For discussion, not for circulation USAID/Uganda Sanitation for Health (S4H) Task 1.1.1 Develop a National Sanitation Market Strategy In-depth research findings: Value chain For discussion, not for circulation 2 Acronyms and terms Agg. Aggregate EA Enumeration area FSM Fecal sludge management HH Household HW Hardware store IBT Improved (at least basic) toilet MBS Market-based sanitation NSMS National Sanitation Market Strategy S4H Sanitation for Health Permanent materials1 Construction materials that can maintain their stability for more than 15 years; e.g., concrete, cement screed, tiles, iron sheets Temporary materials1 Construction materials that can maintain their stability for no more than 3 years; e.g., grass, mud, wattle VC Value chain VHT Village Health Team 1. National Population and Housing Census 2014: Analytical Report, Uganda Bureau of Statistics, Government of Uganda, 2017 For discussion, not for circulation 3 Table of contents  Overview of value chain research  Executive summary  Entrepreneur, enterprise, and business environment barriers and drivers towards MBS  Appendix For discussion, not for circulation 4 Overview | Objectives  The USAID Uganda Sanitation for Health Activity (S4H) is supporting the Ministry of Health to develop a National Sanitation Market Strategy (NSMS) aimed at increasing access to and use of improved sanitation through market interventions  As part of this process, over the last year, S4H has carried out both secondary and primary research to better understand the current situation of the sanitation market in Uganda, focused on identifying drivers for, and barriers to, the provision of improved sanitation  This involved speaking with experts from the Government, NGOs, and the private sector, and conducting in-depth interviews with households, institutions (schools and health facilities), and actors in the sanitation value chain (e.g., masons, pit diggers, hardware stores, financiers) This document presents the key findings of the value chain and policy research For value chain, our research covered key value chain actors with the aim of understanding their:  Sanitation business outlook including barriers and drivers towards increased participation of the value chain actors in the sanitation market  Business economics of key value chain actors (to the extent possible) including unit margins on sanitation products and services and relative importance of sanitation compared to the actor’s overall construction business For policy, our research covered interviews with select district officials with the aim of understanding:  Key regulatory and policy barriers that may impact households’ ability to construct IBTs and/or impact the business environment within which value chain actors operate For discussion, not for circulation 5 Understand sanitation landscape  Secondary research to understand sanitation value chain, products, and challenges  Immersion field trip to understand value chain actors and their barriers  Hypotheses on barriers and drivers towards increased participation of VC actors in the sanitation market, based on 99 qualitative interviews  Key areas of inquiry for in-depth research Prepare for in-depth value chain research  Define research areas  Develop and test quantitative questionnaire  Develop qualitative discussion guides  Select and train research agency  Digitized questionnaire translated in 9 local languages  Actor-specific discussion guides for qualitative interviews Conduct in-depth value chain research  Analyze in-depth research and Immersion data to identify key barriers and drivers  Conduct unit margin and system economic analyses for key actors  Key barriers and drivers that may prevent/ enable value chain actors to increase participation in the sanitation market  System economics and unit margins of key value chain actors Key activities Outputs Carry out value chain analysis  Interview key value chain actors using quantitative tools  Conduct 8 value chain trace backs in 5 districts  453 quantitative interviews conducted  8 value chain trace backs conducted Apr 2018 – Jul 2018 Jul 2018 – Oct 2018 Oct 2018 – Nov 2018 Nov 2018 – Jan 2019 Overview | High-level approach For discussion, not for circulation 6 Overview | Research locations In-depth quantitative value chain research was conducted in 10 districts, and qualitative trace backs were conducted in a subset of 5 of these 10 districts. The districts were selected to cover a diverse set of sanitation contexts Non-S4H districts S4H program districts VC qualitative interviews 1. Measures relative ability of households in a district to pay for construction of sanitation facilities using a composite of UBOS’s poverty indicator, household asset ownership, percentage of households in the district that consume less than 2 meals a day, and materials used for house construction; 2. Measures relative difficulty faced in accessing materials for construction of sanitation facilities in a district using a composite of average distance from the nearest road, whether the district is difficulty to reach, and whether the district is affected by armed conflict; 3. Measures relative availability of private product and service providers in a district using a composite of average distance from the nearest market selling general merchandise, percentage of households which have at least one member engaged in non-agricultural household based enterprise, and percentage of households with water connections in own yard/ plot/ building For discussion, not for circulation 7 Overview of value chain research | Sample size 1. Includes interviews that were conducted as part of the pre-test 2. Each value chain trace back involved qualitative interviews with the VC actors that provided key inputs or services towards a particular households’ toilet construction We conducted ~450 quantitative interviews in 10 districts, and 8 value chain trace backs in 5 districts as part of the in-depth research; conducted 99 qualitative interviews as part of the Immersion visit District # ofVC trace backs2 Bukomansimbi 1 Buyende 2 Gulu 2 Kabarole 2 Ngora 1 8 Value chain ‘key actor’ # of quantitative interviews1 Aggregate producer 52 Brick maker 50 Sand miner 45 Cement pre-fabricator 30 Hardware store 45 Transporter 48 Pit digger 51 Mason 50 VSLA 47 SACCO 35 453 Quantitative research Qualitative research District # of qualitative interviews Arua 24 Kampala 22 Kibaale 31 Mukono 22 99 Qualitative research (Immersion visit) For discussion, not for circulation Executive summary | Context The value chain includes a wide range of disaggregated players, with some convergence upstream 9 Stakeholder typically found closest to customer Stakeholder typically found farthest from customer – national/ regional Stakeholder typically found moderately close to customer Stakeholder typically found farther away – regional/ district-level Distance from customer Treatment plant Hardware store Manual pit emptier Dump-site owner/manger Mason Roofing agent VSLA SACCO MFIs Commercial banks Cement producer Pan manufacturer Transporter Timber seller Contractor Mechanized pit emptier Customer building a toilet Cement dealer Cement pre-fab Pit digger Brick maker Grass seller Poles / reed seller Pan dealer Sand miner Aggregate producer For discussion, not for circulation 8 Table of contents  Overview of value chain research  Executive summary  Entrepreneur, enterprise, and business environment barriers and drivers towards MBS  Appendix For discussion, not for circulation 10 Executive summary | Key insights For sanitation entrepreneurs Sanitation entrepreneurs are generally unavailable to household customers, in most rural and some urban areas, either due to lack of physical presence (cement pre-fabricators) or due to perceived lack of business potential in household toilets (contractors); this leads to a disaggregated supply chain and a DIY (do-it-yourself) delivery model Other value chain actors that could play this sanitation entrepreneur role do not have the requisite business acumen or inclination to succeed in this role (e.g., pit diggers, masons) High working capital requirement for actors such as hardware stores, transporters, and contractors, coupled with lack of appropriate capital products, limits their ability and/ or interest to provide sanitation-specific products or services Sanitation, as a stand-alone business, may not be viable for many value chain actors due to seasonality in income, high competition, and customer-related delays However, sanitation is adequately profitable at a unit level, more so for service-related actors such as pit diggers and masons; this may increase their interest in sanitation 1 2 3 4 For sanitation enterprises Product design of plastic pans may not be appropriate for large parts of the country, and many pit diggers do not have the required skill or knowledge to offer households the most appropriate pit type Lack of appropriate sales and marketing efforts leads to untrained masons, and a customer base that may not be willing to buy sanitation-specific products due to insufficient knowledge about price and/ or value Within the existing DIY delivery model, knowledge of closely-related actors and customer referrals among them may provide the actors with additional business; it may also provide the potential for an existing actor to serve as a focal point to households 5 6 7 For discussion, not for circulation 11 arket Executive summary | Key insights Within the business environment Poorly penetrated associated supply chains (hardware stores, sand, aggregate) lead to limited local access and increased transportation costs, particularly for rural households Increasing fuel costs may impact the viability of various actors (such as pan manufacturers and transporters) Government policies, such as mining regulations may increase the cost of doing business and may make the construction of IBTs more expensive National level Public Health Act may not be well supported at the local level by adequate bylaws, and may not be adequate in promoting appropriate toilets for households Budgetary constraints, insufficient political will at local Government level, and unintended consequences may render enforcement of the Public Health Act and any bylaws (if present) ineffective 8 9 10 11 12 These key insights have been further detailed in the next section of the document against the Sanitation M System – Framework for MBS1 1. Scaling Market Based Sanitation, June 2018, by Agarwal, Chennuri, and Mihaly For discussion, not for circulation 12 Table of contents  Overview of value chain research  Executive summary  Entrepreneur, enterprise, and business environment barriers and drivers towards MBS  Appendix For discussion, not for circulation Barriers and Drivers | Framework The Sanitation Market System – Framework for MBS1 1 BROADER CONTEXT SANITATION MARKET BUSINESS ENVIRONMENT CUSTOMER Affordability Availability ENTREPRENEUR ENTERPRISE Target Market Delivery Model Product System Sales & Marketing A barrier is any factor that restricts a value chain actor’s participation in the sanitation market, thereby making it more difficult for customers to adopt IBTs A driver is any factor that enhances a VC actor’s participation in the sanitation market, thereby making it easier for customers to adopt IBTs 1. Scaling Market Based Sanitation, June 2018, by Agarwal, Chennuri, and Mihaly 13 For discussion, not for circulation 14 Barriers and Drivers | Entrepreneur Entrepreneur barriers/ drivers 14 BROADER CONTEXT BUSINESS ENVIRONMENT CUSTOMER Affordability ENTERPRISE Target Market Delivery Model Product System Sales & Marketing Availability ENTREPRENEUR SANITATION MARKET  Lack of sanitation entrepreneurs, especially in rural areas  High working capital requirements and lack of appropriate capital products  Lack of viability of sanitation business  Adequate unit margins on sanitation products/services, for some actors  Drivers  Barriers For discussion, not for circulation 15 Entrepreneur | Barrier | Availability of sanitation entrepreneurs (1/8) Sanitation entrepreneurs1 are generally unavailable to household customers, in most rural and some urban areas, either due to lack of physical presence (cement pre-fabricators) or due to perceived lack of business potential in household toilets (contractors); this leads to a disaggregated supply chain and a DIY (do-it￾yourself) delivery model Other value chain actors that could play this sanitation entrepreneur role do not have the requisite business acumen or inclination to succeed in this role to succeed (e.g., pit diggers, masons) 1 Cement pre-fabricators are not found in most rural and many urban areas a b c 1. Sanitation entrepreneurs are value chain actors that play some ‘focal-point’ role by aggregating materials, services, and/ or information on behalf of the customer d e Contractors currently have low interest in taking on household toilet jobs as they perceive the jobs to have lower revenue potential compared to institutional toilet jobs, and low profitability Pit diggers do not always charge a higher per-foot rate for rocky soil conditions Masons do not engage in marketing efforts, and find it difficult to estimate their annual revenues from toilet construction jobs A largely DIY (‘do it yourself’) model requires customers to individually source most materials and services from various locations, some of which may be far away For discussion, not for circulation 16 Entrepreneur | Barrier | Availability of sanitation entrepreneurs (2/8) Cement pre-fabricators are not found in most rural and many urban areas a 1 The field research team deployed by S4H was unable to identify sufficient number of cement pre-fabricators to interview for the primary research in both urban and rural areas The S4H team aimed to interview 30 cement pre￾fabricators across 10 districts as part of the in-depth research 3 interviews per district, with 1 in a rural setting 40% of the districts had insufficient cement pre￾fabricator interviews1 50% of districts had no rural cement pre-fabricator interviews2 60% 40% % of districts in which VCAS was conducted Districts with insufficient interviews Districts with sufficient interviews 50% 50% % of districts in which VCAS was conducted Districts without rural interviews Districts with rural interviews 1. The districts with insufficient interviews include Buyende, Kabarole, Kibaale, and Kotido. 