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Emerging Experiences with Sanitation Financing Models & Approaches, in Lao PDR.
Declan OLeary, J anuary 2013,


1


This paper emerges from a research initiative commissioned by
SNV the Netherlands Development Organization in 2011 and is
linked to the first phase of the regional Sustainable Sanitation
and Hygiene for All-SSH4A programme component in the Lao
Peoples Democratic Republic (Lao PDR), then funded by the
Australian Government via the Australian Agency for
International Development AusAID and the Directorate-
General for International Cooperation (DGIS) of the Dutch
Ministry of Foreign Affairs through SNV.
The paper is intended to provide a snapshot of and insight into
some of the sanitation financing models/approaches and
results obtained (up to the end of 2011) in Lao PDR. The
research field work was undertaken by an independent expert
(Mr Khanthaly Seanvilayvong) with expertise in credit and
saving programmes, supported by the SSH4A Project Manager
under the guidance of the Water Sanitation and Hygiene
(WASH) Sector Leader and other advisers in country
2
.
The objective of the 2011 research was to gain a better
understanding of, and into the mechanisms that had or were
being used to finance and/or subsidise sanitation interventions
and investments in country by identifying, documenting and
focusing on some of the initiatives
3
in Savannakhet province as
representative examples of the country.
Background & Context Setting
Savannakhet province is the largest province in Lao PDR by
area, covering 21,774 square kilometres as well as the most
populated province, with over 916,984
4
people distributed
across ~1,015
5
Bans (villages) in 15 districts making it up.
The province is traversed by a number of designated regional
highways running both north south (Asian Highway 11) and
east west connecting Northern Thailand and Myanmar with
Vietnam and the sea, this highway has also been designated
part of the Greater Mekong Sub-Region, East West Economic
Corridor.
Issues Statement
Improved sanitation coverage for Lao PDR in 2005 was
reported at 48%, significantly below the regional average for
South East Asian countries at 67%. Considerable progress has
been made toward the national sanitation target of 70% in
2015 for the countrys commitments to the Millennium
Development Declaration and it goals (MDGs) increasing
sanitation coverage from 11% in 1990 to 48% in 2005.
Nationally the economic impacts from the lack of sanitation
have been calculated by the World Banks Water & Sanitation
Programs (WSP) supported Economics of Sanitation Initiative
(ESI), which calculated in 2009, that the overall economic
costs of poor sanitation in Lao PDR to be equivalent to US$193
million per year, with per capita (monetised) economic loss
from the adverse impacts from sanitation equal to 345,653 Kip
(~US$34) per person year
7
, equivalent to 2,073,918 Kip (US$204
per household (of six persons) per year! Thus showing a clear
justification and economic benefit for households to have and
invest in sanitation.
Access to sanitation in Savannakhet province has been
identified as continuing to lag behind other provinces in the
country even though the majority of the provinces population
(concentrated in the western part of the province) are more
affluent that many provinces in the country. In fact,
Savannakhet province was reported to have the third worst
levels of sanitation coverage in the country (National Census
Data 2005)
8
.
Figure 2. District Distribution of Water Supply and Sanitation Coverage, Savannakhet
Province
(%of households WITHOUT Water and Sanitation 2010)
3%
0% 0% 2%
19%
45%
29%
5%
0% 0%
4%
40%
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4%
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7%
44%
67%
68%
78%
86% 86%
50%
56%
81%
44%
79%
69%
46%
86%
0%
10%
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40%
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70%
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90%
100%
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% of HH Without Sanitation & Water Supplies
( Data sour ce PDOH/ Nam Saat 2010)
Total HH%W/OWater Supply Total HH%W/OSanitation
Source: Provincial Department of Health Environmental Health & Water Supply
(Nam Saat) section data.
Overall sanitation coverage across the 15 districts in
Savannakhet province was reported at 45% of households
having a toilet in 2011, (with 83% in urban areas and 37% of
rural areas). Provincial progress has been made over the
previous five years where access to sanitation is reported to

Figure 1 Districts of Savannakhet province, indicating the %s of the population
living below the national poverty line, red areas >60% poor
6
, with inset national
map.

