Plan has been promoting the CLTS approach locally in its target areas and nationally along with other key partners including Nam Saat, SNV, WSP and UNICEF.

Currently, Plan’s WASH program is working with Lao government authorities and key stakeholders to contribute to improved health conditions in 90 villages in Bokeo and Oudomxay through CLTS and associated school triggering. In mid-2014, Plan began working with UNICEF to implement CLTS and water supply interventions in Ta-Oy and Salavan districts in Salavan Province targeting 70 villages over the next two years.

SNV

SNV currently operates across Africa, Asia and Latin America, working in three main sectors: Agriculture, Renewable Energy and Water and Sanitation (WASH). SNV first came to Laos in 1993 and established a full office as an independent organisation in 2004. SNV’s WASH programs are based upon the belief that access to water and sanitation is a human right, and that local government is the duty bearer of that right. Ensuring sustainable service delivery requires engagement from all sector stakeholders. Therefore, SNV engages both locally – building capacity among local government in Savannakhet, Champasak and Sekong,

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private sector and civil society for sustainable service delivery – and at national level – working with government officials and development partners to support sector reform.

Within its rural sanitation and hygiene work, SNV has integrated insights in CLTS promotion, sanitation marketing and value chain development, hygiene behavioural change communication and WASH governance to support local governments in developing a sustainable service delivery model. Particular attention is given to ensure equity and sustainability, finding service delivery solutions for vulnerable groups, and ensuring long term hygienic use and maintenance of sanitation facilities.

Nam Saat

The National Center for Environmental Health and Water Supply (Nam Saat) has primary responsibility for rural water supply and the promotion of sanitation and hygiene for rural and urban areas. The Nam Saat was created in 1998 as one of six national centers under the Department for Hygiene and Disease Prevention within the Ministry of Public Health.

In this position, Nam Saat has been endorsing several projects with multiple stakeholders in order to improve access, use and sustainability of new and existing water supply and sanitation facilities in rural areas, as well as to maximize the health and socioeconomic impact of water and sanitation facilities in the context of rural development and water resources management.

1.4 Purpose and Objectives of Supply Chain Study

This national supply chain analysis aims to inform a future at-scale communications and marketing strategy and implementation plan to strengthen the market supply of affordable, accessible and desirable sanitation products and services to rural households, particularly those with lower incomes.

This supply chain study is a diagnostic of the rural sanitation supply and value chain in distinct physical and market environments. It focuses on the commonly found or most preferred products and services for improved sanitation in rural Laos PDR (including below-ground and above-ground sanitation facilities).

The Study analyzes the opportunities, issues, constraints (including market and non-market impediments) and potential risks with the current supply chain and its capabilities, particularly in reaching the base of the pyramid. It also maps existing actors and stakeholders, up and down the supply chain of sanitation goods and services and the relationships between them.

The Study aims to identify possible business models, interventions and support services which have the potential to improve the availability of affordable sanitation products and services to rural low-income households. The findings – along with the separate study of consumer behavior – will inform the Government’s national sanitation marketing and behavior change communication strategy and implementation plan.

1.5 Geographic Scope

The research team focused on seven provinces throughout the country, located in the Northern, Central and Southern regions (see Figure 4):

Northern Region: Bokeo, Luangnamtha;

Central Region: Borikhamxay, Savannakhet;

Southern Region: Sekong, Attapeu, Salavan.

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Figure 4: Seven provinces for field work

Field work took place in 20 districts in these provinces, including regions with a variety of economic, social, and geographical conditions that can impact the sanitation supply chain (Table 2). These districts also include those that are Government focal districts for development.

According to available data (see Table 2), in some research districts as few as 15% of households have a latrine (Salavan and Ta-Oy in the south), while in others 70% or more have latrines (Houay Xai in the north and Khamkuet in the centre).

1

2

3

4

5

6

7

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Table 2: Characteristics of the research districts

Source: Nam Saat provincial and district officers; research team estimates.

Region Province DistrictNumber of poor

villages

Number of poor

households

Distance from

Provincial Capital

Percentage of

households with

latrine

Number of villages

with water scarcity

Number of villages

without electricity

Mountainous

(Yes/No)

Number of banks &

MFIs present

Estimated minimum

no. of building

material suppliers

Estimated minimum

no. of concrete

producers

Houay Xai 1 89 - 70% 1 1 Yes 5 >15 5

Phaoudom 43 2800 50 60% >20 >20 Yes 1 4 2

Mueng 14 >600 120 67% >10 2 Yes 1 2 1

Long 43 1250 110 50% 16 >5 Yes 4 >3 >3

Sing 8 848 60 39% 44 21 Yes 3 >15 >4

Xonnaburi 25 462 78 32% <95 36 No 1 5 3

Atasaphone 2 >91 95 52% 4 >25 Yes 1 4 3

Nong 61 2234 265 61% 15 63 Yes 1 2 2

Khamkheuth 4 823 220 80% 5 No Yes 4 >20 3

Viengthong 12 689 210 54% 6 8 Yes 1 <10 >3

Xaychamphone 14 554 270 68% 4 15 Yes 1 1 0

Dakcheung 12 1233 105 34% 17 43 Yes 1 2 1

Kaluem 15 79 78 45% 8 >50 Yes 1 1 1

Lamarm 10 920 0 51% 16 16 No 5 5 5

Sanamxay 13 2176 35 57% 5 12 No 1 8 3

Sanxay 36 1699 35 41% 9 13 Yes 1 2 2

Phouvong 15 500 17 37% 6 >2 Yes 1 >4 1

Saravan 5 249 0 14% <4 <10 No 1 >30 >30

Ta Oi 32 2654 85 15% 6 44 Yes 1 2 2

Sa Moui 34 2737 136 19% 6 40 Yes 1 3 1

Southern

Central

Northern

Bokeo

Luang Namtha

Savannakhet

Bolikhamxay

Sekong

Attapeu

Saravan

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2 Methodology

2.1 Data Collection Methods

Preliminary field visits to two provinces were conducted in December 2013. The aim was to better understand supply chain issues and the businesses of potential interviewees for the field work. Bokeo (north) and Savannakhet (central) were visited. In both provinces, the research team met with relevant government officials at both the provincial and district level, and then conducted meetings with supply chain actors from the private sector. The meetings included all types of actors in the Lao PDR supply chain including importers, wholesalers, retailers, providers of transportation services, concrete and brick producers and masons. These meetings were semi-structured interviews.

After the training of research teams and the development and testing of the research tools (in collaboration with the Studies’ sponsors), field research took place over five weeks during March and April 2014. Some additional meetings and informal discussions in Vientiane took place in May 2014.

During the field research, EMC made use of three different means of data collection: key informant interviews; quantitative data collection through in-depth interviews; and qualitative data collection through focus group discussions.

EMC has found that in-depth interviews yield results that are better able to capture business economics and do not suffer from inconsistencies in data definition. Confidence in data arising is achieved through: i) knowledgeable informants answering fact-based questions; ii) high quality interactions with the researcher; iii) triangulation between several informants and follow-up on discrepancies; and iv) utilizing interviewers with good technical understanding of the subject matter.

Table 3: Field work methodology overview

Methodology

Main Activities

Interviewee / Respondent Profile

Number of interviews

Key informant interviews (all in Vientiane)

Conducting unstructured interviews with key informants to understand specific issues affecting the supply chain, such as customs duty, taxation, transportation costs, and finance.

Organisation involved in sanitation

marketing: PSI

Private business owners: Lao Cement

Commercial bank: ACLEDA Bank

Government owned bank: Nayobay Bank

Government of Lao PDR: Department of

Customs and Department of Tax

Local importer of sanitation products

A logistics/transport company

8

Quantitative data collection Conducting surveys (in-depth one to one interviews) with market actors in the seven provinces (20 districts) with standardized questionnaire designed in Phase 2 Attempted to interview at least one actor type in every district

Market actors along the sanitation supply chain: Construction materials’ importers,

wholesalers and retailers

Concrete product producers

Masons

Micro finance institutions/banks at the

district level were also interviewed.

200

Qualitative data collection Conducting focus group discussions where various market actors interact and discuss opportunities, issues and constraints to the current supply chain Gathering recommendations from market actors to strengthen the supply chain

When possible, one actor per each categories (construction materials suppliers, concrete producers, masons) and local authorities’ representatives

17 FGDs, 104 participants

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2.2 Sample

In-depth interviews were conducted with a total of 200 business actors in the sanitation supply chain including importers, wholesalers and retailers of construction materials, concrete producers and masons, as well as local representatives from micro finance institutions and banks5. In total, the team interviewed 68 suppliers of construction materials, 37 concrete producers and 71 masons (Table 4). Fifty-nine of the interviewees (30%) were women.

Table 4: In-depth Interviews – Total Sample

Region Province District

# of Construction

Materials Suppliers

# of Concrete Producers

# of Masons

# of Micro finance

Institutions/ Banks

Northern Luangnamtha Sing 5 1 2 2

Long 4 1 2 2

Bokeo Meung 2 0 3 2

PhaOudom 4 2 2 1

Huay Xai 5 2 2 2

Central Borikhamxay Khamkeut 5 2 3 1

Viengthong 4 3 5 1

Xaychamphone 0 0 3 1

Savannakhet Xonnabuly 3 3 5 1

Adsaphone 5 2 8 1

Nong 2 2 2 1

Southern Salavan Ta-Oy 1 1 4 1

Samoi 3 1 2 1

Salavan 6 4 5 1

Sekong Kaleum 1 1 1 1

Dakcheung 1 1 5 1

Lamarm 5 5 7 1

Attapeu Sanxay 4 2 3 1

Phouvong 4 1 4 1

Sanamxay 4 3 3 1

Total 68 37 71 24

Total 200 Source: EMC research.

A total of seventeen focus group discussions were conducted, involving more than one hundred different participants. The typical focus group had six participants (excluding our research team), but as many as nine people attended some. The focus group discussions were often held in a relaxed and informal setting (sometimes a restaurants or café) in order to encourage participants to openly speak and share their ideas and perceptions on sanitation issues.

5 Feedback on the Inception Report from Project sponsors indicated an interest in microfinance and a desire to understand more about its potential role in the chain.

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Material supplier Interview in Dakcheung District Focus Group Discussion in Samoi District

Orientation session in Sekong Province Mason Interview in Salavan Province

Most focus groups included a mix of material suppliers, concrete producers and masons. Local health department and Nam Saat officials also attended and contributed to the FGDs. FGDs were not held in three of the districts: Houay Xai, Phaoudom, and Lamarm. In these districts our research teams were unable to encourage sufficient actors to attend.

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3 Possible limitations of the data

The data presented in this report may be limited by a number of factors. These include the sample size. For example, 37 concrete producers were interviewed in total, so provincial- and district-level data for these actors must be treated with some caution. Similarly, in some districts only a few material suppliers were interviewed. However, data were verified against other sources. The reported selling prices of various construction materials were double-checked.

The data may also suffer from selection bias. Those companies that were prepared to be interviewed may not be representative of the population. However it is not clear in what direction this bias might affect the data. Some actors refused to be interviewed (some citing that are too often asked questions by sanitation programs) and some of these tended to be larger suppliers. But other large suppliers were interviewed.

Some interviewees may have believed that their answers could determine whether they would win future work from the project. That is, they may have believed they were being interviewed as a prospective supplier to a program (since many actors in the Lao PDR sanitation supply chain have knowledge of, or experience working with, Government and NGO programs). This became apparent in some interviews during the preliminary field visits. As a result, the research teams were trained to explain that this was not the case and that interviewee’s answers would be used anonymously. However, it may be that some interviewees still understated their business’s constraints and weaknesses, for example.

At many interviews and all focus groups, local Nam Saat and/or Health officials were present. This may have influenced some interviewees’ answers. Though in general officials were a useful source of local knowledge and assisted the research teams in finding actors to interview.

Some interviewees may have been hesitant to reveal a lack of knowledge and so provided guesses rather than stated that they didn’t know. Research teams were trained to probe and attempted to limit this.

The research team did not reach the most rural villages because in these villages supply chain actors are not present and interviewing poor households was not in the project scope. This implies that the research did not reach the most rural communities but only those rural communities with at least one supply chain stakeholder. However, actors were asked about the location of their customers and their ability to serve remote rural areas.

Finally, the research location did not include the whole supply chain. For example, manufacturers and suppliers in Thailand and Viet Nam were outside the geographic scope of the project, yet these businesses are an important part of the chain. Also, construction material suppliers in Pakse (and some other towns) play a role in the supply chains studied but these were not in the selected research districts. Similarly, some suppliers in Vientiane form part of the supply chain to rural areas. The team tried to obtain interviews with Vientiane construction material suppliers, but they all refused stating they had been questioned too many times previously by sanitation projects (with the exception of an informal meeting with one supplier).

-----------------------

All data in the tables and figures in this report are from the study’s field research, unless stated otherwise.

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4 The Sanitation Supply Chain

4.1 The actors

4.1.1 Manufacturers

Most manufacturers of components for latrines are in Thailand, China and Vietnam. There are three Lao manufacturers of cement (two are state-owned). Sand and gravel are produced locally. We are not aware of any local manufacture of latrine pans.

As a result, there were no in-depth interviews with manufacturers. However, the team had an unstructured interview with Lao Cement.

Lao Cement

Lao Cement is owned by the Lao and Chinese governments. It produces the two types of cement (known universally throughout Lao as Red and Green brands) at its plant in Vientiane province under the brand name Kating Thong. The company supplies twelve provinces: Oudomxay, Luangnamtha, Huaphan, Xieng Khuang, Luang Prabang, Xayabuly, Xayxomboun, Vientiane, Vientiane Capital, Borikhamxay, Khammouan, and Savannakhet. However, more than 80% of output is for Vientiane and surrounding areas. A separate state-owned cement manufacturer is located in Savannakhet and a there is a private cement producer in Salavan.

The delivered price for nearby provinces is 780,000 LAK per ton for Red, and 710,000 LAK per ton for Green. Lao Cement stated that its price is a little higher than cement from other factories in Lao as well as from Thailand, Vietnam, and China. The plant gate price is about 10-15% lower if spot buyers come to the factory. For delivery to farther provinces, an additional cost of 270,000 LAK per ton is charged. A slightly lower price is offered in wet season, and other periods of excess supply. This discount is about 15,000 LAK per ton.

Lao Cement supplies to its regular wholesale shops who act as sales agents. In wet season, the company sells on credit to its agents and wholesalers - until cement is sold out. No credit is offered during the dry season. The company produces brochures explaining the company and its products. These brochures are supplied to sales agents, wholesalers and new clients. The company has no direct link to rural areas. Wholesalers in these areas buy on spot from Lao Cement.

4.1.2 Construction materials importers and suppliers (wholesale and retail)

Importers/wholesalers are businesses that import construction materials (e.g. cement, ceramic pans, PVC tubing, tiles, etc.) from outside Lao PDR for wholesaling.

Retailers are shop-keepers in urban or rural markets who sell construction materials, including latrine components, usually directly to consumer households.

Importers/wholesalers are usually located in the provincial capital and sell to retailers in the province, construction projects, and may also sell small amounts directly to households. Latrine related products are generally a small part of their product range and income. Some importers are not in the provincial capital but are in towns close to the border.

The average number of construction material suppliers per research district is 6.96. However there is wide variation: Houay Xai, Sing, Khamkeut and Salavan districts have at least 15 material suppliers while Xaychamphone and Kaluem have only one (Table 2). Detailed maps and explanation of product flows are provided below.

6 Data are the minimum estimated number of suppliers in the district.

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Retailers are located in the provincial towns and villages and are typically family-owned small enterprises. Usually they supply themselves from importers and wholesalers located close to the border and their customers are almost 100% individual households. Some retailers also import directly themselves.

However, in Lao PDR a clear distinction between importers, wholesalers and retailers is often difficult to discern. Especially closer to the border the distinction between these activities is blurred and nearly all construction material shops do some importing. Sometimes the supply chain is totally bypassed by individual end customers, who travel to Thailand to purchase products (typically because the price is lower, at least partly due to avoiding import duty and custom fees).

The EMC research team interviewed a total of 68 construction materials suppliers. The interviewees were either the shop owner who employs staff (51%) or a self-employed sole trader (i.e. no staff) (49%). The majority of the owners and the sole traders were female, 57% and 67% respectively (Table 5). This level of female ownership is consistent with that for micro businesses (those having 1 or 2 staff) throughout the country: 63% of micro businesses in Lao PDR in 2011 were owned or managed by a woman (GIZ 2012).

Table 5: Owner and Self Employed Material Suppliers – Distribution by gender (n=68)

Owner (with staff) Self-employed sole trader (no staff) Total Male Female Total Male Female

Northern 30% 83% 17% 70% 29% 71%

Bokeo 55% 83% 17% 45% 60% 40% Luangnamtha 0% 0% 0% 100% 11% 89%

Central 53% 40% 60% 47% 11% 89%

Borikhamxay 67% 0% 100% 33% 0% 100% Savannakhet 40% 100% 0% 60% 17% 83%

Southern 66% 32% 68% 34% 60% 40%

Attapeu 50% 0% 100% 50% 50% 50% Salavan 70% 71% 29% 30% 67% 33% Sekong 86% 17% 83% 14% 100% 0%

Total sample 51% 43% 57% 49% 33% 67%

In our sample, construction materials suppliers on average employ 4 staff, and have been in business for seven years. Those in district capitals typically employ more staff than the others (5.7 compared to 3.3, on average) and have been in businesses for longer (10 years compared to 6 years, on average).

Material suppliers in Sekong Province

Business owners outside district and provincial capitals are more likely to have other business interests

(52%) compared to shops in district capitals (39%) (Table 6). This perhaps shows that the income generated

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from the shop is insufficient and has to be supplemented by other activities.7 This is particularly the case in

the southern provinces of Salavan and Sekong — two provinces with among the lowest rates of improved

sanitation coverage in Lao PDR.

Table 6: Other business activities – material suppliers (n=68)

Region – Province Do you have other business activity? % answering Yes

Suppliers outside capital district Suppliers inside capital district

Northern 60% 40%

Bokeo 83% 40% Luangnamtha 44% na

Central 32% na

Borikhamxay 22% na Savannakhet 40% na

Southern 69% 38%

Attapeu 50% 0% Salavan 100% 33% Sekong 100% 60%

Total sample 52% 39% Of the 68 material suppliers interviewed, 50 were outside the provincial capital districts and 18 were within them.

Note: Research was not conducted in the capitals of Luangnamtha, Borikhamxay, and Savannakhet.

The most common other activity of material suppliers is running a grocery store (Table 7). Construction work and mechanic (such as motorbike repair shop) are next most common other activities, followed by running a petrol station and operating a guesthouse.

Table 7: Types of other businesses owned by material suppliers (n=68)

Most common “other business activities”

% of sample

Grocery store 13% Construction 6% Mechanic 6% Fuel station 4% Guesthouse 4%

For their source of the capital to start the business, “saving money” and “loan from bank” are the most

common options. Nearly 80% of material supplies started their business with only their savings, while 16%

used a combination of savings and a loan from a bank. Only 5% began their business only with a bank loan (

7 It is not known if supplying construction materials is the primary or secondary source of income for these business owners.

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Table 8). Almost no business owners mentioned “borrow money from family/friends” or other source of

capital. The Central region has a significantly lower percentage of businesses financed by bank loan,

compared to the Northern and the Southern ones (finance is discussed in more detail in Section 9).

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Table 8: Source of capital – material suppliers (% of total) (n=68)

Region – Province Where did you obtain the money to start your business?

Only saved money Only loan from bank Saved money & loan

from bank

Northern 35% 30% 30%

Bokeo 55% 18% 27% Luangnamtha 11% 44% 33%

Central 79% 5% 16%

Borikhamxay 78% 0% 11% Savannakhet 80% 10% 20%

Southern 38% 14% 48%

Attapeu 42% 8% 50% Salavan 40% 20% 40% Sekong 29% 14% 57%

Total sample 79% 5% 16%

For all building material suppliers interviewed, latrines are a small part of their overall business – but estimating how small is not possible. Many of them do not know how important latrines are to their business (since they do not always know for what purpose materials are bought). Latrine pans alone are likely to account for less than 5% of revenues for most suppliers.8 The material suppliers interviewed estimate that they sold a total of 18,300 latrine pans and bowls in 2013.9 Around 92% of these were squat pans, the vast majority made in Thailand.

Typically, the business’s finances are managed by women (58%, reflecting also the majority of business owners that were women), while the men managed the finances only in 24% of the cases. In the remaining businesses (18%), both partners take care of the financial aspects of the business.

Table 9: Gender of the person who manages the business’s accounts/finances (% of total) (n=68)

Region – Province Woman Man Both Partners

Northern 55% 30% 15%

Bokeo 55% 27% 18% Luangnamtha 56% 33% 11%

Central 68% 16% 16%

Borikhamxay 78% 0% 22% Savannakhet 60% 30% 10%

Southern 55% 24% 21%

Attapeu 75% 0% 25% Salavan 30% 60% 10% Sekong 57% 14% 29%

Total sample 58% 24% 18%

Most of the material suppliers interviewed are “formal” businesses (that is, they are officially registered). Around 12% of materials supply businesses outside district capitals are not formally registered compared with only 1% inside the capitals. This has some implications for accessing formal credit (see below).

In the Northern region, almost no business is purely a wholesaler; even large material suppliers sell direct to households. Government or NGO programs are a part of the chain, sometimes acting as an intermediary between suppliers and households (see section 8 for a discussion of this issue). In the Northern region, on average, 55% of the customers of large construction material suppliers are households, 25% are

8 Total revenues for these businesses are not known. 9 However, two suppliers in Houay Xai account for half of this. Excluding these two, the material suppliers interviewed sold an average of 135 pans and bowls each in 2013.

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construction companies, 12% Government or NGO programs, and the remainder are other materials suppliers (Figure 5). Small material suppliers sell mostly to households (86%) with the rest to programs or other material suppliers.

Figure 5: Supply chain flow for building materials – Northern Provinces (n=20)

Note: Percentages are number of customers or transactions, not revenue.

In the Central region, households are a larger proportion of customers for large and small material suppliers than in the Northern provinces. Government and NGOs account for a similar proportion than in the north. Sales to construction companies are very small in the Central provinces compared with the north.

Figure 6 Supply chain flow for building materials – Central Provinces (n=19)

Note: Percentages are number of customers or transactions, not revenue.

In the South, households account for a similar proportion of sales as in the central provinces. However, Government and NGO programs are less important to large material suppliers, replaced in importance by small material suppliers and construction companies.

Large material suppliers Small material suppliers

NGOsConstruction company

8%

Govt/NGOs

25%

12%

8% 6%

86%

55%

Households

Other small material suppliers

Main customers for construction material suppliers (% of total)

x%

% of customer

Large material suppliers Small material suppliers

Construction company

7%

79%

Households

Govt/NGOs

2% 2%

11% 5%

Main customers for construction material suppliers (% of total)

x%

% of customer

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Figure 7 Supply chain flow for building materials– Southern Provinces (n=29)

Note: Percentages are number of customers or transactions, not revenue.

The above diagrams illustrate the customers of Lao material suppliers. However it should be noted that households often buy directly from material suppliers in Thailand and Viet Nam, bypassing the local supply chain. Households also sometimes obtain latrines or latrines components from government or development partners. These issues are discussed later in this report.

4.1.3 Concrete Producers

Concrete producers are businesses that manufacture and sell concrete products such as prefabricated concrete rings for lining latrine pits and wells, concrete posts for house construction, and slabs for use in latrine construction. Some also make concrete bricks.

On average there are approximately 3.7 concrete producers in each research district.10 However Salavan has many more than any other district. Excluding Salavan, there are 2.4 concrete producers per district (Table 2). Concrete producers are less prevalent in the research districts than construction material suppliers. Possible reasons for this include: insufficient demand for concrete products to support many producers; and upfront costs such as moulds and land for making and drying products.11

The concrete producers interviewed on average employ 4 or 5 staff, and have been in business for around 5 years. The percentage of females involved is much lower than for materials suppliers — 30% of the interviewees were female.

Concrete producers in Salavan Province

10 Estimates of total concrete producers in some districts are a minimum. See Table 2. 11 Material suppliers’ upfront costs include shop space and acquiring stock. It is not known how these costs compare to those for concrete producers.

Large material suppliers Small material suppliers

Construction company

14%

73%

Households

Govt/NGOs

9% 2%

5% 5%

Main customers for construction material suppliers (% of total)

x%

% of customer

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Table 10: Owner and Self Employed Concrete Producers – Distribution by Gender (n=37)

Region – Province

Owner (with staff) Self–employed sole trader (no staff) Total Male Female Total Male Female

Northern 67% 100% 0% 33% 50% 50%

Bokeo 50% 100% 0% 50% 50% 50% Luangnamtha 100% 100% 0% 0% 0% 0%

Central 42% 60% 40% 58% 57% 43%

Borikhamxay 20% 0% 100% 80% 50% 50% Savannakhet 57% 75% 25% 43% 67% 33%

Southern 37% 57% 43% 58% 82% 18%

Attapeu 33% 100% 0% 50% 100% 0% Salavan 33% 50% 50% 67% 75% 25% Sekong 43% 33% 67% 57% 75% 25%

Total sample 43% 69% 31% 54% 70% 30%

Those interviewed estimate that the percentage of their businesses related to latrines (for example, concrete rings for the pit) is on average 36% but there is wide variation across the provinces (see Figure 8). The importance of latrines to their business may be related to the number of concrete producers in each area shown in Table 2. For example, there are more concrete producers in Salavan than in Attapeu and Sekong. However, Savannakhet and Borikhamxay have similar numbers of concrete producers yet they have very different levels of latrine work.