2. The districts without rural interviews include Buyende, Gulu, Jinja, Kabarole and Kotido For discussion, not for circulation 17 Entrepreneur | Barrier | Availability of sanitation entrepreneurs (3/8) Contractors currently have low interest in taking on household toilet jobs as they perceive the jobs to have lower revenue potential compared to institutional toilet jobs, and low profitability b 1 Contractors believe that household toilet jobs generate low revenues Contractors believe that household toilet cannot be priced in a profitable manner “Have not done any work for households because the jobs are of low value – they only require 2-3 stance toilets” - Contractor in Ngora1 “I don't have household clients - I need to quote prices which can cover the cost of my taxes, which puts me out of the reach of households. Households would rather negotiate with masons.” - Contractor in Bukomansimbi1 “Individual household toilet construction jobs are of much lower value than institutional jobs – so I don’t see many prospects for this type of business.” - Contractor in Kabarole1 “I would not be interested in building a household toilet for UGX 1.5M – I don't think the job will be profitable at that budget. I would charge around UGX 2.5M million for a 1-stance toilet.” - Contractor in Kabarole1 1. Source: Qualitative value chain interviews For discussion, not for circulation 18 Entrepreneur | Barrier | Availability of sanitation entrepreneurs (4/8) Pit diggers do not always charge a higher per-foot rate for rocky soil conditions c 1 Pit diggers do not charge a higher per-foot rate for rocky soil conditions… …while they take longer to complete a job in rocky soil conditions, which may reduce the number of jobs they are able to take on “I charge UGX 10K per foot for a rectangular pit. The conditions of the soil doesn’t affect the price.” - Pit digger in Kabarole “I always charge UGX 6K per foot – this does not change based on the pit depth or by type of soil.” - Pit digger in Buyende “Once I have negotiated the rate with the household, I won’t change it even if I encounter rocky soil.” - Pit digger in Gulu Illustration Pricing mechanism for a pit digger in Bukomansimbi1 Non-rocky soil Rocky soil # of days taken to dig 14-15 28-30 Per-foot rate charged UGX 6,000 – 7,000 UGX 6,000 – 7,000 “When digging in rocky ground, I sometime use fire to split the stones in order to be able to dig further. However, this process is risky, and can leave me with blisters, which leave me unable to dig for a few days.” - Pit digger in Bukomansimbi 1. Source: Qualitative value chain interviews For discussion, not for circulation 19 d Entrepreneur | Barrier | Availability of sanitation entrepreneurs (5/8) 1 Masons typically do not engage in marketing efforts, and find it difficult to estimate their annual revenues from toilet construction jobs Masons do not actively market themselves to acquire new customers; they rely on ‘word of mouth’ to source new customers “I don’t need to market my work – it will speak for itself.” - Mason in Buyende2 “I don’t market my masonry business at all, even if I don’t get a job for 6 months.” - Mason in Gulu2 Secondary research As per a PATH study3 on the sanitation supply chain in rural Uganda, “Most masons find new opportunities by word-of-mouth and based upon their reputation…none were engaged in active promotions, particularly related to household sanitation.” 25% 18% 22% 63% 98% 75% 82% 78% 37% 51 Hear about mason from an advertisement 51 See mason working nearby Mason is known in the area Hear about mason from other value chain actors Hear about mason from friends/ neighbors 2% 51 51 51 Channels through which potential customers hear about masons1 % of masons who cited the channel as a means to acquire customers % of masons who did not cite the channel as a means to acquire customers 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews 3. Source: PATH, Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda (2012) For discussion, not for circulation 20 d Entrepreneur | Barrier | Availability of sanitation entrepreneurs (6/8) 1 Masons typically do not engage in marketing efforts, and find it difficult to estimate their annual revenues from toilet construction jobs Mason are sometimes unable to estimate their annual revenues from toilet construction jobs “I know that I earn around UGX 300K per month from masonry, but I can’t estimate how much of that is from toilet construction jobs.” - Mason in Buyende “I don’t know how much I earn from masonry each year.” - Mason in Gulu “I earn around UGX 600K per month from masonry. I don’t know how much I earn from toilet construction jobs.” - Mason in Gulu Source: Qualitative value chain interviews For discussion, not for circulation 21 e Entrepreneur | Barrier | Availability of sanitation entrepreneurs (7/8) 1 A largely DIY (‘do it yourself’) model requires customers to individually source most materials and services from various locations, some of which may be far away (1/2) 29% 15% 71% 85% 59 Urban Rural 21 % of households who constructed an IBT in the past 3 years, and self-purchased materials for toilet construction1 Question: Who bought the materials needed for the toilet? (selection of multiple choices) % of households who purchase materials by other means3 % of households who purchased materials themselves “Households will not trust me to purchase materials on their behalf as they think I will run away with the money.” - Mason in Ngora2 “I don’t have the working capital to purchase materials on behalf of households.” - Mason in Gulu2 1. Source: Quantitative household interviews 2. Source: Qualitative value chain interviews 3. ‘Other means’ includes purchase of materials by a mason, a contractor, or a transporter on behalf of the household For discussion, not for circulation 22 Entrepreneur | Barrier | Availability of sanitation entrepreneurs (8/8) A largely DIY (‘do it yourself’) model requires customers to individually source most materials and services from various locations, some of which may be far away (2/2) e 1 Primary research The value chain trace backs conducted by S4H revealed that:  Irrespective of whether they were urban or rural, households needed up to 8 material or service inputs from various value chain actors to construct an IBT – Materials included: aggregate, brick, sand, hardware materials (including cement), timber – Services included: pit digging, masonry, transportation  In 4 of out 6 IBT trace backs, households interacted with the various value chain actors and sourced each material or service themselves – Among the remaining 2 IBT trace backs, households used transporters to purchase sand and aggregate, but sourced the remaining materials and services themselves Source: FSG analysis based on qualitative interviews conducted by S4H. For detailed trace back slides, click here For discussion, not for circulation 23 Entrepreneur | Barrier | High working capital requirement (1/7) High working capital requirement for actors such as hardware stores, transporters, and contractors, coupled with lack of appropriate capital products, limits their ability and/ or interest to provide sanitation￾specific products or services Hardware stores need to maintain a large inventory of products and often do not receive credit from suppliers, creating a working capital challenge. Further, capital may get locked-up in slower moving sanitation-specific products which may discourage hardware stores from stocking and selling these products Customers typically pay transporters once the product has been delivered, and several transporters provide credit to household customers; this requires the transporter to have sufficient working capital to buy the materials on behalf of the customer 2 a b Contractors are paid for Government toilet projects after construction has been completed and hence have high working capital requirements in order to procure materials and labor c Financiers may not be offering value chain actors with loan products that have reasonable collateral requirements, interest rates and repayment periods d For discussion, not for circulation 24 a Entrepreneur | Barrier | High working capital requirement (2/7) 2 Hardware stores need to maintain a large inventory of products and often do not receive credit from suppliers, creating a working capital challenge. Further, capital may get locked-up in slower moving sanitation-specific products which may discourage hardware stores from stocking and selling these products (1/2) Why does a customer choose to purchase from you instead of from your competitors? (multiple choice) 70% Have wide range of products 30% 45 Other reasons 70%1 stated that having wide range of products was one of the reasons why customers choose them 58%1 did not receive credit from any of their suppliers 26%1 stated high working capital to be one of the key challenges 45 42% Yes 58% Do you receive credit from any of your suppliers? No Others3 26% 74% What are the key challenges in selling cement/ iron sheet/ iron bar/ wire mesh? (multiple choice) 45 High working capital “To compete in this market, you need to stock every product.” - Hardware store in Arua2 “Shortage of working capital becomes a challenge as I need to pay suppliers upfront.” - Hardware store in Mukono2 “It is expensive to maintain large stocks in the shop.” - Hardware store in Kibaale2 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews 3. Other challenges included variation in prices charged by suppliers, low margin, low customer demand, and payment default, among others For discussion, not for circulation 25 a Entrepreneur | Barrier | High working capital requirement (3/7) 2 Hardware stores need to maintain a large inventory of products and often do not receive credit from suppliers, creating a working capital challenge. Further, capital may get locked-up in slower moving sanitation-specific products which may discourage hardware stores from stocking and selling these products (2/2) 45 Have you considered expanding the toilet construction-related activities you are involved in? 62% No Yes 38% 62%1 were interested in expanding their sanitation-related business Of these, 68%1 stated they were not interested in selling plastic pans Of these, 38%1 stated lack of customer demand2 as a reason for not selling plastic pans No 32% 28 Yes 68% Have you considered selling plastic toilet pans 38% Others Low customer demand 62% Why are you not considering selling plastic toilet pans (multiple choice) 19 “SatoPan has been a slow-moving product and sales have come down. Stores cite unsold stocks as a challenge and only a few of them place repeat orders.” - Pan distributor in Mukono2 “Sanitation products are not attractive enough. Only 2% of my customers may take interest in pans, so it is not worth stocking for me.” - Hardware store in Buyende2 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews 3. Other reasons included lack of interest, low revenue potential, and lack of access to finance to sell pans For discussion, not for circulation 26 b Entrepreneur | Barrier | High working capital requirement (4/7) 2 Customers typically pay transporters once the product has been delivered, and several transporters provide credit to household customers; this requires the transporter to have sufficient working capital to buy the materials on behalf of the customer “There is a need to pay the supplier upfront but the customer only pays after delivery which leads to cash flow problems. One needs to make sure there is enough capital to be able to take on larger orders.” -Transporter in Gulu2 “Suppliers want cash, which sometimes I may not have, and might have to borrow from a friend in order to have the materials supplied to the customers.” -Transporter in Mityana2 Yes Do customers of sand/ brick/ aggregate travel with you to the supplier’s site? 80% 20% No 48 80%1 stated that none of their customers travel to the material supplier’s site with them, which implies that customers pay the transporter upon delivery 58%1 provide credit to their customers, for one or more of the materials 48 58% 42% Yes Do you provide credit to customers of sand/ brick/ aggregate? No 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews For discussion, not for circulation 27 c Entrepreneur | Barrier | High working capital requirement (5/7) 2 Contractors are paid for Government toilet projects after construction has been completed and hence have high working capital requirements in order to procure materials and labor to execute Unfavorable payment terms Delays in payment Lack of capital “For larger construction jobs, Government might pay the contractor in stages. However, for smaller jobs such as toilet construction, payment is typically disbursed only after completion of the job. This means contractors must pay for labor and material themselves. In fact, we are often asked to wait until the next quarter for our payment.” - Contractor in Bukomansimbi1 “I feel financially strained and in need of a loan as there isn’t enough working capital. To top that, there are delays in receiving payments for Government jobs.” - Contractor in Kabarole1 “Delay in payment by the Government is very common. I got my payment one month after finishing the toilet construction. The process is very cumbersome.” - Contractor in Ngora1 1. Source: Qualitative value chain interviews For discussion, not for circulation 28 d Entrepreneur | Barrier | High working capital requirement (6/7) Financiers may not be offering value chain actors with loan products that have reasonable collateral requirements, interest rates and repayment periods (1/2) More than 65%1 of the SACCOs and VSLAs require collateral to receive a productive loan “To get a loan from our SACCO, members have to provide land titles as their collateral. The loan request is rejected if they can’t provide the security,” - SACCO in Bukomansimbi2 Loan terms SACCOs (n = 28) VSLAs (n = 32) Monthly interest rate (avg.) 7% 6% Primary research SACCOs 74% 26% 35 % that required collateral VSLAs 68% 32% 47 SACCOs and VSLAs provide productive loans with relatively high monthly interest rates As per a report by World Bank,3 In real terms, Uganda’s lending rates are even higher relative to those of its neighbors. Although it is difficult to assess the degree to which a particular level of lending rates is justifiable, surveys find that the high cost of finance and the stringent collateral requirements are a significant barrier to enterprise growth and operation, particularly in the case of small and medium enterprises... in terms of the affordability of financial services index, Uganda ranks in 120th place out of 138 countries, with a steady decline in its position over recent years. Secondary research 2 1. Source: Quantitative value chain interview . Source: Qualitative value chain interviews . World Bank, Uganda Economic Update (2017) 2 3 For discussion, not for circulation 29 d Entrepreneur | Barrier | High working capital requirement (7/7) 2 Financiers may not be offering value chain actors with loan products that have reasonable collateral requirements, interest rates and repayment periods (2/2) “Lenders are not currently focusing on the actual needs of supply-side players, like their working capital requirements. Current loan options are not structured well for their needs, especially in aspects like loan tenure, grace period etc. Moreover, some of the smaller supply-side players are not able to provide the level of collateral needed.” - Credit supervisor of a bank in Uganda1 “In one of our pilot programs, we realized that one of the main issues was that masons lack access to credit. To resolve this we tried to create a model with VSLA, but it did not work because of their liquidity challenges. We also tried to tie up with MFIs, but because they require collaterals, it was challenging to access credit through MFIs as well.” - Representative from Plan International1 Secondary research As per a report by World Bank2 In Fort Portal, uptake (for sanitation specific loan products) has been disappointing, primarily because the interest rates and collateral requirements are generally perceived to be relatively high Secondary research As per a report by ACP-EU Development Minerals Programme3 Small-scale sand miners, aggregate miners, and brick makers indicated fear and uncertainty in approaching or borrowing from most interest-based institutions... they do not feel safe working with financial institutions, and feel that they will not be able to comply with the standards that are required. 