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have doubled, from just 22% of households in 2005 to ~45% in
2011, though considerable challenges exist to continue to
increase coverage across the province.
Table 1 Overall Water Supply and Sanitation coverage SavannakhetProvince (2011)
2005 2006 2007 2008 2009 2010 2011*
Sanitation 22% 23% 27% 33% 36% 43% 45%
Water
Supply
92% 98% 99%
Source: Provincial Department of Health Environmental Health & Water Supply
(Nam Saat) section data.
From an international development perspective supporting
and universally subsidising improving access to sanitation for
the majority of households in Savannakhet was and is not a
viable or recommended option and would be wasteful of the
limited development resources available in country. As many
households without sanitation are not poor and vulnerable
and would appear to be unwilling and or reluctant to make
the necessary investments required to obtain improved
sanitation, possibly due to a number of reasons, including but
not limited to:
Poor or limited awareness and understanding of the
adverse impacts and costs from the lack of sanitation as
mentioned above,
Limited access to information on cost effective sanitation
and construction materials and approaches, and
The demand for sanitation is simply not a priority for many
households who often have other competing demands
for the financial resources available to them. Or put
another way, the opportunity cost forgone in not
choosing to invest in sanitation or its impacts was
perceived as low.
Additional research initiatives undertaken on sanitation
demand and other issues in Laos
9
identified a need for this
research to gaining a better understanding into what types of
projects etc. had been undertaken to contribute to closing the
sanitation gap in the province and country, and what
financing mechanisms were used to support these and how
effective they had been.
Research Approach
The research approach was based on discussions with
responsible provincial government offices and non-
governmental organisation (NGO) development actors. This
identified projects, gather available information and
documented feedback on their experiences on sanitation
financing approaches.
Those consulted included the Environmental Health and Water
Supply Office (commonly referred to as Nam Saat) of the
Provincial Department of Health which is responsible for rural
sanitation as well as its district offices, the provincial Urban
Water Supply State Enterprise (Nam Papa) of the Provincial
Department of Public Works and Transport, with the
department which is now often taking the lead for urban
sanitation as well as the Lao Red Cross. NGOs consulted
included FIDA International, SNV, World Vision, NORMAI (Non-
profit Association for Rural Mobilisation and Improvement)
which is one of the localised entity of the CIDSE programme,
and a number of emerging private sector actors, namely the
owners of a number of involved private sector enterprises
(construction material retailers/suppliers, and/or material
fabricators) currently or in the recent past involved in
sanitation provision and support in the province.
17 different programmes, projects and businesses were
identified by interviewed stakeholders either being undertaken
in different locations and or over different phases and
available information was collected on these, namely on:
Table 2 Sanitation Financing Actor/ Stakeholders and the Locations of Reported Project Interventions
Involved Implementers,
(may not mention all partners)

#

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Reported Locations of Projects (district)
(Note likely duplication as activities reported by project
partners, Government & NGOs whose reviews have
been combined in the analysis)
Leading State Actors/ Stakeholders
Nam Papa Provincial Urban Water Supply State
Enterprise, of the Department of Public Works & Transport
and its district offices. Support provided by UN-Habitat
and ADB.
Urban 5
Projects and or phases initiated or undertaken in (i)
Outhoumphone, (ii) Phine, (iii) Atsaphangthong & (iv)
Villabouly, Districts Centres. With the first project (i)
reported on 2004, and the latest initiated in 2011.
Nam Saat (NS) Environmental Health and Water Supply
Section, Provincial Department of Health or its district
offices (multiple donors and partners)
As the responsible government agency for rural
sanitation, Nam Saat is frequently the lead
implementing partner in many of the reviewed
projects.