Concrete producers’ fortunes are directly linked to the construction industry in the surrounding areas: in certain districts, given the low level of construction activities, their services (as well as masons’) are not continuously required. This is why in remote districts (such as Ta-Oy and Samoi) the market size does not allow concrete producers to have a steady flow of work: the limited demand and the low level of construction development determine that they work only on request.

Figure 8: Average percentage of concrete producers’ business related to latrine construction (n=37)

Note: as estimated by the businesses interviewed.

Around 43% of the concrete producers surveyed have other business activities. However this percentage varies significantly from region to region: in the Northern region only 33% reported having additional revenue streams, in the South 43% and in the Center 50%.

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Table 10: Other business activities for concrete producers (n=37)

Region – Province Do you have other business activity?

Percent answering Yes

Northern 33%

Bokeo 25% Luangnamtha 50%

Central 50%

Borikhamxay 20% Savannakhet 71%

Southern 42%

Attapeu 50% Salavan 50% Sekong 29%

Total sample 43%

Concrete producers are more likely than material suppliers to rely on only one business for their income. That is, construction material suppliers are more likely to have other businesses than concrete producers. This may be because material suppliers are more entrepreneurial and/or have better access to capital with which to open other businesses (access to capital is discussed in Section 9). Or it may be that concrete production requires greater investment capital, or because making concrete products involves more specialized skills.

Concrete producers with other business interests are most likely to be involved in construction (leveraging their skills and contacts) or own a retail shop (Table 11). They are also involved in selling furniture, and some sell stone and sand (possibly surplus inputs from producing concrete products).

Table 11: Types of other businesses activities by concrete producers (n=37)

Most common “other business activities”

% of sample

Construction 8% Retailer shop 8% Furniture shop 5% Selling stone and sand 3% Electronics shop 3%

Concrete producers started their business mainly with their own capital (68%), a percentage similar to construction material suppliers. Only 8% of the total sample started their business only with a loan from a bank (Table 12). Finance and borrowing is discussed in more detail later in this report.

Table 12: Source of capital – concrete producers (% of total) (n=37)

Region – Province

Where did you obtain the money to start your business?

Only Saved money Only Loan from Bank Save Money & Loan

from bank

Northern 50% 33% 0%

Bokeo 25% 50% 0% Luangnamtha 100% 0% 0%

Central 67% 8% 17%

Borikhamxay 60% 20% 20% Savannakhet 71% 0% 14%

Southern 74% 0% 16%

Attapeu 83% 0% 0% Salavan 67% 0% 17% Sekong 71% 0% 29%

Total sample 68% 8% 14%

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In terms of supply chain flow, concrete producers throughout the country mostly sell directly to individual households. The role played in their business by construction companies or NGOs is negligible in comparison. The values are not homogenous across regions, where construction companies seem to play a bigger role in the North (17% of the total customer) than in the Center (3%) and in the South (9%) — similar to what was found for construction material suppliers. NGOs play a role in certain provinces (e.g. Savannakhet, Bokeo, Salavan) but seem to be not consistently present in others (Borikhamxay, Attapeu).

Table 13: Customers of concrete producers (average of reported %) (n=37)

Region – Province HH Construction companies

NGOs Other

Northern 77% 17% 7% 0% Bokeo 68% 23% 10% 0% Luangnamtha 95% 5% 0% 0%

Central 90% 3% 5% 3% Borikhamxay 100% 0% 0% 0% Savannakhet 83% 4% 9% 4%

Southern 83% 9% 7% 0% Attapeu 92% 8% 0% 0% Salavan 79% 8% 13% 0% Sekong 80% 11% 9% 0%

Total sample 84% 8% 6% 1%

The overwhelming majority (86%) did not receive any training for their business. Percentages are very similar in the three different regions; however, Bokeo and Salavan districts have the highest percentage of trained concrete producers (17%).

Table 14: Concrete producers who have received training (n=37)

Region – Province Have you ever received any

training for this job? Percent answering Yes

Northern 17%

Bokeo 25% Luangnamtha 0%

Central 8%

Borikhamxay 0% Savannakhet 14%

Southern 17%

Attapeu 17% Salavan 20% Sekong 14%

Total sample 14%

4.1.4 Masons

Masons are builders or construction workers who are contracted build a variety of structures, including latrines.

Masons can be divided into three groups:

• Skilled masons: experienced workers with advanced masonry and construction skills and will typically lead a team in construction;

• Semi-skilled masons: workers with basic masonry and construction skills and able to construct simple structures but will typically work under a skilled mason; and

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• Unskilled masons: unskilled laborers, mostly farmers or otherwise unemployed, that offer their manpower to perform manual tasks.

Masons will typically be approached and contracted by households for labor services with materials purchased by the households themselves. It’s rare that the mason purchases materials on behalf of the household. Usually the mason has no preference from which shops the materials are purchased.

The masons interviewed have been in the business for 12 years on average. All the masons interviewed were men. Their main reasons for being a mason are lack of other alternatives, as well as to take advantage of the recent boom in construction of houses in Laos PDR.

Masons in Attapeu Province

Around a third of masons surveyed reported to have other business activities (mainly farming and retailing). Five masons stated that other activities provide more of their income than masonry. These activities include teaching, running a petrol station, growing coffee, and “selling”.

Only 6% of the masons interviewed declared to be registered.12

The overwhelming majority (79%) has not been trained for working as a mason but rather learnt the technical skills “by doing”; however the difference among the regions is large. Northern masons are relatively more trained (45%) than Southern (30%). None of the masons interviewed in the Central region said that he was trained for that job.

Figure 9: Masons who have received training (% of total per region/province) (n=71)

12 The formal fee for business registration is 70,000 LAK (US$8.75) plus a fee based on the amount of registered capital (for example: 300,000 LAK fee for 75 million LAK registered capital). A registered business is also subject to annual income tax.

0%

10%

20%

30%

40%

50%

60%

70%

80%

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Of the masons that have been trained, 14% declared to be trained at college and the remaining from NGOs or other development programs. However, 83% stated they were willing and available to improve their skills, in terms of type of construction, internal decoration and others areas.

The masons interviewed estimate that they built 455 latrines in the last year. This is 6.4 latrines per mason, although two masons report building 50 latrines and another two built 20. On average, masons stated that 69% of the latrines they build are as part of a new house. However, there is a wide range in answers: for some masons 100% of the latrines they construct are part of building a new house; for others, 60% are for new houses and 40% “only latrines” (that is, not part of a new house and not because an old latrine was broken or full). Thirteen masons (18%) said they had built new latrines because an existing latrine was broken/collapsed.

Among the 54 masons who indicated building “only latrine” as part of their business, about 20% of their income is related to latrine construction.

Mason’s latrine knowledge and skills

Masons generally had a limited knowledge of latrine designs. The most popular latrine as described by masons includes:

• Concrete slab;

• Offset pit (with bricks rather than concrete rings as preferred lining);

• Squat pan (from Thailand);

• Brick superstructure (if not brick, then often the involvement of a mason is not necessary, with the household building themselves)

About 96% of the sample said they were able to build a full latrine (underground and superstructure). In terms of pit lining, bricks seem to be becoming more popular than concrete rings — at least partly because they allow the building a bigger pit (that takes longer to fill). 96% of the masons reported that they had built a latrine pit lined with bricks, and 86% with concrete rings.13 Typically the customer will have purchased the construction materials, including bricks or rings.

Table 15: Pit lining options (% of total) (n=71)

Region – Province Masons who have experience lining pits:

Only with Bricks Only with Concrete rings Bricks & Concrete rings

Northern 0% 0% 100%

Bokeo 0% 0% 100% Luangnamtha 0% 0% 100%

Central 4% 4% 88%

Borikhamxay 0% 0% 91% Savannakhet 7% 7% 87%

Southern 24% 0% 76%

Attapeu 30% 0% 70% Salavan 18% 0% 82% Sekong 23% 0% 77%

Total sample 13% 1% 85%

Masons are able to build different kind of latrines: 85% declared being able to build a flush/pour flush latrine to a pit, 79% to a septic tank and 61% to a piped sewerage system. However, only 11% reported knowledge of building a dry latrine (probably because they have never built this kind of latrine – these are usually made by households themselves with natural local materials).

13 Sums to more than 100% because masons can do both types. That is, most masons (85%) have constructed both brick-lined and ring-lined pits.

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Table 16: Type of latrines masons able to build (% of total) (n=71)

Region – Province Flush / Pour Flush:

Dry latrine Composting toilet

to piped sewerage systems

to septic tank to pit latrine

Northern 64% 73% 100% 27% 9%

Bokeo 71% 71% 100% 43% 14% Luangnamtha 50% 75% 100% 0% 0%

Central 46% 62% 81% 0% 0%

Borikhamxay 64% 55% 73% 0% 0% Savannakhet 33% 67% 87% 0% 0%

Southern 71% 94% 82% 15% 24%

Attapeu 70% 90% 80% 10% 20% Salavan 100% 100% 91% 9% 18% Sekong 46% 92% 77% 23% 31%

Total sample 61% 79% 85% 11% 13%

Repairs and maintenance

Around 34% of the masons declared that they repair latrines (with an average of 2.5 latrines repaired in the last year). In terms of upgrading existing latrines, 27% of the masons declared they are able to upgrade an existing latrine. They report an average of 3 latrine upgrades in the last year.

Table 17: Ability of masons to repair and upgrade a latrine and average per year (n=71)

Region – Province Repair Upgrading

Able (%) # in the last

year Able (%)

# in the last year

Northern 91% 2.5 55% 4.0

Bokeo 86% 3.0 57% 4.0 Luangnamtha 100% 1.0 50% 4.0

Central 46% 2.0 35% 2.3

Borikhamxay 55% 2.0 64% 2.3 Savannakhet 40% 2.0 13% 0

Southern 6% 3.3 12% 2.5

Attapeu 10% 5.0 10% 0 Salavan 9% 2.0 9% 2.0 Sekong 0% 0 15% 3.0

Total sample 34% 2.5 27% 3.0

The most common type of upgrade/improvement is building a new pit (56% of masons reported doing this), followed by building a permanent superstructure (49% of the masons).

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Table 18: Most common improvements made (% of total, multiple choice allowed) (n=71)

Region – Province New pit New slab Permanent

superstructure Northern 36% 27% 36%

Bokeo 29% 29% 29% Luangnamtha 50% 25% 50%

Central 65% 42% 77% Borikhamxay 73% 55% 82% Savannakhet 60% 33% 73%

Southern 56% 6% 32% Attapeu 30% 10% 30% Salavan 82% 0% 36% Sekong 54% 8% 31%

Total sample 56% 23% 49%

4.1.5 Latrine emptying

No latrine emptying businesses were interviewed. These are very rare in the research districts. Local officials in Bokeo stated that one company in the province empties latrines. Usually new pits are dug when required.

4.2 Product flows, maps

Overall, the sanitation supply chain in the provincial capitals (the one included in the research and the one visited for the orientation session) is extensive — many importers, wholesalers/retailers, concrete producers and masons.14 This is to be expected, given the size and average incomes of these towns. However, outside of district centers the supply chain is quite limited with a small availability of materials suppliers, mainly along the main road connecting with the provincial capitals.

Sometimes, especially in remote districts, masons and concrete producers do not work in these roles full time but work only on spot, on a request basis. In some places they are not available at all. As discussed above, there are no concrete producers in Xaychamphone and only one in each of Meung, Dakcheung, Kaleum, Phouvong and Samoi. Mason availability is discussed below (Section 7.3.1).

Figure 10: Supply Chain Map (conceptual)

14 The district centers visited have at least: two building material suppliers; two concrete producers; and multiple masons.

Importers

WholesalersRetailers

Retailers

Retailers

Supply Chain Actors Location

• Provincial capital

city

• Provincial district

• Remote district

Co

nc

rete

pro

du

ce

r

Ma

so

ns

• In remote

districts, masons

and concrete

producers are

often not

available/work

only on request

base

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The origin of the construction materials depends on which is the closest neighboring country and on the availability of international check points, enabling trade between the two countries.

In most of the research provinces, Thailand plays a pivotal role as supplier of all kinds of materials. China plays an important part in Luangnamtha, given its proximity to the province and the increasing amount of Chinese businesses there. Vietnam supplies the Central Region as well as the Southern Region.

Table 19: Construction materials – Country of origin

Region – Province Latrine Pan Cement Steel PVC pipe Zinc sheet

Northern Thailand (100%) China (16%),

Thailand (84%) China (67%),

Thailand (33%) China (8%),

Thailand (92%) China (9%),

Thailand (91%)

Bokeo Thailand (100%) Thailand (100%) Thailand (100%) Thailand (100%) Thailand (100%)

Luangnamtha Thailand (100%) China (25%),

Thailand (75%) China (100%)

China (11%), Thailand (89%)

China (16%), Thailand (84%)

Central Thailand (64%), Vietnam (36%)

Laos (44%), Vietnam (56%)

Thailand (67%), Vietnam (33%)

Thailand (71%), Vietnam (39%)

Thailand (47%), Vietnam (53%)

Borikhamxay Thailand (8%), Vietnam (92%)

Vietnam (100%) Vietnam (100%) Thailand (63%), Vietnam (37%)

Vietnam (100%)

Savannakhet Thailand (100%) Laos (78%),

Vietnam (22%) Thailand (100%)

Thailand (78%), Vietnam (22%)

Thailand (88%), Vietnam (12%)

Southern Thailand (98%), Vietnam (2%)

Laos (76%), Thailand (14%), Vietnam (10%)

Thailand (47%), Vietnam (53%)

Thailand (83%), Vietnam (17%)

Thailand (63%), Vietnam (37%)

Attapeu Thailand (100%) Laos (88%),

Thailand (12%) Thailand (43%), Vietnam (57%)

Thailand (100%) Thailand (83%), Vietnam (17%)

Salavan Thailand (95%), Vietnam (5%)

Laos (57%), Thailand (14%), Vietnam (29%)

Thailand (8%), Vietnam (92%)

Thailand (65%), Vietnam (35%)

Thailand (28%), Vietnam (72%)

Sekong Thailand (100%) Laos (83%),

Thailand (17%) Thailand (100%) Thailand (100%)

Thailand (86%), Vietnam (14%)

As mentioned above, some products are sourced locally, such as cement, sand and gravel. There is not local manufacture of pans. In general, suppliers report than consumers prefer products from Thailand over local or Chinese products.

4.2.1 Northern Region

In Luangnamtha, pans come usually only from Thailand, while steel is entirely from China. The other materials (cement, PVC pipe, zinc) are shared between the two countries.

In Long district, materials from Thailand enter in the country through Xiengkok village, or directly from Bokeo through Houay Xai. Steel

In Sing district, the proximity with China has an important role in terms of materials supplied where retailers either go to China to supply themselves directly or receive the products from Chinese suppliers. Materials from Thailand come through big importers located in Houay Xai or sometimes through Vientiane Capital.

In Bokeo, the chain starts in Thailand. Houay Xai is the entry gate for supplying the whole province. In the city there are two-three big importers that sell through the region with an extensive distribution network, having customers from Houay Xai, Phaoudom, Oudomxay

Sing

Long

Phaoudom

Meung

Huay Xay

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and Luangnamtha. Phaoudom and Meung either purchase directly from Thailand or through Houay Xai.

In some cases the local supply chain is bypassed entirely, with the end consumer travelling to Thailand to buy the necessary materials and constructing latrines themselves.

4.2.2 Central Region

In Borikhamxay steel, cement and zinc comes from Vietnam. The remaining materials (pans, PVC pipe) either from Thailand through Vientiane Capital or from Vietnam.

Supplies from Thailand reach Vienthong and Khamkeut through Vientiane Capital. Khamkeut has a more extensive supply chain than Vientong, with several construction material shops. Vientong often purchase the products from suppliers in Khamkeut.

The supply chain has limited presence in Xaychampone where the research team was not able to find any construction material shop.

In Savannakhet, cement is produced locally, while the rest of construction materials come from Thailand, except in remote districts close to Vietnam.

Xonnabuly and Atsaphone districts purchase all the materials needed from importers in Savannakhet city, except cement that is sourced locally in Atsaphangtong district.

Given its proximity to the Vietnamese border, Nong district has only Vietnamese products, except cement.

4.2.3 Southern Region

Pakse is an important link in the Southern supply chain. In Salavan, steel comes mainly from Vietnam, cement from Laos and Vietnam, the rest from Thailand via Pakse.

Ta-Oy and Samoi districts supply themselves either directly from Vietnam or from Thailand through Pakse. Cement is produced locally.

In Sekong province, everything comes from Thailand, except cement. Lamarm (Sekong) district works as an intermediary step between Pakse and remote districts such as Dakcheung and Kaleum. In Lamarm there is also a shop importing directly from Thailand, bypassing Pakse.

In Attapeu, steel comes from Vietnam through Saysettha. Cement comes from Salavan. All the rest from Thailand through Pakse and Sekong.

Sansay, Sanamsay and Phouvong districts have to purchase materials from Lamarm (Sekong) shops. Vietnamese products come into the country through Saysettha district.

Vienthong

Khamkeut

Xaychampone

Xonnabuly

Atsaphone

Nong

Ta Oy

Samoi

Lamarm

Kaleum

Dakcheung

Sansay

Sanamsay

Phouvong

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5 The Latrine

5.1 The most common latrine

The focus of this Study is “on the commonly found or most preferred products and services for improved sanitation in rural Laos PDR (including below-ground and above-ground sanitation facilities).”15 As such, actors were asked about the types of latrines they most typically sold products for or built.

However, there is no “typical” or common latrine. A wide variety of options, sizes and materials were suggested by interviewees. Generally, most said it was a pour-flush squat latrine with ceramic pan. Few masons reported awareness of dry latrines (16%). Some (75%) mentioned septic tanks (Figure 11).

Figure 11: Do you know about these different latrine options? (n=71)

Latrine sizes (suggested by all types of actors) varied, considerably in some cases:

Pit sizes from 1m x 1m x 2m, to 2m x 4m x 1.5m.

Superstructure sizes: 2m x 2m and 1.5m tall, to 3m x 4m and 2m tall.

Materials also vary:

Bricks (clay or concrete) often preferred to concrete rings for pit lining;

Concrete or clay bricks for walls (sometimes with wood frame); sometimes wood or bamboo walls;

Typically zinc roof, sometimes wood;

Sometimes the latrine has tiles (not clear if floor only or also walls).

Consumers’ latrines

Most households (86.5%) in poor rural villages that have adopted a latrine have a flush or pour-flush squat latrine (Table 20). The superstructure is most likely to be wood or some form of bamboo or palm (Table 21).

Table 20: Type of latrines owned by the rural poor

Region – Province Type of latrine the household has:

Dry pit latrine

Flush or pour flush (sit style)

Flush or pour flush (squat style)

No answer

Northern 22.7% 0.8% 72.7% 3.9% Bokeo 44.6% 1.5% 50.8% 3.1% Luangnamtha 0.0% 0.0% 95.2% 4.8%

Central 0.0% 1.1% 98.9% 0.0%

15 Project’s ToR

16%

73% 76%

90%

Dry latrine Offset pit Flush to septic tank Poor Flush

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Borikhamxay 0.0% 0.8% 99.2% 0.0% Savannakhet 0.0% 2.1% 97.9% 0.0%

Southern 12.9% 0.7% 83.5% 2.9% Attapeu 2.6% 0.0% 94.9% 2.6% Salavan 3.3% 0.0% 90.0% 6.7% Sekong 22.9% 1.4% 74.3% 1.4%

Total sample 10.6% 0.9% 86.5% 2.0% Note: only rural poor households interviewed for this data. Districts within these provinces are not the same as the supply chain study sample. Source: WSP – Consumer Behavior Research.

Table 21: Latrine superstructures of the rural poor

Region – Province What kind of material is the latrine superstructure made of?

Concrete / Brick

Cement Galvanized

steel Wood

Palm / Bamboo

Plastic Sheet

Zinc Sheet

Northern 21.1% 14.8% 1.6% 11.7% 62.5% 5.5% 21.1%

Bokeo 1.5% 3.1% 0.0% 7.7% 83.1% 3.1% 6.2% Luangnamtha 41.3% 27.0% 3.2% 15.9% 41.3% 7.9% 36.5%

Central 43.8% 17.6% 2.3% 34.1% 21.0% 1.1% 28.4%

Borikhamxay 34.4% 5.5% 0.8% 42.2% 25.0% 0.8% 28.9% Savannakhet 68.8% 50.0% 6.3% 12.5% 10.4% 2.1% 27.1%

Southern 3.6% 1.4% 0.0% 35.3% 43.9% 2.9% 53.2%

Attapeu 2.6% 0.0% 0.0% 17.9% 56.4% 5.1% 46.2% Salavan 3.3% 3.3% 0.0% 20.0% 53.3% 0.0% 60.0% Sekong 4.3% 1.4% 0.0% 51.4% 32.9% 2.9% 54.3%

Total sample 24.6% 11.7% 1.4% 28.0% 40.2% 2.9% 34.1% Note: only rural poor households interviewed for this data. Districts within these provinces are not the same as the supply chain study sample. Source: WSP – Consumer Behavior Study.

5.2 Latrine cost

Supply chain actors predominantly regard the commonly built latrine as being a model that is unaffordable for poor households. Total material costs vary considerably (depending on size and quality as well as location), but can be 3 million LAK (US$375) for a latrine consisting of the following:

Table 22: List of materials to build a typical latrine

Commonly Built Latrine Item/Material Quantity (#) Unit of Measure Area

Lao Red Cement 10 Bags Core and Superstructure

Concrete 250 Bricks Superstructure

Wood 1 Door Superstructure

Wood 10 Pieces (4x8) Superstructure

Concrete rings 3 100cm Core

Gravel 1 m^3 Core and Superstructure

PVC pipe 2 Pipes (1 large, 1 small) Core

Sand 1 m^3 Core and Superstructure

Zinc sheeting 5 Sheet Superstructure

Concrete Lid 1 Lid Core

Ceramic pan 1 Pan Core

Slab 1 Slab Core

Other (nails etc) N.a. Miscellaneous Superstructure

The cost varies by province (Table 23). The average national cost is about 2.8 million LAK (US$353). These costs are for materials only. They do not include labor, or any additional transport costs (though some

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transport cost is already embedded in materials prices). The latrine costs are overwhelmingly driven by the cost of the superstructure. The superstructure accounts for around 70% of the total costs (Table 23).

Table 23: Latrine core and superstructure costs for a commonly-built latrine (LAK)

Region – Province Core Superstructure Total materials

cost (LAK) Total materials

cost (US$) Superstructure % of total cost

Northern 815,389 1,697,331 2,512,720 314 68%

Bokeo 788,023 1,606,745 2,394,768 299 67% Luangnamtha 842,756 1,787,917 2,630,673 329 68%

Central 869,642 1,949,535 2,819,177 352 69%

Borikhamxay 898,714 1,750,917 2,649,631 331 66% Savannakhet 840,569 2,148,153 2,988,722 374 72%

Southern 968,382 2,060,500 3,028,882 379 68%

Attapeu 981,109 1,901,071 2,882,181 360 66% Salavan 913,992 2,099,467 3,013,458 377 70% Sekong 959,833 2,246,083 3,205,917 401 70%

Total sample 889,285 1,934,336 2,823,621 353 69% Note: excludes labor. Core defined here as pan, rings, lid, slab, PVC piping, and 20% of the total cement, sand and gravel used.

Although regional differences in costs in the above table have been standardised as much as possible, some differences in costs may be due to the quality of the materials used.

These numbers are not inconsistent with the WSP - Sanitation Consumer Behavior Study, where more than 58% of rural households who purchased their own latrine spent more than 700,000 LAK.16

It should be noted that the latrine core costs (that is, underground and ground level components) in the table above are the pan, slab, rings, lid and PVC piping and an assumption about how much of the cement, aggregate and bricks is used for the ground level structure and how much is for the superstructure. In addition, some of the bricks may be for ground level structure but here all bricks are included in the superstructure costs.

These prices are higher than those found by some other studies. For example, Plan International provided data that the materials for an offset pour-flush latrine in Bokeo would cost around 1.7 million LAK (US$210)17 – though this may be only the cost in Houay Xai, not more remote areas.

Samples of latrine materials quotes from suppliers

16 37% of total latrine owners spent more than 700,000 LAK for their latrine. However, 36% of latrine owners did not spend anything for their latrines (they either built it themselves from available materials or they received it from a program). 17 This latrine includes 4 100cm concrete rings, zinc roof, and a wood frame with bamboo walls and door.

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On average, throughout the country, the total material costs for a commonly-built latrine is 2,823,621 LAK (US$350). These costs are driven by cement (23% of the total material costs). Among the other items, concrete bricks to build the superstructure (13%), wood door (11%), wood pieces (10%), concrete rings (9%), gravel (8%), and PVC pipes (7%) are the most expensive items. The remaining items such as sand and zinc sheeting (5%), pan, lid and slab (3% each) have a smaller role in the total cost structure.

Figure 12: Cost drivers for commonly-built latrine (LAK and cumulative % of total costs)

As the superstructure accounts for about 70% of the total material costs, it’s possible to look only at the key cost drivers of the core structure (Figure 13). The core structure alone costs on average 889,285 LAK (US$110). As shown in the figure below, concrete rings amount for about 30% of the total core structure costs, followed by PVC pipes (22%) and cement (14%). These three items alone cover more than 65% of the costs for building the core structure.

