WaterSHED WASH-Loans Update – September 2013
Cambodia Sanitation Financing Study – August 2014
Evaluating the Effect of Microcredit on Latrine Uptake in Rural Cambodia
In Cambodia, access to finance is cited as one of the primary constraints preventing the sanitation market from reaching scale. Producers of latrines often complain that lack of access to affordable capital prevents the expansion of their business operations, while households cite financial limitations as a factor preventing them from investing in on-site sanitation. In an effort to help overcome this financing hurdle, WaterSHED, in partnership with a research team from the University of North Carolina-Chapel Hill, conducted a study in 2012, designed to test the viability of using microfinance to improve household uptake of latrines.
The intervention sought to address the following research question:
- Does access to micro-finance, offered during the latrine sales process, improve latrine product uptake/purchase in the sanitation marketing project?
To answer this question, rural communes in the provinces of Kampong Speu and Kampong Cham were cluster-matched and randomly assigned to either be exposed to standard sanitation sales activities only, or to be exposed to the same activities plus the offer of microcredit from a local microfinance institution (MFI). Through partnerships with two leading Cambodian MFIs – Amret and PRASAC – credit officers were deployed to regularly attend sales events in selected communes, while non-MFI-attended sales events continue in control communes.
WaterSHED believes that access to microfinance may serve to increase latrine product uptake. To measure the impact of microcredit, WaterSHED collected data on the use of loans during sales events, and compared this alongside latrine sales reported under usual sanitation marketing conditions. Comparing these data, the researchers are assessing whether or not sales are augmented by the offer of micro-finance. Further surveying of sales event attendees provided qualitative, contextual information on factors that potentially influence purchasers and non-purchasers, such as previous exposure to sanitation marketing and/or micro-finance.
The study launched in October 2011 concluded in December 2012. Preliminary results were presented to the Water Institute at UNC, Water and Health Conference in October 2012. The research is currently being prepared for publication. With little evidence-based research that explores the link between microfinance and the uptake of safe sanitation products, the results of this study are important to both sanitation and microfinance communities. Generating evidence-based recommendations, this innovative project serves to further inform practitioners about the viability of utilizing microfinance to improve access to sanitation in rural Cambodia, and similar settings throughout Southeast Asia.
Water For People’s review of sanitation financing: Microfinance as a Potential Catalyst for Improved Sanitation – (PDF) January 2014