1. Source: Qualitative value chain interviews 2. World Bank Uganda Sanitation Diagnostic Report, (2017) 3. ACP-EU Development Minerals Programme, Baseline Assessment of Development Minerals in Uganda Volume 1 (2018) For discussion, not for circulation 30 Entrepreneur | Barrier | Lack of viability (1/6) Sanitation, as a stand-alone business, may not be viable for many value chain actors due to seasonality in income, high competition, and customer-related delays Sanitation is not a large percentage of overall business for many actors (apart from pit diggers and masons) due to seasonality of construction business and the need to have multiple income sources; this may reduce the value chain actors’ ability to place greater emphasis on their sanitation business High competition (for brick makers) and digging of pits by households (for pit diggers) impacts viability of such actors 3 a b Customer payment defaults impact the viability of some value chain actors (such as pit diggers, hardware stores, contractors); provision of customer credit further exacerbates the challenge c Masons face delays in project completion due to incomplete construction material being made available by the customer d For discussion, not for circulation Entrepreneur | Barrier | Lack of viability (2/6) 3 Sanitation is not a large percentage of overall business for many actors (apart from pit diggers and masons) due to seasonality of construction business and the need to have multiple income sources; this may reduce the value chain actors’ ability to place greater emphasis on their sanitation business (1/2) a Sanitation is not a large percentage of the construction business or overall income for most value chain actors… 31 % of actors with multiple income sources; main income source is construction (i.e., main source is brick making, masonry, etc.) % of actors whose sole source of income is construction (i.e., only source is brick making, masonry, etc.) % of actors with multiple income sources; main income source is not construction (i.e., main source is not brick making, masonry, etc.) 1. Represents qualitative understanding of the importance of sanitation to the construction business of each value chain actor based on qualitative interviews. While this information was also obtained in the quantitative research, the data is likely to be incorrect due to the survey context. The quantitative data has only been used to help identify the relative importance between different actors 2. Source: FSG analysis based on qualitative value chain interview 3. Source: Quantitative value chain interviews Percentage of value chain actors that have another stream of income in addition to their construction business3 Share of sanitation within construction business1,2 Low Moderate High 25% 47% 29% 20% 16% 37% 40% 17% 24% 23% 49% 33% 38% 50% 37% 47% 65% 31% 51% 52 30 10% 45 51 12% 50 52 45 Sand miner Agg. producer Brick maker Cement pre-fabricator Hardware store Pit digger Mason For discussion, not for circulation 32 a Entrepreneur | Barrier | Lack of viability (3/6) 3 Sanitation is not a large percentage of overall business for many actors (apart from pit diggers and masons) due to seasonality of construction business and the need to have multiple income sources; this may reduce the value chain actors’ ability to place greater emphasis on their sanitation business (2/2) …as income from construction, and by extension, sanitation-related construction, is seasonal for most value chain actors 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews  Aggregate producers receive 180% more orders during good months of business compared to the bad months1 (n=52)  Hardware stores generate 150% more revenue during good months of business compared to the bad months1 (n=45) # of good business months # of bad business months Average # of months of good business reported by select value chain actors1 Some actors reported only 3-4 good months of construction business per year 9 9 8 9 Brick maker 3 3 Agg. producer 3 4 Hardware store Sand miner 52 50 45 45 Primary research “I typically only get pit digging jobs in the dry months – January, February, June and July” - Pit digger in Bukomansimbi2 “I only get construction in the dry months after the harvest, when households have the money to spend” - Mason in Ngora2 For discussion, not for circulation 33 b Entrepreneur | Barrier | Lack of viability (4/6) 3 High competition (for brick makers) and digging of pits by households (for pit diggers) impacts viability of such actors Some brick makers cited competition as a challenge for their business Estimation of # of similar actors found in the same parish/ ward by select value chain actors1 30% of brick makers interviewed cited competition as a key challenge for their business1 (n=50) Primary research 40% Aggregate producers 26% 74% Brick makers 60% 30% 70% Sand miners 52 50 45 % who estimated <5 similar actors in same parish/ ward % who estimated 5+ similar actors in same parish/ ward Most rural households do not hire a pit digger, and use own-labor instead, in order to reduce costs As per an SNV study3 of the sanitation market and supply chain in Uganda, “In half of the cases [observed from data gathered in the field across Uganda], family labor is used for digging the pit” Secondary research Percentage of households who hired labor for toilet construction2 80% 20% 165 Labor - pit excavation Used hired labor Used own/ family labor 1. Source: Quantitative value chain interviews 2. Source: Quantitative household interviews – consists of households which built a toilet (IBT or unimproved) in the past 3 years 3. Source: SNV Consumer Insight and Sanitation Supply Study, Uganda (2015) For discussion, not for circulation 34 Entrepreneur | Barrier | Lack of viability (5/6) Customer payment defaults may impact the viability of some value chain actors (such as pit diggers, hardware stores, masons, transporters); provision of customer credit may further exacerbate the challenge c 3 1. Default payments include both non-payment and late payments by customers. Default payment was stated to be a significant challenge only by the value chain actors represented on the graph 2. Source: Quantitative value chain interviews 3. Source: Qualitative value chain interviews Percentage of actors facing payment default challenges from household customers1,2 % of actors who did not cite payment-related challenges % of actors who cited default payments as a challenge for their business and offer credit % of actors who cited default payments as a challenge for their business and do not offer credit 58% 35% 16% 33% 27% 18% 23% 38% 38% 66% 44% Transporter 4% Hardware store Pit digger 45 Mason 52 50 48 “Default and delayed payments and how to deal with them is a recurring and critical challenge for many participants (new and small business owners) of our training programs” - Representative from Enterprise Uganda3 “My biggest challenge is dealing with customers who try to cheat me out of payment.” - Mason in Kabarole3 For discussion, not for circulation 35 d Entrepreneur | Barrier | Lack of viability (6/6) 3 Masons face delays in project completion due to incomplete construction material being made available by the customer Primary research 90% masons interviewed stated that they faced delays in construction of household toilets due to lack of required construction materials being available on-site1 (n=50) Secondary research As per a PATH study2 on the sanitation supply chain in rural Uganda, “Masons cited frustrations with having to wait for the household to buy the materials before they could start construction, often running into issues with not having the correct amount or type of materials they need…[when] a household purchases the materials in batches or pays in installments, this delays the construction process even more.” 1. Source: Quantitative value chain interviews 2. Source: PATH, Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda (2012) For discussion, not for c Entrepreneur | Driver | Adequate unit margin (for some actors) (1/2) irculation Sanitation is adequately profitable at a unit level, more so for service-related actors such as pit diggers and masons; this may increase their interest in sanitation (1/2) 4 36 40% – 42% 59% 35% – 40% 4.5% 3% – 7% 75% 44% – 47% 20% – 40% Unit margin earned by value chain actors on the construction of a 2-stance IBT for a rural household (1,000 UGX)1,2,3 1. Costs borne by a rural HH customer during the construction of a 2-stance IBT are taken from the toilet cost build-up of a toilet in rural Uganda which can be found by clicking here, and unit margin is based on FSG’s analysis of unit economics for the value chain actors, more information on which can be found by clicking here 2. Data for actors not directly involved in construction of 2-stance IBTs in rural households (such as contractors, cement-prefabricators, etc.) can be found in the appendix 3. Unit margins indicated for cement and other hardware materials are applicable only to retailers; we did not conduct unit economic analyses for the upstream value chains of these products 4. FSG’s analysis of unit margin accounts for land purchase/ rental costs for aggregate producers, but does not do so for brick makers and sand miners due to data gaps Source: FSG analysis based on qualitative interviews conducted by S4H, and quantitative value chain interviews Unit margin (%)1,3,4 Labour for masonry Cement (from hardware store) Aggregate Labour for pit digging Other hardware materials Brick Sand Transport costs 90 279 37 275 205 121 51 19 325 13 15 143 107 148 186 56 Cost borne by HH customer for material/ service Unit margin earned by value chain actor For discussion, not for circulation 37 Entrepreneur | Driver | Adequate unit margin (for some actors) (2/2) Primary research  68% of the brick makers thought sanitation was a key area for their business; 45% of these said that doing sanitation-related business would provide them with additional business opportunities1 (n=50) “I look at sanitation as a valuable component, central to my business. Not many people are building houses so there can be a situation where we have about 10 people who all want to build a toilet.” - Brick maker in Bukomansimbi2 “Toilets are an area of business for the future; every youth who grows up and moves out of home will need a new toilet.” - Mason in Bukomansimbi2 Sanitation is adequately profitable at a unit level, more so for service-related actors such as pit diggers and masons; this may increase their interest in sanitation (2/2) 1. Source: Quantitative value chain interviews 2. Source: Qualitative value chain interviews 3. Other reasons include high demand, higher margins compared to other activities, among others 4 Value chain actors such as pit diggers, masons, and brick makers are interested in sanitation as they view it as an area with high revenue potential within the current scope of their activities Brick makers 38% 62% 34 See high revenue potential in sanitation Percentage of actors who view sanitation as an area of high revenue potential1 63% 51 37% Pit diggers 58% 50 42% Masons Why do you see sanitation as a key area for your business? (multiple choices)3 For discussion, not for circulation Barriers and Drivers | Enterprise 38 38 BROADER CONTEXT BUSINESS ENVIRONMENT CUSTOMER Affordability Availability ENTREPRENEUR Delivery Model Sales & Marketing SANITATION MARKET ENTERPRISE Target Market Product System  Appropriate product designs not available to customers, in some contexts  Lack of appropriate sales and marketing for sanitation-specific products,  Potential for increased business due to customer referrals among closely-related actors Enterprise barriers/ drivers  Drivers  Barriers For discussion, not for circulation 39 Enterprise | Barrier | Product system challenges (1/4) Product design of plastic pans may not be appropriate for large parts of the country, and many pit diggers do not have the required skill or knowledge to offer households the most appropriate pit type Pans require regular, albeit low, water usage which may not be feasible or desirable for households in many parts of the country, especially rural areas Many pit diggers do not know how to dig circular pits. Those that do, may not be advising customers living in areas with soil susceptible to collapsing, about circular pits 5 a b For discussion, not for circulation 40 Enterprise | Barrier | Product system challenges (2/4) Pans require regular, albeit low, water usage which may not be feasible or desirable for households in many parts of the country, especially rural areas (1/2) a 5 4%1 of rural and 27%1 of urban households have easy access to piped water 2% 2% 44% 52% Rural Households Piped water into compound Piped to neighbor Tubewell/ borehole2 Other sources 8,251 51% 13% 14% 22% Urban Households 3,620 60%1 of rural and 33%1 of urban households travel for more than 20 minutes to get water from the source 11 to 20 minutes 14% 60% 3% 1 to 10 minutes 23% Rural Households More than 20 minutes 0 minutes 8,251 13% 33% 42% 12% Urban Households 3,620 1. Source: Quantitative household interviews 2. Proximity to tubewell/ borehole depends on the location of the house - for many households, these sources might not be in their vicinity For discussion, not for circulation 41 Enterprise | Barrier | Product system challenges (3/4) Pans require regular, albeit low, water usage which may not be feasible or desirable for households in many parts of the country, especially rural areas (2/2) a 5 There may be low feasibility to use water for sanitation, given the water consumptions levels Customers tend to prefer a product that does not require any water 50 liters per day per person It takes more than 50 liters per day per person to have enough for personal hygiene1 Average water consumption ranges from 12 to 14 liters per day per person in rural Uganda2 13 liters per day per person “Feedback from urban customers has made us realize that people seem to prefer a pan in which they won’t need to put in any water. Customers are aware that the current need for water is low, but it is still not suiting their desired feature.” - Pan manufacturer in Uganda3 “The design of SaTo pans is such that users require water to keep it clean, but since a majority of the population in the country does not clean themselves with water after using the toilet, they don't want to use a product which will use up their water resources.” - Representative from SNV in Arua3 1. World Health Organization, The Right to Water (2003) 2. Poverty Eradication Action Plan (2004/5 to 2007/8), Ministry of Finance, Planning and Economic Development (2004) 3. Source: Qualitative value chain interviews For discussion, not for circulation 42 Enterprise | Barrier | Product system challenges (4/4) Many pit diggers do not know how to dig circular pits. Those that do, may not be advising customers living in areas with soil susceptible to collapsing, about circular pits b 5 District # of research EAs that have sandy (loose) or rocky soil3 % of households that considered any form of circular pit for their toilet3 # of pit diggers who have dug a circular pit1 Mityana 7 out of 10 4% of 55 Households 3 out of 5 Kotido 9 out of 10 4% of 101 Households 1 out of 5 In districts where most of the EAs had sandy (loose) or rocky soil, only 4%1 of the households considered a circular pit for their toilet Primary research 21%1 pit diggers did not know how to dig a circular pit 52% Have dug a round pit Have never dug a round pit, but know how to2 27% 21% Total Pit Diggers 100% Don’t know how to dig a round pit 51 1. Source: Quantitative value chain interviews 2. 