Figure 13: Cost drivers for core structure (LAK and cumulative % of total costs)

5.3 Materials prices

Pans from Thailand tend to be cheaper in the north and most expensive in the south. However, cheap pans from Viet Nam are available. Cement is particularly cheap in Luangnamtha, where competition from China may be holding down prices. Savannakhet and Salavan are also relatively inexpensive for cement — there are cement factories in both provinces. Prices quote for other products tend show less of a pattern. PVC pipe is expensive in the south, but steel and zinc sheeting are not.

0%

25%

50%

75%

100%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Cement ConcreteBricks

Wooddoor

Woodpieces(#10)

ConcreteRings(#3)

Gravel PVCPipes(#2)

Sand Zincsheet

Lid CeramicPan

Other

0%

25%

50%

75%

100%

-

50,000

100,000

150,000

200,000

250,000

300,000

Concrete Rings(#3)

PVC Pipes (#2) Lao RedCement

Lid A1 pan Gravel Other

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Table 24: Materials prices in different provinces (average of suppliers’ selling price), LAK

Item Pan Cement Steel PVC pipe Zinc

Quantity 1 pan 1 bag / 50 kg 1 piece 1 pipe

1 sheet Thai Vietnam

Lao green

Lao red China Thai Vietnam Thin Thick Thin Thick

Northern 71,947 39,167 39,667 37,667 44,333

38,923 59,833 81,941 103,833 35,867

Bokeo 71,273 40,600 40,600

44,333

38,727 62,800 94,700 127,500 37,909

Luangnamtha 72,875 32,000 35,000 37,667

40,000 45,000 63,714 92,000 30,250

Central 74,167 66,667 37,417 40,417

39,667 40,462 65,000 67,667 160,000 25,563

Borikhamxay 73,750 66,667 38,750 38,750

39,667 37,667

70,714 160,000 24,750

Savannakhet 74,375 36,750 41,250

42,857 65,000 65,000

26,375

Southern 86,211 69,500 45,263 47,813

36,737 33,000 84,063 117,143 26,950

Attapeu 83,300 28,000 50,600 51,714

35,100

96,000 122,500 29,000

Salavan 91,667 110,000 34,400 39,400

38,143 33,000 74,375 110,000 23,000

Sekong 85,000 30,000 45,500 51,500

40,000

90,000

27,750

Concrete producers also report different prices for some inputs. However, these price differences might

reflect quality differences (cement from Viet Nam for example). In general, concrete prices are lower in the

North and Centre than in the South. As in

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Table 24 above, cement in Luangnamtha (particularly Sing district) is cheaper than many other areas. Cement is also reported to be cheap in Khamkeut and Salavan.

Table 25: Price paid by concrete producers for cement (LAK per ton)

Province District Price Difference from Lao Cement

‘Green’ factory gate price

Bokeo Houay Xai 750,000 17.2% Phaoudom 900,000 40.6%

Luangnamtha Sing 670,000 4.7% Long 800,000 25.0%

Borikhamxay Khamkeut 645,000 0.8% Vienthong 790,000 23.4%

Savannakhet Xonnabuly 764,000 19.4% Atsaphone 780,000 21.9% Nong 775,000 21.1%

Attapeu Sanamxay 833,333 30.2% Samakheexai 850,000 32.8%

Salavan Salavan 700,000 9.4% Ta-Oy 800,000 25.0% Samoi 900,000 40.6%

Sekong Lamarm 856,000 33.8% Dakcheung 1,200,000 87.5% Kaleum 825,000 28.9%

Notes: Sample size is small (in some districts only 1 concrete producer interviewed). Lao Cement’s “Green” brand is around 640,000 LAK per ton when bought at the Vientiane factory. However, the prices quoted by concrete producers may be for different quality cement (Lao Red, for example). Hence, these are intended to present margins, but rather a guide to cost differences between provinces and districts.

According to concrete producers’ selling prices, concrete rings are significantly cheaper in the north than in the central and southern provinces (Table 26). 100cm concrete rings in the south are on average 42% more expensive than in the north.

Table 26: Price of concrete rings in different provinces (average of producers’ selling price)

Region – Province 80 cm rings 100 cm rings

Northern 53,800 68,333

Bokeo 44,750 58,750 Luangnamtha 90,000 87,500

Central 68,333 84,444

Borikhamxay 75,000 93,333 Savannakhet 65,000 80,000

Southern 82,857 97,083

Attapeu 86,667 106,000 Salavan 80,000 96,250 Sekong 80,000 83,333

Total sample 69,944 86,481

5.4 Building a latrine

Most (82%) adopter households surveyed in the WSP - Sanitation Consumer Behavior Study reported constructing their own latrine – 12% hired a mason.

Masons reported that it takes two to three workers almost two weeks to build a latrine, costing around

3 million to 4 million LAK (US$375 to US$500) for their labor (Table 27). The superstructure takes the

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longest, reflecting that masons are used to building substantial structures (reflected in the high cost of

latrines above). Lining a pit with bricks requires more labor than using concrete rings, partly because such

pits are usually larger, adding to the total cost of the latrine. Overall, labor costs can double the total price

of a latrine.

Table 27: Labor required to build the “most commonly built” latrine, as quoted by masons (n=71)

Region – Province

Pit Digging Pit Lining

(Concrete Rings) Pit Lining (Bricks)

Pan & Slab & Pipe

Installation Super Structure Total

# of Work

er

# of Days

# of Worker

# of Days

# of Worker

# of Days

# of Worker

# of Days

# of Worker

# of Days

Average labor cost

# Days (brick)

# Days (concrete)

Northern 2.0 1.5 2.5 1.3 2.5 2.1 1.5 1.4 2.5 7.1 3,783,333 12.0 11.2

Bokeo 2.0 1.7 2.0 1.0 2.0 2.2 2.0 1.3 2.0 6.0 2,150,000 11.2 10.0

Luangnamtha 2.0 1.3 3.0 1.5 3.0 2.0 1.0 1.5 3.0 8.2 5,416,667 12.9 12.4

Central 2.0 2.5 2.0 1.1 2.0 3.0 2.0 1.7 2.0 5.2 3,397,000 12.4 10.5

Borikhamxay 2.0 2.6 2.0 1.0 2.0 3.4 2.0 2.0 2.0 4.8 4,242,000 12.8 10.4

Savannakhet 2.0 2.4 2.0 1.1 2.0 2.6 2.0 1.4 2.0 5.6 2,552,000 12.0 10.5

Southern 2.0 2.3 2.3 1.0 2.7 2.3 2.0 2.0 2.7 6.0 3,242,611 12.6 11.3

Attapeu 2.0 2.5 3.0 1.0 3.0 2.3 2.0 1.2 3.0 6.7 3,460,000 12.7 11.4

Salavan 2.0 2.1 2.0 1.1 3.0 2.3 2.0 2.3 3.0 4.5 3,090,909 11.1 10.0

Sekong 2.0 2.3 2.0 1.0 2.0 2.3 2.0 2.5 2.0 6.8 3,176,923 13.9 12.5

Total sample 2.0 2.1 2.3 1.1 2.4 2.4 1.9 1.7 2.4 6.1 3,441,214 12.4 11.0

Much of the variation in total labor cost above is from differences in average daily labor costs (

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Table 28). Average costs in the south are lower than the northern and central regions. Within regions there can be wide variation, with Luangnamtha much more expensive than Bokeo and Borikhamxay more expensive than Savannakhet. Hence masons in Luangnamtha estimate constructing a latrine will take two more days than those in Bokeo, yet the total labor cost is 150% higher (Table 278). A similar comparison can be made for Borikhamxay and Savannakhet.

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Table 28: Average daily cost per person for latrine construction (n=71)

Region – Province Average number of

masons needed Average daily labor cost

(LAK) Average daily individual

labor cost (LAK)

Northern 2.2 325,448 147,931

Bokeo 2.0 203,150 101,575

Luangnamtha 2.4 427,632 178,180

Central 2.0 296,297 148,149

Borikhamxay 2.0 364,547 182,273

Savannakhet 2.0 225,974 112,987 Southern 2.3 271,830 116,499

Attapeu 2.6 286,740 110,285 Salavan 2.4 293,963 122,485 Sekong 2.0 240,583 120,291

Total sample 2.2 293,616 134,065

Average labor costs in Lao increased by around 65% between 2009 and 2012 (World Bank 2013b). Labor in Lao PDR can be expensive (relative to Cambodia or Myanmar, for example).18

5.5 Transport costs

Transport costs and road conditions are a major factor determining sanitation coverage rates for Lao PDR. Rural areas without road access are much less likely to have access to improved sanitation than rural areas with road access (15.8% compared with 38.8% according to the third Multiple Indicator Cluster Survey). Poor roads affect both the demand and the supply for sanitation products and services. Regions with bad roads have less economic development and more poverty; hence fewer people can afford latrines. Also, areas with bad roads do not have access to the supply chain to obtain the necessary materials. Furthermore, road quality can help determine access to credit: banks require collateral (land) and they assess the quality of collateral in part on its proximity to a good road (Access to credit and other finance issues are discussed in Section 9).

Transport cost in the sanitation supply chain take two forms: as explicit prices for the delivery of products, and as an embedded cost in the price of products and services. For example, cement in Phaoudom is more expensive than 70km away in Houay Xai (in certain conditions it can take four hours to travel between the two).

Even when still accessible in wet season, the nature of the road may add to transport costs. That is, in wet season some roads are only passable by smaller trucks. This means smaller average loads, increasing per-unit transport costs. For example, a transport company in Houay Xai charges 7,000 baht (around 1.8 million LAK or US$225) for a nine-tonne load to Phaoudom19, whereas a much smaller truck (around two-tonne load) to Phaoudom costs 3,000 baht (approximately 780,000 LAK or US$98) – roughly double the unit cost.

According to one national transport company, transport costs in Lao PDR are 10% to 30% higher than in Thailand (key informant interview in Vientiane).

Unit transport costs between major centres are lower than local transportation costs (Table 30). This is

because roads are better and large transportation companies can ship 35, 40 or 60 tonnes per trip.

According to one transport company, transporting large loads of this size between major centers costs

around 400 LAK (5 cents) per ton per kilometre where the road conditions are good and the area is not

mountainous, and 750 LAK per ton per kilometre where roads are bad and the terrain is mountainous.

18 This in part derives from the demand for labor being pushed up by Lao’s significant mining industry. Although not labor intensive, income from mining pushes up the demand for labor in service industries, increasing labor costs throughout the economy (and not only in mining areas, since labor is mobile). Similarly, demand from the mining industry may contribute to higher prices for some construction materials. 19 Apparently the limit for this road.

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Table 29: Transport costs for large loads between major centers

From To Cost (LAK per ton)

Vientiane city Luang Prabang 262,500

Luangnamtha Sing 24,720

Phaoudom Paktha 22,500

Vientiane city Pakse 191,168

Pakse Salavan (Salavan) 53,560

Pakse Ta-Oy 157,500

Pakse Samouy 111,240

Samouy Ta-Oy 45,000

Pakse Sekong (Lamarm) 127,500

Lamarm Kaleum 63,750

Kaleum Ta-Oy 35,020

Pakse Dakcheung 195,000

Paksan Khamkeut 92,700

Paksan Vienthong 103,000

Paksan Xaychamphone 133,900

Savannakhet Xonnabuly 32,960

Savannakhet Ardsaphone 41,200

Savannakhet Nong 123,600

Attapeu Sekong 28,840

Phouvong Xaysathan 7,416

Sanamsay Saysetha 32,136 Minimum load 15 tons. Source: A national freight company

However, distributing from these above towns to smaller towns and villages, particularly those that are more remote or are in mountainous areas, significantly increases transport costs. Compared with 450 LAK per ton per kilometre for large loads on good roads, and 750 for worse roads and mountainous areas, reaching towns with smaller trucks can cost as much as 5,500 LAK per ton per kilometre (see Table 30 below).

5.5.1 Construction materials suppliers

Many (at least 68%20) construction materials suppliers have their own truck and deliver to their customers. This delivery is typically free within a certain range, and for a fee beyond that.

In the Northern region, transportation cost is normally included in the price if destination is within town and not far away (for example, within 15km), while 50,000 LAK to 100,000 LAK (US$6 to US$12) may be added to the order (one truck-load) if farther delivery is needed. Usually delivery, with or without additional cost, is provided only when materials are bought in larger quantities. For smaller orders, buyers collect materials themselves by tractor, motorbike, small truck, etc. A retailer in Phaoudom gives free transport for nearby customers and for a delivery of 16km charges 160,000 LAK (US$20). Another supplier said they would charge 300,000 LAK (US$37.50) for ten tonnes to be transported 15km.

The Central region is similar to the north: for short distances free delivery is provided, however an informal and negotiable cost of 100,000 LAK (US$12.50) may be added for a small truck delivering within the district but not very far away. However, long distances with poor road conditions can significantly add to costs. For

20 68% reported providing delivery. It is possible, though perhaps unlikely, that more than this have a truck (for collecting products from their upstream suppliers for example).

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example, delivery from Vienthong to Xaychamphone (75 km) in Borikhamxay province will cost 1 million LAK (US$125) for about 4–5 tons.

Suppliers in the Southern region did not mention specific transportation costs. Normally it is automatically incorporated in materials costs. Materials prices do tend to be higher in southern provinces (as discussed above).

Table 30: Examples of local transportation costs

Route Distance Price per ton per km (LAK)

Viengthong–Xaychamphone 75km 2,963

Phaoudom–surrounding area 15km 2,000

Houay Xai–Phaoudom – mid-size truck 70km 2,857

Houay Xai–Phaoudom – small truck 70km 5,571

5.5.2 Concrete products

Given their weight and bulk, transport costs can be particularly important for concrete products such as slabs and rings. Many concrete producers will provide delivery over a limited distance (e.g. 10 km) to the buyer’s site, included in the product price. For greater distances, the producer will negotiate the price according to volume and distance.

Despite their size and weight, and hence potential difficulty in transportation (and possibility of cracking or breaking on bad roads), concrete rings are made at the producer’s premises. Concrete producers state that rings are not made on-site at the customer’s location because of the cost and availability of moulds.

5.5.3 Masons

Nearly two-thirds of masons report that they charge a higher fee when they have to travel far for work. Many report charging an additional 20%; others report an additional 700,000 LAK for building a latrine not in their local area.

5.5.4 Costs of transporting latrines

A medium size truck can transport six to seven basic low-cost latrines (such as the PSI/WSP model), excluding superstructure. Smaller trucks (necessary to reach some areas) can transport three to four basic latrines.

To transport seven latrine cores to areas surrounding Phaoudom, for example, would cost 2,857 LAK per latrine per km. This equates to a 17.7% extra cost for delivering one 400,000 LAK latrine a distance of 25km (or 21% if six latrines are delivered per truck instead of seven). However, for areas only accessible by smaller trucks (carrying three or four latrines), the transport cost per latrine almost doubles to around 34%.

If superstructure is also included, transport costs per latrine are significantly higher (because fewer latrines can fit on one truck). Number of latrines per truck then depends on the size and materials of the superstructure. Assuming superstructure materials (such as bricks, door and zinc sheeting) take as much space as the latrine core, then the above transport costs double (but transport costs as a percentage of latrine cost do not double — in fact they decrease where the superstructure costs more than the core).

Hence flat-pack superstructure options can be attractive in that they involve lower unit transportation costs. However these might not appeal to consumers (Cambodia evidence?)

However, transporting prefabricated concrete products such as latrine slabs to remote areas can be difficult due to the possibility of breakage when the road quality is bad. Onsite casting is one option around

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this. Transporting all the components, as well as moulds, will still involve considerable cost, but it is likely total transport costs will be less.21

5.6 Affordability

“Affordability is a function of two main factors: (a) cost of the product relative to net income and (b) the perceived value of the product in the eyes of the consumer.” (IDE 2007). It is also a function of payment options (that is, the ability to pay in installments).

Combining together materials and labor costs, a commonly built latrine can cost US$780 (Table 31).

Table 31: Commonly-built latrine total costs (materials + labor)

Region – Province Materials cost

(LAK) Labor cost (LAK)

Total cost (LAK)

Total cost (US$)

Northern 2,512,720 3,783,333 6,296,053 787

Bokeo 2,394,768 2,150,000 4,544,768 568

Luangnamtha 2,630,673 5,416,667 8,047,340 1,006

Central 2,819,177 3,397,000 6,216,177 777

Borikhamxay 2,649,631 4,242,000 6,891,631 861

Savannakhet 2,988,722 2,552,000 5,540,722 693

Southern 3,033,852 3,242,611 6,276,463 785

Attapeu 2,882,181 3,460,000 6,342,181 793

Salavan 3,013,458 3,090,909 6,104,367 763

Sekong 3,205,917 3,176,923 6,382,840 798

Total sample 2,813,110 3,451,144 6,264,254 783

The above latrine costs are beyond the means of poor households. For households at the official rural poverty line22 — 180,000 LAK (US$22.50) per person per month (GoL 2012), which equates to 900,000 LAK (US$112.50) for the typical five-person household — the commonly-built latrine would cost at least three months’ income. Many target households are well below the poverty line: the WSP - Sanitation Consumer Behavior Study found that around 85% of poor rural households in the South have a monthly income of less than 500,000 LAK (US$63). Almost 70% of households in the Central region and 55% of households in the North have incomes under 500,000 LAK (Figure 14). Transport costs to many target areas make the latrine even more expensive. It is apparent that the ‘commonly built’ latrine is out of reach for everyone considered “poor”. It is hard to imagine people sparing over six month’s income for a latrine – perhaps even if payments were spread over time.

21 More data is required to estimate the number of latrines that could be made from inputs and moulds per truck delivery. 22 The number of households in each district below the official poverty line is shown in Table 2.

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Figure 14: Poor rural households’ stated monthly income, by region

Source: WSP - Sanitation Consumer Behavior Study.

Supply chain actors also view as standard a latrine model that is significantly over-designed. Superstructure and pit sizes are sometimes very large. Also some suggested latrines include bathing or other facilities (that is, a full bathroom). Expensive materials are also often used because suppliers are accustomed to serving higher-income clients. For example, two masons estimated that a door would cost 1,000,000 LAK (US$125) (one stated 700,000 for the door and 300,000 for the frame).

Although low-cost designs exist that are within many consumers’ willingness to pay (see below), these designs do not include a shelter. Shelters are important for consumers. According to the WSP - Sanitation Consumer Behavior Study, 83% of non-latrine owners would rather pay more for a solid superstructure (brick) than an inexpensive option (bamboo, palm or wood). Despite this preference, many poor households who own a latrine do build a shelter built from locally-available materials: in the Northern region, 69% of surveyed latrine-owning households had a shelter from bamboo, palm, thatch or similar (WSP – Sanitation Consumer Behavior Study).

From the WSP - Sanitation Consumer Behavior Study, more than 75% of poor rural households without a latrine who knew what one would cost and the days required to build, believed that it will cost at least 1 million LAK (US$125)23. Around 29% of households without a latrine are prepared to pay 200,001 to 700,000 LAK (US$25 to US$88) for a latrine, while 29% are willing to pay more than 700,000 LAK (Figure 15).

23 769 non-latrine owners surveyed.

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Figure 15: How much are you willing to pay for a latrine? (Rural poor, non-latrine owners)

Note: only rural poor households interviewed for this data. Source: WSP - Sanitation Consumer Behavior Study.

The mismatch between actors’ costs of for a commonly-built latrine and consumers’ willingness to pay is highlighted in Figure 16.

Figure 16: Comparing costs with consumer expectations and willingness to pay (LAK)

Note: Excludes labor and transport costs. SS = superstructure.Low-cost design with SS: assumes 635,000 LAK (US$80) superstructure. Consumer perceived cost: more than 75% of poor rural households without a latrine, who knew the amount one would cost and the days required to build, believed that it will cost at least 1 million LAK. Consumer willingness to pay: 40% of poor non-latrine owners are willing to pay at least 500,000 LAK.

6 The Consumer

A separate study examines consumer sanitation behaviour in detail, particularly for households in rural and remote poor villages. In this Section, some evidence from the supply chain actors regarding consumer demand is presented.

2,813,110

1,035,000 1,000,000 878,892

500,000 400,000

Actor's estimate- total

Low-cost designwith SS

Consumerperceived cost

Actor's estimate-core

Consumerwillingness to

pay

Low-cost design,no SS

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6.1 Market growth

The sanitation market appears to have grown over recent years. All focus groups reported that there has been an increase in latrine construction. Participants believe this has been driven by:

increasing incomes;

population growth;

more households emulating others;

migration to low lands, plus less forest for OD;

better roads;

improved health knowledge; and

government support.

Many, although not a majority, of supply chain actors report increased sales of latrine products. Around 44% of material suppliers are selling more latrine pans than 3 years ago (change in pan sales for the rest are not known). Many of these are in Xansay (Attapeu), Khamkeut and Viengthong (Borikhamxay), and Atsaphone (Savannakhet) – 14 of the 16 material suppliers interviewed in these districts reported increased pan sales. Ten suppliers in Sing and Long (Luangnamtha) and Phaoudom and Meung (Bokeo) report increased pan sales. Furthermore, about 12% are selling pans at a slightly higher (average 4%) price.24

Similarly, 40% of concrete producers report selling more concrete rings than they were 3 years ago. Most of these are in Sing (Luangnamtha), Khamkeut (Borikhamxay), and Xonnabuly, Atsaphone and Nong (Savannakhet). More than one-quarter are charging slightly higher prices (around 5%) than 1 year ago.

One-third of masons report that they are building more latrines now than 3 years ago. These are mostly in Long, Samoi, Sanxay, Khamkeut, Nong, and Vienthong. Around 45% of masons are charging higher fees than a year ago (typically 10% higher, but some are charging 20% or 30% more)25.

6.2 Actors’ views of consumers

As discussed above, most actors in the supply chain regard a relatively expensive model as the typical latrine. Hence the consumers they are most accustomed to dealing with are unlikely to be poor.

Masons appear to be better informed than material suppliers and concrete producers about end consumers’ latrine requirements. This is consistent with their position in the chain. However, nearly all material suppliers report that they have at least some sales direct to households. Despite this, material suppliers often are ignorant of latrine options and consumers’ tastes (although 29% report that customers seek their advice on required materials).

Masons typically report that 60% to 70% of the latrines they build are part of the construction of a new house (hence the consumer they are used to dealing with is reasonably affluent). Around half of masons state that they advise households on latrine options. Similarly, 43% of material suppliers believe that households are advised by masons on their purchase. But many masons (87%) believe their customers are already knowledgeable about different latrine options available.26

Masons believe that cost and accessibility of materials are the most important factors determining household decisions of latrine type and design. Material suppliers and concrete producers think access to materials is a less important factor, but this might be because they are more likely to be in central towns where materials are more accessible. Some masons interviewed were in districts with few or no material suppliers (such as Xaychamphone and Ta-Oy).

24 Some reported a particular percentage price increase for all items sold, not specifically pans. 25 As noted above, average labor costs in Lao PDR increased by around 65% between 2009 and 2012 (World Bank 2013b). 26 It is not known if more affluent consumers are more knowledgeable about latrines.

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Supply chain actors believe that health is the most important reason why households build a latrine (75% of material suppliers, 76% of concrete producers and 77% of mason cite this as one of the main reasons households obtain a latrine). Actors also said that convenience/comfort is a factor (69% of material suppliers, 81% of concrete producers and 73% of masons). This is the opposite of poor households’ views, with over 85% of households stating that convenience and comfort are the main benefits of owning a latrine and around 45% of latrine owners stating that health/hygiene was a benefit (WSP - Sanitation Consumer Behavior Study).

For a number of masons, around 30% of the latrines they build are for a Government or NGO project. One mason reported that 70% of the latrines he builds are for such projects.27 The role of Government and NGO programs in the supply chain is discussed in detail in Section 8.

7 Market structure, environment and reach

7.1 Competition and margins

Overall, there appears to be reasonable competition through the supply chain in most areas. That is, concentrated market power is likely not pushing up the price of latrines.

7.1.1 Competition between actors

The extent of market competition in the supply chain varies from district to district. More remote and poorer areas might have only one construction material supplier — sometimes because the size of the market can support only one. In Borikhamxay for example, Khamkeut district has over 20 material suppliers but Xaychamphone has only one. However, in a number of border districts there is competition from material suppliers in Thailand and Viet Nam. Individual customers will buy directly from Thailand or Viet Nam rather than the local supplier. Hence the extent of competition is determined not only by the number of local suppliers.

Overall, there appears to be more competition among material suppliers than concrete producers and masons (Figure 17). One-third of material suppliers reported facing no competition, compared with more than half of concrete producers and masons.

Figure 17: Proportion of actors reporting no competitors in latrine products/services

Two construction material suppliers in Phaoudom stated that they have an agreement with competitors (presumably each other). They say that they have agreed to sell products at the same price. This is consistent with that found by Willets (2013), where a supplier in Phaoudom stated that “[T]hese three to four shops… we all know each other… and sell at the same price. We have a close relationship”. However, there is not strong evidence that this agreement is significantly affecting prices: the margin on latrine pans,

27 Note that this could be affected by selection bias. That is, local Nam Saat officials sometimes helped research teams to locate potential interviewees, and officials are more likely to know actors who have been involved in programs.

33.8%

59.5% 52.1%

Material suppliers Concrete producers Masons

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for example, in Phaoudom (24%) is slightly lower than in Meung and Long districts.28 Margins are discussed in more detail below.