Rural 5
Districts where supported project were reported were; (i)
Phine, (ii) Villabouly, (iii) Atsaphangthong, (iv) Phalanxai
(v) Xaibouly, (vi) Nong, (vii) Sepone (viii) Xonabouly, (ix)
Songkhong (x) Outhoumphone (xi) Atsaphone, and (xii)
Thapangthong districts. Some districts had or have a
number of projects implemented with different partners
(see below).
Provincial Government Rural Development & Poverty
Reduction Office, SNV
Rural 1 Phine, Atsaphone, Xonabuly, and Phalanxai
Lao Red Cross (Netherlands Red Cross) Rural 1 Phalanxai and Xaibouly
Private Sector
Private Sector/ Entrepreneurial Initiatives (The Nang
Chouk Material Shop -NCMS, Southchay Construction
Company -SCC) Pakorb Construction Materials Shop
PCMS)
Urban/ Rural 3
Atsaphongthong District
Outhoumphone District
Xonabuly District (in order respectively)
Birla-Lao Farm and Plantation Company Rural 1 Phalanxai district
Multilateral Agencies and Non-Governmental Organisations
UNICEF Rural
Nong, Sepone, Villabouly and Xonabouly districts
UN-Habitat Urban
Outhoumphone, Phine,
Atsaphangthong & Villabouly Districts Centres
Oxfam (Belgium) Rural 1
Xonabuly District
World Vision International Rural 6
Outhoumphone, Nong, Atsaphone, Phalanxai,
Atsaphone, Thapangthong (mainly through integrated
areas development programs-ADPs)
SNV Netherlands Development Organisation Rural 2
Sepone & Villabouly districts (Pro-Poor WASH),
Atsaphone, Phalanxai Xonabouly, Phine (SSH4A)
Page 3 of 15
Fida International Organisation Rural 1
Songkhong District
CIDSE project now localised to the Non-profit association
NORMAI.
Rural 1
Phine District
Christian Broadcasting Network-CBN Rural 1
Atsaphangthong district
CIDA Rural 1
Phine District

The consultations allowed for the identification of a number of
variants of financing models/ approaches, though different
names were sometimes use by organisations and agencies,
those identified have been group together as the approaches
in general were similar, and the reporting scale, performance
and progress (table 4) is up to the end of 2011. The models/
approaches identified included:
Table 3 Identified Sanitation Financing Models & Implementing/ Support Organisations
Model
Reported Implementers &
involved partners/ funders
Direct Grants or Subsidies to cover all or parts of the cost of
sanitation/ toilet materials and super structures.
Commonly providing either as cash or more frequently
materials, namely
o Differing numbers and sizes concrete rings for single pit or
dual pits
o Ceramic pans/ bowls,
o Piping (usually PVC)
o Cement (bags or set weight/volumes)
o Other materials (bricks, sand etc....).

Nam Saat/ Fida International Organisation
Nam Saat/ UNICEF.
Birla Lao Pulp and Plantation Co. (Corporate Social
Responsibility model).
Nam Saat/ CIDSE, (Coopration Internationale pour le
Dveloppement et la Solidarit)
Nam Saat/ SNV with European Commission support.
Nam Saat/ CIDA-Canadian International Development
Agency
Nam Saat/ Christian Broadcasting Network CBN.
In some instances full subsidies were provided for poor and
vulnerable targeted households and groups. Enabling those
households to gain access to sanitation,

Revolving Fund Models, loans or credits to cover the costs of
materials and or construction services which are repayable
either with or without interest within a specified timeframe
Nam Papa Urban Projects with UN-Habitat and ADB-the Asian
Development Bank, focusing on emerging Urban Areas/ District
Centres.
World Visions through its Area Development Programs-ADPs
Oxfam Belgium
Established Village Development Funds
There are well established village development funds in some
villages across
Emerging Private Sector/ Entrepreneurial Innovative Credit
Approaches Though similar in manner to credit models it was
considered best to document these separately
Three companies/ businesses in different districts, some now
working through MoUs with state actors (Nam Saat, Nam Papas).
Indirect Subsidies for the likes of Community Led Total
Sanitation (CLTS)/ Sanitation Marketing (Sanimart) Models,
CLTS, and Sanimart was being piloted in a number of districts
(6) and villages (~105) by projects.
Led by the Provincial Rural Development & Poverty Reduction
Office (PRD0) in one project with SNV, with AusAID/ DGIS support.
Nam Saat/ SNV in another project with European Commission
support

Overall Findings
The following table summarises the estimated hardware
investments made and reported unit costs for sanitation
materials, as well as the reported delinquency rates in
repayments on credit based approaches (revolving funds and
credits) though noting that many of the projects are reported
as ongoing. Additional findings were (following table)

Table 4. Reported Impacts, Investment and Hardware Unit Costs of Supported Models
#
Model/ Approaches
applied
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Estimated Investment
(Only hardware / material
costs usually reported )
Cost per Units
(median values)
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Reported
Timeframe
Lao Kip US$ Lao Kip US$
1. Revolving Fund Model