27% respondents mentioned that the reason they have never dug a round pit for toilets is due to low demand or because it was more difficult/ time consuming (compared to rectangular pits). Lack of skill or knowledge was not mentioned as a reason 3. Source: Quantitative household interviews For discussion, not for circulation 43 Enterprise | Barrier | Sales and marketing (1/5) Lack of appropriate sales and marketing efforts leads to untrained masons, and a customer base that may not be willing to buy sanitation-specific products due to insufficient knowledge about price and/ or value Many masons are not aware of the different slab options and how to install them A mismatch between pan prices, as advertised across the country and as actually offered in hardware stores, turns some customers away 6 a b Customers may not see the value in purchasing pre-packaged 1 kg cement bags, as hardware stores sell loose cement (from larger, damaged bags) at lower prices c Customer experience of receiving free products and services may impact the target market size for some value chain actors such as pan manufacturers d For discussion, not for circulation 44 Enterprise | Barrier | Sales and marketing (2/5) 6 Many masons are not aware of the different slab options and how to install them a 22% to 48% of the masons interviewed were not aware of one or more of the common pan/ slab options1 16% 38% 46% 50 Not aware of the product Aware of the product but don’t know how to install it Know how to install the product 36% 50 46% 18% 50 22% 2% 76% 50 42% 12% 46% Plastic pan Plastic SanPlat Concrete SanPlat Pre-fabricated cement slab 1. Source: Quantitative value chain interviews For discussion, not for circulation 45 Enterprise | Barrier | Sales and marketing (3/5) 6 A mismatch between pan prices, as advertised across the country and as actually offered in hardware stores, turns some customers away b “Our marketing team uses different marketing collaterals and radio advertisements to inform customers of the price at which they should buy the product. There are two prices advertised – one for the Kampala region and another for outside the Kampala region.” - Pan manufacturer in Uganda1 “Radio advertisement states that the cost of a SaTo is UGX 15,000. Now, I buy each SaTo pan for UGX 20,000 from Masaka and sell them in my store at UGX 22,000. The challenge is that when I quote this price, customers say it is not the price they heard on radio, and it gets difficult to convince them.” - Hardware store in Bukomansimbi1 1. Source: Qualitative value chain interviews For discussion, not for circulation 46 Enterprise | Barrier | Sales and marketing (4/5) 6 “W “Regular HW stores already sell loose cement in 1kg quantities by using the damaged cement bags.” - Bonastore in Kampala1 e have recently introduced cement in bag sizes of 1 kg, 5 kg and 10 kg” - Hima Cement1 “Loose cement is typically sold by hardware stores in ordinary plastic bags for UGX 800 per kg. Hima cement, on the other hand, has introduced the 1kg cement bags for UGX 1,300, making it very difficult to sell them.” - Bonastore in Kampala1 “We also sell 1 to 10 kg of cement for UGX 1,000 per kg, typically from the bags that we open for customers who want to buy half of the quantity” - Hardware store in Arua1 Customers may not see the value in purchasing pre-packaged 1 kg cement bags, as hardware stores sell loose cement (from larger, damaged bags) at lower prices c 1. Source: Qualitative value chain interviews For discussion, not for circulation 47 Enterprise | Barrier | Sales and marketing (5/5) 6 d Customer experience of receiving free products and services may impact the target market size for some value chain actors such as pan manufacturers “I see very limited scope of sanitation products in the household market (of Uganda). Marketing efforts have shown some result, however, changing the overall culture is practically impossible, as people have a strong inherent belief that they will be provided these products for free. Companies have historically been unsuccessful in convincing households to purchase their own sanitation products.” - Former employee of a pan manufacturing company in Uganda1 “Main challenge with regards to sanitation in my district is people’s attitude. People can make their own toilets and improve it by engaging with the private sector. However, that does not happen because the culture of ‘Government will come and fix my sanitation needs’ is deeply entrenched because they are used to free sanitation facilities.” - Senior district official, Gulu1 Secondary research As per a PATH report2 on the sanitation supply chain in Uganda, “.. This (donor funded development programs stemming out of Poverty Eradication Action Plan), has consequently distorted the potential for market development… by creating unrealistic expectations, most likely within the supply chain, that services will be provided to households for free or via subsidies through Government, donor, or NGO funding.” 1. Source: Qualitative value chain interviews 2. PATH, Analysis of the Sanitation Supply Chain in Rural and Small Towns in Uganda (2012) For discussion, not for circulation 48 Enterprise | Driver | Customer referrals among closely-related actors Within the existing DIY delivery model, knowledge of closely-related actors and customer referrals among them may provide the actors with additional business; it may also provide the potential for an existing actor to serve as a focal point to households 7 Refer Do you refer your customers to a pit digger and a HW store? 73% 27% Do you refer your customers to a mason and a HW store? Don’t 88% 12% 51 51 48% 52 Refer 52% Do you refer your customers to buy cement and sand from people you know? Don’t 73%1 pit diggers refer their customers to HW stores and/ or masons 48%1 of agg. producers and 54%1 of brick makers refer their customers to HW stores and/ or sand suppliers 88%1 masons refer their customers to HW stores and/ or pit diggers 64%1 sand suppliers refer their customers to HW stores and/ or agg. producers Don’t 46% 54% 50 Do you refer your customers to buy cement and sand from people you know? Refer 36% Refer 64% Do you refer your customers to buy cement and aggregate from people you know? Don’t 45 Pit diggers Masons Agg. producers Brick makers Sand suppliers “I help identify a mason if the customer doesn't have one, and in return, charge the mason UGX 20,000.” - Pit Digger in Gulu “I refer customers to pit diggers and earn a commission for it as well; for 20 feet I earn UGX 2,000 and for 40 feet I earn UGX 5,000.” - Mason in Buyende 1. Source: Quantitative value chain interviews Each of the above mentioned value chain actor was asked if they refer their customers to specific actors. Information on whether or not they referred their customers to other actors was not collected For discussion, not for circulation 49 Barriers and Drivers | Business environment BROADER CONTEXT 49 SANITATION MARKET BUSINESS ENVIRONMENT CUSTOMER Affordability Availability ENTREPRENEUR ENTERPRISE Target Market Delivery Model Product System Sales & Marketing  Poorly penetrated associated supply chains (hardware stores, sand, aggregate, etc.)  Increased cost of doing business (due to policy and fuel costs) Barriers due to the business environment  Inadequate local adaptation of national sanitation policies  Ineffective/undesirable consequences to enforcement of policies  Drivers  Barriers For discussion, not for circulation 50 Business environment | Barrier | Supply chain penetration (1/2) 8 Poorly penetrated associated supply chains (hardware stores, sand, aggregate) lead to limited local access and increased transportation costs, particularly for rural households Primary research On an average, a typical rural household customer traveled ~20 km to access a hardware store, while a typical urban household customer traveled ~4 km1 Illustration from trace back in Gulu 3 km Hardware Store in Gulu 24 km Urban Household Rural Household 1. Source: FSG analysis based on qualitative interviews conducted by S4H. For detailed trace back slides, click here For discussion, not for circulation 51 Business environment | Barrier | Supply chain penetration (2/2) 8 Poorly penetrated associated supply chains (hardware stores, sand, aggregate) lead to limited local access and increased transportation costs, particularly for rural households Primary research  On average, transporters traveled 35 to 50 km to supply a rural household with sand or aggregate, whereas, they traveled 20 to 25 km to supply these materials to an urban household1  As a result, for getting one trip of the material supplied, the total transportation cost incurred by rural households is ~UGX 70,000 to 90,000, while for urban households it is ~UGX 45,000 to 53,0001,2 Illustration from trace back in rural Gulu Total trip distance - 55 km Illustration from trace back in urban Buyende Total trip distance - 20 km 26 km 3 km 26 km Sand miner Rural Household Transporter 5 km 10 km 5 km Aggregate producer Urban Household Transporter 1. Source: FSG analysis based on qualitative interviews conducted by S4H. For detailed trace back slides, click here 2. Costs include fuel cost, loading/ unloading costs, and markup added by the transporter For discussion, not for circulation 52 Business environment | Barrier | Increasing fuel price Increasing fuel costs may impact the viability of some actors (such as pan manufacturers and transporters) 9 Increasing fuel costs may be impacting viability of certain actors 79% of transporters interviewed cited high fuel costs as a key challenge for the viability of their business1 (n=48) Primary research “Fluctuation of prices of raw materials, driven by the fuel cost, is a challenge. We can’t adjust the price of the pans based on the fluctuations as this will result in too many price changes for the customer.” - Pan manufacturer Y-o-Y change, retail price -4% -8% 6% 13% Y-o-Y change, crude oil price -45% -16% 22% 31% The increased prices in Uganda are notable as they differ from the variance in global crude oil prices Comparison of retail oil prices in Uganda with global crude oil prices, 2014-2018 (UGX per liter)2 3,733 3,595 3,317 3,509 3,968 2,287 1,256 1,053 1,281 1,672 2014 2015 2016 2017 2018 Retail oil price in Uganda (UGX per liter) Brent crude oil price (UGX per liter)3 1. Source: Quantitative value chain interviews 2. Source: FSG analysis, and data obtained from ‘Global Petrol Prices’ 3. Brent crude oil prices are a benchmark for crude oil prices worldwide For discussion, not for circulation 53 Business environment | Barrier | Government regulations on mining 10 Government policies, such as mining regulations may increase the cost of doing business and may make the construction of IBTs more expensive Secondary research According to the (Draft) Mining and Mineral Policy of Uganda, 2018 by Republic Of Uganda, Ministry of Energy and Mineral Development “The policy (Mineral Policy of Uganda in 2001) has become obsolete and is not strategically positioned to address new and emerging issues, including the need to regulate commercial exploitation of substances like sand, stone, clay and murram, excluded from the definition of the word “mineral” (earlier) in Article 244(5) of the Constitution…” “The role of the Local Governments under this (new) Policy shall include: ….licensing building minerals such as sand, clay and murram…..The private sector players including exploration and mining companies shall work with Government in implementing this Policy as well as complying with the provisions of the law and mineral development agreements or licenses relating to mineral rights.” Secondary research An article in Daily Monitor1 says, “Government has approved a new mining policy, placing Uganda’s sand, murrum, granites and stones under the mineral sector, ending centuries of unregulated mining of the said products. In a decision that is likely to have huge impact on the construction industry, the cabinet decided that for one to mine sand and other associated products, a license has to be issued by the line minister and that should such entity violate the terms in the license, punitive measures will be instituted against such a person or entity.” 1. Daily Monitor, Cabinet Puts Sand, Stones And Murrum Under Minerals In New Mining Policy (May, 2018) For discussion, not for circulation 54 Business environment | Barrier | Insufficient local bylaws (1/2) National level Public Health Act may not be well supported at the local level by adequate bylaws, and may not be adequate in promoting appropriate toilets for households (1/2) 11 Bylaws or ordinances allow local officials to levy penalties, and enforce punitive measures - Senior district official, Gulu 1. Outcomes of the Focus group discussions for the situational analysis for water hygiene and sanitation in Mpunge, Kasali, and Bulebi landing sites (2012) 2. Source: FSG analysis based on qualitative interviews conducted by S4H 2 out of 5 districts in which S4H conducted qualitative interviews did not have local bylaws or the relevant district officials were not aware if they existed2 Secondary research According to focused group discussions conducted in partnership with UWASNET1 “In Bulebi (Mukono district), local leaders enacted the bylaws against open defecation. Everyone caught defecating in the open…is charged a fee of UGX 20,000…” “Since the bylaw was passed (in 2009), so far only one person was caught defecating in the open…” “The main issue related to sanitation is the lack of any ordinance or bylaw. In the absence of a bylaw, the Public Health Act is not as effective.” Primary research Some districts in Uganda may not have bylaws for sanitation-related policies For discussion, not for circulation 55 Business environment | Barrier | Insufficient local bylaws (2/2) National level Public Health Act may not be well supported at the local level by adequate bylaws, and may not be adequate in promoting appropriate toilets for households (2/2) 11 Existing policies may not be adequate in promoting improved (as opposed to unimproved) toilets for households “The current policies/regulations may not be adequate because the type of toilet that households should build is not defined.” - District water official, Buyende “Need to set standards for household toilet facilities. The bylaws focus on enforcing latrine ownership, but not on the type of latrine that should be built.” - Senior district official, Buyende Source: FSG analysis based on qualitative interviews conducted by S4H For discussion, not for circulation 56 Business environment | Barrier | Ineffective enforcement (1/2) Budgetary constraints, insufficient political will at local Government level, and unintended consequences may render enforcement of the Public Health Act and any bylaws (if present) ineffective (1/2) 12 Budgetary constraints limit the ability of district teams to do effective monitoring and enforcement Lack of interest and resistance from local leaders further limits enforcement “One of the enforcement-related challenges is the limited funding from the Department of Health. For effective enforcement, we need to mobilize teams, and have a vehicle and this becomes a challenge due to insufficient funds.” - District health official, Kabarole “Sometimes even the local leaders (the LC) are not interested in pushing their communities towards improving their toilet facilities because it can jeopardize their political capital.” - Senior district official, Ngora “Find great improvements (in sanitation facilities) in places where leaders are proactive but in many places there is interference by politicians (LC1 and LC3), who don’t support local sanitation policies or their constituents being prosecuted.” - District health official, Kabarole “To implement and enforce, we need VHT’s and vehicles. Currently, due to insufficient budgets, we cannot pay VHT’s well and they are not interested in going to far away areas. The district office only has one car which means that the health team cannot split-up and conduct monitoring rounds in different areas of the district.” - District health official, Gulu “Enforcement is a major challenge as political leaders put up a lot of resistance when officers move ahead to enforce (the policies).” - District water official, Buyende Source: FSG analysis based on qualitative interviews conducted by S4H For discussion, not for circulation 57 Business environment | Barrier | Ineffective enforcement (2/2) Budgetary constraints, insufficient political will at local Government level, and unintended consequences may render enforcement of the Public Health Act and any bylaws (if present) ineffective (1/2) 12 Enforcements may also lead to households building temporary or unimproved toilets Secondary research As per a study by PATH1  At the local level, the Uganda Public Health Act mandates that all households have a latrine, but the regularity of enforcement varies. This leads to inconsistency in households’ expectations of enforcement and can create a mixed sense of urgency and prioritization around sanitation, which in turn can affect levels of demand and the market’s ability to respond appropriately.  Unfortunately, this has created an environment where top concern of many households is to have something installed to meet the requirement.  