Another two material suppliers (one in Meung and one in Xonnabuly) have a close relationship with another material supplier (in Meung the competitor is owned by relatives).

Many material suppliers are aware of the prices charged by their competitors (and these prices are typically the same). Nine material suppliers of the 45 who do face competition did not think it was a concern.

Around 27% of concrete producers stated that they knew the prices of their competitors. Many locations have only one concrete producer (such as Samoi in Salavan province and Kaleum and Dakcheung in Sekong province). Xaychamphone has no concrete producers, but obtains concrete products from adjacent districts. It is not unusual for a town to have more material suppliers than concrete producers.

Those masons who have competitors on average report having about 10 competitors. However, some have only 2 or 3 (in Lamarm, Sekong for example), while others report as many as 20 (Houay Xai, Salavan, Kamkhert, Nong, Atsaphone, Xonnabuly, Xaychamphone). Some areas appear to have a number of Vietnamese masons. Masons in Lamarm, for example, reported competition with labor from Vietnam.29 However, many rural villages have no masons. The WSP - Sanitation Consumer Behavior Study found that 46% of non-latrine owners said their village has skilled masons who can build a latrine30. Some masons may travel far to build a latrine (typically 30–40km, but often much further). They are accustomed to living in the location in which they are working for the duration of the construction project.31

“Masons are not well organized and acted as freelance then competed between themselves in terms of price and labor cost.” – FGD in Sekong

7.1.2 Competition among upstream suppliers

Actors were asked about competition among their upstream suppliers. Only 19% of material suppliers and 17% of concrete producers state that their upstream suppliers compete with each other. Similarly, 15% to 21% of material suppliers report multiple upstream sources for a number of their products (Figure 18). However, this might reflect the importance of established relationships with upstream suppliers rather than a lack of competition per se.32 As discussed above, a number of districts have multiple sources of materials (from within Lao plus Thailand, Viet Nam and China). For example, Ta-Oy district in Salavan obtains cement from Salavan and from Viet Nam.

Construction material suppliers

Thirteen building material suppliers (21% of those answering the question) reported having two or more suppliers of latrine pans.33 These are in the districts of Houay Xai (Bokeo), Long (Luangnamtha), Salavan (Salavan), Lamarm (Sekong), Sanamxay (Attapeu), Khamkeut, Vienthong and Adsaphone (Borikhamxay), and Nong (Savannakhet).

It tends to be the same shops that have multiple suppliers for various products. That is, if a shop has two or three suppliers for pans, they are also likely to have multiple suppliers for cement or PVC pipes (and in many cases it will be the same suppliers).

28 Customers in Phaoudom do have the option of buying directly from Thailand. 29 Reported during focus group discussion. SNV confirms that Vietnamese masons are often cheaper than local masons. 30 The extent to which the supply chain reaches the rural poor is discussed separately below. 31 The client usually provides food and shelter, except for NGO sanitation projects (hence masons charge a higher fee for NGO project work). 32 84% of material suppliers have a regular supplier for many or all of their products. 33 They were asked about their main or key suppliers. Many stores may have multiple potential suppliers but only buy from one.

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Figure 18: Construction material shops reporting more than one main upstream supplier (n=68)

New Thai suppliers try to build relationships with Houay Xai wholesalers, marketing their products and services (but not sanitation products). Hence there appears to be at least a reasonable level of competition at the top of the Lao supply chain. One large Houay Xai wholesaler said that Thai companies would invite them to attend promotions in Thailand.

Concrete producers

Six concrete producers (17%) say that their suppliers compete with each other to win their business. These are in Sing, Khamkeut, Xonnabuly, Atsaphone, Salavan. Most concrete producers report multiple suppliers of cement (an average of 3.3 cement suppliers), but significantly fewer suppliers of sand and gravel (1.3 and 1.4). Two concrete producers in Vienthong said there was only one potential supplier of cement (but a third producer there said there were three). The concrete producer interviewed in Kaleum said that he had only one potential supply of cement. Producers in Lamarm and Sanamxay reported 4 or more potential cement suppliers. Only Nong and Salavan districts appear to have multiple potential sources of sand and gravel (although producers in some districts did not answer this question).34 Very few producers reported the number of potential suppliers of moulds (three said there was 1 supplier and one said there are 2 suppliers).

Masons

Masons typically do not purchase materials for the construction of latrines (their customers do): 91.5% of masons say that their customers provide all of the materials for building a latrine. Only 4 masons (5.6%) stated that they supplied all the materials (two in Bokeo, one in Sekong and one in Borikhamxay).

However, half of masons did report that building material suppliers offer them incentives; typically discounts but sometimes credit. Thirty-four masons (nearly 48%) state that they regularly buy from certain suppliers. A similar percentage (45%) has been found for concrete producers from which masons regularly purchase what they need. Four masons (12% of the 34) stated that this was because there was only one shop to buy from.

The overwhelming majority reported being familiar with the shop owner (or in some cases related to them), receiving discounts, or getting delivery (particularly for concrete products) as the reason for using a certain supplier or a certain concrete producers.

34 They may not necessarily be located in these districts, but are supplying to them.

21% 18% 17% 16% 15% 15%

20%

Pans Sand Cement Steel PVC Pipe Zinc Sheet Bricks

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Table 32: Relationship between masons and other supply chain actors (% of total)

Region – Province

Do you regularly go to certain concrete producers over others to purchase the

materials you need?

Do you regularly go to certain retailers over others to purchase the materials you

need?

No Yes No Yes

Northern 73% 27% 82% 18%

Bokeo 86% 14% 86% 14% Luangnamtha 50% 50% 75% 25%

Central 27% 73% 19% 81% Borikhamxay 36% 64% 9% 91% Savannakhet 20% 80% 27% 73%

Southern 71% 29% 68% 32%

Attapeu 60% 40% 60% 40% Salavan 91% 9% 82% 18% Sekong 62% 38% 62% 38%

Total sample 55% 45% 52% 48%

7.1.3 Margins

Margins are higher on some products and in some areas than others (Table 332). Margins on pans, cement and steel are higher in the South. This could imply lower levels of competition there: Sekong and Attapeu do have fewer material suppliers than Salavan and have higher margins for most products.35 However, in the Central region Borikhamxay has more material suppliers than Savannakhet yet higher margins for a number of products.

Differences in margins might be explained not by the extent of competition, but by other market factors. They could reflect the cost of stores having to carry slow-moving products for longer. Furthermore, margins often incorporate transportation costs, in two ways:

Many suppliers offer free delivery within a certain radius, such as 15km (transport fees are discussed above); and

Some shops use their own transport to get goods from their upstream supplier, and this cost has to be recouped. Shops that instead receive delivery from their supplier will have the cost of this included in the wholesale price they pay (resulting in a higher wholesale cost and lower margin for a given sales price).

Table 33: Suppliers’ gross margins on selected materials (n=68)

Region – Province

Pan Cement Steel Zinc

Thai pan Lao green Lao red From China

from Thailand

Northern 20% 16% 9% 19% 32% 3% 39% Bokeo 22% 17% 12% 30% 3% 45% Luangnamtha 19% 3% 19% 7% 21%

Central 16% 10% 9% 14% 8% Borikhamxay 31% 19% 13% 14% Savannakhet 5% 5% 11% 14% 4%

Southern 24% 24% 25% 18% 14% Attapeu 12% 28% 19% 11% 16% Salavan 49% 4% 9% 26% 4% Sekong 19% 33% 40% 26% 19%

35 The high margin on pans in Salavan appears incongruous.

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“We buy products from Vietnam because it is cheaper than from Vientiane, and can sell at the same price.”

– FGD in Borikhamxay

Zinc sheeting margins are notably highest in Bokeo, and some other products there have higher margins than in Luangnamtha. Bokeo’s higher margins are in part a result of higher margins in the district of Phaoudom (24% for pans and cement). It is not clear that this derives from the pricing agreement between two material suppliers noted earlier (two other retailers were also interviewed in the district, who are not party to the agreement, and households there can, and do, source directly from Thailand).

Furthermore, as discussed above, in some districts two or more shops might be owned by members of the same family or close relatives. Hence the presence of multiple suppliers is not always a guarantee of competition and there may be some collusion. However, many material suppliers also face some competition from businesses not in their district, with customers prepared to travel (in some cases to Thailand or Viet Nam) to acquire materials.

In general the margins in Table 33 are not unreasonable given the high costs of distribution in rural areas. Gross margins of 25% to 35% are not unusual for products successfully reaching the bottom of the pyramid (Hystra 2013).36

In the focus groups, some supply chain actors indicated that margins for latrine products and services are less than their other activities. Statements such as “The selling of products for latrine is not good business if compare with another” and “It's good business but if we compare with other products it's not good benefit” suggest that latrines might have to be even more profitable for actors to increase their focus on them.

7.2 Seasonal supply and demand

For most actors, their business faces some seasonality, but there is a key difference:

81% of material suppliers and 66% of masons state they are busier in dry season; yet

73% of concrete producers report being busier in wet season.

For many areas, road conditions in wet season are such that materials are not available. Furthermore, more construction is possible when it is not raining. Hence seasonality can be a supply issue. However, demand also plays a part: many rural households might have more income in dry season (that is, post-harvest) and hence there is more demand for construction materials and services. On the other hand, in some areas open defecation might be less possible in wet season – for example, because usual defecation locations are flooded –resulting in greater demand for latrines (but latrines are not a major part of most actors’ business).

It is to be expected that businesses would be busier in dry season. The finding that concrete producers are busier instead in wet season is therefore curious. Perhaps they experience stronger demand for other products during this time, such as for rainwater storage. Some other studies have also found that wet season can be a busier time for the supply chain (EMC 2009, for example).

The implications of this finding are discussed in the Findings section below.

7.3 Reaching the rural poor

The sanitation supply chain in Lao PDR often does not serve the rural poor. In part this is because of the high cost of latrines (see above). However, it is also the case that many areas simply do not have access to the necessary materials and services. This section discusses the availability of materials and services, the willingness of actors to sell lower-cost latrines, and the geographic reach of the supply chain.

36 Hystra notes that “These gross margins are quite high when compared with ‘rich world’ benchmarks”.

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7.3.1 Material and mason availability

Many construction material suppliers reported that certain materials often were not available, particularly in the rainy season. Nearly 43% reported problems with material availability, including cement, steel, and zinc sheeting. This appears to particularly be a problem in the districts of Sing, Long, Meung, Salavan, Ta-Oy, Kaleum, Sanamsay and Khamkeut. One supplier (in Sanamsay, Attapeu) reported that they sometimes have to wait about one month for cement, when road conditions are bad.

Around 20 masons (30%) state that some materials are not readily available. These masons are in Salavan, Dakcheung, Phouvong, Vienthong, Atsaphone, Xonnabuly, and Xaychamphone. The materials that are often not readily available are sand and gravel, but also cement and steel. Generally, pans do seem to be available in most districts. However, masons in Xaychamphone believe that it might be necessary to source other materials (such as cement, PVC pipe and concrete rings) from up to 150km away. One mason in Long mentioned that no one locally makes concrete rings.

The WSP - Sanitation Consumer Behavior Study asked villagers in poor rural areas about the local availability of masons to build latrines. Surprisingly, villagers in the South were more likely to report that a skilled mason was available (Table 34). This could be because villagers in the South use a lower skill threshold (that is, more masons might qualify as “skilled” in villagers’ minds and hence they would be more likely to answer ‘yes’ to this question). This is supported by the fact that 74% of latrine-owning households in the South stated that it is difficult to find masons in their village to repair latrines, compared with 43% in the North and 36% in the Center (WSP - Sanitation Consumer Behavior Study).

Borikhamxay has the highest level of reported skilled mason availability. Around one-third of villagers in all other provinces believe their village has a skilled mason who can build a latrine.37

Table 34: Availability of skilled and knowledgeable masons in poor rural villages

Region – Province

There are skilled masons in our village who know how to build improved latrines including underground parts

Yes No Don’t Know

Northern 33.8% 35.2% 31.1%

Bokeo 34.1% 24.7% 41.2% Luangnamtha 33.7% 39.4% 26.9%

Central 42.3% 53.1% 4.6%

Borikhamxay 85.0% 10.0% 5.0% Savannakhet 38.4% 57.1% 4.6%

Southern 58.2% 21.3% 20.6%

Attapeu 47.0% 20.5% 32.5% Salavan 63.9% 19.7% 16.4% Sekong 61.0% 24.4% 14.6%

Total sample 44.8% 35.5% 19.7% Note: only rural poor households interviewed for this data. Districts are not the same as the supply chain sample. Source: WSP - Sanitation Consumer Behavior Study

7.3.2 Preparedness to sell to poor and remote communities

Fifty-six materials suppliers (82%) said they would be prepared to sell more latrine products for a lower margin if volumes were a lot higher.38 However, Hystra (2012) found that “marketing innovative products to the BoP [bottom of the pyramid] must be a high gross margin business if it is to ever be sustainable. Volume will not compensate for low margins, given the geographic dispersion of the market and the required village level marketing efforts.”

37 These answers may also reflect a lack of villager knowledge about what services their mason can offer. 38 They were asked this specifically. Note that they may have thought they were being considered as a supplier to a sanitation project, and so answered affirmatively.

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Ten suppliers (16% of those answering) said that they would not be prepared to sell to remote or poor communities. Mainly they viewed this as just not possible, due to road conditions. All the others were prepared to sell to remote and poor villages, some only provided that it was profitable.

Similarly, 13% of concrete producers interviewed said that would not be prepared to sell to remote or poor communities. A number of those that said they would supply these communities stated they would do so only if they were paid for the cost of delivery or if the customer arranged their own delivery.

Nearly two-thirds of masons report that they charge a higher fee when they have to travel far for work. Many report charging an additional 20%; others report an additional 700,000 LAK (US$87, about 25% extra on typical labor costs) for building a latrine not in their local area.

7.3.3 The reach of the chain

The WSP - Sanitation Consumer Behavior Study found that among the latrine owners who purchased sanitary hardware (e.g. a ceramic pan) for latrine construction, 76% traveled to other towns in the same district and 11% traveled to other districts to purchase the products. On average, latrine owners traveled two hours (including the return trip) to go to nearby markets outside of their village to purchase latrine construction materials. Travel costs largely depend on their distance from the city, and the availability and choice of transport mode.

“Our village is very far from the construction shop, and we have no transportation to go there to get the materials” (Villager in Vienthong district).

The field research was limited to areas where the supply chain exists. That is, we generally did not go into areas where the supply chain is absent because, obviously, there would be no actors to interview there. However, we did ask actors about their geographic reach (how far away they had customers and areas they were able to serve). For southern provinces we asked suppliers if they had, or were able to, sell to some specific poor villages (villages in those districts surveyed by the WSP - Sanitation Consumer Behavior Study).

In some areas there we simply fewer actors to interview, such as Dakcheung and Ta-Oy. Not surprisingly, these districts also have low rates of improved sanitation coverage.

Luangnamtha

Some building materials suppliers in Sing district claim that they sell to all villages in the district. Another, in Singajalern, states that most of his customers are nearby but estimates that his furthest customer is 45km away. Four of the five suppliers interviewed in Sing report having customers in Long district.

In Long district, material suppliers state that they supply to Xiengkok, Sompan,Phonsamphanh, Jalernxay, That, Chomjaeng, Donyaaeng, Luangphakham, Poungxai, Xiengkok-old, and Sala villages.

Bokeo

In Houay Xai, materials suppliers sell not only around the district but also to Mueng. One reports having customers as far away as Luangnamtha, Oudomxay and Luang Prabang.

Suppliers in Phaoudom report selling to the following villages: Viengkhamyai, Kenkham , Homsouk, Mokso, Hokso, Viengkham, Houaykhoun, Houaysang, Xayoudom, Homsouk, Viengphattana, Somsavang, Phonlard, Pounglard, Phaoudom, and Thinkeo. Two suppliers in Phaoudom report that their furthest customers are in Mokkho village, 70km away and another sells to Hukhom village about 40km away.

The two suppliers in Meung district sell to locally and also to Nummeung, Phonsavang, Huaythad, Huaynumkha, Phonsavang, Phangam, and Houay Yo, Their furthest customers are 15km away, in Xiengdao and Huaynumkha.

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Salavan

In Samoi district, suppliers report that they have supplied A-ho and Meo villages. Thedsaban can be supplied year-round, but A-ho and Meo can only be supplied in the dry season.

In Ta-Oy, the villages of Pajoudon, Pi ko, Thong Sa, Ka Ten, and Sabongkok hai have been supplied and are accessible all year. Ta Poun Phu and Houn Yai have not been supplied by those interviewed, but could be in dry season only.

Sekong

In Kaluem district, Keangkui and Keangkien villages have been supplied by those interviewed, but Songkhone and Tangpa cannot be supplied.

Dakcheung district is 100km from Sekong. It is not accessible from June to October. Suppliers there have sold to the following villages: Tangbrong, Xiengloaung or Liengloaung, Nonsavanh, Darkta Ork Yai, Xiengmai, and Darktring; all in dry season only except Tangbrong.

Attapeu

In Sanxay district, suppliers have provided materials to Dark Hied, Moon, Dak Mor/ Vang Say, Dak Bang, and Som Boon in dry season. They say that most materials for all of these villages are delivered from Saysettha district.

Material suppliers in Puovong district have sold to Vonglakhone and Vongvilaytai villages.

7.4 Business relationships

7.4.1 Business network/relationships

Nearly 84% of building material suppliers stated that they have a regular supplier for their products. Most of these stated the reason as being the relationship they have with the supplier. Many also said it was because the supplier provides credit. Only 26% said it was because they offered discounts for bulk purchases. Many materials shops interviewed purchase the bulk of their stock range from a single supplier (although cement, sand and steel will often be provided by other, specialist, suppliers). However, a number of shops have different suppliers for different products, even buying pans and PVC pipe, for example, from different suppliers.

Despite more potential suppliers for cement than other inputs, nearly 87% of concrete producers stated having a regular supplier for cement. All but one of these stated that the reason was their relationship with the supplier. About half also say they buy from this supplier because they offer credit. One-fifth reported receiving discounts for bulk purchases. Interestingly, none stated that they bought from this supplier because they were cheaper.

Although masons don’t always buy the construction materials themselves, they do have relationships with material suppliers and concrete producers. Nearly half of masons interviewed (48%) said they regularly buy from a particular material supplier. The rate was particularly high in the Central provinces (81%) than the North (18%) and the South (32%). The main reasons given for buying from the supplier is that they can get a discount or simply that they know the supplier (sometimes they are related). Some said that they had “no other choice”.

7.4.2 Trade credit

The use of credit is quite common in the supply chain, although the terms are limited. Typically credit is only available for larger orders, and it is not offered to all customers.

Nearly 81% of material suppliers provide credit to their customers, and 93% receive credit from their upstream suppliers. In both cases it is typically interest-free, with repayment due in 1 to 4 weeks.

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Over 60% of concrete producers give credit to their customers, and 89% receive credit from their suppliers. Again, it is usually interest-free, they offer their customers from 1 week to up to 6 months to pay. Their suppliers typically require payment in 7 to 90 days.

Nearly half (47%) of masons provide credit to their customers, and 58% report receiving credit from material suppliers (though they typically do not buy latrine materials themselves). Both are interest-free, up to 90 days.

Figure 19: Percent of actors offering credit (delayed payment) to customers

Some actors complain about customers not paying for their products and services (discussed more in Section 10).

7.5 Marketing and sales promotion

Almost all construction material suppliers and concrete producers interviewed have a passive sales approach. The research team could not find any proactive identification and development of potential customers.

Especially in the provincial capital cities, some retailers carry thick, glossy color brochures, including for bathroom products, from Thai suppliers, that are available for customers to peruse. However these brochures target high-end consumers, not the rural poor.39 Besides this, there is no specific marketing activity to promote the materials. Thai suppliers of building materials are more proactive, traveling every year to their major Lao customers to promote their products.

Lao PDR supply chain actors do very little marketing of their businesses, relying almost solely on word of mouth.40 There are some signs displayed at their premises, provided by manufacturers of materials, but very little or none for sanitation products. Especially in rural districts, where there are very few shops, no specific marketing strategy is provided because there is no necessity to promote products there.

Most suppliers verbally introduce and explain the price, quality and appearance of items to the buyer in the shop. However, there is not much introduction on other materials such as PVC pipe, cement, zinc, steel, etc. as they are commonly well known by the buyers. Marketing is based primarily on word of mouth as well as referral from previous customers.

39 These brochures include a form of private sector sanitation behavior change marketing, with advertisements promoting the hygiene benefits of their products. 40 One exception is Lao Cement, which produces brochures.

81%

60%

47%

Material suppliers Concrete producers Masons

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One construction material supplier promotes itself with t-shirts

“Enterprises make very little effort to market sanitation solutions or to improve coordination, exert quality control, or reduce costs within the supply chain. Actors that have the resources to address this challenge do not see sanitation as an important part of their market, and the enterprises closest to the market are very small and constrained in geographic reach. Few of these enterprises specialize in sanitation services, and they find it hard to signal any unique quality of service outside of the immediate vicinity where reputation is attested to by word of mouth” (WSP 2014).

Business owners did state that thanks to promotion of sanitation programs, more and more communities are becoming more aware of sanitation. An indirect promotion of latrine related materials is achieved through the spread of sanitation programs by government officials, DPs such as WSP, UNICEF, Plan International, SNV, Oxfam and others that aim to increase the awareness in the local community of sanitation and hygiene.

Overall, 10% of construction material suppliers have now or had in the past a marketing plan. The percentage is higher for concrete producers where 27% of the businesses surveyed reply positively. These percentages vary significantly from region to region, with marketing plans more prevalent in the Central region than the rest of the country (32% for construction material suppliers and 42% for concrete producers). Suppliers in the South did not report any marketing related activities.

Table 35: Business or Marketing Plan – Positive Respondents (% of total) (n=68 and 37)

Region – Province Do you have/have you ever done any of these types of plans?

Construction material suppliers Concrete producers

Business Plan Marketing Plan Business Plan Marketing Plan

Northern 70.0% 5% 50% 17% Bokeo 90.9% 9% 50% 25% Luangnamtha 44.4% 0% 50% 0%

Central 57.9% 32% 67% 42%

Borikhamxay 66.7% 22% 60% 20% Savannakhet 50.0% 40% 71% 57%

Southern 10.3% 0% 26% 21%

Attapeu 8.3% 0% 33% 33% Salavan 10.0% 0% 33% 33% Sekong 14.3% 0% 14% 0%

Total sample 41.2% 10% 43% 27%

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Examples of marketing initiatives for concrete producers include: a closer collaboration with masons, making T-shirts and giving them to customers as gift, distributing brochures in other villages especially at the marketplace.

Construction material suppliers’ initiatives include opening branches in remote area as well as focusing on development projects (targeting NGOs and governments).

A bigger percentage of respondents in both the categories have or had a business plan (mostly meaning plan to expand the shop or to sell more products): 41% of construction materials suppliers and 43% of concrete producers. Again, there is a huge variance in the three different regions, where Northern (70% for suppliers and 50% of concrete producers) and Central (58% and 67%) businesses are more likely to have expansion plan than the Southern ones (10% and 26% respectively).

Construction materials suppliers mostly want to expand their shops and/or products offerings. Two even said they wanted to expand into concrete producing. Concrete producers plan to expand production (more rings, more product types), and two said they would like to also sell construction materials.

7.5.1 Sales agents

Three material suppliers (less than 5%) reported that they used sales agents. No concrete producers reported using sales agents or paying others a commission. This low prevalence of sales agents and paying a commission is not surprising given the passive nature of the businesses. Upstream, Lao Cement has sales agents in major provinces.

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8 Government and Development Partners are part of the chain

As illustrated in the diagrams in Section 8, Government and NGO programs form part of the sanitation supply chain. Government and NGOs may account for 12% or more of the sales of some construction material suppliers (though these programs may not all be sanitation-related). They act as an intermediary between private suppliers of products and services and the end consumer.

8.1 Actors working with Government and Development Partners

Nearly 30% of construction material suppliers said that they had been involved in a Government or Development Partner (DP) sanitation or water program in the last two years (Figure 20). They cited Plan International, ADB, GTZ, Care, Norwegian Church Aid, World Vision, SNV and district health offices amongst the organisations they had worked for. They reported that they supplied a variety of materials to these projects. Some said they supplied everything required for a latrine, others only supplied a combination of pans, cement zinc sheeting, and PVC piping. Some supplied pans only (one supplied 30 pans, another 50 pans). These suppliers are in five of the seven provinces studied: Luangnamtha, Bokeo, Sekong, Borikhamxay, and Savannakhet.

Similarly, nearly a third of concrete producers have supplied rings and/or slabs and other products to Government or DP programs. They have supplied Plan International (Bokeo), Red Cross (Borikhamxay and Sekong), SNV (Savannakhet), World Vision (Savannakhet), and Care (Sekong).

Around 27% of masons reported working for Government or DP projects41. For these masons, such projects usually accounted for 10% to 30% of their work. These masons are in Luangnamtha, Bokeo, Salavan, Sekong, Attapeu, Borikhamxay and Savannakhet.42 Typically though, masons do most of their work for households. Half of masons reported that all of their work is for households, and a further 14% reported that at least 80% of their work is for households. However, some of those that do work for programs obtain a significant proportion of their workload from them. One mason reported that 80% of his work is for Government and 20% for NGOs. Another reported that 10% of his work is for UNICEF, 70% for Lao Red Cross and the rest for households.43

Figure 20: Percent that have worked for Government or Development Partner project

In addition to the above data, research teams often had difficulty obtaining interviews with suppliers — some suppliers reported being regularly bothered with questions from NGOs. At least two material suppliers refused outright to be interviewed on these grounds.