1.1 World Vision 894 48 6 536,400,000 $ 67,050 600,000 $ 75 40%
2007- (ongoing
end of 2011)
1.2 Nam Papa 587 39 5 864,000,000 $ 108,000 1,471,891 $ 184 65%
2005-(ongoing
end of 2011))
1.3
Nam Saat / Oxfam
Belgium
23 3 1 14,996,000 $1,875 652,000 $ 82 100% 2004
2 Grants/Direct Subsidies Model


2.1
Nam Saat / FIDA
International
1,190 39 1 1,792,900,000 $224,113 1,506,639 $ 188 1998-2010
2.2 Lao Red Cross 379 7 2 n/ d 2000-2005
2.3 Nam Saat / CIDA 724 13 1 579,200,000 $72,400 800,000 $ 100 2002-2006
2.4 Nam Saat / CIDSE 121 8 1 n/ a 2000-2005
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2.5 Nam Saat / SNV 296 8 2 74,000,000 $ 9,250 250,000 $ 31 2010-
2.6 Nam Saat/ UNICEF 990 14 4 n/ a 2000-2009
2.7 Birla Lao Co. 238 2 1 n/ a 2010-
2.8 Nam Saat / CBN- 304 6 1 109,440,000 $13,680 360,000 $45 2004-
3. Private Sector/ Entrepreneurial Model

3.1
NCMS 373 7 1 111,900,000 $13,988 300,000 $ 38 2009-
3.2 PCMS 300 14 1 203,000,000 $ 25,375 620,000 $ 78 9% 2007-
3.3 SCC 419 27 1 209,500,000 $ 26,188 500,000 $ 63 29% 2007-

6,838 235 4,495,336,000 $ 561,919
n/ a =Not available or n/ d =no reported data.
1. Sanitation intervention investments were reported to have
been undertaken in a total of 235 of the ~1,015 villages in
the province (23%) dispersed across 12 of the 15 districts of
Savannakhet province by interviewed implementers.
Though it should be noted that this does not exclude
activities in the other three districts, just that they were not
reported upon by interviewed implementers.
2. The timeframe covered by the reported projects
stretched back over a decade to 1998, with associated
sanitation investments by one organisation (FIDA
International) in one district (Songkhong) which was
reported as continuing up to 2009. The sanitation
component of this evolving programme/ project enabled
over 1,090 households to benefit with a reported
investment in excess of US$220,000. Some of the units costs
reported for early phases by this organisation where some
of the most expensive quoted at 2,500,000 (US$250) per
unit!
10