More often than not, this equates to a makeshift, unimproved latrine built from whatever meager budget or physical resources a household has at the time. “Households do end up building toilets of locally available materials due to enforcement. Communities can get good sanitation with log and wood as well, they do not need to necessarily cast a slab.” - Senior district official, Gulu “We have seen instances of households building very basic toilets as a result of enforcement. This is primarily due to the financial constraints of the household.” - District water official, Bukomansimbi 1. PATH, Analysis of Sanitation Supply Chain in Rural and Small Towns in Uganda (2012) For discussion, not for circulation Barriers and Drivers | Overall summary 58 58 BROADER CONTEXT SANITATION MARKET BUSINESS ENVIRONMENT CUSTOMER Affordability Availability ENTREPRENEUR ENTERPRISE Target Market Delivery Model Product System Sales & Marketing  Poorly penetrated associated supply chains (hardware stores, sand, aggregate, etc.)  Increasing fuel costs  Inadequate local adaptation of national sanitation policies  Ineffective/undesirable consequences to enforcement of policies  Lack of sanitation entrepreneurs, especially in rural areas  Lack of viability of sanitation business  Appropriate product designs not available to customers, in some contexts  Lack of appropriate sales and marketing for sanitation-specific products  Potential for increased business due to customer referrals among closely-related actors Enterprise barriers and drivers Barriers and drivers due to business environment Entrepreneur barriers and drivers  Adequate unit margins on sanitation products/services, for some actors  High working capital requirements and lack of appropriate capital products  Drivers  Barriers Customer barriers  Strong preference for IBTs  Inadequate income to afford IBTs  Inadequate seasonal savings  Lower priority accorded to sanitation  Unwillingness or inability to obtain financing  Preference for the “ideal solution For discussion, not for circulation 59 Table of contents  Overview of value chain research  Entrepreneur, enterprise, and business environment barriers and drivers towards MBS  Appendix For discussion, not for circulation 60 Appendix - Table of contents  Value chain trace backs  Toilet cost build-up  Value chain actor profiles  Back-up for barriers and drivers For discussion, not for circulation 61 Value chain trace backs | Key takeaways  Average cost of constructing two-stance IBTs is ~UGX 1.77M with a range of UGX 590k – UGX 2.5M – 5 of the 6 IBTs were 2-stance (one was a single-stance), and none used temporary materials for the superstructure  Only 1 HH had piped non-drinking water source in the House compound, rest relied on unprotected springs or tube well/borehole  Service providers (pit diggers and masons) are within easy reach of HHs and within a ~2 km radius of the HHs  HW stores were, on average, located ~20 km from the HH in rural areas and ~4km in the urban areas  Transporters used by the rural HHs were parked, on average, ~20 km away from the HH; this may increase overall transportation costs for the HHs  Bricks, unlike sand and aggregate, are generally available within the same village as the HH (most brick makers were <1km meters from the HH)1  Financiers rarely used by HHs for toilet construction (1 out of 8 HHs) even though 5 out of 8 HHs mentioned some finance-related challenge as one of their key challenges during toilet construction Source: FSG analysis and qualitative Interviews conducted by S4H 1. Household may still rely on a transporter to get the bricks delivered to their house For discussion, not for circulation 62 Trace back of an unimproved toilet found in rural Kabarole (1/2) District snapshot  Male-headed household, with 6 members; Located in Mugusu B village in Busoro sub-county  Highest education level in household: A-level  Occupation(s) of household head: Farming, fishing  House characteristics: Own house largely constructed using permanent materials (i.e., cement walls, iron sheet roof)  Non-drinking water source: Unprotected dug well  Select assets owned: Motor cycle, bicycle, television, radio, mobile phone, solar light system  Single-stance unimproved toilet with no bathroom or curtain wall; shared among 2 families; Constructed 2.5 years ago  Substructure description: 20 ft. deep unlined pit  Interface description: Floor made of wooden poles, mud, and sand  Superstructure description: Walls made of wooden poles and mud; roof made of iron sheets  History of toilet ownership: This is the first toilet constructed by the household  Total cost of toilet: UGX ~600K  Loan taken for toilet construction, if any: Loan of UGX 500K taken from local SACCO  Key challenge with existing toilet: “Would prefer to have a toilet made of permanent materials instead, but can’t afford to build one immediately.” – Household head Household descriptors Toilet descriptors Demographic profile1 Sanitation 2 profile Population 469,200 % of HH with basic service 15% % urban population 26% % of HH with limited service 11% Average HH size 4.4 % of HH with unimproved service 74% House Toilet superstructure Toilet interface 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation Trace back of an unimproved toilet found in rural Kabarole (2/2) 63 1. Boda-boda operator was not interviewed by the S4H team However, the household head mentioned that he had hired the boda-boda operator from outside the HW store 2. Reed seller was not interviewed by the S4H team. However, as the household head mentioned that the reed seller collected the reeds from a forest near the house, the reed seller is assumed to be within a radius of <1 km from the household. 3. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used Source: Qualitative interviews conducted by S4H in Kabarole Hardware store Mason Boda￾boda operator1 Reed seller2 6 Customer building unimproved toilet 4 Pit digger 5 Distance of value chain actors from household3 Financier 7 1 2 3 1 7 2 km 12.9 km 12.9 km < 1 km 5.4 km < 1 km 5 4 6 3 2 Input Suppliers Executors Financiers Location of household For discussion, not for circulation 64 Trace back of an IBT found in rural Kabarole (1/2) House Toilet superstructure Toilet interface District snapshot Demographic profile1 Sanitation profile2 Population (2014) 469,200 % of HH with basic service 15% % urban population 26% % of HH with limited service 11% Average HH size 4.4 % of HH with unimproved service 74% Household descriptors  Male-headed household, with 5 members; Located in Iruhura A village in Kasenda sub-county  Highest education level in household: College/ University level  Occupation(s) of household head: Farming  House characteristics: Own house largely constructed using permanent materials (i.e., cement walls, iron sheet roof)  Non-drinking water source: Protected spring  Select assets owned: Motor cycle, mobile phone, solar light system, chair, bed  Two-stance IBT with curtain wall and no bathroom; Constructed 2.5 years ago  Substructure description: 55 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership: Current toilet is the first IBT built by the household when they moved to this house; had constructed and used unimproved toilets before  Total cost of toilet: UGX ~2.5M  Loan taken for toilet construction, if any: None  Key challenge in toilet construction: “We faced financial difficulties during toilet construction due to the high cost.” – Household head Toilet descriptors 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation Trace back of an IBT found in rural Kabarole (2/2) 65 Pit digger Transporter (bricks)1 Brick maker Lake sand seller Clay sand seller 12 2 Customer building an IBT Mason 1 3 9 11 Hardware store Transporter (hardware materials) Aggregate producer Transporter (sand, aggregate) 4 6 7 5 Timber seller2 8 10 1. We did not interview the transporters of bricks and other hardware materials. We have assumed that these transporters were identified in the same location as the source of the relevant materials 2. We did not interview the timber seller. However, the household head mentioned that the timber seller was located within the same village 3. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used Source: Qualitative interviews conducted by S4H in Kabarole Distance between VC actor and HH or between two VC actors3 10 9.6 km 27.5 km 3 9 27.1 km 4 11 1 2 < 1 km 3.4 km 27.1 km 8 5 16.8 km 7 Input Suppliers Executors Financiers 8.2 km 7.6 km 6 8 12 4.4 km < 1 km < 1 km Location of household For discussion, not for circulation 66 Trace back of an IBT found in urban Gulu (1/2) House Toilet superstructure Toilet interface District snapshot Demographic profile1 Sanitation profile2 Population (2014) 436,300 % of HH with basic service 13% % urban population 34% % of HH with limited service 26% Average HH size 5.0 % of HH with unimproved service 50% Household descriptors  Female-headed household, with 5 members; Located in Bwobo Aywaaya village in Gulu Municipality  Highest education level in household: A-level  Occupation(s) of household head: Teaching  House characteristics: Own house largely constructed using temporary materials (i.e., wood and mud walls, grass thatched roof, etc.)  Non-drinking water source: Piped water into compound, yard/ plot  Select assets owned: Bicycle Toilet descriptors  Single-stance IBT with no bathroom or curtain wall; Constructed 3 years ago  Substructure description: 25 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of unburnt bricks; roof made of iron sheets  History of toilet ownership: Second IBT constructed by household after previous one collapsed  Total cost of toilet: UGX ~350K  Loan taken for toilet construction, if any: None  Key challenge in toilet construction: “I know that the current walls of the toilet are not strong and am worried about them collapsing” – Household head 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation 67 Trace back of an IBT found in urban Gulu (2/2) Cement dealer Cement pre￾fabricator Pit digger Mason Hardware store Customer building an IBT 1 2 3 6 5 4 Distance of value chain actors from household1,2,3 1 2 < 1 km 2.9 km 2.1 km 3 km < 1 km 6 5 4 3 Input Suppliers Executors Financiers 1. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used 2. Brick maker, sand miner, and aggregate producer are not denoted on this map as the respective materials were not purchased/ paid for by the household customer – the household made their own bricks from mud and obtained the required sand and aggregate from their neighbor 3. Sand seller and aggregate producer supplying to the cement pre-fabricator were not interviewed. We have not denoted them on the map as we are unaware of their location Location of household Source: Qualitative interviews conducted by S4H in Gulu For discussion, not for circulation 68 Trace back of an IBT found in rural Gulu (1/2) House Toilet superstructure Toilet interface District snapshot Demographic profile1 Sanitation profile2 Population (2014) 436,300 % of HH with basic service 13% % urban population 34% % of HH with limited service 26% Average HH size 5.0 % of HH with unimproved service 50% Household descriptors  Male-headed household, with 11 members; Located in Awoonyim village in Patiko sub-county  Highest education level in household: A-level  Occupation(s) of household head: Operating a general store  House characteristics: Own house largely constructed using permanent materials (i.e., cement walls, iron sheet roof)  Non-drinking water source: Unprotected spring  Select assets owned: Motor cycle, bicycle, mobile phone Toilet descriptors  Two-stance IBT with a curtain wall and no bathroom; Constructed 3 years ago  Substructure description: 25 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership: First IBT built by the household; had constructed two unimproved toilets earlier, which filled up. Decided to build an IBT as it would be easier to clean.  Total cost of toilet: UGX ~2M  Loan taken for toilet construction, if any: None  Key challenge in toilet construction: “Transporting materials from Gulu town was very expensive” – Household head 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation Trace back of an IBT found in rural Gulu (2/2) 69 Distance of value chain actors from household1,2 < 1 km 3.8 km 23.9 km 7 3 2 km 5 6 4 Transporter Hardware store Timber seller Customer building an IBT 8 1 2 < 1 km 24.1 km 24.6 km 1 2 3 4 Aggregate producer Mason Pit digger 7 6 Sand miner 5 8 Input Suppliers Executors Financiers 1. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used. However, the distance between the customer and the sand miner/ aggregate producer is the straight line distance plotted on Google Maps as the roads between these locations are not currently plotted on the platform 2. Brick maker is not denoted on this map as the household did not purchase/ pay for bricks for their toilet; made their own bricks from mud Source: Qualitative interviews conducted by S4H in Gulu Location of household For discussion, not for circulation 70 Trace back of an IBT found in rural Ngora (1/2) District snapshot House Toilet superstructure Toilet interface Demographic profile1 Sanitation profile2 Population (2014) 141,900 % of HH with basic service 19% % urban population 11% % of HH with limited service 12% Average HH size 6.0 % of HH with unimproved service 60% Household descriptors  Male-headed household, with 15 members; Located in Kakor village in Kapir sub-county  Highest education level in household: O-level  Occupation(s) of household head: Fishing  House characteristics: Owns two housing structures – one largely constructed using permanent materials and the other largely constructed using temporary materials  Non-drinking water source: Unprotected spring  Select assets owned: Mobile phone, table, chair Toilet descriptors  Two-stance IBT with 2 bathrooms and curtain walls; Constructed 2 years ago  Substructure description: 12 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership: First IBT built by the household; had constructed eight unimproved toilets earlier, which became unusable due to termite infestations  Total cost of toilet: UGX ~1.3M  Loan taken for toilet construction, if any: Borrowed undisclosed amount from family  Key challenge in toilet construction: “The cost of pit digging and purchasing materials to construct the toilet were very high.” – Household head 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation Trace back of an IBT found in rural Ngora (2/2) 71 Distance of value chain actors from household2 Customer building an IBT Pit digger Mason1 Hardware store Sand mine Transporter (hardware materials) Brick maker 7.8 km < 1 km 8.2 km 7 10 31.5 km 6 2 8 1 9 7.6 km 1.75 km < 1 km < 1 km 5 3 31.5 km Timber seller Aggregate producer 4 Transporter (sand, brick, aggregate) 8 4 7 5 9 10 1 2 3 Input Suppliers Executors Financiers 1. The mason typically works in the village in which the household is located. Therefore, his distance from the household has been assumed to vary between 0.5-1 km. 2. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used Source: Qualitative interviews conducted by S4H in Ngora 6 Location of household For discussion, not for circulation 72 Trace back of an IBT found in rural Buyende (1/2) House Toilet superstructure Toilet interface Demographic profile1 Sanitation profile2 Population (2014) 323,100 % of HH with basic service 27% % urban population 7% % of HH with limited service 12% Average HH size 5.3 % of HH with unimproved service 48% Household descriptors  Female-headed household with 10 members; Located in Buyokero village in Buyende sub-county  Highest education level in household: O-level  Occupation(s) of household head: Not available, as question was not asked  House characteristics: Own house largely constructed using permanent materials (i.e., brick walls, iron sheet roof)  Non-drinking water source: Tube well/ borehole  Select assets owned: Radio, bicycle Toilet descriptors  Two-stance IBT with no bathroom or curtain wall; Constructed 1 year ago  Substructure description: 48 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership: Current toilet is the first one constructed in this house; had constructed 2 IBTs when they lived at another location  Total cost of toilet : UGX ~583K  Loan taken for toilet construction, if any: None  Key challenge in toilet construction: “The cost of pit digging was very high.” – Household head District snapshot 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation Trace back of an IBT found in rural Buyende (2/2) 73 Distance of value chain actors from household1,2,3 1 5 1.25 km 1.2 km < 1 km < 1 km 3.3 km 4 3 2 6 Mason Customer building an IBT 6 1 Timber seller Pit digger Hardware store 4 3 2 1. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used 2. Sand miner and aggregate producer are not denoted on this map as these materials were not used by the household for construction of their toilet; the toilet slab was built by making a cemented surface over a timber base 3. A transporter/ boda-boda operator is not denoted on this map as the household customer transported the brick and hardware materials using a bicycle Source: Qualitative interviews conducted by S4H in Buyende Input Suppliers Executors Financiers Brick seller 5 Location of household For discussion, not for circulation 74 Trace back of an IBT found in urban Buyende (1/2) House Toilet superstructure Toilet interface District snapshot Demographic profile1 Sanitation profile2 Population (2014) 323,100 % of HH with basic service 27% % urban population 7% % of HH with limited service 12% Average HH size 5.3 % of HH with unimproved service 48% Household descriptors  Male-headed household with 5 members; Located in Buwande village in Buyende Town Council  Highest education level in household: Primary  Occupation(s) of household head: Not available, as question was not asked  House characteristics: Own house largely constructed using permanent materials (i.e., brick walls, iron sheet roof)  Non-drinking water source: Tube well/ borehole  Select assets owned: Motorcycle, bicycle Toilet descriptors  Two-stance IBT with curtain wall and no bathroom; Constructed 2 years ago  Substructure description: 43 ft. deep unlined pit  Interface description: Floor made of cement/ concrete  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership First IBT built by the households; had an unimproved toilet earlier  Total cost of toilet: UGX ~2.47M  Loan taken for toilet construction, if any: None  Key challenge in toilet construction: “The pit digger was unreliable. He would come one day and dig a bit and then disappear for a few days after which we would have to go look for him.” – Household head 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation 75 Trace back of an IBT found in urban Buyende (2/2) Distance between VC actor and HH or between two VC actors1,2 6.75 km 7.4 km 1.3 km 6 3 5.3 km 4 8 1 2 4.5 km 5.85 km 5.26 km Aggregate seller Customer building an IBT Hardware Store Mason Timber seller 2 3 4 Transporter Pit digger Sand mine 8 7 6 1 5 Input Suppliers Executors Financiers 5 7 Location of household 1. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used 2. Brick maker is not denoted on this map as the household purchased bricks from another household, who had excess material left over from their own construction work Source: Qualitative interviews conducted by S4H in Buyende For discussion, not for circulation 76 Trace back of an unimproved toilet found in rural Bukomansimbi (1/2) Toilet superstructure Toilet interface District snapshot Demographic profile1 Sanitation profile2 Population (2014) 151,400 % of HH with basic service 27% % urban population 9% % of HH with limited service 13% Average HH size 4.4 % of HH with unimproved service 58% Household descriptors  Male-headed household with 6 members; Located in Mijinwa village in Bigasa sub-county  Highest education level in household: Primary  Occupation(s) of household head: Farming  House characteristics: Own house largely constructed using permanent materials (i.e., brick walls, iron sheet roof)  Non-drinking water source: Tube well/ borehole  Select assets owned: Bicycle Toilet descriptors  Two-stance unimproved toilet with no bathroom or curtain wall; Constructed 9 months ago  Substructure description: 22 ft. deep unlined pit  Interface description: Floor made of wooden poles, mud, and sand  Superstructure description: Walls made of burnt bricks; roof made of iron sheets  History of toilet ownership: Household had only constructed unimproved toilets thus far; previous number of toilets constructed is unknown  Total cost of toilet: UGX ~348K  Loan taken for toilet construction, if any: None  Key challenge with existing toilet: None stated 1. Source: Uganda National Census, 2014 2. Source: Uganda Demographic and Health Survey (UDHS), 2016 For discussion, not for circulation 77 Trace back of an unimproved toilet found in rural Bukomansimbi (2/2) Distance of value chain actors from household1 1 2 1 km 1.25 km 15.5 km < 1 km < 1 km 6 5 4 3 Pit digger Timber seller Hardware store 2 3 4 Mason Brick seller 1 6 5 Input Suppliers Executors Financiers Customer building unimproved toilet Location of household 1. We have estimated the distance between two GPS points using the shortest routes suggested by Google Maps. Actual distance traveled may vary, if alternate routes are used 2. Source: Qualitative interviews conducted by S4H in Bukomansimbi For discussion, not for circulation 78 Appendix - Table of contents  Value chain trace backs  Toilet cost build-up  Value chain actor profiles  Back-up for barriers and drivers For discussion, not for circulation 79 Material 877K (60%) 415K (28%) 183K (12%) 1.47M Total expenditure Labor Transportation  Single unlined pit  15 feet deep  Plastered walls made of burnt brick and cement  Roof made of iron sheets  Wooden door on both toilet stances  Two-stances  Floor made of cement covering the entire pit  No pan, squat hole cut into the floor Sub-structure Interface Super￾structure Toilet cost build-up in rural Uganda (1/4) Two-stance IBT with a bathing area and a curtain wall For discussion, not for circulation Toilet cost build-up in rural Uganda (2/4) Total cost ranges between UGX 1.47 million and UGX 1.93 million1 80 Material (60% of total expenditure) Labor (28% of total expenditure) & Transportation (12% of total expenditure) PIT (0% of total expenditure) INTERFACE (20% of total expenditure) SUPERSTRUCTURE (40% of total expenditure) PIT (10% of total expenditure) INTERFACE & SUPERSTRUCTURE LABOR (18% of total expenditure) Note(s): (A) All figures are in UGX (B) K stands for thousand, M stands for million Pit Digger 142K INTERFACE & SUPERSTRUCTURE TRANSPORTATION (12% of total expenditure) 180 - 192K (31%) Cement 28 - 64K (5%) Timber Door 34 - 46K (6%) Nails, Wire 175 - 234K (30%) 100K (17%) Brick 584 - 733K (100%) Sand Iron Total Sheet 22 - 51K (4%) 44 - 46K (8%) Cement Agg. 80 - 100K (27%) 35 - 40K (12%) 52 - 78K (18%) Iron Bar Sand Timber 25K (9%) Wire Mesh 90 - 96K (31%) 293 - 356K (100%) Total 11 - 17K (4%) 183 – 280K 163 - 210K (100%) (89%) Sand, Brick, Agg. 20 - 70K (11%) Hardware products Total 22K (8%) 250 - 400K (92%) Mason Tools 272 – 422K (100%) Total 0 No Material 183K (12%) 415K (28%) 877K (60%) Total expenditure 1.47M Lower end of material cost Lower end of labor cost Lower end of transport cost Additional cost building-up to the cost range 1. All percentages on the graphs are with respect to the lower ends of material, labor and transport costs, which build-up to a toilet costing 1.47 million For discussion, not for circulation 81 Toilet cost build-up in rural Uganda (3/4) List of materials and rate per unit of material used in the toilet Toilet Part Characteristics Material Cost1 Labor Cost1 Transporter Cost1 Material Purchased Quantity Purchased Amount Paid Per Unit (UGX) Labor Hired Amount Paid (UGX) Transporter Hired Amount Paid (UGX) Substructure  Single unlined pit  Pit depth 15 feet2 No Material - - Pit Digger 9,500 per foot of the pit dug - - Interface3  Two-stances  Floor made of cement covering the entire pit  No pan used, squat hole is cut into the floor Cement4 3 bags 30,000 to 32,000 per bag (see next slide) (see next slide) Sand 1 ton 11,250 to 17,000 per ton Aggregate5 1 ton 80,000 to 100,000 per ton Bricks6 100 bricks - Timber 5 pieces 7,000 to 8,000 per piece Iron Bar 2 to 3 bars 26,000 per bar Wire Mesh 1 sheet 25,000 per sheet 1. Data on the list of material and quantities of each material is based on 5 mason interviews. Data on the range of prices paid by customers is based on FSG analysis conducted on the quantitative and qualitative interviews with the respective value chain actors that sell these materials to HH customers 2. Pit diggers typically dug pits that were either 15 feet or 40 feet deep, however, there wasn’t huge variation in the rate per foot charged for both the pit depths 3. Interface is casted on-site 4. Quantity of cement, sand and aggregate used for interface could vary based on the mason’s construction practices 5. Stated price is for 0.5 inch stones, which, as per masons, is used more commonly for toilet construction comparted to aggregate of other sizes (e.g., 1 inch) 6. Some masons mentioned the use of 50 – 100 bricks to surround the interface. For simplicity, the material cost of these bricks has been added to the superstructure For discussion, not for circulation 82 Toilet cost build-up in rural Uganda (4/4) List of materials and rate per unit of material used in the toilet Toilet Part Characteristics Material Cost Labor Cost Transporter Cost Material Purchased Quantity Purchased Amount Paid Per Unit (UGX) Labor Hired Amount Paid (UGX) Transporter Hired Amount Paid (UGX) Superstructure  Plastered walls made of burnt brick and cement  Roof made of iron sheets  Wooden door on both the toilet stances Cement 6 bags 30,000 to 32,000 per bag Mason2 250,000 to 400,000 for constructing both, the interface and the superstructure Transporter for sand, brick and aggregate4 163,000 to 210,000 for material used for both, interface and superstructure Sand 2 tons 11,250 to 17,000 per ton Brick 1,500 to 2,000 bricks 117 per brick Timber 4 to 8 pieces 7,000 to 8,000 per piece Door 2 doors1 50,000 per door Tools for Mason3 22,500 for tools used for both, the interface and the superstructure Transporter for hardware products5 20,000 to 70,000 for products used for both, interface and superstructure Iron Sheet 2 sheets1 22,250 to 23,000 per sheet Wire 2 kilos 8,000 per kilo Nails 3 to 5 kilos 6,000 per kilo 1. The bathing area typically does not have a door and is open to the sky 2. In addition to labor cost, households may also incur some cost for providing food to the masons, porters, and pit diggers for the duration of the construction period 3. Customers may have to arrange for some basic tools like hoe, spade, wheelbarrow for the mason. 4. A trip made by the transporter for each product includes the distance from the tipper center (i.e., where the truck is usually parked) to the material supplier site + the distance from the material supplier site to the customer’s house + the distance from the customer’s house back to the tipper center. In practice, when a single transporter is hired to supply all three products, they may be able to optimize the routes so as to reduce the number of kilometers traveled; this would reduce the transportation cost for the customer by some amount. Transporters may not come back to the tipper center after delivering each product to the customer and may instead go to the next material supplier directly, thus optimizing the route. Instead of assuming 3 independent trips, we have factored for this optimization and assumed 2.33 trips, making the total trip distance to be 80 – 115 km for all three products. The stated cost also includes loading/ unloading charges 5. Customers might transport hardware store products in different ways; the cost of transportation depends on the vehicle used (motorbike, truck), the quantity of products to be transported and the number of trips made to and from the hardware store. The cost here assumes 2 trips of a boda-boda on the lower end, and 1 trip of a transporter on the upper end For discussion, not for circulation Toilet cost build-up in urban Uganda (1/4) 83 Labor 857K (60%) Total expenditure 465K (32%) Transportation 120K (8%) 1.44M Material Two-stance IBT with a bathing area and a curtain wall Sub-structure Interface Super￾structure  Single unlined pit  15 feet deep  Plastered walls made of burnt brick and cement  Roof made of iron sheets  Wooden door on both toilet stances  Two-stances  Floor made of cement covering the entire pit  No pan, squat hole cut into the floor For discussion, not for circulation 4 Toilet cost build-up in urban Uganda (2/4) Total cost ranges between UGX 1.44 million and UGX 1.9 million1 8 Material (60% of total expenditure) Labor (32% of total expenditure) & Transportation (8% of total expenditure) PIT (0% of total expenditure) INTERFACE (20% of total expenditure) SUPERSTRUCTURE (40% of total expenditure) PIT (10% of total expenditure) INTERFACE & SUPERSTRUCTURE LABOR (22% of total expenditure) Pit Digger 142K Brick 575 - 737K (100%) 174 - 195K (30%) Cement Nails, Wire 175 - 234K (30%) 28 - 46K (5%) Sand 28 - 64K (5%) Timber 22 - 51K (4%) Door Total 47K (8%) Iron Sheet 100K (17%) 1.44M Total expenditure 857K (60%) 465K (32%) 120K (8%) 11 - 17K (4%) 54 - 111K (19%) 35 - 40K (12%) Timber 15 - 27K (5%) Wire Mesh Cement 87 - 97K (31%) Sand Agg. Iron Bar 80 - 100K (28%) 282 - 392K (100%) Total Sand, Brick, Agg. 105 - 123K (88%) 15 - 45K (13%) Hardware products 120 – 168K (100%) Total 22K (7%) Mason 300 - 440K (93%) Tools 322 – 462K (100%) Total No Material 0 INTERFACE & SUPERSTRUCTURE TRANSPORTATION (8% of total expenditure) Note(s): (A) All figures are in UGX (B) K stands for thousand, M stands for million Lower end of material cost Lower end of labor cost Lower end of transport cost Additional cost building-up to the cost range 1. All percentages on the graphs are with respect to the lower ends of material, labor and transport costs, which build-up to a toilet costing 1.44 million For discussion, not for circulation 85 Toilet cost build-up in urban Uganda (3/4) Material Cost1 Labor Cost1 Transporter Cost1 Toilet Part Characteristics Material Purchased Amount Paid Quantity Per Unit Purchased (UGX) Labor Amount Paid Hired (UGX) Transporter Amount Paid Hired (UGX) Substructure   Single unlined pit Pit depth 15 feet2 No Material - - Pit Digger 9,500 per foot the pit dug of - -  Two-stances Cement4 3 bags 29,000 to 32,500 per bag Sand 1 ton 11,250 to 17,000 per ton 3 Interface   Floor made of cement covering the entire pit No pan used, squat hole is cut into the floor Aggregate5 1 ton 80,000 to 100,000 per ton (see next slide) Bricks (see next slide) 6 100 bricks - Timber 5 pieces 7,000 to 8,000 per piece Iron Bar 2 to 3 bars 27,000 to 37,000 per bar Wire Mesh 1 sheet 15,000 to 27,000 per sheet List of materials and rate per unit of material used in the toilet 1. Data on the list of material and quantities of each material is based on 5 mason interviews. Data on the range of prices paid by customers is based on FSG analysis conducted on the quantitative and qualitative interviews with the respective value chain actors that sell these materials to HH customers 2. Pit diggers typically dug pits that were either 15 feet or 40 feet deep, however, there wasn’t huge variation in the rate per foot charged for both the pit depths 3. Interface is casted on-site 4. Quantity of cement, sand and aggregate used for interface could vary based on the mason’s construction practices 5. Stated price is for 0.5 inch stones, which, as per masons is used more commonly for toilet construction comparted to aggregate of other sizes (e.g., 1 inch) 6. Some masons mentioned the use of 50 – 100 bricks to surround the interface. For simplicity, the material cost of these bricks has been added to the superstructure For discussion, not for circulation 86 Toilet cost build-up in urban Uganda (4/4) List of materials and rate per unit of material used in the toilet Toilet Part Characteristics Material Cost Labor Cost Transporter Cost Material Purchased Quantity Purchased Amount Paid Per Unit (UGX) Labor Hired Amount Paid (UGX) Transporter Hired Amount Paid (UGX) Superstructure  Plastered walls made of burnt brick and cement  Roof made of iron sheets  Wooden door on both the toilet stances Cement 6 bags 29,000 to 32,500 per bag Mason2 300,000 to 440,000 for constructing both, the interface and the superstructure Transporter for sand, brick and aggregate4 105,000 to 123,000 for material used for both, interface and superstructure Sand 2 tons 11,250 to 17,000 per ton Brick 1,500 to 2,000 bricks 117 per brick Timber 4 to 8 pieces 7,000 to 8,000 per piece Door 2 doors1 50,000 per door Tools for Mason3 22,500 for tools used for both, the interface and the superstructure Transporter for hardware products5 15,000 to 45,000 for products used for both, interface and superstructure Iron Sheet 2 sheets1 23,700 per sheet Wire 2 kilos 5,000 to 8,000 per kilo Nails 3 to 5 kilos 6,000 per kilo 1. The bathing area typically does not have a door and is open to the sky 2. In addition to labor cost, households may also incur some cost for providing food to the masons, porters, and pit diggers for the duration of the construction period 3. Customers may have to arrange for some basic tools like hoe, spade, wheelbarrow for the mason. 