When interviewing wholesalers and retailers, the team was often told that “if the project requires other materials, we can import them”. It is though they think the research team is interviewing them as

41 Some more masons also reported doing work for government departments but it was not clear if these were sanitation projects. If these were sanitation projects, the percentage increases to 34%. 42 Although the work may not have taken place in these provinces. 43 Data in this section could involve some selection bias. Government officials helped teams locate interviewees, and officials are more likely to be familiar with actors who have been involved in projects.

29% 32% 27%

Material suppliers Concrete producers Masons

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prospective suppliers to a NGO program.44 Some were very eager to assure the team of the quality of their products, noting that none of it was made in China or if it was that it was good quality.

Similarly, when asking local government officials about the cost of a latrine, they answer in terms of cost “to the project” or the amount of subsidy offered by the program. It is almost as though Nam Saat officers see themselves as suppliers of sanitation products and services. Discussions with some officials give the impression that no one in rural areas obtains a latrine outside of a program.45

Some NGO staff has detailed data on latrine costs and contact and other information on potential suppliers. This is because the programs they work for are a part of the supply chain. They are not the end user of the product, but sit between the private sector and the end consumer (potentially blunting or restricting demand signals from consumers to suppliers if they buy materials directly themselves).

It is not clear the extent to which the supply chain has already been affected by such programs. For example, would there be fewer supply chain actors in the absence of programs (unlikely, since for most sanitation is a small part of their overall business), or less knowledge of latrine components and their construction.

8.2 Subsidized provision of latrines

Despite the prevalence of these projects, in Lao PDR “Only 18 percent of household latrine construction in 2008/09 was subsidized, with the vast majority funded from households’ own resources” (WSP 2012a). Similarly, the WSP - Sanitation Consumer Behavior Study found that 24% of latrine owners received their latrine for free.

Table 28: Household expenditure on latrine construction, 2008-09

Source: WSP 2012a.

All latrine subsidies are funded by donors. Government spending on sanitation accounts for 12.5% of the total (Figure 21), but is “spent entirely on salaries and administration” (WSP 2012a).

44 It is not clear to what extent – and in what direction – this belief may have biased their answers. 45 Whereas people in urban areas get a latrine when they build a house.

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Figure 21: Estimated sanitation and hygiene financing, 2008-09

Notes: “Software” includes personnel, administration, communications, logistics etc. Private sector (value unknown est. at 1.7%). Total value = 49.7 billion LAK (US$5.9 million). Source: WSP 2012a.

Subsidies create distortions, for both consumers and also private sector suppliers. For the demand side, “the incubation of village dependency on outside organizations to assist them with a task that most villagers can do themselves.” (Plan International 2011). WSP (2013) found that the “main reason for households having a toilet was that they were provided or supported by projects”46 and that “Respondents in all sites cited ‘never offered a toilet’ as a reason for not having one.” So despite some consumer recognition of the benefits of sanitation, many Lao PDR households decide to wait for an NGO or the government to provide a toilet rather than invest in one themselves.47

“Subsidized latrine programs in social marketing target areas may undermine willingness to pay for latrines, as beneficiaries wait for a subsidy based intervention. Also the limited technology promoted may undermine attempts to alter the consumer perception of latrines, if the technology promoted is expensive. On the other hand, a large latrine supply program may offer the opportunity to innovate in technology and delivery mechanisms." IDE August 2007

In terms of the supply side, subsidies can provide a good source of revenue for businesses, and may make them more familiar with sanitation products than they otherwise would be. However, businesses are also less likely to think of the end user as the consumer of the product because many programs sit between them and the end user. Businesses in the sanitation supply chain hence may be insulated from private demand. They might also be less likely to engage in marketing (although most do very little marketing of any of their products anyway — see Section 7).

46 Yet WSP (2012a) states that only 18% of latrines were provided by subsidy. 47. Also, they might not be able to afford one – or believe they cannot afford one.

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A Plan International (2011) survey of 11 villages in Bokeo found that seven of the villages had “received toilet subsidies at some point in their recent past” (that is, at some time over the previous 5-6 years).48 WSP noted that a program with a subsidy:

is expensive to scale up;

creates community expectations of external support, reducing the motivation of householders to build latrines at their own expense; and

makes it very difficult for private masons and suppliers to generate business since their products are not subsidized. (WSP 2012a)

9 Finance

Access to finance is reported as a problem by some actors in the supply chain. Slightly more than 28% of material suppliers, 38% of concrete producers, and 19% of masons stated that access to finance was a constraint. Although these are not a majority of the sample, more actors report access to finance as a constraint than other factors. (Another finance problem is customers not paying. Constraints are discussed further in Section 10 below.)

It is quite common for small businesses, regardless of industry and country, to cite access to finance as a constraint. In 2011, 20% of all Lao companies reported access to finance as a primary constraint (World Bank 2011), and 57% of micro businesses and 45% of small businesses said that lack of capital is a “big” or “very big” constraint (GIZ 2012).49 Similarly, in Bangladesh in 2011 and in India in 2010, 28% and 35% of businesses, respectively, reported access to finance as a constraint (World Bank 2013a). Even in developed economies, such as the EU and the United States, small businesses report access to finance as a constraint (see, for example, O’Toole et. al. 2014).

“SMEs complain more about access to finance – a finding that is consistent with many other studies. However ... finance is different from the other constraints; bigger complaints by SMEs could reflect a financial system that is poorly equipped for evaluating the projects of small firms, or the existence of a well-functioning financial system that requires collateral and a track record before lending.” (Carlin et. al. 2006).

The higher percentage for concrete producers is interesting. It may reflect the necessary capital expenditure required by this type of work (moulds and tools, etc), or it could be that either their informality, lack of collateral, or insufficient regular income prevents them from accessing credit, compared with material suppliers. Indeed, fewer concrete producers interviewed have or have had a bank loan than material suppliers.

Around 50% of material suppliers interviewed have or have had a bank or MFI loan. The interest rate is usually around 13% (ranging from 6% to 15%) and the term is 1 or 3 years. About 22% of concrete producers interviewed have or have had a bank loan. The Interest rate is usually 14% and the term is 1 year. More material suppliers and concrete producers have a loan than the national average of 19% (World Bank 2011).

Masons do not access formal credit, perhaps because they have less need of it less but also because they are almost always unregistered, and also cannot provide collateral. If masons borrow, it is most likely to be from informal money lenders.

Interviews with financial institutions in the districts showed that they do provide some funds to businesses involved in the sanitation supply chain. However the percentage of branches lending to these businesses (retailers, concrete producers) is low (Table 36). The organizations that had lent to these supply chain

48. Those villages with subsidized toilets had an average 69% toilet coverage (range from 38% to 100%), but 17% of these toilets were broken and/or not currently being used (in one village 61% of toilets were not being used, because of insufficient water supply) (Plan International 2011). 49 Micro businesses defined here as having 1 or 2 staff and small businesses as having 3 to 19 staff.

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actors were Nayobay Bank, Lao Development Bank, Agriculture Promotion Bank as well as Xayniyom MFI (which had lent to a mason).

In addition, three branches stated that they had lent to households in order to build a latrine (this may have been as part of a home loan or home improvement loan). These were all Nayobay Bank branches and were in Phaoudom, Vienthong and Xansay.

Table 36: Branches interviewed that have lent to households for toilet construction and to supply chain)

Region – Province Households Construction

materials suppliers Concrete producers

Masons

Northern 17% 22% 0% 22% Bokeo 33% 20% 0% 20% Luangnamtha 0% 25% 0% 25%

Central 11% 33% 17% 0% Borikhamxay 20% 33% 33% 0% Savannakhet 0% 0% 0% 0%

Southern 11% 44% 22% 22% Attapeu 33% 33% 0% 0% Salavan 0% 33% 33% 33% Sekong 0% 67% 33% 33%

Total sample 13% 33% 13% 17% Note: Excluding lending as part of any Government or NGO program.

Branches from all the organisations interviewed except BCEL intend to increase their lending in the research districts — 83% of the branches surveyed plan to expand their operations in the area.

Table 37: Plans to expand operation in the district (% of total)

Region – Province

Is your organization trying/planning to increase its overall lending in this district?

No Yes

Northern 22% 78%

Bokeo 20% 80% Luangnamtha 25% 75%

Central 17% 83%

Borikhamxay 0% 100% Savannakhet 33% 67%

Southern 11% 89%

Attapeu 0% 100% Salavan 33% 67% Sekong 0% 100%

Total sample 17% 83%

The only institution present in the whole research area is the government-owned Nayobay Bank. It aims to provide loans to the 68 poorest districts in the country and has service units in each of these, with a larger branch in ten provincial capitals. In this study’s research area, Nayobay Bank has branches in Luangnamtha, Savannakhet, and Attapeu. At district level it has service units in Phaoudom, Meung, Long, Adsaphone, Nong, Sonbouly, Samoi, Ta-Oy, Sanxay, Phouvong, Kaleum, Dakcheung and Sanamxay.

Given the not-for-profit nature of Nayobay bank and its other goals, interest rates are relatively low for poor households and small businesses, ranging from 5% per year for short term (less than 12 months), 6% per year for medium term (1–3 years), up to 7% per year for long term (more than 3 years).

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The conditions are that the borrower must have:

1. clear objectives;

2. collateral for business and individual: usually land or house warranty; and

3. the loan should benefit the poor.

For group loans, there is no need for land/house collateral but the group members are responsible for all members’ repayments. Each group consists of around 7–15 households, with a maximum of 30 million LAK (US$3,750) borrowed per household.

ACLEDA Bank also has a presence in the research area (though not as prevalent as Nayobay). It has branches in the capitals of fourteen provinces, including Bokeo, Luangnamtha, Borikhamxay, Savannakhet, Salavan, Sekong, and Attapeu. The bank is working to increase awareness of it in rural areas. Being a private bank, ACLEDA’s rates are not as low as Nayobay’s — but they are still lower than the 5% per month typically charged by informal money lenders. The Bank claims to have more than 30,000 clients in rural areas. It lends to both SMEs and to households. The bank began as an MFI in Cambodia and has experience with small loans and rural lending.

Figure 22: ACLEDA Bank – Credit conditions

Source: ACLEDA Bank.

As highlighted in the “Consumer Research to Inform Rural Sanitation Behavior Change and Marketing Communications for Lao PDR”, most non-latrine owners (82%) are not interested in using microfinance to purchase a latrine. The main reasons are that: (1) they do not know anything about microfinance (40%); and (2) have concerns about interest rates (38%). The majority of households surveyed prefer to 'save money and get a latrine later' rather than 'getting loan to get a latrine now'. Only one-fifth of non-latrine owners would like to obtain a latrine now by using credit.

However, evidence from Cambodia suggests that although many households initially do not want to borrow to purchase a latrine, this attitude can change as they are given more exposure to the concept. Pilots in two Cambodian provinces of a sanitation financing approach that included MFI officers attending group sales meetings (and offering loans for latrine purchases) found that in one province there was a strong preference for buying latrines on credit; and in the other province the number of latrines bought on credit grew strongly late in the pilot (Path 2013).

GIZ is establishing village banks in Lao PDR. WSP intends an experiment using these to provide household financing for latrines.

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10 Business constraints

Actors cited labor issues (availability, quality, and training), roads, insufficient demand, customers not paying, and access to finance as main constraints. The cost of inputs, availability of materials, Government fees and regulations, and corruption were generally not viewed as constraints by most actors.

Figure 23: Business constraints (percent of actors reporting each as a main constraint)

10.1 Roads

As discussed in the Transport section above, the low quality of roads limits the potential market for sanitation products by increasing prices (through high transportation costs) and preventing access to many villages. Market penetration of the supply chain is therefore limited, consistent with the literature relating sanitation coverage to road access.

Material suppliers cited bad roads as a constraint more often than any other (31% of suppliers reported this was a main constraint). It was also a significant issue for concrete producers (19% of which indicated “transportation” as one of the biggest problem in the supply of materials. Masons, who do not need to transport products and often work locally, were less likely to report roads as a problem.

“Especially in the rainy season, cannot go to pick up the product to sell.” – Material supplier

“Difficult to deliver the products to the clients.” – Concrete producer

10.2 Availability of labor

Problems with labor availability and quality are particularly acute for concrete producers and masons (work that is more labor-intensive than material supply). For masons, around 40% said labor availability was a main constraint and a further 21% cited staff and training problems (many also citing absenteeism and wage costs as issues). Nearly 41% of concrete producers face problems with labor availability.

“We don't have enough labor so we cannot produce on schedule.” “If more customers, I cannot cope with

the demand.” – Concrete producer

“We need more skilled workers” but “skilled workers are too expensive.”; “I am afraid that I will pay more

and more wages for labor”- Mason

0%

10%

20%

30%

40%

50%

60%

70%

80%

Material suppliers Concrete producers Masons

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Labor constraints are not a problem unique to the sanitation supply chain problem. It is not unusual for businesses in Lao to face labor constraints. The problem is for both skilled and unskilled labour. For example, 64.5% of services businesses and 57% of manufacturing businesses complain that they had no or few applicants for “elementary” jobs (World Bank 2014). Furthermore, in 2011 18% of businesses in Lao PDR reported inadequate skills as a primary constraint (World Bank 2011). An “inadequately educated workforce” is now the top investment climate constraint in the country (World Bank 2013b).

10.3 Customers not paying

A number of actors report problems with customers not paying (most offer limited credit to their customers). This is more a problem for material suppliers (30% of suppliers) and is just behind bad roads as the most-oft cited constraint. Because they often offer their customers better trade terms than they receive from their suppliers, this constraint can affect their working capital requirements. Access to sufficient working capital is a common constraint for most small businesses regardless of industry.

10.4 Access to finance

As noted in the earlier section on Finance, many actors interviewed have had a loan from a bank. However, 28% of material suppliers and 38% of concrete producers also say that access to finance is a main constraint to their business. It is less of a problem for masons (19%), partly because they have lower capital requirements. However, as discussed above, small businesses typically report problems with access to finance (and that this may actually be a sign of a well-functioning finance system, rather than a problem).

“Difficult to borrow money from the Bank, we must have a warranty before the loan is approved” –

Material supplier

“Have difficulty to access to the money due to the high interest rate” – Material supplier

“I don’t have enough money to buy better machinery and expand my business” – Concrete producer

“I have no access to finance because I have no property”- Mason

10.5 Insufficient demand

Over a third (35%) of concrete producers and 41% of masons said that their business had problems of insufficient demand. These actors often have to rely on other sources of income, and may only work on request.

This suggests that there is spare supply capacity in this part of the chain that can respond to any increase in demand arising from consumer awareness and behavior change programs.

For concrete producers, the use of bricks for pit lining (discussed above) is a related issue. That is, preferences for lining pits with bricks mean less demand for their concrete rings.

10.6 Competition

Although not a major constraint, some actors did mention that competition is a threat to their business (12% of suppliers, 15% of concrete producers and 8% of masons). One retailer in Bokeo said that it has many competitors, with ten suppliers along the same road over a stretch of 120km. The competition includes legal competition from other businesses and illegal competition (smuggling) from both businesses and individual customers that avoid taxes and import duties. Masons reported illegal competition from neighboring countries, mainly Vietnam: reportedly the oversupply of labor in these countries push skilled and unskilled masons to Lao PDR, where allegedly they are able to undercut the local labor force.

The fact that few actors report competition as a threat suggests that there may be some issues with insufficient competition in the supply chain (see separate section on competition above).

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“I am afraid that better and bigger shops will come”; “If better roads, customer will prefer to go and buy at bigger and cheaper shops, they come to me because of the bad road.”

“Competition from Vietnam is increasing, they are cheaper than us.”

10.7 Import arrangements and taxes

10.7.1 Importing processes

There are mixed views among supply chain actors on the ease of importing and associated costs. Retailers state that they telephone their order to Thai supplies and delivery occurs quickly. One retailer reported that there are two deliveries per week from Thailand in the dry season and one to two per month in the wet season. Some Thai suppliers ship their product to the Lao border, and the Lao buyers arranges transport from the border back to their business since most Lao material suppliers have their own truck (at least 68%). Some reported that Thai suppliers provide transport all the way to their shop (implying that the Thai company deals with all customs issues at the border).

A small number of material suppliers complained about exchange rate issues. Since Thai companies require payment in baht but they have to sell in LAK (particularly when NGO programs are involved), fluctuations in the exchange rate can seriously affect their profitability by eroding their margins. Particularly for slow-moving items such as latrine pans, the time between purchase from Thailand and sale locally can be long, allowing for significant change in the exchange rate. This also reduces the incentive to carry much stock of these items.50

Given their proximity and shared border, Thailand, Viet Nam and China are the easiest countries for Lao PDR to trade with. Non-tariff trade costs add 48% to the cost of goods imported from Thailand, 79% from Vietnam and 130% from China. This encompasses all additional costs other than import duties involved in trading goods bilaterally rather than domestically. Indirect costs such as cumbersome import procedures are included. However, Lao PDR trade with Thailand is less costly than Cambodian Trade with Thailand. (UN ESCAP 2012 Report on the Comprehensive Trade Costs of Lao People’s Democratic Republic, June 2012. United Nations Economics and Social Commission for Asia and the Pacific)

10.7.2 Import duty and fees

Some suppliers complained about having to pay import duty on products. It appears to be a bigger issue in the North than elsewhere: about 20% of Northern construction material suppliers, 5% of Central, and 3% of Southern declared that they are facing challenges with import taxes and related processes.

Some of the complaint relates to items that are not sanitation-specific. But given that the majority of the cost of a latrine is general construction materials, these import duties are still relevant.

Illegal imports from Thailand and Vietnam, either by individual households or small retailers, reportedly affect the overall profitability of some businesses. When imported as a single item, no import duty is said to be paid, but when suppliers import larger quantities into Lao PDR, they must pay duty, which increases the overall sales price.

One construction material supplier said they pay 170,000 LAK (US$21) import duty for importing 10 tonnes of cement (equivalent to about 2%). This would appear to be lower than the official import. Bigger shops appear to have less problems with import duties. This might be because they are better able to afford the duties; or because they have larger volumes over which to spread the fixed component of import fees (that is, informal fees that may be required by Customs officials)51; or perhaps because they face less competition and are hence better able to pass on the duties to their customers.

50 Where delivery times from Thailand are relatively quick, the need to carry much stock is reduced anyway. 51 There is no scale benefit in terms of official import duty since this is a percentage of the value of the imports. Other import fees (such as inspection charges) may be a fixed amount.

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Because cement and steel are designated as national protected products52, before importing, importers should go to the MOIC first for quota, then payment for tax and VAT is required by the Ministry of Finance.

Table 38: Current Import Tariff and VAT Rates in Lao PDR (%)

Product Tax rate VAT

Cement 10 10 Steel 5 10 Zinc sheeting 5 10 Roof tile 10 10 PVC pipe 5 10 PVC door 10 10 Wood door 30 10 Floor tile 5 10 Latrine Pan 5 10 Gravel 5 10

Source: Tax Department, Ministry of Finance

Imports that are part of an officially-approved sanitation program are exempt from import duty. However anecdotal evidence suggests that the exemption can result in significant delays for clearing the goods through Customs.

However, in reality the importing process is very blurry. In practice, importers in Vientiane do not need to go to MOIC for other construction materials; in the provinces, before going to the Provincial Finance Office, importers might need to go to the Provincial Office of Industry and Commerce (POIC) for quota.

The size and the importance of informal fees should not be underestimated, as well as the business practice of paying a lump sum for importing a certain amount of different materials. For example, in the Northern region, 10–12 million LAK (US$1,250–US$1,500) is charged for a 10- and 12-wheel trucks or 100,000 to 400,000 LAK for importing by boat. Sometimes, for a cargo of materials valued about 2.5 million LAK, some importers reported paying total fees of 100,000 LAK (4% of total value).

52 National protected products mean the products which are traded, imported, exported must be approved, supervised by government authorities in the forms of quota, etc.

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11 Summary of Findings

Many of this study’s findings are consistent with studies of sanitation supply chains in other countries (such as that no actor sells a complete latrine). The findings in this report are summarised below. These have been discussed in the various sections above. Suggested actions to address certain findings are presented in the following section.

The actors

1 No actor sells a complete latrine (except in some pilot programs such as PSI/WSP) – the chain is fragmented. 2 Businesses rely on other sources of income – they don’t view themselves as part of the sanitation supply chain.

3 Female ownership rates for material suppliers appears high (62%) but is consistent with other micro businesses.

4 Most businesses are small and unregistered (and much less likely to be registered outside of capital districts). 5 One-quarter of concrete producers report having a marketing plan, which appears high. 6 Masons can be transient, travelling far to work for extended periods. 7 Concrete producers are busier in wet season, the opposite of masons and material suppliers. 8 Businesses do very little marketing (and there is almost no use of sales agents). The consumer 9 Masons are better informed about household requirements. 10 Households prefer to use own labor. 11 Consumers (83% of non-owners) are happy to pay more for brick superstructure. 12 Most (82%) non-latrine owners do not want to borrow to obtain a latrine. 13 68% of households travel to buy materials for a latrine (to a district capital or bigger cities). Latrine options and costs

14 Latrines most commonly built by the supply chain are very expensive – costing six months’ income for poor households.

15 Labor can double the cost of a latrine. 16 Pit lining with bricks instead of rings is becoming more common. 17 The potential rural market for low-cost options is 150,000 to 200,000 latrines. Competition and margins 18 Actors have multiple upstream sources, and face local and foreign competition. 19 Gross margins of 15% to 40% are not excessive for such products in rural markets. 20 Some actors think latrine product margins are less than those for other activities. Transport costs 21 Roads are a major constraint 22 Many villages are very difficult to access, and large numbers are not accessible for deliveries in wet season. 23 Suppliers provide delivery for larger orders but not smaller orders. 24 Transport costs – for multiple orders to remote areas – can add up to 34% to cost of a latrine 25 Mason report that concrete producers that can deliver are preferred Finance 26 Actors report access to finance reported as a constraint, but no more than elsewhere, plus many have loans. 27 Businesses have concerns about customers’ late or non-payment. Labor 28 Labor availability is a constraint, consistent with businesses throughout the Lao economy. Government 29 Government and NGO programs are part of the chain. 30 Government officials may view all rural latrine supply as part of government programs (when only 24% is). 31 No actors suggested the government could improve the business or investment environment.

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In addition to the above overall findings, the following region-specific findings were identified:

The supply chain in the north 32 Some evidence of collusion among two material suppliers in Phaoudom. 33 Import tariffs and fees, as well as VAT, appear to be a bigger concern in the North.

The supply chain in the center 34 Concrete producers and masons have less training than the North and South. 35 Daily labor costs for masons are higher than in the North and South The supply chain in the south 36 Concrete producers in the South report much lower sales of products for latrines than in the north and center 37 Businesses in south much more likely to rely on other business activities 38 Businesses in the south are less likely to have business plans

12 Recommendations

This Study aims to provide “strategic recommendations and options for improving the supply/value chain for rural sanitation” and to identify “possible business models and support services, which have potential to scale up the availability of aspirational and affordable sanitation products and services to rural low-income households.”53

One of the main causes of problems for the sanitation supply chain is a lack of scale. Most sanitation supply chain problems appear to stem from this. The latrine market is simply too small.54 Lack of scale is not particular to latrines, it is a problem faced by many industries in Lao because population density is low55, but it is even more acute in latrines, given the nature of the product (infrequent purchases) and current low penetration. Hence many actors supply other products and/or services besides latrines. There is not enough business from latrines alone for most of them to specialize.

The potential market for a lower-cost latrine is around 150,000 to 200,000 latrines, assuming there were no problems in distributing the latrines. At lower latrine prices, the market increases slightly (Figure 24). The basis for this estimate is that about 414,000 rural households in Lao do not use an improved facility56. Around 46% of rural households without a latrine are willing to pay 500,000 kip (US$62.5) to obtain one (based on WSP – Sanitation Consumer Behaviour Study), which is 190,500 households.

Figure 24: Potential rural latrine market size (number of latrines)

53 Project’s Tor 54 “Market” defined here as the number of latrines being bought. As discussed earlier, potential demand for latrines is far greater than this if affordability can be improved. That is, the addressable market is un-penetrated. 55 Although low population density constrains the market, it also means that some sanitation problems such as moving or emptying pits are not as acute as in high-density urban settings. 56 EMC calculation: 4.1 million rural people (67% of the population in Lao PDR), 5 people on average per household, and 50% without improved facilities (WHO-UNICEF JMP 2014).

240,247 215,394

190,541 165,688

140,835 120,124

300,000 400,000 500,000 600,000 700,000 More than700,000

Latrine Price (LAK)

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For more poor households to have latrines, demand-side interventions are most important. The local latrine supply chain should respond to an increase in demand, because:

The private market is already supplying most latrines;

Barriers to entry are not too high; The required capital to start a small business is not excessive and formal finance is available, There are few or no regulatory barriers; and

According to businesses, the latrine market has been growing.

However, past evidence from CLTS programs shows that supply does not respond adequately to demand-only strategies. The possible reasons for this are summarised in the diagram below. If there is demand for latrines but the supply chain is not serving that demand then it is either not sufficiently profitable to do so, or the market is failing, or the government (or others) is preventing the market from functioning efficiently.

It is possible that some of the potential market cannot be profitably served, particularly given transportation difficulties in remote areas. Further, some supply chain actors indicated that sanitation products were less profitable than their other activities (FGDs).