3. Overall at least 6,838 households gained access to some
form of improved sanitation, though a considerable
number of sanitation options were provided and or
supported by implementing partners and enterprises, in
general allow would have allowed to the construction of
an improved sanitation option
11
. It is likely that a greater
number benefited as some supported activities were
ongoing at the time of the field work in late 2011, so the
research and this paper only provide a snapshot of what
was and is going on.
4. Over the ~13 year period which were reported upon by
interviewed stakeholders (1998-2011), at least
4,495,336,000/4.5 Billion Lao Kip (equivalent to at least US$
561,919) was reported invested by some though not all
implemented projects with no investment costing from
UNICEFs supported interventions between 2002-2009, Lao
Red Crosss, the NGO CIDSE or the Corporate Social
Responsibility (CSR) approach of the Birla Lao company.
4.1. Averaged supported investments across those
implementers both grant and credit based reporting,
were 744,503 Kip (~US$93) per household investment,
and ranged from 250,000 Kip (~US$25) for one project (by
Nam Saat/ SNV in 2011) to a reported averaged high of
1,506,639 Kip (~US$188), across the various investments
made by Fida International, between the late 1990s-
2009 with significant high investment costs reported in the
early 2,000s.
4.2. The investment figures generally only report the costs of
the supporting hardware/sanitation materials and not
the process or support cost involved? It is reasonable to
speculate that at least the same amount of 4,000,000,000
Kip (~US$500,000) was investment by beneficiary
households in additional materials and efforts to
construct or improve on the sanitation supported by
development partners. As most of the reported
investments/ credits only supported sanitation related
components (ceramic pans, concrete rings, covers,
some cement and associated pipe-work) but not the
necessary investments for superstructure.
5. One of the most interesting findings was the reported
scale of private sector sanitation financing initiatives
reported in some (3) of the provinces districts. Those
private enterprises interviewed, usually initially got
involved through supplying development projects but in a
number of instances have scaled up their own support,
now often working in/ through cooperation agreements
with responsible local authorities in the districts (possible
examples of public private partnerships). The three
enterprises consulted with in three districts provided nearly
a fifth (17%) of the supported toilets, most reported
operating credit base systems for materials with flexible
payment often aligned (but not always) with households
ability to make repayments usually post-harvest.
5.1. The sanitation material set options provided by the
private sector enterprises were usually more flexible in
nature and appeared to be more cost effective,
averaging at 472,000 Kip (US$53), in general ranging
between 300,000 Kip (US$38) 620,000 (US$78) though
one did mention willing to provided financing for full
latrine kits including all sanitation and superstructure
materials which was costed at 1,230,000 Kip (US$154)
per set.
5.2. As a credit model, the private enterprises did have some
difficulties with an averaged reported repayment
delinquency rate of 19% across two of the three
enterprises interviewed. This appears to be significantly
lower than the urban and rural development partner
(Nam Papa, World Vision, Oxfam) revolving fund models
where delayed repayment rates (the preferred terms
used by interviewed responsible respondents) was 68%.
5.2.1. In many instances development partner (Aid) provided
funds were either (i) not repaid, (ii) were significantly
behind the agreed/ contracted repayment plans, (i.e.
three -12 months behind)m or (iii) were paid into an
existing village development (credit) fund (i.e. as
reported in World Vision supported areas) and then
never reallocated for sanitation financing again. As it
appears that the village development fund (VDF)
manuals used and their committees did not allow for or
consider sanitation loans as being a listed option for
loans from the fund.
Page 5 of 15
6. Grant subsidy models were the most commonly
implemented approach reported for the period 1998-2010
in the province. This conventional approach has been
found deficient in delivering significant improvements and
progress in improving sanitation coverage, in that;
6.1. Rarely did grant/ subsidy models provide significant
increased village sanitation coverage in term of the
number of households in villages gaining access to
sanitation. The most frequently reported level of
sanitation increase was 12% of village households gaining
access to improved sanitation through subsidy based
approaches. Reported increases ranged from 3% of
households in 2 villages to 100% in three villages where
such information was made available
6.1.1. Limited data, apart from overall outputs figures (the total
number of sanitation material sets provided and the
number of villages covered) was frequently all that was
available, making it difficult to qualify the actual
sanitation coverage percentage increased in villages.
6.1.2. It had also been observed that what was reported were
outputs, in terms of the number of sanitation sets
delivered to a villages and may not actually reflect on
the actual number of toilets constructed as in some case
provided materials were horded till households had the
financial resources to build proper though costly toilets
structures with brick, plaster and tiling.
6.1.3. The researcher was informed that available data sets by
village, of sanitation coverage may have been available
at district levels (at the District Health Offices), as the
provincial level only received consolidated figures. The
researcher then found (from the district offices) that
village data sets were often only available for villages
where district Nam Saat personnel were directly involved,
indicating a deficiency in the current monitoring system
which did not provide adequate resources for minimal
monitoring levels in terms of being able to visit/or obtain
information from every villages in a district at least once
per year.
6.1.4. Quantities of sanitation material sets distributed was also
difficult to qualify ranging from six sets in a couple of
villages, to 230 sets for a village in Xonabouly (Ban
Kongpathoumvan) with UNICEF support through Nam
Saat, which reportedly increased sanitation coverage by
73%.
The annexed table attempts to summarise and document the
reported processes, approaches, achievements and
challenges as seen from the implementers perspectives. It
should be noted that a number of the projects/ approaches
were reported completed/ ended (e.g. UNICEF
12
, Oxfam,
CIDSEs, Lao Red Cross, FIDA, and CIDA,) while other projects
and marketing initiatives were reported as ongoing at the end
of 2011. Levels of and quality of information provided varied
considerable

