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Why markets - not NGOs - are key to solving the sanitation crisis

Source: Thomson Reuters Foundation - Sun, 18 Nov 2012 10:52 PM
Author: john-sauer
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Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

John Sauer is assistant director, thought leadership, Water for People.

This is what we know about the challenge of a world where 2.6 billion people do not have a toilet:  while conventional knowledge might motivate us to throw foreign aid toward regions with inadequate sanitation coverage, using that money to simply construct more latrines is not enough to ensure lasting results.

While this may have an impact on short-term sanitation coverage, latrines given to families by non-governmental organisations (NGOs) chiefly serve to create only one thing in the long-term: a dependency on that NGO to always provide support.

For all the discussion about sustainability, aid effectiveness, and reaching the poor, with this strategy NGOs  don’t seem to be “walking the talk” and pursuing their unspoken core objective: to work themselves out of a job by providing a truly long-term solution to the sanitation crisis.

Instead, by too-often focusing on spending funds directly on latrine construction, they are “crowding-out” the local private sector and fundamentally distorting the potential for a sanitation market to develop and remain strong over time.

The ideal sanitation market would see local businesses taking the primary role of providing ongoing sanitation services to those most in need, forever.

To achieve our core mission and have an exit strategy from the start, NGOs need to reorient their work away from latrine construction to facilitating market system development.

A growing number of organizations have moved beyond the short-term, “project”-oriented, approach of simply measuring success by the number of toilets built and have recognized the importance of setting the stage for local businesses to enter the market and provide a reliable supply chain of sanitation goods to meet customer demand.

In this scenario, NGOs provide training for entrepreneurs to develop the skills needed to grow and maintain successful sanitation businesses.

Yet despite being a step in the right direction, this approach still encourages entrepreneurs to rely on NGO-support for business development, creating the potential for another activity (market-growth support) to be dependent on NGOs in the long-term.

This failure to realistically envision an exit strategy, where NGOs are no longer needed for market support, highlights the lack of attention placed on analyzing the market system as a whole, and a miscalculation of the role NGOs can and should play: to create a sanitation market that on its own, will expand, diversify, and remain strong in the future.

In the more ideal model, rather than working directly with the entrepreneurs, NGOs support a local business development service (BDS), which in turn provides direct support to local sanitation entrepreneurs to grow their businesses.

These ideas are rooted in a market-based development approach known as Making Markets Work for the Poor (M4P), with a central premise arguing that since the poor are already dependent on market systems for their livelihoods, NGOs can best provide long-term, positive, impacts on their quality of life by making these market systems more effective and sustainable.

As NGOs facilitate the needed adjustments to strengthen the market system, the range of goods offered can continue to expand, diversify and be sustained in the long term because the local private sector, a more sustainable stakeholder than an NGO, is driving the process forward.

With sanitation, if the proper market incentives are in place, households acquire products and services they want at a reasonable price, and the private sector does what it does in any healthy market; it plays the leading role in maintaining its current customer base as well as bringing in new customers.

Many will (oftentimes correctly) argue that markets will not always reach everyone; NGOs can play a significant role to the growth of current developing markets by monitoring who market systems reach over time, so as to develop strategies to mitigate any bottlenecks and facilitate processes by which even the most poor and vulnerable can benefit from market development.

By focusing on creating and encouraging favorable market conditions that will ensure effective, long-term provision of sanitation products  and services that reach everyone, even the most vulnerable, NGOs have eliminated local dependency on their services, and markets will be strong enough to respond to changing demands over time.

In this way, NGOs can realize their unspoken objective to work ourselves out of a job because they have created a market system that will survive without them.  Now that is a graceful exit.

Find a related graphic here

I welcome your comments, please join the conversation @johnwsauer, and learn more about Water For People's Everyone Forever approach.

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