In general, the sanitation supply chain market does appear to function efficiently. Margins are reasonable and there is not strong evidence of significant market power and lack of competition. However, there may be some information asymmetry, with actors unaware of cheaper latrine options and the potential

Latrine demand not served

Not sufficiently profitable

Not profitable at all

Less profitable than alternatives

Market failure

Information asymmetry

Market power

Public good

Externality

Govt/Policy failure

Regulatory/tax barriers to entry

Subsidy distortion

X

X

X

?

?

?

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demand for them. There are externalities in the provision of sanitation (positive spillovers57) — though this does not explain the problem of unmet demand.

No evidence was gathered of any significant regulatory barriers to market entry or other government action inhibiting the business environment. No actor suggested the government could improve the business environment. Subsidies are, and have been, present in the market, which does create some distortions. These are more likely to have affected demand (people waiting for a latrine) than to have detrimentally altered the supply of sanitation products and services. It is possible that some suppliers do not engage in marketing, preferring to wait for programs to create demand for them, though none said this explicitly.

Hence, while demand-side initiatives are paramount it remains important to augment demand-side strategies with some supply chain actions.

12.1 Supply Chain Strategies – Guiding Principles

Notwithstanding that where there are market failures there could be a role for government, in general interventions should be as market-based or ‘hands-off’ as possible. The following principles should be observed:

Facilitation rather than delivery

It is rare to have all the resident expertise that can provide assistance for a diverse set of constraints or training for a wide range of competencies. Furthermore, investment in program delivery personnel and assets makes it more difficult to react proactively to changing market demands. A facilitation role that can utilise a coordinating position in the supply chain would therefore be more consistent with market-based and sustainability principles. It enables government or its development partners to more effectively work with private sector organizations in the delivery of services.

Services rather than products

The emphasis needs to be on responsive services that enable the supply chains to function, not on replicating parts of the supply chain or on the direct provision of latrines (or latrine components).

Government strategy should try to provide services (or encourage others to provide services) that help the market reach poor households.

Treat supply chain actors and households as customers not program beneficiaries

Key to providing meaningful support is to view the supply chain actors as customers rather than beneficiaries, and to be responsive to their needs. Facilitating the provision of services that are needed - either by actors seeking specific skills or in areas where suppliers’ demand for product and services is real - is critical to long-term sustainability and success. It is therefore important to understand the desires of and constraints faced by the supply chain businesses. This means engaging with them regularly, listening to them and responding accordingly – allowing the businesses to drive the services that will meet their needs, not the other way around. A focus on actors’ needs will encourage more of them to become involved in a sanitation program and also will improve longer-term sustainability.

In this approach, it is also important to be flexible, going where ‘customers’ require. Provide services where they are most useful, where they are least disruptive, and in ways which focus on improving businesses’ bottom line.

“The sustainability of the small scale sanitation providers is always vulnerable making the need for a supportive, flexible and understanding relationship with the private sector an essential factor for success. It is imperative that the they are represented in programme design decision making processes.”

- Jenkins & Sudgen 2006, p.28.

57 The health benefits from latrine ownership accrue not only to the latrine owner but also to others in the village.

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Government and DPs should therefore be willing to see and to encourage competition within the supply chain. The overall goal is to increase the number of household’s accessing improved sanitation facilities. It should not matter if this is being delivered by fewer, larger suppliers or more, smaller suppliers.58

Working with a larger number of actors is advisable, as there can be greater risks of market distortion by picking one or two ‘winners’. No promises should be made that there will be a certain sized market for actors participating in a program. However, market intelligence, such as the size of the potential market and the expectation that it will grow (because of demand-side activities) should encourage actors to attempt to capture some of this growth.

Private sector focus rather than NGO/Government

Finally, it is imperative that interventions invoke a private sector, customer-facing, results-oriented culture. Government sanitation officials and development partners should seek to encourage the private sector and facilitate it where possible.

12.2 Actions to address specific findings

Suggested actions to address the findings of this report are summarised below. These actions are then discussed in turn.

Finding Response

2 Businesses rely on other sources of income – they don’t view themselves as part of the sanitation supply chain

Increase awareness of market opportunities. e.g. the potential market size from offering more affordable latrine options 17

The potential rural market for low-cost options is 150,000 to 200,000 latrines

14 Latrines most commonly built by the supply chain are very expensive

Pay in instalments with the involvement of a bank or MFI.

27 Businesses have concerns about customers’ late or non-payment.

12 Most (82%) non-latrine owners do not want to borrow to obtain a latrine

Change this mindset by:

a) Including a finance organisation in consumer sanitation education; and/or

b) Coordination role to link a finance organisation with actors such that actors can offer latrines on credit

24 Transport costs – for multiple orders - add 20% or more to cost of a latrine

Facilitate bulk ordering. Village chiefs may be used as a trusted party for coordinating this.

On-site casting of bulk orders also helps reduce transport costs (and breakage)

23 Suppliers provide delivery for larger orders but not for smaller orders.

13 68% of households travel to buy materials for a latrine (to a district capital or bigger cities)

8 Passive sales approach and very little marketing (and there is almost no use of sales agents)

Design generic marketing materials that are low-cost and easy for small businesses to carry and distribute.

Use village chiefs as sanitation champions.

Encourage suppliers to forge relationships with village chiefs. May include commission paid to chief for latrine orders.

15 Labor can double the cost of a latrine Educate households about models that allow self-installation (though households still prefer solid superstructure)

10 Households prefer to use own labor

58 Within a limit. Monopoly supply is generally not desirable.

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38 Businesses in the south are less likely to have business plans

Capacity building through business mentoring: business plans, financial management.

29 Government and NGO programs are part of the chain.

Government should discourage NGO programs that involve direct subsidies (to stop consumers waiting for provision and to provide incentive for businesses to market to households).

30 Government officials appear to view all rural latrine supply as part of government programs (when only 24% is).

Training to change the mindset of officials from that of being a provider of latrines to a business and market facilitator/coordinator.

12.2.1 Market intelligence dissemination

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 [or unable] 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 (Sy & Warner 2014).

“In a market economy, where there is effective demand (willingness and ability to pay) for a product or service, entrepreneurs will take steps to make profits by serving the demand” (IDE 2007). In Lao there is considerable effective demand for latrines below 700,000 LAK. As discussed above, the fact that entrepreneurs are not taking steps to serve this demand suggests that either: it would not be profitable to do so; or there is some form of market failure. This market failure is most likely in the form of information asymmetries. Government and its development partners should seek to overcome such information asymmetries by publishing market information (potential size, etc) to encourage more investment or the entry of new actors, particularly bigger players.

Further, informing the market that demand-side interventions are being undertaken will encourage actors about the possibility for demand growth. Supply chain actors should be given information on which villages in their area will be subject to CLTS or other behavior change programs and the timing of these activities. They can then plan for capitalising on this increase in demand.

Also, information should be disseminated about the types of latrine options that can satisfy the currently unserved demand. Given high labor costs, these more affordable designs should also be quicker and easier to install. More affordable designs already exist and are being tested in certain areas (or have been tested, such as in Cambodia). WSP (2012b) identified two cost-effective products:

a pour-flush latrine with a retail price 375,000 LAK (US$47); and

a waterless latrine, a basic model of which had a retail price 100,000 LAK (US$12.50), or a model with tiles for 155,000 LAK (US$19.42).

In Lao PDR, WSP, through its implementing partner PSI, is attempting to scale and strengthen the marketing and supply of a low-cost latrine (costing around US$50) in Champasak and Sekong provinces. It has a direct-drop pit (to keep costs down). Similarly, in Cambodia a pilot project developed a US$35 latrine (excluding labor and superstructure) that was designed to be simply and easily installed by consumers (WSP 2012c). This now costs US$45 and has been rolled out more widely. Superstructure costs can be reduced by using zinc or fibro-cement sheeting with a metal or bamboo frame, instead of bricks.59

However, it must be kept in mind that the margins from selling these products must make it worth the actors’ while. Latrines compete with not only the demand priorities of the consumer but also the sales priorities of the businesses. A latrine that is profitable to sell is not enough – it must be sufficiently profitable. That is, more profitable than the alternative for the business, which may be to spend their time and resources selling non-latrine products. As discussed, some actors believe that they have opportunities elsewhere to earn a better return on their capital.

59 Ideal latrines costs are high not only because of materials used but also because of the size of the latrine, which may also include bathroom.

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It is unlikely that the very poor in remote areas can be served profitably. Hence, dry pit latrines should also be considered as part of the strategy (although they not a supply chain product): WSP (2013) found that in Lao “[t]he high net benefits of low-cost sanitation options, such as wet pit latrines in urban areas and dry pit latrines in rural areas, also suggest that these technologies should be at the center of national plans for sanitation improvements, especially where funds are scarce.” Furthermore, WSP stated that shared facilities should not be ruled out.

12.2.2 Financing arrangements

In general, direct subsidy that removes the link between supplier and consumer should be discouraged (see below). But other financing arrangements are possible.

Table 39: Potential finance approaches for onsite sanitation

Source: WSP 2012d, p. 27.

Being able to pay in instalments makes latrines more affordable for many. Instalments have proven to be attractive with households as part of sanitation programs in Cambodia and Indonesia. However, the businesses in the supply chain are unlikely to be able to manage instalment schemes themselves. Furthermore, the businesses already complain about customers’ late or non-payment. Such concerns are likely to be even greater when selling to customers in poor rural areas.

By partnering with a bank or MFI, actors are able to supply latrines on formal credit with the payments spread over time (which is attractive to consumers) and do no bear credit risk from non-payment (attractive to the businesses). This model has been used in Cambodia, for example (“SanFin”; see Path 2013). Households agree to buy a latrine and apply for a loan at the same time, the MFI approves the loan and pays the business, and the household repays the MFI over time. This model may involve a commission paid to the loan officer, increasing their incentive to find latrine customers.

An issue is how to make it attractive to the MFI. They have experience dealing with credit risk in rural areas. Many MFIs have found group loans to be one effective way to manage this. Another might be to

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involve a trusted local (i.e. the village chief) in the transaction. The MFI takes comfort that the chief has vouched for the borrower, and the borrower is more likely to repay when the chief is involved. Greater involvement of village chiefs in sanitation marketing is discussed more below.

12.2.3 Village chiefs as champions and coordinators

Village chiefs should have a role as local sanitation champions. The supply chain actors will value have a trusted promoter. Supply chain actors should be encouraged to form relationships with village chiefs. Using chiefs help build trust: trust from suppliers that villagers are more likely to pay; and trust from the villagers that the supplier is vouched for by the chief.

Village chiefs can play a role in coordinating bulk orders. Bulk purchases can increase the size of the market and take advantage of any scale benefits. This helps overcome the problem of high transport costs. Suppliers may not deliver for small orders, but delivering can be attractive to customers60. Direct bulk purchases by government or DPs are discouraged however, for the same reasons that direct subsidies are not favored but also because they remove the relationship between the supplier and the consumer. However, by only playing a coordinating role in helping a group to simultaneously acquire latrines, the relationship between customers and businesses remains intact. Local suppliers should be used where possible, with purchasing at market prices.

Bulk purchasing might also enable on-site casting. On-site casting of bulk orders also helps reduce transport costs (and breakage). However, even with multiple deliveries, transport costs can still be high. Only a limited number of latrines (or their components) can be delivered per truck; and only smaller trucks are able to access some villages.

The role for government and development partners is to introduce officials to the concept and facilitate their interaction with the supply chain. This should be coordinated with demand-side activities (that is, roll it out in CLTS villages for example), ensuring that group orders are resulting from demand creation or behavior change strategies.

12.2.4 Marketing and sales

Supply chain actors do very little, or no, marketing of their products and services — not only sanitation marketing but any kind of marketing.61 The generic nature of the materials, and small size of most suppliers, means that sanitation does not lend itself to branding. Coordinated marketing is beyond many businesses in the supply chain. Few businesses have the desire or skill to invest in marketing.

By making village chiefs champions of sanitation, they can take on some of the role of promoting latrine products, and recommending suppliers. One option is to work with businesses so that they become comfortable with paying village chiefs a commission for the sale of latrine products. Village chiefs would then be incentivised to promote latrine use. As discussed, the actors have very little experience with sales agents or paying commission so there is a role for government or development partners in initially promoting this approach.

However, getting the supply chain to understand the benefits of marketing is important for longer-term sustainability. Involving respected upstream partners in marketing has proven is helpful in other development programs62. Lao Cement, Nayobay Bank and ACLEDA Bank have indicated potential willingness to be involved. The first two are part owned by the Lao Government, and so may be willing to be involved in Government sanitation efforts. Both have extensive distributions networks throughout the country, which could be used to disseminate marketing information. They might feel that being involved in a large sanitation project is good for their brand. Lao Cement has been involved in development projects previously, such as the construction of schools in remote areas. Similarly, ACLEDA Bank stated is willing to

60 Around 60% of non-adopters in one Cambodian study said that deliver was important (Pedi et al 2013). 61 Some of the larger players in the chain, such as Lao Cement and Thai manufacturers, are more active in marketing. 62 Such as the Cambodia MSME Project, funded by USAID.

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be involved in social projects. The Bank has an extensive marketing network in Lao PDR, with field officers in rural areas (each credit officer is responsible for 5 to 10 villages). Using these organisations’ distribution channels, and being associated with their strong brands, could provide novel and effective means of improving knowledge.

Finally, any public sanitation marketing and education campaigns should include materials that can be used by small-scale providers of private sanitation services.

12.2.5 Capacity Building – particularly for the South

The sanitation supply chain is weaker in the South, particularly in certain provinces and districts, where there are fewer actors at most levels. Furthermore, businesses in the chain in the South are much more likely to rely on other sources of income, and are less likely to have business plans. Finally, latrines are more expensive in the Southern provinces.

Hence it is not surprising that it is the South of Lao PDR that has the lowest levels of improved sanitation coverage. However, the direction of causality is not obvious. Are there fewer latrines in the south because the supply chain is weaker there, or is the supply chain weaker in the south because household demand is lower?

Hence there could be a role for capacity building through business mentoring to help rural businesses with planning and financial management. Improving the efficiency of businesses in the supply chain could help lower their production costs, allowing cheaper latrines to be produced while maintaining margins.

Furthermore, workshops hosted and/or sponsored by large private sector providers (such as Lao Cement), or visits to other businesses can increase market and technical knowledge while also fosterer links through the supply chain. Closer links to larger actors could also result in agency, distribution or sub-contracting networks, helping address some capacity and commercial challenges.

12.2.6 Changing the way officials think and work

Nam Saat or other officials should be encouraged to play a supporting role connecting businesses and customers – and to move away from the mindset that they are the providers of latrines. As already discussed above, there are coordinating activities and roles for government within the supply chain (consistent with the guiding principles outlined above).

Officials might therefore require capacity building private sector facilitation and in the principles outlined above. For example, foreign competition, although a complaint of a number of actors, should not necessarily be viewed negatively. The primary goal of sanitation programs should be more latrines, not necessarily supporting local business. More competition is generally a good thing.

Further, Government should discourage the use of subsidies in programs. This will stop consumers waiting for free provision of latrines and will provide incentives for businesses to market to households. The Lao PDR government has realized that subsidies are not necessarily effective and while some rural areas have significant coverage in terms of access to toilets, they were not used and remain broken and not useable. The government has adopted the position to move away from direct subsidies and they “…should only be considered for use if needed to target villages and households defined as being ‘poor’ or ‘vulnerable’ (single parent households, disabled supported elderly households)” (Lao Ministry of Health 2012).

12.2.7 Business environment improvements and national-level policies/strategy

The business environment does not appear to be constraining investment in the chain. Few actors mentioned government regulations or fees as a constraint. None suggested the government could improve the business or investment environment.

One small area of concern is import tariffs and VAT. These add to the cost of latrines, and some suppliers (particularly in the North) complained about importing fees.

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WSP (2012e) found that “a supportive enabling environment was an essential element of large-scale rural sanitation programs” as “the countries with the strongest enabling environment made the most progress”. There are number of reforms and other policies that could help the sanitation supply chain. Generally these involve improving the business environment. In particular, Nam Saat or the Ministry of Health should be encouraged to discuss issues of import procedures, import tariffs and VAT for sanitation products with the Tax and Customs departments.

The single biggest action that would improve sanitation in Lao would be investment in roads. The Ministry of Public Works and Transport (MPWT) is the national government agency primarily responsible for expansion and maintenance of the transport infrastructure Lao PDR. The Asian Development Bank is also a major funder of road infrastructure in Lao. Unfortunately “MPWT's multi-criteria mechanism for prioritizing projects gives more weight to funding regional projects connecting the international borders than the projects providing access to remote areas within the country.” And ADB’s focus follows suit. Furthermore, “While the quality of outputs [ADB rural road projects] has generally been satisfactory, there is inadequate capacity at the provincial level to implement these projects.”

It is unrealistic to expect sanitation policy to influence investment in roads, but the importance of roads cannot be ignored. Where possible, senior Ministry of Health officials could remind officials at MPWT and the Ministry of Rural Development of the wider importance and impact of continued investment in roads.

12.3 The labor availability constraint

No action is recommended to address the problem of labor availability. This problem is not exclusively a sanitation issue and there is little that can be done in terms of the sanitation supply chain. For example, training workers to improve skills may make them more employable elsewhere, so the local sanitation chain does not reap the benefits of the training. If actors in the chain were able to pay higher wages this could help them attract more, and better-quality, labor. Higher relative wages may result if their businesses grow sufficiently. In the mean time, the appeal to workers of higher wages in the cities and in Thailand is going to remain a problem. However, building capacity at scale may eventually offset the risk of mobility and benefit other areas.

According to WSP – Consumer Behaviour Research, approximately 25% of rural non latrine owners agreed with the statement “I am not willing to pay for a latrine because we are moving again soon” showing that labor mobility and the search for better employment opportunities affects not only in the supply side (lack of skilled stakeholders) but also the demand side (lack of willingness to build a latrine).

12.4 The complete latrine

Reducing latrine costs can be difficult. Costs are dominated by material costs and transport. Bundling may be one way to lower the cost of a latrine. This reduces transaction costs for households. It reduces the fragmentation of the supply chain by providing a single-priced final latrine product, rather than a collection of materials. When combined with a cheaper latrine design (provided it is a design that is still appealing to consumers), this model can provide a product that satisfies more of the potential market. This model sometimes involves sales agents (such as PSI/WSP in Lao and sanitation marketing projects in Cambodia).

However, while a review of a bundling pilot model in Cambodia found a 7.7 percentage point increase in sanitation coverage (with households purchasing 10,621 unsubsidised latrines from private businesses63), enterprises were only selling to ‘early adopters’. Because the potential market for the businesses was limited to these early adopters, the project’s geographic scope was increased to help the businesses grow, resulting in ‘wide but shallow’ market penetration (WSP 2012c). The latrine being marketed was designed by the project and cost US$35 (excluding superstructure and labor) and could be bought from a single

63 Cambodia may have a stronger history of households purchasing latrines from private suppliers than in Lao PDR.

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business. Local businesses were trained to produce and sell it.64 A review of the project concluded that there was a need for more effective sales and marketing as well as complementary finance options for households (WSP 2012c).

Note also that working with the wrong actors can severely limit project effectiveness: “Some 1,700 small providers, including masons and sanitarians, were accredited and encouraged to use the “ ”

(“My Latrine is Hygienic”) logo in their marketing materials. Newly trained masons introduced innovative and affordable products to market. This approach did not achieve the expected results. For example, of 1,700 people trained, more than 97 percent were reported to be either inactive or utilizing their improved skills in other sectors or areas. The selection process for trainees was one factor in this disappointing outcome. Another factor was that few trainees had the ideal mix of dynamism, ambition, people skills, and technical capacity. Another factor was that local masons—who were less educated and less mobile, yet were the first persons contacted by consumers seeking information about sanitation products and services—were not included among trainees (the selection criteria specified higher levels of formal education and training). During implementation, it was recognized that relying on training masons did not adequately address all supply needs. A business aggregator mechanism was needed to connect household demand, material suppliers, and service providers. These findings informed the subsequent design of the entrepreneur training and one-stop shop model.” (WSP 2012d).

Reinventing supply chain businesses such that latrines become their primary (or only) activity may address some of the identified problems. However, the main problem is not the businesses themselves. Changes to businesses (such as changing their product offering to include a complete latrine, or changing their sales approach to include marketing or sales agents) may achieve incremental improvements in the supply chain, but some major issues will not be resolved. For example, delivery of latrines to some areas will still be difficult and expensive.

It is unlikely private businesses are using materials wastefully. How can businesses do better with a product (latrines) that is a slow-moving consumer durable (i.e. low-frequency, lumpy sales) in an environment with high transport costs? There is no simple solution. Change will take time. Letting businesses grow organically – in response to demand-side initiatives – may not deliver large immediate results, but will be more sustainable and will involve much lower per-latrine government and DP program costs.

12.5 Direct subsidies

Market-only approaches do have their limitations, such as the Cambodian program discussed above. Similarly, in Vietnam a recent study of a sanitation marketing approach showed that there was a lower rate of uptake during a pilot project of poor households as compared with non-poor and the report noted that a financing strategy for the poor was missing (Sijbesma et al 2010).

One way to increase the size of the market is to directly subsidize latrines. However, subsidies generally create distortions and lead to outcomes that are not sustainable. They do not result in viable private sector supply or lasting demand. Households tend to expect or wait for subsidized provision of latrines. WSP (2013) found that “[r]espondents in all sites cited ‘never offered a toilet’ as a reason for not having one.”

Artificially increasing demand temporarily is not consistent with the guiding principles discussed above. This is recognized by government (as noted above) and some DPs: “Overall, we want to encourage local suppliers to benefit from the business CLTS may generate. We are trying to support market-based supply of materials to villages; … we want to avoid handling cash or playing the “middleman” for these material purchases. We want to encourage village committees to negotiate directly with suppliers. Village committees will be responsible for all payments and final selection of suppliers” (Plan International 2011).

64 The project targeted existing concrete producers. They were already producing the concrete components of latrines, and were present in numbers at provincial and district centers. These became a “one-stop-shop” for the new latrine product.

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However, improved sanitation involves positive spillovers (“externalities”), which provide some justification for financial support. Further, the poorest households are unlikely to be able to afford a latrine without support. Any form of financial support should not disrupt that link between supplier and consumer. Hence systems involving vouchers for consumers to purchase a latrine from the private sector may be attractive. Vouchers can be an effective mechanism for transferring subsidies via the demand side to ultimately support the supply-side of the market, allowing beneficiaries to select service providers based on price and preference, rather than being dependent on program driven decisions.

They may help develop sustainable local supply chains that strive to achieve efficiency in the market.

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Appendix 1: Selected Sanitation Data from Lao Social Indicator Survey

Percent distribution of household population

Use of Improved Sanitation Facilities

Use of Unimproved Sanitation Facilities

Open Defecation Safe Disposal of child's feces

Region Northern 61.3 5.1 33.6 16.8

Central 67.8 1.8 30.4 23.3

Southern 34.8 1.4 63.2 11

Province Vientiane 97.9 0.7 1.4 50.2

Phongsaly 34.1 4.1 61.8 8.5

Luangnamtha 67.3 0.1 32.6 20.1

Oudomxay 44.2 8.9 46.9 9.1

Bokeo 69.3 0.2 30.5 15.6

Luangprabang 58.6 2.1 39.3 19.7

Huaphanh 58.8 12.5 28.7 13.4

Xayabury 89.7 3.5 6.8 32.5

Xiengkhuang 54.1 12.6 33.3 12.2

Vientiane 88.2 1.7 10.1 35

Borikhamxay 84.0 0.4 15.6 30.9

Khammuane 42.1 0.9 57.0 6.7

Savannakhet 43.0 0.5 56.5 9.8

Salavan 22.3 0.2 77.5 7.4

Sekong 37.7 10.2 52.1 12.4

Champasack 43.2 1.0 55.8 14.4

Attapeu 37.2 5.2 57.6 8.4

Residence Urban 91.3 1.0 7.7 43.2

Rural 48.2 3.6 48.2 11.8

Rural with road 51.2 3.8 45.0 12.8

Rural without road 22.5 2.3 75.2 4.3

Education of Household

Head

None 39.5 2.0 58.5 4.5

Primary 53.3 3.8 42.9 15.7

Lower secondary 72.5 3.4 24.1 31.4

Upper secondary 84.4 1.6 14.0 43.1

Post secondary non tertiary

86.9 1.1 12.0 47.4

Higher 97.2 0.1 2.7 46.9

DK/Missing 89.9 0.0 10.1 -

Wealth index

quintile

Poorest 12.6 5.8 81.6 2.3

Second 34.6 4.7 60.7 6.8

Middle 59.9 3.4 36.7 16.8

Fourth 89.3 0.4 10.3 33.2

Richest 99.7 0 0.3 50.4

Ethno-linguistic group of

Household head

Lao-tai 73.8 1.4 24.8 27.7

Mon-khmer 30.0 6.2 63.8 6.6

Hmong-Mien 46.3 2.9 50.8 7.8

Chinese-Tibetan 29.9 4.6 65.5 4.6

Other,Missing, DK 71.7 1.5 26.8 -

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Appendix 2: Material Suppliers Questionnaire

Interview Number:

Data Entry Completed

SSSC – Field Work Interviews Questionnaire – Suppliers

Date:

Time:

Province:

District:

Village:

Location/Venue: Distance (km)

from center of district

Interviewer:

Interviewee:

Contact info:

Organization:

Title/rank:

Directions:

Explain the project (see background sheet).