Discussions on the Findings
The research found that a wide range of organisations and the
private sector actors were or had been active in the sanitation
sector and had utilised a variety sanitation financing models
and approaches with varying degrees of success and
impacts.
By far the most commonly practiced approach were grants
and subsidies, followed by the revolving funds and credits
though it was interesting to find that this was found to be an
emerging area for private sector participation and initiatives.
Most recently (2010/2011), indirect subsidy approaches
through community led total sanitation-CLTS and sanitation
marketing have been tried, encouraging and increasing
sanitation demand, and getting households onto the
sanitation ladder as well as developing the sanitation supply
chain and local governance, and all be look at briefly in turn
below.
In general what was being financed (through grants and or
credits) were usually sets of sanitation materials, though this
varied considerable in terms of the type and quantities of
materials supported as there appeared to be little or no
guidance and or a lack of consensus on what the basic
requirements for improvement sanitation were. Even though
national materials on this had been developed over a
decade ago (by the National Centre for Environmental Health
and Water Supply- Nam Saat Central); these materials
appeared to be poorly disseminated and or not available to
current or involved sanitation actors. The varied sets also
appeared to have resulted in significant cost variations for
their provision, though one would rather not advocate for
compulsory standardised sanitation packages.
Subsidy/ Grant Funds
These are commonly considered the most conventional
approach for contributing to making improvements in and
across the water and sanitation sector. Decades of
experience have been gained in providing sanitation with
questionable results often been obtained particularly in
relation to the coverage of and sustainability of sanitation
interventions.
In a few instances complete toilet units were reported
provided including superstructures (in the early days of FIDA,
and some demonstration models in targeted villages (usually
at poor household who might not be able to afford to
sanitation investments.) for SSH4A as part of the construction
training.
By far the majority of sanitation interventions supported the
provision of some materials, usually for the sanitation
components with the households and community provided
the additional materials and labour inputs to construct the
latrines and superstructures.
Reporting on performance of this approach was in some
instances questionable, as what was reported (e.g. Nam Saat
/UNICEF) was the distribution of material sets (as the output)
and not the actual number of latrines constructed.
Further in the majority of cases the quantities of material sets
provided at village levels usually only covered a percentage
of the households in need of sanitation. In some cases
materials were provided for shared latrines which may not
contribute to the national Commitments to the Millennium
Development Goals (MDGs) or were captured by
elite/powerful social and economic groups in villages who
obtained the materials first often leaving the most vulnerable
households without sanitation, though in later years actors
stated that they were making better efforts to target the
sanitation materials at poor and vulnerable communities and
households.
Regardless of this, the overall improvements in sanitation
coverage by providing a limited number of sanitation units in
villages, generally did not contribute significantly to reducing
Page 6 of 15
incidence of sanitation related illnesses in villages as the
residents were still being exposed to faecal contaminants
because of ongoing open defection by the unserved
population.
The grant subsidy approach often makes reasonable project
rationale and justification; in that projects and programmes
could claim to be contributing to making improvements in
(access to) sanitation, by provided X number of sanitation units
to Y numbers of villages in a project area. Rarely was overall /
universal coverage in or for villages or projects being
considered, usually because of the lower prioritisation of
sanitation in general against water supplies, also because of
the likely significant cost implications of such as approach.
Regardless of this evident exists that simply providing access to
sanitation may not result in reducing adverse health impacts if
sanitation usage and hygiene behaviours dont change or
increase, as numerous actors globally have often observed
and found that supported and supplied sanitation materials
inputs often uninstalled and or unused, because of a lack of
improved knowledge and or changing behaviours
It is partly because of these limitations of grant / subsidy
approaches that alternative models have developed to
encourage and seek greater commitment from beneficiary
groups and households being targeted for sanitation. One of
the more increasingly advocated approaches is revolving
funds and credits.
Revolving Funds
Global experience with Sanitation Revolving Funds has been
ongoing since at least the 1990s if not before where they
have been increasingly used to encourage sanitation
improvements more frequently in urban areas often through
upgrading of existing sanitation facilities. There are cases
where funds have encouraged and expanded sanitation
coverage by deferring the investment cost thus making it a
more encouraging option for some households.
However there are risks that credit based approaches have of
excluding the poor, vulnerable groups and those on low
incomes (below or near national poverty lines) in that they can
create or contribute to increasing the debt burden on such
households.
In the urban case in Savannakhet the district water and