4. A trip made by the transporter for each product includes the distance from the tipper center (i.e., where the truck is usually parked) to the material supplier site + the distance from the material supplier site to the customer’s house + the distance from the customer’s house back to the tipper center. In practice, when a single transporter is hired to supply all three products, they may be able to optimize the routes so as to reduce the number of kilometers traveled; this would reduce the transportation cost for the customer by some amount. Transporters may not come back to the tipper center after delivering each product to the customer and may instead go to the next material supplier directly, thus optimizing the route. Instead of assuming 3 independent trips, we have factored for this optimization and assumed 2.33 trips, making the total trip distance to be 46 – 57 km for all three products. The stated cost also includes loading/ unloading charges 5. Customers might transport hardware store products in different ways; the cost of transportation depends on the vehicle used (motorbike, truck), the quantity of products to be transported and the number of trips made to and from the hardware store. The cost here assumes 1 trip of a boda-boda on the lower end, and 1 trip of a transporter on the upper end For discussion, not for circulation 87 Appendix - Table of contents  Value chain trace backs  Toilet cost build-up  Value chain actor profiles  Back-up for barriers and drivers For discussion, not for circulation 88 Input suppliers | Aggregate producer Age & gender 44 years (average); 73% are male Years in business ~7 years (average) Full-time employees (avg.) 70% did not have any full-time employees; they were sole entrepreneurs cutting stones Training 7% received training; were typically trained by family/ friends Education level ~65% received some primary education; 15% received some secondary or higher education Sources of income 52% stated aggregate production as the primary source; 36% stated it as a secondary source Other sources include farming, trading, among others Typical actor profile1 Role in the sanitation value chain Overview  Cuts stone into multiple sizes of aggregate; the aggregate is typically used with sand and cement to create a concrete mix for construction purposes  Within toilets, half-inch or quarter-inch sized aggregates are typically used, as part of the concrete mix, to build the toilet slab  Aggregate producers are typically found at a sub-county, or county level  Unit margin on a batch of 1 ton of half-inch aggregate is ~40% Key inputs  27%1 own the land from which they source aggregate; ~85%1 reported sharing the land with other aggregate producers  Tools required to cut the stone to size are typically purchased by the entrepreneur Operations  Aggregate producers typically pre-cut 4-8 tons of stones in anticipation of customer orders; produce as much as 30-40 tons per month during dry season  80%1 do not provide transportation services to their customers; households may hire a transporter to have the aggregate delivered Customers1  96%1 stated households and/or transporters as their top 2 customer types  98%1 stated that customers come from the same district as the aggregate producer; 29%1 of these stated that customers come from the same village/ town council/ municipality  All aggregate producers stated that customers hear about them through friends/ neighbors, and/or that they are generally known in the area as someone who sells aggregate  28% of aggregate producers do not provide credit to customers; 100%1 customers pay for the aggregate with cash Key linkages within value chain  48%1 refer their customers to hardware stores and/ or sand sellers Source: Qualitative interviews conducted by S4H 1. Based on interviews with 52 aggregate producers in the 10 research districts. 29 of these were conducted in rural settings and 23 were conducted in urban settings For discussion, not for circulation 89 Input suppliers | Brick maker Age & gender 33 years (average); 96% are male Years in business 6.5 years (average) Full-time employees (avg.) 58% did not have full-time employees; others had 2 full-time employees, who typically help in preparing mud, and shaping and burning bricks Training 22% received some technical training; majority of which was through technical training institutes Education level 46% received some primary education; 40% received some secondary or higher education Sources of income 50% stated brick making as the primary source; 50% stated it as a secondary source. Other sources include farming, fishing, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 50 brick makers in the 10 research districts. 32 of these were conducted in rural settings and 18 were conducted in urban settings Role in the sanitation value chain Overview  Makes bricks (clay/ mud, burnt/ unburnt) that are used for construction purposes  Within toilets, bricks could primarily be used to build the superstructure and/ or to line the walls of the pit. A few bricks might also be used around the interface  Brick makers are often found within the same village though households may not always directly interact with them to buy bricks  Unit margin on a batch of 10,000 bricks is ~60% Key inputs  58%1 own the land from which they produce the bricks; others may take it on rent  Firewood, grass, hoe, water, and molds are other materials that are used in the brick making process and are typically bought, or sourced locally without any cost Operations  Bricks are typically made in batches of 10,000 during the dry season (~Nov – Feb); many brick makers make 2 – 3 batches in a year  76%1 of brick makers do not provide transportation services to their customers; households may hire a transporter to have the bricks delivered Customers1  96% stated Household and/ or Transporter as their top 2 customers  98% stated that their customers come from within the same district as the brick maker; 38% of these stated that customers come from the same village/ town council/ municipality  82% stated that customers hear about them through friends/ neighbors, or see them making bricks  68% did not provide credit to their customers; brick makers are paid for their bricks in cash Key linkages within value chain  54%1 brick makers refer their customers to cement and/ or sand sellers For discussion, not for circulation 90 Input suppliers | Sand miner Age & gender 38 years (average); 93% are male Years in business ~6.5 years (average) Full-time employees (avg.) 64% did not have any full-time employees; hired temporary labor based on customer demand Training 11% received technical training; majority of these attended a training institute Education level ~60% received some primary education; 28% received some secondary or higher education Sources of income ~49% stated sand mining as the primary source; 33% stated it as a secondary source Other sources include farming, brick making, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 45 sand miners in the 10 research districts; 32 of these were conducted in rural settings and 13 were conducted in urban settings Overview  Mine and sell sand used for construction purposes; 91%1 sell plaster/ river sand, and others sell lake sand, which is finer and more expensive  Within toilets, sand could be used to build the slab along with cement and aggregate as part of the concrete mix; it could also be used with cement to build a brick superstructure and to plaster the walls  Sand miners are typically found at a sub-county or county level  Unit margin on a batch of 1 ton of plaster sand is 35-40% Key inputs  34%1 own the land from which they mine sand; they rent from the owners  Sand miners typically own the tools required for mining such as spade, pick axe, etc. Operations  On average sand miners only mine sand for 4 months1 (November to February) of the year, during the dry season; sand miners may mine up to 30-40 tons1 per month during this time, and can turnaround orders within 1-2 days  78%1 do not provide transportation services to their customers; households may hire a transporter to have the sand delivered Customers1  91%1 stated households and/or transporters as their top 2 customer types  All1 sand minersstated that customers come from within the same district as the sand miner; 26%1 stated that customers come from the same village/ town council/ municipality  97%1 stated that customers hear about them through friends/ neighbors, and/or that they are generally known in the area as someone who sells sand  44%1 of sand miners offer credit to their customers; All1 customers pay for the sand with cash Key linkages within value chain  48%1 refer their customers to hardware stores and aggregate producers Role in the sanitation value chain For discussion, not for circulation 91 Input suppliers | Cement pre-fabricator Age & gender 38 years (average); 83% are male Years in business ~7.5 years (average) Full-time employees (avg.) Have 4 full-time employees, who help fabricate the various cement products Training 73% received some technical training; 77% of these were trained at a technical institute Education level 43% received secondary education; 30% received some college/ university education Sources of income 64% stated cement pre-fabrication as the primary source; 33% stated it as a secondary source Other sources include farming, trading, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 30 cement pre-fabricators in the 10 research districts. 8 of these were conducted in rural settings and 22 were conducted in urban settings Overview  Fabricate and sell cement products (like toilet slabs, cement rings, cement blocks) for various construction applications  For toilets, fabricate cement slabs, which can be used as an alternative to a slab cast on-site by a mason; also fabricate cement rings which can be used to line toilet pits, but this is not commonly used by households  Cement pre-fabricators are typically found at largely municipalities/ town centers  Unit margin on a 60 cm by 60 cm slab is 25% - 34% Key inputs  43%1 own the land from which they fabricate cement products; the rest may rent  Purchase materials to produce the slabs (i.e., cement, sand, and aggregate) themselves  Cement pre-fabricators typically own the tools required to fabricate cement products, such as molds, spades, etc. Operations  On average, cement pre-fabricators get orders for toilet slabs for only 4-5 months per year, during the dry season (December to March); they manufacture 10-15 slabs1 per month, on average  Household customers typically arrange for transportation of the slab to their home Customers1  All1 cement pre-fabricators stated households, and/ or contractors among their top 2 customer types  As cement pre-fabricators are concentrated in urban centers, most customers come from within the district  Customers typically hear of cement pre-fabricators via their friends/ neighbors  50%1 offer credit to their customers; All1 customers pay for cement slabs with cash Key linkages within value chain  73%1 refer customers to other actors relevant to toilet construction such as hardware stores and sand miners Role in the sanitation value chain For discussion, not for circulation 92 Input suppliers | Hardware store Age & gender 40 years (average); 84% are male Years in business 7 years (average) Full-time employees (avg.) 78% of stores have 1 – 3 full-time employees working at the store, who primarily help in dealing with customers and managing inventory Training 22% received some technical training; majority of which was through a technical training institute Education level 71% received some secondary; 24% received college education Sources of income 53% stated hardware store as the primary source; 44% stated it as a secondary source. Other sources include agriculture, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 45 hardware stores in the 10 research districts. 18 of these were conducted in rural settings and 27 were conducted in urban settings Overview  Sell various hardware materials required for construction; these include cement, iron bars, nails, tools, pipes, etc.  Some also sell sanitation-specific products such as plastic pans, plastic SanPlats etc.  Hardware stores are mostly found in the urban centers of a district, with smaller stores also present in rural trading centers of some districts  Unit margin on a single unit of product varies from 3% to 11% Key inputs  62%1 hardware stores rent the space from where they operate their business  Products of various categories and brands are stocked to cater to customer preferences. Suppliers include other hardware stores, dealers, distributors, company outlets, and producers; transportation is often provided by distributors and dealers but rarely by other suppliers  58%1 did not receive credit from any of their suppliers Operations  Most of the sales occurs on a walk-in basis; frequent and larger customers, like builders, also place their order over the phone. Oct – Jan are good months for the business of more than 50%1 hardware stores  60%1 do not provide any transportation to their customers Customers1  95% stated Households and 71% stated Masons as one of their top 2 customers  71% stated that their customers are from the same village/ town council  80% stated that customers hear about their store from friends/ neighbors; 73% stated that their hardware store is generally known in their area  71% provide credit to their customers; hardware stores are typically paid for their products in cash, though a few might accept mobile money or bank transfers Key linkages within value chain  29%1 refer their household customers to sand sellers and/ or masons Role in the sanitation value chain For discussion, not for circulation 93 Input suppliers | Transporter Age & gender 35 years (average); 100% are male Years in business 6.5 years (average) Full-time employees (avg.) Typically transporters have 1 – 2 employees, who help in driving the truck and loading/ off-loading materials Truck registration 38% had their trucks registered with a transporter association Education level 31% received some primary education; 65% received some secondary or higher education Sources of income 42% stated transportation business as the only source of their income Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 48 transporters in the 10 research districts. 