Highlight the target districts within the province.

Clarify whether each answer applies only to the target districts, or more generally.

Supervisor sign:

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Section 1 – Background information

Q. Questions Response Data

entry

1 What is your position in the business?

[SELECT ONLY 1]

If “Hired” skip to Q.6

Owner (with staff)

Self Employed

Hired

Other (specify)

2 How many years have you been in this business?

3 How large is the business? (# staff) Male Female

Permanent 3.1

Semi-permanent 3.2

Occasional 3.3

Total 3.4

4 If you are the owner or self employed, where did you get the capital to start the business?

[SELECT ALL APPLY]

(% if possible)

Saved money 4.1

Loan from bank 4.2

Loan from family/friends 4.3

Loan from other source 4.4

Village development fund 4.5

Support from donor funded project 4.6

Other (specify)

4.7

5 How much of your business is latrine-related?

(Approximate %)

6 Do you have other business

activities?

(if NO skip to Q.7)

Yes

No

6.1

If yes, what are they? 6.2

7 Is your business registered? Yes

No

7.1

Why/Why not? 7.2

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8 Who manages your finances?

(self, wife, manager, etc)

9 Do you have/have you ever done any

of these types of plans? If yes, can

you please give us the details?

[SELECT ALL APPLY]

Business plan

Yes

No

9.1.A

Details:

9.1.B

Marketing plan

Yes

No

9.2.A

Details:

9.2.B

Financial plan

Yes

No

9.3.A

Details:

9.3.B

10 Have you ever participated in any

type of business training before?

(if NO skip to Q.11)

Yes

No

10.1

If yes, can you please give us details?

(book keeping, marketing, etc)

10.2

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Section 2 – Product information/materials

Q. Questions Response Code

Skip

11 Who are your main/key suppliers for the following materials?

(please list company’s names, as many as possible)

A1

A2

W1

W2

11.1

Sand

11.2

Gravel

11.3

Cement

11.4

Steel

11.5

PVC pipe

11.6

'Red earth' blocks

11.7

Zinc sheet

11.8

Grass/thatch

11.9

Doors (plastic sets, wooden sets, bamboo or other waste

materials used...etc.)

11.91

Flooring of the toilet (tiles, slabs...etc.) 11.92

12 Where do they come from (China, Thailand, Vietnam, local etc)?

(for local, specify where)

A1

A2

W1

W2

12.1

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Sand

12.2

Gravel

12.3

Cement

12.4

Steel

12.5

PVC pipe

12.6

'Red earth' blocks

12.7

Zinc for the roof

12.8

Grass for the roof

12.9

Doors (plastic sets, wooden sets, bamboo or other waste

materials used...etc.)

12.91

Flooring of the toilet (tiles, concrete slab...etc.)

12.92

13 Do your suppliers compete with each other to sell you their products?

(if NO skip to Q.14)

Yes

No

13.1

If yes, how?

13.2

14 Is there quality difference in the different suppliers of materials?

(if NO skip to Q.15)

Yes

No

14.1

Can you explain why?

14.2

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15 What kind of pans/bowls do people most commonly buy? (picture)

A1 15.1

A2 15.2

W1 15.3

W2 15.4

16 For the following pans/bowls please show the quantities sold last year and this year

2013 2014

A1 16.1

A2 16.2

W1 16.3

W2 16.4

17 Are you selling more pans this year than last year?

Yes

No

18 Than 3 years ago? Yes

No

19 What are the main factors affecting households’ decisions in terms of the type of latrine they want to have?

[SELECT ALL APPLY]

Cost of materials 19.1

Quality of materials 19.2

Materials that match the house 19.3

Materials that will last the longest 19.4

Physical accessibility of materials 19.5

Other (specify)

19.6

20 What do you think is the main reason for households to build a latrine?

[SELECT ALL APPLY]

Emulate others 20.1

Regulations 20.2

Healthcare 20.3

Convenience/comfort 20.4

Education program 20.5

Other family members influence 20.6

Sales promotions 20.7

Other (specify)

20.8

21 Is there any seasonality to your sales?

No seasonality

Dry season

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[SELECT ONLY 1] Wet season

22 How much do you pay to buy the following materials (specify quantity, quality and price)

Item Brand Quantity Price

Sand (metric

ton)

22.1

Gravel (metric

ton)

22.2

Cement (sack,

kg, or metric

ton)

22.3

Steel

(different

lengths)

22.4

PVC pipe

(different

sizes)

22.5

'Red earth'

blocks

22.6

Zinc sheet for

the roof

(different

sizes)

22.7

Grass for the

roof (different

sizes)

22.8

Doors 22.9

Flooring of

the toilet

22.91

Pan A1 22.92

Pan A2 22.93

Bowl W1 22.94

Bowl W2 22.95

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Section 2b – Only for importers

Q. Questions Response Data

entry

23 If you have to import materials from outside of Laos what do you do? What procedures do you have to go through?

24 Do you do the paperwork for importing? Or does your supplier?

25

Can you please specify the amount or % of tax (import duty and customs fees) you actually pay for each of the following goods?

Item Import Custom Other

Latrines pans 25.1

Sand (metric ton) 25.2

Gravel (metric ton) 25.3

Cement (sack, kg, or metric

ton)

25.4

Steel (different lengths) 25.5

PVC pipe (different sizes) 25.6

Concrete blocks 25.7

'Red earth' blocks 25.8

Zinc sheet for the roof

(different sizes)

25.9

Grass for the roof (different

sizes)

25.91

Doors 25.92

Flooring of the toilet 25.93

26 Have you ever paid informal fees for importing?

Yes

No

27 Is the import and custom fee a challenge for your business?

Yes

No

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Section 3 – Pricing information

Q. Questions Response Data

entry

28 What is the trend of construction material prices for the past year?

[SELECT ONLY 1]

No material price increased 28.1

Some material prices increased

All material prices increased

Which item?

28.2

By what %?

28.3

29 How have your prices changed in the past year?

[SELECT ONLY 1]

Increased 29.1

Remained the same

Decreased

Which item?

29.2

By what %?

29.3

30 Do customers negotiate the price of your products? And on what products mostly?

(if NO skip to Q.32)

Yes

No

31 What do they negotiate about?

[SELECT ALL APPLY]

Cheaper price 31.1

Discounts for bulk orders 31.2

Free delivery 31.3

Other (specify)

31.4

32 What do you prefer in terms of payment?

[SELECT ALL APPLY]

Cash up front 32.1

Cash over time (step by step). How many payments, over

how long?

32.2

Goods (barter) up front 32.3

Goods (barter) over time 32.4

33 What do your customers usually prefer?

[SELECT ALL APPLY]

Cash up front 33.1

Cash over time (step by step). How many payments, over

how long?

33.2

Goods (barter) up front 33.3

Goods (barter) over time 33.4

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34 What is the price that you sell each of these items?

Item Brand Quantity Price

Pan A1 34.1A

34.1B

34.1C

Pan A2 34.2A

34.2B

34.2C

Bowl W1 34.3A 34.3B 34.3C

Bowl W2 34.4A 34.4B 34.4C

Sand (metric

ton)

34.5A 34.5B 34.5C

Gravel

(metric ton)

34.6A 34.6B 34.6C

Cement

(sack, kg, or

metric ton)

34.7A 34.7B 34.7C

Steel

(different

lengths)

34.8A 34.8B 34.8C

PVC pipe

(different

sizes)

34.9A 34.9B 34.9C

'Red earth'

blocks

34.91A 34.91B 34.91C

Zinc sheet

for the roof

(different

sizes)

34.92A 34.92B 34.92C

Grass/thatch

for the roof

(different

sizes)

34.93A 34.93B 34.93C

Doors 34.94A 34.94B 34.94C

Flooring of

the toilet

34.95A 34.95B 34.95C

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Section 4 – Customer base

Q. Questions Response Data

entry

35 Who are the main customers buying latrine-related products? [SELECT ALL APPLY]

(% if possible)

Households 35.1

Wholesalers 35.2

Retailers 35.3

Construction company 35.4

Local NGO/government projects 35.5

Other(specify)

35.6

36 Do your customers have quality preferences? [SELECT ALL APPLY]

Brand 36.1

Durability 36.2

Color 36.3

Strength 36.4

Other (specify)

36.5

37 What type of latrines do customers want? (Latrine Size, wet/dry, offset, pan type, type of superstructure)

38 Do customers know what materials they need? (if NO skip to Q.39)

Yes

No

38.1

If yes, where do they get this information?

38.2

Do they seek your advice? 38.3

39 Approximately how many customers of latrine products did you have in the last year?

40 How many villages are you covering?

Please name them.

40.1

How many districts?

Please name them

40.2

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41 Are all your customers nearby? (Same village? District?)

41.1

What is the name of the furthest village? How far (km)?

41.2

42 Have you been involved in an NGO/government program in the last 2 years?

(if NO skip to Q.43)

Yes

No

42.1

If yes, which organization? Where?

42.2

If yes, what was your involvement?

(I.e. what did you supply?)

42.3

43 When you are supplying products for a latrine – why is this customer buying it?

[SELECT ALL APPLY]

(% if possible)

Part of building a new house 43.1

First latrine for house that had no latrine at all 43.2

Rebuilding collapsed latrine 43.3

Full latrine pit 43.4

Vulnerable groups or poor households supported by government of NGO project

43.5

Other (specify)

43.6

44 How do you market your business?

45 Do your suppliers give you marketing materials to promote their products?

Yes

No

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46 Do you do any promotion or marketing of latrines?

Yes

No

47 How do customers obtain information about products/services you provide?

Section 5 – Transportation

Q. Questions Response Data

entry

48

49

Who provides transportation for your inputs? How much does the transportation cost? How many km?

Item Who provides

transportation

Price of

transportation

Km

Pan A1 48.1A 48.1B 48.1C

Pan A2 48.2A 48.2B 48.2C

Bowl W1 48.3A 48.3B 48.3C

Bowl W2 48.4A 48.4B 48.4C

Sand 48.5A 48.5B 48.5C

Gravel 48.6A 48.6B 48.6C

Cement 48.7A 48.7B 48.7C

Steel 48.8A 48.8B 48.8C

PVC pipe 48.9A 48.9B 48.9C

'Red earth' blocks 48.91A 48.91B 48.91C

Zinc sheet for the

roof

48.92A 48.92B 48.92C

Grass/thatch for

the roof

48.93A 48.93B 48.94C

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Doors 48.95A 48.95B 48.95C

Flooring 48.96A 48.96B 48.96C

50 Do you deliver to your customers?

51 How much does it cost? (please specify price by weight, items and km)

Item (specify quantity/weight) Price KM

Pan A1 51.1

Pan A2 51.2

Bowl W1 52.3

Bowl W2 51.4

Sand 51.5

Gravel 51.6

Cement 51.7

Steel 51.8

PVC pipe 51.9

'Red earth' blocks 51.9

Zinc sheet for the roof 51.91

Grass/thatch for the roof 51.92

Doors 51.93

Flooring 51.94

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Section 6 – Business Network

Q. Questions Response Data

entry

52 Do you have regular suppliers for your products?

Which products in particular?

(if NO skip to Q.54)

Yes

No

53 If yes, why? [SELECT ALL APPLY]

Cheaper price/item 53.1

Discount for bulk purchases 53.2

Credit 53.3

Relationship (you have always purchased from them 53.4

Selling on consignment (agreement to pay after goods are sold)

53.5

There is only one supplier 53.6

54 If they provide you credit, please specify the credit conditions

Interest rate 54.1

Duration 54.2

Other requirements (collateral, guarantee)

54.3

55 Do you borrow from other sources?

[SELECT ALL APPLY]

Money lender Yes

No

55.1

Bank (specify) Yes

No

55.2

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MFI (specify) Yes

No

55.3

56 What was this loan for?

57 Please specify the credit conditions Interest rate: 57.1

Duration: 57.2

Other requirements (guarantee, collateral , etc)

57.3

58 Do you provide credit to your customers?

(if NO skip to Q.60)

Yes

No

59 Please specify the credit conditions Interest rate 59.1

Duration 59.2

Other requirements (collateral, guarantee) 59.3

60 Who are your main competitors in supplying latrine products?

Where are they?

61 Do you have any agreement with your competitors (e.g. deciding together price etc)

(if YES skip to Q.62)

Yes

No

61.1

If No, why not? 61.2

62 If yes, what are the agreements?

63 Have you ever paid any commission to middleman in order to find new customer?

(if NO skip to Q.65)

Yes

No

64 If yes, how much?

64.1

What are the conditions?

64.2

65 Do you have sales agents?

(if NO skip to Q.67)

Yes

No

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66 If yes, how do you pay them? (Salary? Commission?).

66.1

How much?

66.2

Can you please specify details?

66.3

Section 7- SWOT

Q. Questions Response Data

entry

67 Strengths: Why do customers choose you over your competitors?

(Don’t limit discussion to those listed here.)

[SELECT ALL APPLY]

Price (I have cheaper prices than my competitors) Please specify why:

67.1

Quality (I have better products than my competitors) Please specify why:

67.2

Reliability (I always have all the materials they need) Please specify why:

67.3

Location Please specify why:

67.4

Delivery Please specify why:

67.5

Bulk discounts Please specify why:

67.6

Other service Please specify why:

67.7

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Connections Please specify why:

67.8

Other (specify)

67.9

68 Weaknesses: What are the main constraints to your business?

[SELECT ALL APPLY]

Access to finance Please specify why:

68.1

Cost of inputs Please specify why:

68.2

Availability of labour Please specify why:

68.3

Availability of material Please specify why:

68.4

Bad roads Please specify why:

68.5

Corruption Please specify why:

68.6

Government fees/regulations Please specify why:

68.7

Insufficient demand Please specify why:

68.8

Customer not paying Please specify why:

68.9

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Staff Please specify why:

68.91

Training of staff Please specify why:

68.92

Other (specify)

68.93

69 Weaknesses: what are the problems related to supply of materials?

[SELECT ALL APPLY]

Inconsistent availability Please specify why:

69.1

Changing prices Please specify why:

69.2

Exchange rate Please specify why:

69.3

Financing the purchase of inputs Please specify why:

69.4

Transportation problems Please specify why:

69.5

Long distances travelled Please specify why:

69.6

70 Opportunities: What can you do to grow your latrine-related business?

[SELECT ALL APPLY]

Providing information to customers on sanitation Please specify why:

70.1

Providing information to customers on latrine options Please specify why:

70.2

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Improve the quality of products Please specify why:

70.3

Lower cost of product Please specify why:

70.4

Advertisements Please specify why:

70.5

Other (specify)

70.6

71 Opportunities: what do you need to expand your business?

72 Threats: What can change

in the future that will negatively affect your business?

Section 8 – Business opportunity

Q. Questions Response Data

entry

73 Would you try to sell more materials for latrines if it was more profitable?

74 Would you be prepared to sell more latrine products/services if the margin (unit profit) was lower but volumes were a lot higher?

(if NO skip to Q.76)

Yes

No

75 If yes, would this include selling to remote or poor communities?

76 In what ways does government help your business?

77 If what ways does government limit your business?

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78 How could the government help your business grow?

79 How could the government improve sanitation coverage in rural areas?

80 What opportunities do you have to improve your skills and knowledge?

81 Special observations

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Appendix 3: Concrete Producers Questionnaire

Interview Number:

Data Entry Completed

SSCA– Field Work Interviews Questionnaire – Concrete Producers

Date:

Time:

Province:

District:

Village:

Location/Venue: Distance (km)

from center of district

Interviewer:

Interviewee:

Contact info:

Organization:

Title/rank:

Directions:

Explain the project (see background sheet).

Highlight the target districts within the province.

Clarify whether each answer applies only to the target districts, or more generally.

Supervisor sign:

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Section 1 – Background information

Q. Questions Response Data

entry

1 What is your position in the business?

[SELECT ONLY 1]

If “Hired” skip to Q.6

Owner (with staff)

Self Employed

Hired

Other (specify)

2 How many years have you been in this business?

3 How large is the business? (# staff)

Male Female

Permanent 3.1

Semi-permanent 3.2

Occasional 3.3

Total 3.4

4 If you are the owner or self employed, where did you get the capital to start the business?

[SELECT ALL APPLY]

(% if possible)

Saved money 4.1

Loan from bank 4.2

Loan from family/friends 4.3

Loan from other source 4.4

Village development fund 4.5

Support from donor funded project 4.6

Other (specify) 4.7

5 How much of your business is latrine-related?

(Approximate %)

6 Do you have other business activities?

(if NO skip to Q.7)

Yes

No

6.1

If yes, what are they? 6.2

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7 What are your sources of

income?

[SELECT ALL APPLY]

(% if possible)

Concrete products 7.1

Construction services 7.2

Selling construction materials 7.3

Farmer 7.4

Other family members 7.5

Other (specify)

7.6

8 Who manages your finances?

9 Do you have/have you ever

done any of these types of

plans? If yes, can you please

give us the details?

[SELECT ALL APPLY]

Business plan

Yes

No

9.1.A

Details:

9.1.B

Marketing plan

Yes

No

9.2.A

Details:

9.2.B

Financial plan

Yes

No

9.3.A

Details:

9.3.B

10 Have you ever participated in

any type of business training

before?

(if NO skip to Q.11)

Yes

No

10.1

If yes, can you please give us

details? (book keeping,

marketing, etc)

10.2

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Section 2 – Product information/materials

Q. Questions Response Data

entry

Suppliers

name

Suppliers

location

Number of

Potential

suppliers

11 Who are your key/main suppliers for the following materials?

(please list company’s names, as many as possible)

Cement

11.1

Sand

11.2

Gravel

11.3

Mould (for

concrete rings)

11.4

Other (specify) 11.5

12 Where do these materials come from (China, Thailand, Vietnam, local etc)?

(for local, specify where)

Cement

12.1

Sand

12.2

Gravel

12.3

Mould (for concrete rings)

12.4

Other (specify)

12.5

13 How many potential suppliers are there for each these materials?

Cement

13.1

Sand

13.2

Gravel

13.3

Mould (for concrete rings)

13.4

Other (specify)

13.5

14 Do suppliers compete with each other to sell their products to you?

(if NO skip to Q.15)

Yes

No

14.1

If yes, how?

14.2

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15 Are there quality differences in the different suppliers of materials?

(if NO skip to Q.16)

Yes

No

15.1

If yes, can you explain why? (i.e. country of origin)

15.2

16 What kind of latrine-related

products do you produce? (size)

Ring:

60cm 16.1

80cm 16.2

100cm 16.3

Slab 16.4

Lid 16.5

Other (specify) 16.6

17 Are you selling more rings and slabs this year than last year?

Yes

No

18 Than 3 years ago? Yes

No

19 What are the main factors affecting households’ decisions in terms of the type of latrine they want to have?

[SELECT ALL APPLY]

Cost of materials 19.1

Quality of materials 19.2

Materials that match the house 19.3

Materials that will last the longest 19.4

Physical accessibility of materials 19.5

Other (specify)

19.6

20 What do you think is the main reason for households to build a latrine?

[SELECT ALL APPLY]

Emulate others 20.1

Regulations 20.1

Healthcare 20.2

Convenience/comfort 20.3

Education program 20.4

Other family members influence 20.5

Sales promotions 20.6

Other (specify)

20.7

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21 Is there any seasonality to your sales?

[SELECT ONLY 1]

No seasonality

Dry season

Wet season

22 How much do you pay to buy the following materials (specify quantity, quality and price)

Item Brand Quality Price

Cement 22.1

Sand 22.2

Mould 22.3

Other (specify) 22.4

Section 3 – Pricing information

Q. Questions Response Data

entry

23 What is the trend of input prices for concrete products over the past year?

[SELECT ONLY 1]

No material price increased 23.1

Some material prices increased

All material prices increased

Which item? 23.2

By what %? 23.3

24 How have your prices changed in the past year?

[SELECT ONLY 1]

Increased 24.1

Remained the same

Decreased

Which item? 24.2

By what %? 24.3

25 What is the reaction of the customers to your prices?

[SELECT ALL APPLY]

They have the money but choose not to purchase 25.1

They do not have enough money 25.2

They try to negotiate the price 25.3

Other…please specify

25.4

26 Do the customers negotiate the price of your concrete products?

(if NO skip to Q.28)

Yes

No

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27 What do they negotiate about?

[SELECT ALL APPLY]

Cheaper price 27.1

Request cheaper materials 27.2

Free delivery 27.3

Discounts for bulk orders 27.4

Other (specify)

27.5

28 What is the 2014 price and 2014 quantity sold for each of these items so far?

Item 2014

Price

2014

Quantity

Ring: 60cm 28.1

80cm 28.2

100cm 28.3

Slab Size? 28.4

Lid 28.5

Other

(specify)

28.6

29 What is the 2013 price and 2013 quantity sold for each of these items?

Item 2013

Price

2013

Quantity

Ring: 60cm 29.1

80cm 29.2

100cm 29.3

Slab 29.4

Lid 29.5

Other

(specify)

29.6

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Section 4 – Customer base

Q. Questions Response Data

entry

30 Who are your main customers for latrine related products?

[SELECT ALL APPLY]

(% if possible)

Individuals 30.1

Retailers 30.2

Construction companies 30.3

NGO/Government projects 30.4

Other (specify)

30.5

31 Have you noticed increased preference for brick-lined pits?

(if NO skip to Q.32)

Yes

No

31.1

If yes, has this hurt your business? 31.2

32 Are all your customers nearby? (Same village? District?)

32.1

What is the name of the furthest village? How far (km)?

32.2

33 How many customers for latrine products did you have in the last year?

33.1

What percentage is this of your total customers for concrete products?

33.2

34 How many villages are you covering?

Please name them.

34.1

How many districts?

Please name them

34.2

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35

Have you been involved in an NGO/government program in the last 2 years?

(if NO skip to Q.36)

Yes

No

35.1

If yes, which organization? Where?

35.2

If yes, what was your involvement? (I.e. what did you supply?)

35.3

36 When you are supplying products for a latrine – why is this customer buying it?

[SELECT ALL APPLY]

(% if possible)

People that are building a new house 36.1

People that had no latrine at all but now building one 36.2

People with collapsed latrine 36.3

People with full latrine pit building a new pit 36.4

Vulnerable groups and poor households (supported by

government or NGO)

36.5

Other (specify) 36.6

37 How do you market your products and services?

38 How do customers obtain information about products/services you provide?

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Section 5 – Transportation

Q. Questions Response Data

entry

39

40

41

Who provides transportation for your inputs? How much does the transportation cost? How many km?

Item Who provides

transportation

Price of

transportation

Km

Cement

39.1 40.1 41.1

Sand

39.2 40.2 41.2

Gravel

39.3 40.3 41.3

Moulds

39.4 40.4 41.4

Other

(specify)

39.5 40.5 41.5

42

Do you deliver to your customers?

(if NO skip to Q.43)

Yes

No

42.1

If Yes, how (transportation means)?

42.2

If Yes, how much does it cost? (please specify price, volume/weight and km)

Rings and lids

42.3

Slabs

42.4

Other

42.5

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Section 6 – Business work

Q. Questions Response Data

entry

43 Do you have regular suppliers for all your products? (if NO skip to Q.45)

Cement 43.1

Sand 43.2

Gravel 43.3

Moulds 43.4

Other (specify)

43.5

44 If yes, why? Cheaper price/item 44.1

Discount for bulk purchases 44.2

Credit 44.3

Relationship (you have always purchased from them 44.4

Selling on consignment (agreement to pay after goods are sold)

44.5

There is only one supplier 44.6

45 If they provide you credit, please specify the credit conditions

Interest rate: 45.1

Duration: 45.2

Other requirements (guarantee, collateral, etc)

45.3

46 Do you borrow from other sources?

Money lender Yes

No

46.1

Bank (specify) Yes

No

46.2

MFI (specify) Yes

No

46.3

47 What is this loan for?

48 Please specify the credit conditions

Interest rate:

48.1

Duration:

48.2

Other requirements (guarantee, collateral , etc)

48.3

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49 Do you provide credit to customers? (if NO skip to Q.51)

Yes

No

50 Please specify the credit conditions you give your customers

Interest rate:

50.1

Duration:

50.2

Other requirements (guarantee, collateral , etc)

50.3

51 Do you have many competitors in making concrete products? How many?

52 Are they working in the same area?

Yes

No

53 Do you know the prices they charge?

(if NO skip to Q.54)

Yes

No

If Yes, how different with your?

54 Do you know their contact details?

55 Do you have any agreement with your competitors (e.g. deciding together price etc) (if Yes skip to Q.56)

Yes

No

55.1

If No, why not? 55.2

56 If yes, what are the agreements?

57 Have you ever paid any commission to a middleman in order to find new customers?

(if NO skip to Q.59)

Yes

No

58 If yes, how much?

58.1

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What are the conditions?

58.2

59 Do you have sales agents?

(if NO skip to Q.61)

Yes

No

60 If yes, how do you pay them? (Salary? Commission?).

60.1

How much? 60.2

Can you please specify details? 60.3

Section 7 – SWOT

Q. Questions Response Data

entry

61 Strengths: What is the reason why your customers choose your business over others?

(Don’t limit discussion to those listed here.)