sanitation schemes which have been progressively
implemented since 2005 developed their own poverty
targeting approach based on three categories (which does
not appear to be aligned with the national poverty criteria) to
identify what they considered eligible households, who were
targeted with sanitation loans, these were generally taken up.
Community management committees (community based
organisations-CBOs) were then given the responsibility to
collect the loans for re-issuing and the performance of which
has been marginal to date, with an average of 37% of the
provided loans being repaid by the end of 2011, as report by
DPWT, ranging from 31%-50% of loans made. It is worth noting
that many of these schemes were reported as ongoing at the
end of 2011. Those projects reporting on were initially started in
Outhoumphone District Centre 2004 (with 31% of loans
reportedly repaid), Phine DC 2007 (50%) and Atsaphongthong,
Villabouly & Xepone DCs 2010 (30%) respectively.
Two other project phases for Atsaphonthong and Villabouly
also reported underway, but no sanitation loans reported on,
which had started in 2010 and 2011. In recent years the
application of sanitation funds have followed a mixed
approach in that some households the very poor receive
free materials while some others are also partly subsidised, so
some aspects of these projects could be considered as
subsidy model as well
In rural areas, the World Vision International (WVI) supported
revolving fund approach covered one now ended project
and four ongoing areas development programmes (ADPs) in
the province. WVI initially provides village sanitation funds
which were likely used by better off households in targeted
villages to construct sanitation with responsibilities given to
local community management groups (CBOs_ to recoup the
funds invested.
Overall reported revolving rates by WVI were just 13% ranged
from 10%-18% across the project and ADP though there were
reported to be villages with up to 60% of sanitation fund rolling
over. One of the identified deficiencies was collected
repayment funds were generally not reissued for sanitation
loans again in most villages, simply bundled into existing
Village Development Funds and used for other purposes.
While the third small example reported upon initiated by
Oxfam in the mid 2,000s at the end of a programme was not
reported to have revolved at all.
All the supported revolving funds reported confronting similar
challenges in that (a) the repayment plans and contracts
were not adhered to by households, or (b) the repayment
periods were reported either not sufficient to make the
repayments, (c) households and communities were aware
that other development organisations provided (some) free
sanitation in certain villages and felt that they should have free
sanitation as well, and the organisations, local government
and established community structure made little or no effort to
encourage or compel repayments to be made, which likely
deprived other households in targeted villages from benefiting.
Most of the projects provided at least 12 months or more for
the repayments to be made, which equated to monthly
repayments ranging between 50,000-90,000 Kip per month
(US$6.25-11.20). However even if repayments were being
made they were frequently reported as not being completed
in a consecutive manner, or with delays and deferments often
being asked for, to enable borrowing households to either;
(i) Pay off their sanitation loans during period of financial
surplus usually post-harvest (December-February), or
(ii) Utilise the households available financial resources for
other purposes, possibly indicating the low prioritisation of
sanitation in general, and
(iii) There were also reported (a limited number) of instances of
households simply refusing to make repayment, with little
the local community/village collectors could do.
Likely reasons for some of these challenges were, poor
explanation and understanding by client households and
established CBOs of the, revolving funds mechanisms
(requirements and conditions), poor capacities and
governance of the CBOs. Through the reviewed Lao language
loan documentation, usually a single or double page
document was considered reasonably clear though it may be
difficult to understand in communities with higher rates of adult
literacy exist.
Most communities were familiar with micro-financing/ credit
provisions through village development funds and other saving
Page 7 of 15
and credit approaches as these have been an ever
expanding concept across the districts in the province over
the last decade.
This also raises questions about the existing capacities of the
support organisations (frequently state agencies) that
provided the training and support to facilitate the
establishment of revolving funds. In that once established they
appear to do little to ensure the overall performance of the
funds, with limited inputs or support to follow up on repayments
possibly indicating a low prioritisation of sanitation revolving
funds. This is likely as usually, there were often limited resources
available either committed by the state or through the
projects for following up on the performance of the
established revolving funds.
The performance of revolving funds is debatable in that even
though the repayment terms were reasonable with
repayment periods averaging at least 12 months and reported
ranging from three-18 months, often with little or no interest
(just repaying the capital). Most if not all only achieve partial
repayments of the amounts invested to varying degrees.
A resulting impact from the delayed and deferred repayments
is that the number of additional sanitation loans is hindered in
either being delayed further or not taking place at all.
Additionally there is little or no information available on the
rolling over of revolving funds for sanitation, as project have
