Slide 1

Urban Sanitation: potential for a pro-poor market?

Lessons learned from a pilot project in Jakarta, Indonesia

1How to enable viable sanitation enterprise describes the challenges encountered and lessons learned Experience from a pilot project in Jakarta, IndonesiaImplemented by an iNGO Mercy Corps; funded by SuezShows market potential and new types of solns for urban sanitation, while also confronting traditional challenges of land tenure, access to finance, risks to entering the market, public good nature of sanitation, free-rider syndrome

Action Research QuestionsHow to enable access to sustainable sanitation for large number of urban poor?Can we enable access through development of a pro-poor market?Can market providers be those from the low-income communities themselves? What is the potential for employment and small/micro sanitation business development?

Pro-poor market: provides a product geared towards low income HHs targets lower end of the market, rather than upper end

-this was the question that the pilot project set out to addressA rather ambitious project that encountered numerous challenges, but hopefully provides some interesting lessons that others can learn from

2Indonesia Access to Sanitation52% (94 mil) without access to adequate sanitationHealth impact + Economic impact (>50,000 death/yr from diarrhoea, 2.3% GDP)Scale of public investment required - $150 billionNational mandate: sanitation is no longer just a private matter

Strides in rural sanitation CLTS + communal septic tank systems

Urban challenges, and opportunity?50% urban population + high urban growth rate Land tenure, housing density, free ridersMarket potential?

Before I get into the LL and challenges, Ill give you a bit of background and context regarding sanitation and urban sanitation in particular in Indonesia, that can help you understand where this project was coming fromthe context in which it was developed

73% coverage/access to adequate sanitation is required to meet MDGsSanitation in Indonesia for the rural poor has worked rather well, using CLTS and semi-communal septic tank/public toilet systems...

-additional challenges in urban areas: lack of community cohesion, problem of free riders and public goods, difficulty with CLTS in that incremental approaches are not feasible, and very big issue of land tenure where to put the public toilets? Often alongside river banks or on un-used land, but when one tries to formalise the public toilet block run in to difficulties with zoning/bylaws and land ownership

3Jakarta Access to SanitationSanitation infrastructure: 10 million IDR, large volume, black + grey-high ongoing O&M costs Low-cost septic tank/treatment option technically viable?

Economically viable? -Small business opportunities: manufacture, installation, servicing (de-sludging)14

PUSH Program Untuk Sehat dan Sanitasi/Hygiene

Formal objectives modest:Pilot low cost, sustainable, and replicable infrastructure modelPromote awareness of the economic benefits of improved sanitation for urban poor communities

Informal objectives ambitious! Demand and supply side interventionsSanitation service chain installation + treatment + O&M

Multi-stakeholder partnership: Mercy Corps Indonesia/iNGO, IATPI MFI/cooperative, PD. PAL, West Jakarta govt, community, local entrepreneurs

2009-2011 ongoing project

to address issues of lack of access, and inadequate/non-existent treatment...pilot project developed...15Sanitation service chainAffordable and appropriate technologyPrivate householdsSmall/micro sanitation businessesCommunity based and/or micro-sludge removal businessSupporting markets: R&D, financial institutions, marketing servicesAmbitious!

16Demand & Supply side interventionsDemand side:Building demand sanitation marketing/hygiene awarenessRegulatory environmentSupporting financial systems enabling access to finance

Supply side:R&D - Testing a new sanitation product for urban poor householdsBuilding capacity of market to provide local construction firms/entrepreneurs, business development skillsO&M service market de-sludging, private/public partnership

17Supply: Research & Developmentblack water septic tank + bio-filter (upflow/ anaerobic)meets municipal treatment standardsPre-cast modular units - fit in small houses (2.5m2)service/empty every 1-2 years>60% less expensive than current models

90% of the houses are smaller than 70 m2; 36/28% are smaller than 30 m2

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1919Supply: Small business supportExisting small construction businessesTraining in production & installationFinancial support for marketingMarket assessment

Options for customers:Black vs. black &grey WWTMaintenance packages

20Supply: Public/Private partnershipsSludge removal, transport, treatment

Micro-business or community organisation +Public municipal wastewater treatment company

Building demand market developmentHygiene promotion + Peer group marketingRates of diarrhoea >20% incidenceTarget households who just received piped water connection

Prices still high relative to income:$212-425 USD = 150-250% of HH mthly incomeAffordability only 13% WTP for product without any subsidy81% WTP for ongoing O&M costs

55% of HH monthly income