[SELECT ALL APPLY]

Price (I have cheaper prices than my competitors)

Please specify why:

61.1

Quality (I have better products than my competitors)

Please specify why:

61.2

Reliability (I always have all the materials my customers need)

Please specify why:

61.3

Location

Please specify why:

61.4

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Delivery

Please specify why:

61.5

Additional services

Please specify why:

61.6

Credit

Please specify why:

61.7

Other (specify)

61.8

62 Weakness: What are the main constraints to your business? [SELECT ALL APPLY]

Access to finance

Please specify why:

62.1

Cost of inputs

Please specify why:

62.2

Availability of labour

Please specify why:

62.3

Availability of material

Please specify why:

62.4

Bad roads

Please specify why:

62.5

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Corruption

Please specify why:

62.6

Government fees/regulation

Please specify why:

62.7

Insufficient demand

Please specify why:

62.8

Customer not paying

Please specify why:

62.9

Staff

Please specify why:

62.91

Training of staff

Please specify why:

62.92

Other (specify)

62.93

63 Weaknesses: what are the problems related to supply of materials?

[SELECT ALL APPLY]

Inconsistency in availability Please specify why:

63.1

Changing prices Please specify why:

63.2

Exchange rate Please specify why:

63.3

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Financing the purchase of input Please specify why:

63.4

Transportation problems Please specify why:

63.5

Long distances travelled Please specify why:

63.6

64 Opportunities: What can you do to grow your business?

Providing information to customers on sanitation Please specify why:

64.1

Providing information to customers on latrine options Please specify why:

64.2

Improve the quality of products Please specify why:

64.3

Lower cost of production and products? Please specify why:

64.4

Advertisements (through what channels?) Please specify why:

64.5

Other (specify)

64.6

65 Opportunities: what do you need to expand your business?

66 Threats: What can change in the future that will negatively affect your business?

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Section 8- Business opportunity

Q. Questions Response Data

entry

67 Would you try to sell more products for latrines if it was more profitable?

Yes

No

68 Would you be prepared to sell more latrine products/services if the margin was lower but volumes were a lot higher?

(if NO skip to Q.70)

Yes

No

69 If yes, would this include selling to remote or poor communities?

70 In what ways does government help your business?

71 In what ways does government limit your business?

72 How could the government help your business grow?

73 How could the government improve sanitation coverage in rural areas?

74 Are you aware of any government or NGO sanitation programs?

(if NO skip to Q.75)

Yes

No

74.1

If Yes, can you please give details?

74.2

75 What opportunities do you have to improve your skills and knowledge? Or improve the equipment/technology you use?

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76 Special observations

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Appendix 4: Masons Questionnaire

Interview Number:

Data Entry Completed

SSCA – Field Work Interviews Questionnaire – Mason

Date:

Time:

Province:

District:

Village:

Location/Venue: Distance (km)

from center of district

Interviewer:

Interviewee:

Contact info:

Organization:

Title/rank:

Directions:

Explain the project (see background sheet).

Highlight the target districts within the province.

Clarify whether each answer applies only to the target districts, or more generally.

Supervisor sign:

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Section 1 – Background information

Q. Questions Response Code

Skip

1 What is your position in the business?

[SELECT ONLY 1]

(if “Hired” skip to Q.5)

Owner (with staff)

Self Employed

Hired

Other (specify)

2 How many years have you been in this business?

3 If you are the owner or self employed, where did you get the capital to start the business?

[SELECT ALL APPLY]

(% if possible)

Saved money 3.1

Loan from bank 3.2

Loan from family/friends 3.3

Loan from other source 3.4

Village development fund 3.5

Support from donor funded project 3.6

Other (specify)

3.7

4 If you are the owner, how large is the business? (# staff)

Male Female

Permanent 4.1

Semi-permanent 4.2

Occasional 4.3

Total 4.4

5 Why did you decide to become a mason?

6 Were you trained to do this type of work?

If NO skip to Q.10

Yes

No

7 If “Yes”, who trained you?

[SELECT ALL APPLY]

College/training institute 7.1

NGO 7.2

Faith-based organization 7.3

Community-based organization 7.4

Government 7.5

Apprentice/on-the-job 7.6

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A donor-funded project training programme 7.7

Other (specify)

7.8

8 Training in what?

9 How long were you trained for? (weeks)

10

If you are owner/self employed and have staff, are your staff trained? If yes who trained them? In what subjects/areas?

College/training institute 10.1

NGO 10.2

Faith based organization 10.3

Community based organization 10.4

Government 10.5

Apprentice/on-the-job 10.6

A donor-funded project training programme 10.7

Other (specify)

10.8

11 Do you have other business activities? (if NO skip to Q.12)

Yes

No

11.1

If yes, what are they? 11.2

12 What are your sources of income?

[SELECT ALL APPLY]

(% if possible)

Construction of houses 12.1

Construction of other structures 12.2

Construction of only latrines 12.3

Farmer 12.4

Other family member 12.5

Other (specify)

12.6

13 Is your business registered? Yes

No

13.1

Why/Why not? 13.2

14 Who manages your finances?

(self, wife, manager, etc)

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15

Do you have/have you ever done

any of these types of plans? If yes,

can you please give us the

details?

[SELECT ALL APPLY]

Business plan

Yes

No

15.1.A

Details:

15.1.B

Marketing plan

Yes

No

15.2.A

Details 15.2.B

Financial plan:

Yes

No

15.3.A

Details: 15.3.B

16 Have you ever participated in any

type of business training before?

(if NO skip to Q.17)

Yes

No

16.1

If yes, can you please give us

details? (book keeping,

marketing, etc)

16.2

17 In terms of latrines, which kind of

service you can provide?

[SELECT ONLY 1]

(if “Build only superstructure” skip to Q.19)

Build full toilet (underground and superstructure)

17.1

Build only underground 17.2

Build only superstructure 17.3

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18 Which kind of underground

structure?

[SELECT ALL APPLY]

Pit with bricks 18.1

Pit with concrete rings 18.2

Pit with bamboo 18.3

Other (specify)

18.4

19

Which kind of superstructure?

[SELECT ALL APPLY]

Bamboo 19.1

Bricks 19.2

Concrete blocks 19.3

Floor without tiles 19.4

Floor with tiles 19.5

Roofing (zinc sheet? Other?) 19.6

Concrete water tank 19.7

Other (specify)

19.8

Section 2 – Product information/materials

Q. Questions Response Code

Skip

20 Who purchases the materials you use for building a latrine?

[SELECT ALL APPLY]

Customers supplied all the products 20.1

Customers supplied some of the products 20.2

I supply all products 20.3

Other (specify)

20.4

21 Which materials were usually provided by the customer?

[SELECT ALL APPLY]

Sand 21.1

Gravel 21.2

Cement 21.3

Steel 21.4

PVC pipe 21.5

Cement ring 21.6

Cement slab 21.7

Concrete blocks 21.8

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'Red earth' blocks 21.9

Zinc sheet for the roof 21.91

Grass for the roof 21.92

Doors (plastic sets, wooden sets, bamboo or other waste

materials used...etc.)

21.92

Flooring of the toilet (earth, tiles, concrete...etc.) 21.93

22 What types of latrines can you construct?

[SELECT ALL APPLY]

Flush / Pour Flush: - to piped sewerage systems

22.1

- to septic tank 22.2

- to pit latrine 22.3

Pit latrine with slab 22.4

Pit latrine without slab/open pit 22.5

Dry Latrine 22.6

Composting toilet 22.7

Other (specify)

22.8

23 What is the most common type of latrine you build?

(i.e

Size?

Dry/wet? Offset pit?

Type of superstructure?)

24 For the following materials please show the quantities used and current cost per item for a typical latrine

Quantity Cost

Sand (metric ton) 24.1

Gravel (metric ton) 24.2

Cement (sack, kg, or

metric ton)

24.3

Steel (different lengths) 24.4

PVC pipe (different

sizes)

24.5

Cement ring (different

sizes)

24.6

Cement slab (different

sizes)

24.7

Concrete blocks 24.8

'Red earth' blocks 24.9

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Zinc sheet for the roof

(different sizes)

24.91

Grass for the roof

(different sizes)

24.92

Doors 24.93

Flooring of the toilet 24.94

Others 24.95

25 Do you advise/suggest any type of latrine to your customer?

26 What are the main factors affecting households’ decisions in terms of the type of latrine they want to have?

[SELECT ALL APPLY]

Cost of materials 26.1

Quality of materials 26.2

Materials that match the house 26.3

Materials that will last the longest 26.4

Physical accessibility of materials 26.5

Other (specify)

26.6

27 What do you think is the main reason for households to build a latrine?

[SELECT ALL APPLY]

Emulate others 27.1

Regulations 27.2

Healthcare 27.3

Convenience/comfort 27.4

Education program 27.5

Other family members influence 27.6

Sales promotions 27.7

Other (specify)

27.8

28 What types of materials are not readily available?

[SELECT ALL APPLY]

For each, which is the furthest you have gone to buy materials for latrine construction?

For each, if there is a shortage how many days did you usually have to wait for?

Furthest km Days wait

Sand 28.1

Gravel 28.2

Cement 28.3

Steel 28.4

PVC pipe 28.5

Cement ring 28.6

Cement slab 28.7

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Concrete blocks 28.8

'Red earth' blocks 28.9

Zinc sheet for the roof 28.91

Grass for the roof 28.92

Doors (plastic sets,

wooden sets, bamboo or

other waste materials

used...etc.)

28.93

Flooring of the toilet

(earth, tiles,

concrete...etc.)

28.94

29 Is there any seasonality to your work as mason?

[SELECT ONLY 1]

No seasonality

Dry season

Wet season

30 Are you building more latrines this year than last year?

Yes

No

31 Than 3 years ago? Yes

No

Section 3 – Pricing information

Q. Questions Response Code

Skip

32

Can you please specify how much do you charge, how many people and how much time is required to do the following

Item Price for

the

customer

#

Workers

# Days Worker

salary

(total)

Pit digging 32.1

Pit lining (concrete

rings)

32.2

Pit lining (bricks) 32.3

Pan and slab (specify

which) and pipe

installation

32.4

Superstructure (please

specify which kind)

32.5

Total 32.6

33 What is the trend of construction material prices No material price increased

33.1

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for the past year?

[SELECT ONLY 1]

Some material prices increased

All material prices increased

Which item?

33.2

By what %? 33.3

34 How have your service fee changed in the past year?

[SELECT ONLY 1]

Increased 34.1

Remained the same

Decreased

Which item?

34.2

By what %?

34.3

35 What is the reaction of customers to the fee you charge for building a latrine?

[SELECT ALL APPLY]

“Expensive” 35.1

“Unfair” 35.2

“Reasonable” 35.3

“Cheap” 35.4

Other…please specify

35.5

36 Do the customers negotiate the cost of your service (building a latrine)?

Yes

No

37 What do they negotiate about?

[SELECT ALL APPLY]

Offer to supply certain materials 37.1

Offer manual labour 37.2

Request cheapest materials 37.3

Cheaper price 37.4

Completion time 37.5

Other (specify)

37.6

38 What do you prefer in terms of payment?

[SELECT ALL APPLY]

Cash up front 38.1

Cash over time (step by step). How many payments, over how long? 38.2

Goods (barter) up front 38.3

Goods (barter) over time 38.4

39 What do your customers Cash up front 39.1

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usually prefer?

[SELECT ALL APPLY]

Cash over time (step by step). How many payments, over how long? 39.2

Goods (barter) up front 39.3

Goods (barter) over time 39.4

Section 4 – Customer base

Q. Questions Response Code

Skip

40 Who are the main customers of your services? [SELECT ALL APPLY]

(% if possible)

Households 40.1

Government department/agencies 40.2

Donor funded projects 40.3

Local businesses 40.4

Local NGO 40.5

Other(specify)

40.6

41 Do your customers have quality preferences? (please specify) [SELECT ALL APPLY]

Brand

41.1

Durability/strength

41.2

Color

41.3

Size

41.4

Certain materials

41.5

Other (specify)

41.6

42 How many latrine customers did you have in the last year?

43 Approximately how much of your work in the last year was building latrines? (% of total mason work)

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44 What size, type and quality of latrines do most customers want?

45 Where are most of your customers located? (Same village/district?)

45.1

What is the name of the furthest village? How far (km)?

45.2

46 How much are they usually willing to spend? (only mason fee)

47 What is the furthest distance that you have travelled to construct a latrine?

48 When you go far away from your house, do you usually charge more because of the distance?

Yes

No

49 If yes, how much?

50 When you construct a latrine - who do you usually construct the latrine for? [SELECT ALL APPLY]

(% if possible)

For people that are building a new house 50.1

For people that had no latrine at all 50.2

For people with collapsed latrine 50.3

For people with full latrine pits 50.4

Vulnerable groups and poor households (supported by government or NGOs)

50.5

Other (specify)

50.6

51 How do you market your service?

52 How do people know about your services?

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Section 5 – Maintenance and Improvement

Q. Questions Response Code

Skip

53 Can you please specify which kinds of intervention are you able to do and how many have you done in the last year?

Able/Not able

# in the last year

Repair/Fixing 53.1

Emptying 53.2

Upgrading 53.4

None 53.5

Other (specify) 53.6

54 What is the most common improvements made? [SELECT ALL APPLY]

New Pit 54.1

Line Pit 54.2

New (not cement) slab 54.3

Cement slab 54.4

Permanent superstructure 54.5

Other (specify)

54.6

55 Do you know about different latrine options available? [SELECT ALL APPLY]

Flush to septic tank? 55.1

Pour flush? 55.2

Offset pit? 55.3

Dry latrine? 55.4

Other?

55.5

56 If the mason knows different options: Do you think your customers know about latrine options available? If yes, how they know?

They do not know 56.1

Verbal descriptions 56.2

Pictures 56.3

Physical 56.4

Other (specify)

56.5

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Section 6 – Business Network

Q. Questions Response Code

Skip

57 Do you regularly go to certain concrete producers over others to purchase the materials you need?

If NO skip to Q.58

Yes

No

57.1

If Yes, why? 57.2

58 Do you regularly go to certain retailers over others to purchase the materials or tools you need? If NO skip to Q.59

Yes

No

58.1

If Yes, why? 58.2

59 Do materials retailers give you credit?

If NO skip to Q.61

Yes

No

60 If yes, please specify the credit conditions

Interest rate 60.1

Duration (days, weeks, months?) 60.2

Other requirements (collateral, guarantee) 60.3

61 Do shops give you incentives to purchase from them?

If NO skip to Q.62

Yes

No

61.1

If yes, can you please specify details?

61.2

62 Do you provide credit to customers?

(if NO skip to Q.64)

Yes

No

63 Please specify the credit conditions

Interest rate 63.1

Duration 63.2

Other requirements (collateral, guarantee) 63.3

64 Do you have many competitors in constructing latrines?

Yes

No

64.1

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How many? 64.2

65 Are they working in the same areas?

Yes

No

66 Do you know the prices they charge?

(if NO skip to Q.67)

Yes

No

66.1

If Yes, how different is from yours?

66.2

67 Do you know their contact details? Please write them.

68 Do you have any agreement with your competitors (e.g. deciding together price etc)

(if YES skip to Q.69)

Yes

No

68.1

If No, why not? 68.2

69 If yes, what are the agreements?

70 Have you ever paid any commission to middleman in order to find new customers?

(if NO skip to Q.72)

Yes

No

71 If yes, how much?

71.1

What are the conditions? 71.2

72 Do you have sales agents?

(if NO skip to Q.74)

Yes

No

73 If yes, how do you pay them? (Salary? Commission?).

73.1

How much?

73.2

Can you please specify details?

73.3

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Section 7- SWOT

Q. Questions Response Code

Skip

74 Strength: What is your distinctive point/competitive advantage?

(or: why do you think customers would go to you rather than someone else?)

[SELECT ALL APPLY]

Price (I'm cheaper than my competitors) Please specify why:

74.1

Quality (I'm better than my competitors) Please specify why:

74.2

Speed (I'm faster than my competitors) Please specify why:

74.3

Other (specify) Please specify why:

74.4

75 Weakness: What are the main constraints to your business?

[SELECT ALL APPLY]

Access to finance Please specify why:

75.1

Cost of inputs Please specify why:

75.2

Availability of labour Please specify why:

75.3

Availability of material Please specify why:

75.4

Bad roads Please specify why:

75.5

Corruption Please specify why:

75.6

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Government fees/regulations Please specify why:

75.7

Insufficient demand Please specify why:

75.8

Customer not paying Please specify why:

75.9

Staff Please specify why:

75.91

Training of staff Please specify why:

75.92

Other (specify)

75.93

76 Opportunity: How can you stimulate demand?

(availability of target customers, government projects)

[SELECT ALL APPLY]

Educating customer on sanitation Please specify why:

76.1

Educating customer on latrine options Please specify why:

76.2

Improve the quality of products/services Please specify why:

76.3

Lower cost of product/services Please specify why:

76.4

Advertisements Please specify why:

76.5

Other (specify)

76.6

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77 Opportunity: what do you need to expand your business?

78 Threats: What can change in the future that will negatively affect your business?

Section 8 – Skills ability and capacity

79 How many days does it take for you to build a complete latrine? (what kind of latrine)

How many people?

How much faster can it be built if you have 1 more person?

80 How many latrines can you improve/upgrade in a month? (maximum)

81 If customer numbers increase, how will you cope with the extra demand?

82 In what ways does government help your business?

83 In what ways does government limit your business?

84 How could the government help your business grow?

85 What opportunity do you have to improve skills and knowledge?

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86 Special observations

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Appendix 5: Microfinance Questionnaire

Interview Number:

Data Entry Completed

SSCA – Field Work Interviews Questionnaire – MFI

Date:

Time:

Province:

District:

Village:

Location/Venue: Distance (km)

from center of district

Interviewer:

Interviewee:

Contact info:

Organization:

Title/rank:

Directions:

Explain the project (see background sheet).

Highlight the target districts within the province.

Clarify whether each answer applies only to the target districts, or more generally.

Supervisor sign:

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Section 1 – Business description and loan product information

Q. Questions Response Data

entry

1 How many branches/service outlets does your organization have in this province?

2 How many branches/service outlets in this district?

3 Does the organization have a branch in other target districts of the province?

If “No”, go to Q.4

Yes

No

3.1

If Yes, which one? 3.2

4 What services does your organization provide?

5 Do you target particular types of customers?

If “No”, go to Q.6

Yes

No

5.1

If Yes, which one? 5.2

6 What types of loans? (may save time if they can provide product information brochures/sheets)

7 What are the typical terms for your loans?

Maximum amount: 7.1

Minimum amount: 7.2

Interest rate: 7.3

Period: 7.4

Collateral, etc: 7.5

8 Do these terms vary for different customers (ie different occupations or businesses)?

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Section 2 – Local business environment

Q. Questions Response Data

entry

9 What are the main areas of economic activity in this district?

10 What are the main occupations of

the individuals you lend to in the

district?

11 Does your organization lend to

businesses in the district?

If “No”, go to Q.13

Yes

No

12 If Yes, what is the main kind of

businesses your organization

lends to in the district?

13

What are the main constraints for

businesses in this district?

(not for the MFI, but businesses

generally)

Section 3 – Sanitation programs

Q. Questions Response Data

entry

14 Has your organization been involved in any sanitation programs in the province?

If “No”, go to Q.18

Yes

No

15 If Yes, which programs? (name of organization, location)

16 If Yes, what was your organizations’ involvement?

(e.g. Lent to individuals for toilet construction. Guarantee from NGO, etc)

17 If Yes, what were the terms?

Loan interest rate, duration, guarantee required, etc.

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Section 4 – Lending

Q. Questions Response Data

entry

18 Outside of Government or NGO programs, has your organization provided loans to individuals/households for toilet construction? Or to a group or village committee?

If “No”, go to Q.20

Yes

No

19 If Yes, what were the terms?

Interest rate: 19.1

Duration: 19.2

Other requirements (guarantee,

collateral, etc)

19.3

20 Has your organization lent to any:

Construction material suppliers? 20.1

Concrete producers? 20.2

Masons? 20.3

21 What are the typical terms for loans to these businesses?

Minimum amount: 21.1

Typical/average amount: 21.2

Maximum amount: 21.3

Interest rate: 21.4

Duration: 21.5

Other requirements (guarantee,

collateral, etc)

21.6

22 Is your organization

trying/planning to

increase its overall

lending in this district?

Yes

No

23 Would your organization

be interested in lending

to sanitation-related

businesses?

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Appendix 6: Focus Group discussion Guidelines

FOCUS GROUP DISCUSSION GUIDE

I. Profile and quota of FGDs per province Each FGD will have 6-10 participants. Participants will be recruited from contacts provided by Nam Saat, clients, as well as preliminary field visits.

II. Time needed

Each FGD would last for 1.5 to 2 hours. The FGD session will be arranged in town/village at an appropriate time.

III. Required materials

Materials required: notebook, pen, note sticker, marker, tape recorders (used only if participants agree), and flipchart. Also visual aids (e.g. diagrams of latrines, to aid discussion). A camera to take a photo, if participants agree.

IV. Notes to be taken by assistant moderator

1. Participants’ details including name, sex, age, business/occupation, years in the business. 2. Detailed record of participants’ comments/answers to all key questions. 3. Summary of participants’ conversations with each other during the discussion.

4. Aim for sentences that meet the theme in order to collect as much as possible quotes.

V. Key steps to run a FGD

1. There will be two facilitators – moderator and assistant moderator.

Moderator: To facilitate, encourage participant to speak and keep the discussion on track and time. Makes sure all participants have equal opportunity to express their opinions.

Assistant moderator: To help coordinate the discussion, take notes and record discussion.

2. Moderator will start by introducing her/his whole team, objective of the project briefly,

purpose of this FGD, approximate duration of this meeting, and emphasize a few research ethical codes of conduct, such as “Confidentiality”.

3. Sit in circle. Moderator asks participants to write their names on note stickers and them on their shirts. Then moderator requests participants to briefly introduce themselves: name, age, and current occupation.

4. Discuss through the key questions in the list below, starting with the ice-breaker.

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COVER PAGE

Date of FGD: _ _ / _ _ / _ _ _ _ (DD/MM/YYYY)

Start Time: __ __ : __ __ (24 HH: Min)

End Time: __ __ : __ __ (24 HH: Min)

Reviewed by supervisor: _ _ / _ _ / _ _ _ _ (DD/MM/YYYY)

Moderator:

Note Taker 65:

Province:

District:

Village:

FGD Number:

Number of Participants66:

Details of the participants:

Name Type of business Location Years in this

business Sex

1

2

3

4

5

6

7

8

9

10

65 Sessions will be audio recorded to ensure accuracy of data collection if there is only one note taker present. 66 Facilitators are to confirm and note the group’s representation below.

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Opening

Hello my name is ______________________ and I am working for the survey team under the guidance of the government/NamSaat. We are conducting discussions in selected districts to learn more about your thoughts and practices surrounding the supply of sanitation products and services.

Ice Breaker

Thank you for your kind cooperation to participate in this discussion. First of all, may each of you briefly introduce yourself? Please tell me what I should call you, what are your occupation or daily activities and where do you come from?

Have you join any sanitation meeting before? If yes, when was the last time? Does this happen often? What was the meeting about?

VI. Key Questions per discussion

1. What do you think is the main reason households do not have a latrine?

(once you have a list of a few reasons, encourage participants to rank them. Hints: cost, not know the benefits, water access, transport distances/cost, etc)

2. When and why do people build a latrine?

(eg. when building a house, because of an NGO program, because they know the benefits)

3. Has there been an increase in latrine construction in recent years? Why?

4. Describe the typical latrine people buy

(size, wet/dry, pit type, slab and pan, superstructure)

5. What materials are required to build it?

(see table next page. Use flip chart or large paper and have participants help you fill it in)

6. How much do these materials cost?

7. What about the cost of transport?

8. What labour is required? How much does this cost? (how many men, how many days, how much per

day) Is it skilled labour?

9. How difficult is it for a household to get a latrine?

What knowledge does a typical household have of what is required to build a latrine?

10. Where do households buy everything they need for a latrine? How many shops/businesses must they

visit?

How difficult would it be for one shop to sell everything required?

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11. Do people ever take out a loan to build a latrine? Who do they borrow from? What is the interest rate

and repayment terms?

12. Is there much marketing of sanitation products and services?

By whom? In what form (advertising, posters, brochures, etc)?

13. Is the selling of products for latrines good business?

(We do not mean are they good at it, or is their business a good one. We mean: is selling products for latrines profitable and does it provide sufficient income? Is it more or less profitable than their other products/businesses)

14. Do you think products for latrines will increase in importance to your business?

(Do they think the demand for latrine products will grow? What is the outlook for the latrine part of their business?)

15. What are the main constraints your businesses face?

(once you have a list of a few constraints, encourage participants to rank them. Hints: access to finance, competition, credit terms from suppliers, quality of roads, customers not paying, import tax)

16. What could be done to increase the number of households with latrines in rural areas?

17. What Govt/NGO sanitation programs have operated in this area in the last few years?

Have businesses here been directly involved? Does the program buy materials and services? Or do households? What materials? In what quantity?

18. Which are the strength for latrine building business in the district?

Which are the weaknesses for latrine building business in the district?

Which ones can be the opportunities for latrine building business in the district?

Which ones can be the threats for latrine building business in the district?

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Typical latrine

Size: . WWet or Dry? Offset pit?: Yes/No .

Materials Unit (kg, piece, bag etc) Amount Price Total cost

Pan

Concrete rings

Concrete lid

Concrete slab (size? for dry latrine: slab with pan or not?)

Bricks

Sand

Gravel

Cement

Steel

Wire mesh

PVC pipe (size?, grade?)

Zinc sheet (roof)

Bamboo/rattan

Door

Tiles

Wood

Nails

others

This is a guide. It is not necessary to fill in every row. You can include a range for prices, but try to get them to agree on the most common amount.

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