20 of these were conducted in rural settings and 28 were conducted in urban settings Overview  Connects customers with suppliers of brick, sand, and aggregate by buying the material on behalf of the customer and transporting it to them; also provide a ‘transportation only’ service for moving various goods from one area to another  Transporters are typically found in the urban centers of a district, with fewer transporters also present in rural trading centers of some districts  46%1 of the transporters used a truck with capacity between 2.5 and 4 tons; 45%1 used a truck with capacity more than 5 tons  Unit margin on a 4T trip of sand and aggregate varies from 20% to 40% Key inputs  51%1 owned the truck they use for transportation; 48%1 took it on rent  Input materials are typically acquired directly from production sites; transporters travel ~14 km, on average, to the supplier sites for sand, brick and aggregate  Some materials, such as cement and iron bars, are sourced from hardware stores Operations  Customers typically place an order directly with transporter; 80%1 stated that their customers don’t travel to the material supplier’s site with them  Off-loading service was always provided at the time of delivery Customers  100%1 served household customers; other customers include institutions, contractors, churches  Customers typically come from within the same district as the transporter  Customers primarily hear about transporters through referrals from other customers or value chain actors  58%1 provide credit to their customers; transporters are typically paid for their service and the products in cash, though a few might accept mobile money Key linkages within value chain  46%1 refer their customers to sand sellers and/ or masons Role in the sanitation value chain For discussion, not for circulation 94 Executors | Pit Digger Age & gender 39 years (average); 98% are male Years in business 9.5 years (average) Partner￾ship 85% of the pit diggers may have ~2 more pit diggers that work with/ for them on larger pit digging jobs Training 6% received some technical training; majority of which was through NGOs Education level 25% received no education at all; 65% received some primary education Sources of income 35% stated pit digging as the primary source; 63% stated it as a secondary source. Other sources include farming, daily wage labor work, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 51 pit diggers in the 10 research districts. 34 of these were conducted in rural settings and 17 were conducted in urban settings Overview  Manually digs pits for various purposes like toilets, rubbish pits, placenta pits etc.  Within toilets, digs pits of varying dimensions and for various customers including households, schools, churches, health facilities etc. Most dig rectangular pits but some may also dig circular pits  Pit diggers are primarily found locally at a village level  Unit margin on digging a15 feet deep pit is ~75% Key inputs  Tools needed to dig the pits are typically purchased by the pit digger; households may arrange for a few tools  Tools may need to be replaced after 8 - 10 pit digging jobs Operations  Pit diggers visit the toilet site, discuss the customer requirements, and negotiate on a price before starting the job. May work individually or with 1-2 helpers or additional pit diggers depending on the size of the pit  A 15 feet pit is dug in 2-3 days; customers may also provide food to the pit diggers during this time Customers1  Besides household customers, 57% stated schools and 25% stated hospitals as their customers  75% stated that their household customers come from within the same village  90% stated that customers hear about them from friends/ neighbors and/ or see them working; 84% stated that they are generally known in their area as a pit digger  52% did not provide credit to their household customers; pit diggers are paid for their service in cash Key linkages within value chain  73%1 refer their customers to masons and/ or hardware stores Role in the sanitation value chain For discussion, not for circulation 95 Executors | Mason Age & gender 35 years (average); 100% are male Years in business ~10 years (average) Full-time employees (avg.) None of the masons had full-time employees; hire temporary labor based on customer demand Training 75% received some technical training; 63% of these were trained at a technical institute Education level 39% received some primary education; 37% received some secondary or higher education Sources of income 69% stated masonry as the primary source; 31% stated it as a secondary source Other sources include farming, trading, among others Typical actor profile1 Source: Qualitative interviews conducted by S4H 1. Based on interviews with 51 masons in the 10 research districts. 28 of these were conducted in rural settings and 23 were conducted in urban settings Overview  Masons construct various structures such as houses, churches, schools, etc.  For toilets, masons construct the slab and superstructure on-site, often working with a team of others masons and/or porters  Masons are found at a village/ town council/ municipality level  Unit margin on construction of a rural 2-stance IBT is 44% - 47%; margins are slightly higher for urban masons due to higher prices charged to customers Key inputs  Materials required to construct the toilet, such as cement, brick, hardware materials, etc., are typically purchased directly by the customer  Masons typically own the tools required to construct the toilet; if not, they are provided by the customer Operations  On average, masons typically get toilet construction jobs for only 4-5 months per year, during the dry season (November to February and/or June to August)  On average, masons work on 5-7 household toilet jobs per year1 Customers1  All1 masons stated households and/or schools as their top 2 customer types  All1 masons stated that customers come from within the same district as them; 59%1 stated that customers come from the same village/ town council/ municipality  All1 masons stated that customers hear about them through friends/ neighbors, and/or that they are generally known in the area as someone who can construct toilets  70%1 of masons offer credit to their customers for household and/or schools toilet jobs; all customers pay for the job with cash Key linkages within value chain  88%1 refer their customers to pit diggers and/ or hardware stores Role in the sanitation value chain For discussion, not for circulation 96 Executors | Contractor Age & gender 47 years (average); mostly male Years in business ~10 years (average) Full-time employees (avg.) Employ a few full-time employees, but most are temporary labor hired based on customer demand Training Most contractors receive some training from a technical institute, either in business or in construction Education level Most contractors receive some secondary or higher education Sources of income Most contractors have contracting as their primary or secondary income source; other sources include farming, carpentry, and trading, among others Typical actor profile Role in the sanitation value chain Overview  Contractors provide end-to-end construction services for structures such as schools, health centers, etc.  Contractors typically obtain contracts to construct institutional toilets, and build the complete toilet, including the pit  Contractors are found at a district level, but are typically willing to work on projects at any location within a district, based on customer demand  Unit margin on construction of a 5-stance VIP is 7% - 9% post tax Key inputs  Type and grade of materials required to construct the toilet, such as cement, brick, hardware materials, etc., are specified by the contract, and are purchased by the contractor from suppliers, who are mostly VAT-registered  Contractors hire pit diggers and masons as part of their construction team, based on job requirements; some contractors repeatedly hire the same pit diggers/ masons if they trust the quality of their work  Contractors’ construction team owns the tools required to construct the toilet Operations  Contractors get toilet construction jobs via an RFP (Request For Proposal) issued by institutional customers; may get jobs at any time of the year  On average, contractors work on 2-6 toilet jobs per year, and take 2-3 months to complete a job Customers  Most contractors stated that local/ district Governments, and/or NGOs are their top 2 customers  Most contractors stated that customers come from within the same district  Most contractors stated that customers hear about them via the RFP process  Most contractors stated that they are paid once the toilet has been constructed and/ or inspected; All contractors are paid via a bank transfer Source: Qualitative interviews conducted by S4H For discussion, not for circulation 97 Financiers | VSLA Age of group 45% of the groups started 3 – 5 years ago; 34% of the groups started less than 2 years ago Number of members 35 (average); 7 – 350 (range) Location of members 76% were from the same parish/ ward as the VSLA group Occupation of members 66% stated agriculture/ farming; 19% stated trading of products/ services Sanitation￾specific loan product 6% of the VSLAs had a separate loan product for toilet construction, maintenance, or repairs Members that took loans for sanitation 1 – 3 members, in 6% of the VSLAs, took a loan for toilet construction or improvement purposes in the past one year Typical VSLA profile1 Financier role Source: Qualitative interviews conducted by S4H 1. Based on interviews with 47 VSLAs in the 10 research districts. 25 of these were conducted in rural settings and 22 were conducted in urban settings Overview  VSLAs (Village Savings and Loan Associations) are community led saving and lending groups that collect and manage savings of members and also give out loans  VSLAs are typically found at the sub-county level and can either be registered or operate informally; they typically don’t have another branch under the same association  Leadership typically comprises of 1 chairman, 1 secretary and 1 treasurer Membership and evaluation1  The most common prerequisites to becoming a group member include – Paying one-time membership fee (91%); Being a resident of the same sub￾county (34%); having a proof of stable income (23%) Loan disbursement requirements1  95% require members to save periodically with the group in order to take out a loan; average saving requirement is ~UGX 10,000 per week  68% require collateral prior to giving a productive loan; 64% require collateral prior to giving a non-productive loan Loan usage and terms1  Members tend to take more loans in Jan – Feb and Aug – Sep  Top 3 reasons for taking loans include: – Agricultural loans (49%): Average loan amount given is ~UGX 200,000; average monthly interest rate is 6% – Other business loans (68%): Average loan amount given is ~UGX 350,000 average monthly interest rate is 6% – Loans for paying school fees (62%): Average expected repayment period for all non-productive loans is 3 months  All of the loan takers repay their loan installments by depositing cash during the group meetings; 1 – 2% might also pay via mobile money For discussion, not for circulation 98 Financiers | SACCO Age of group 35% of the groups started 6 – 10 years ago; 34% of the groups started 3 – 5 years ago Number of members 370 (average); 8 – 3800 (range) Location of members 31% were from the same sub-county as the SACCO group; 31% were from the same parish/ ward Occupation of members 54% stated agriculture/ farming; 25% stated trading of products/ services Sanitation￾specific loan product 14% of the SACCOs had a separate loan product for toilet construction, maintenance, or repairs Members that took loans for sanitation 2 – 5 members, in 14% of the SACCOs, took a loan for toilet construction or improvement purposes in the past one year Typical SACCO profile1 Financier role Source: Qualitative interviews conducted by S4H 1. Based on interviews with 35 SACCOs in the 10 research districts. 20 of these were conducted in rural settings and 15 were conducted in urban settings Overview  SACCOs (Savings and Credit Cooperative Organizations) are saving and lending groups that are owned, governed and managed by the group members  Typically SACCOs are found in a few sub-counties and urban centers of a district, and are registered; they might have another branch under the same organization  Leadership typically comprises of chairperson, vice-chairperson, secretary, vice￾secretary, treasurer, a few committee and a few sub-committee members Membership and evaluation1  The most common prerequisites1 to becoming a group member include – Paying one-time membership fee (85%); having a proof of stable income (37%); being a resident of the same sub-county (34%) Loan disbursement requirements1  85% require members to save periodically with the group in order to take out a loan; average saving requirement is ~UGX 10,000 per week  74% require collateral prior to giving a productive loan; 63% require collateral prior to giving a non-productive loan Loan usage and terms1  Members tend to take more loans in Jan – Feb and Aug – Sep  Top 3 reasons for taking loans include: – Agricultural loans (40%): Average loan amount given is ~UGX 340,000; average monthly interest rate is 6% – Other business loans (80%): Average loan amount given is ~UGX 600,000 average monthly interest rate is 7% – Loans for paying school fees (49%): Average expected repayment period for all non-productive loans was 3 months  85% of loan takers repay their loan installments by depositing cash during the group meetings; 15% pay via mobile money or at a bank branch For discussion, not for circulation 99 Appendix - Table of contents  Value chain trace backs  Toilet cost build-up  Value chain actor profiles  Back-up for barriers and drivers Approach to determine unit profitability for value chain actors (1/2) We estimated unit margins for value chain actors using data primarily from qualitative interviews since price and cost information was asked more consistently in these interviews. Quantitative data has helped provide a directional sense for this analysis Actor Unit definition Rationale for choice of unit Range of unit margin (%) Costs excluded in unit margin analysis2 Aggregate producer 1 ton half-inch aggregate Half-inch is among the commonly used sizes of aggregate to cast the cement slab 40% - 42% N/A Brick maker1 1 batch of 10,000 bricks Typical batch size for small-scale brick makers ~59%  Cost of land purchase/ rental excluded  Cost of food and transport for labor excluded Sand miner 1 ton plaster/ river sand Plaster/ river sand is the most common sand type sold 35% - 40%  Cost of land purchase/ rental excluded 1 50-kg cement bag Typical unit of purchase 3.5% - 4.5%  All costs other than material purchase and transport Hardware store excluded 1 plastic toilet pan Typical unit of purchase 9% - 11% 1 unit of other hardware material (e.g., 1 iron sheet, 1 iron bar) Typical unit of purchase 3% - 7% Cement pre-fabricator One 60 cm x 60 cm cement slab Among the most common slab sizes sold by cement pre-fabricators 25% - 32%  Cost of land purchase/ rental excluded  Cost of tools excluded Transporter1 One 4 ton load of aggregate 4 ton is the most common truck size ~20%  Truck depreciation costs excluded  Interest cost excluded One 4 ton load of sand 4 ton is the most common truck size ~40% Source: FSG analysis based on qualitative interviews conducted by S4H, and quantitative value chain interviews 1. Developed point estimates due to insufficient data 2. Taxes are not account for in unit margin calculations for value chain actors, except for contractors 100 For discussion, not for circulation 101 Approach to determine unit profitability for value chain actors (2/2) Actor Unit definition Rationale for choice of unit Range of unit margin (%) Costs excluded in unit margin analysis2 Pit digger1 2-stance, 15 ft. deep pit Most common pit depths found among household toilets ~75% N/A 2-stance, 40 ft. deep pit ~75% Mason 2-stance IBT built in a rural setting Most common type of IBT constructed by masons 44% - 47% N/A 2-stance IBT built in an urban setting 40% - 59% Contractor 5-stance VIP toilet Most common type of toilet constructed by contractors 7% - 9% N/A We estimated unit margins for value chain actors using data primarily from qualitative interviews since price and cost information was asked more consistently in these interviews. Quantitative data has helped provide a directional sense for this analysis Source: FSG analysis based on qualitative interviews conducted by S4H, and quantitative value chain interviews 1. Developed point estimates due to insufficient data 2. Taxes are not account for in unit margin calculations for value chain actors, except for contractors For discussion, not for circulation 102 End of document