Creating Viable and Sustainable Sanitation Enterprises: Guidance for Practitioners

Universal access to basic sanitation is a long-standing challenge despite decades of interventions by governments, donors and funders, and civil society. Even though the importance of the private sector for the supply of toilets was recognized as far back as the 1980s, few development programs applying market-based sanitation (MBS) approaches have scaled. The objective of the Water, Sanitation and Hygiene Partnerships and Learning for Sustainability (WASHPaLS) project is to better understand the barriers to scaling MBS interventions and improve programming globally.

The USAID/WASHPaLS Scaling Market-Based Sanitation: Desk Review on Market-Based Rural Sanitation Development Programs (2018) highlighted the barriers sanitation markets face to scale, and identified some remedial interventions at the three levels of the sanitation market system―the core sanitation market itself, the business environment, and the broader context. The desk review identified multiple questions for further exploration of areas with inadequate evidence (Figure A). This report provides carefully collected evidence to understand how sanitation enterprises can be made viable and sustainable?

This research sought to answer the question through retrospective analyses of the viability and sustainability of sanitation enterprises in partnership with market-based sanitation (MBS) programs in Cambodia (WaterSHED’s Hands-Off project), India (PSI’s Supporting Sustainable Sanitation (3Si) project in the Bihar state in India), and Nigeria (WaterAid’s Sustainable Total Sanitation (STS) project). As part of this research, we realized that few, if any, MBS programs were tracking the financial performance of sanitation enterprises. To fill this essential knowledge gap, we interviewed dozens of sanitation enterprises in the three countries to build detailed financial statements and to understand better their business practices. We found enterprises differed significantly along two dimensions of performance—profit, the primary incentive for entrepreneurs, and revenue, as a metric of scale—and segmented them into four categories. We undertook comparative analyses of enterprises across these four categories to identify the contextual and strategic choice factors that drove differential performance within the same MBS program.

We also assessed enterprise-specific support provided by each MBS program that influenced viability and sustainability. The findings are published as three country case studies. This report consolidates the findings and recommendations across the three case studies to offer implementers guidance on improving the viability and sustainability of the sanitation enterprises they support.