often end or the funds continuation is not adequately
monitored.
In some instances, the transfer of repayment responsibilities to
community based groups and or to existing village funds
Village Development Funds has resulted in the sanitation
funds never being reused for additional sanitation loans or not
being adequately followed up on for repayments. This appear
to be due to the lack of (official) instructions/ guidance to
village committees to consider loans request and or make
available funds specifically for sanitation improvements...
Private Sector Credit Provision
One of the interested findings from the study was the
expansion of credit services being provided by the emerging
private sector in Lao PDR to enable households and
communities to access sanitation materials. These initiatives
were initially highlighted by the provincial Nam Saat Office
who made reference to the credit activities in Atsaphone
district, but which on later inquiry were found to be replicated
or in existence in other districts as well. Those enterprises
making credit available usually got involved through providing
supplies and materials to previous projects and saw potential
business opportunities.
In some cases in what could be considered as public private
partnership model was involved, based upon an agreed and
signed Memorandum of Understanding (MoU) between the
supplier and the District Health Office. Whereby (a) a supplier
provided credit for materials to villages/ or groups of
households, (b) based on household lists generated by district
Nam Saat, (c) household loan contracts would then be
generate detailing conditions and terms etc.. Which when
signed and witnessed (by the village authorities and the
district) would (d) allow for the delivery of materials. This model
was identified by the Provincial Health Department for follow
up and possible replication across other districts as it was seen
as a potential win win for those involved.
The private sector enterprises saw some advantages with the
approach in that for those interviewed, it appeared to give
them favoured position in supplying sanitation materials,
though they carried the investment risks.
They did report having some difficulties in that up to a fifth
(19%) of sanitation credits provided were reported in arrears,
though this reported averaged rate across two of the three
enterprises was three to four time better than the reported
repayment rates of revolving funds supported by
development projects and NGOs consulted with.
In some cases the owners knew there were delays, as the
household contracts terms generally had a (too) short three to
four month repayment period and if issued mid-year most
households could not build toilets at that time as it was
monsoon season. In many instances the owners said they were
flexible to this but one also mentioned that they had
experience of taking back some material sets from some
households who had not made an effort to pay for the
materials.
This independent initiative has great potential and could be
seen as the model that could contribute to picking up the
pace for delivering on increasing sanitation coverage in the
province.
Indirect Subsidies
In this type of approach efforts are made to not directly
subsidise materials for sanitation interventions, but rather to
look at the overall sanitation supply chain identifying barriers
and opportunities to increase the pace of sanitation provision.
Working at creating sanitation demand from households and
communities and also addressing supply side issues,
enhancing supply actors with sanitation marketing support,
improving products quality and options, reduce production
costs etc... As well as facilitating other actors and stakeholders
to provide better support.
The experience with this type of approach is relatively new in
Laos, with just one example the Sustainable Sanitation and
Hygiene for All project so far, which was still being piloted at
the end of 2011. And the project supported the research
initiative upon which this paper is based. This approaches
initially applied a variant of community led total sanitation
CLTS to encourage households and communities in 80 villages
across four districts to build toilets and strive to achieve open
defecation free (ODF) status, with an expectation of getting
households and communities onto the sanitation ladders. The
project also engaged with other sanitation actors and
stakeholders (construction material retailers, materials
fabricators, micro and small scale construction contractors)
involved in the sanitation supply chain.
Actual field implementation of the project was just over 12
months, and had resulted in 729 household toilets being
constructed by the end of 2011, with 457 others toilets
reported as still under construction, with post December being
identified as being the main construction period. 17 private
sector enterprises across the four districts (mainly retailers and
material fabricators) were involved with the project and
benefiting from a target revolving fund for fabrication moulds
(for a pan stand and rings) to reduce production costs.
To date (December 2011) just three of the 80 villages had
declared ODF status with sanitation coverage between 90-
100% with three other villages closing on ODF status with over
80% sanitation coverage.
Page 8 of 15
The project reported significant challenges during its
implementation in that apart from confronting flooding
(reportedly the worst flooding since 1962) which resulted in 25%
of the target villages being listed by the government as
disaster affect villages, while the majority of other villages
suffered varying degrees of damage and destruction of
economic infrastructure and food supplies. The approaches
(CLTS and sanitation Marketing) and implementation structures
were based upon a multistakeholders approach involving a
range of six diverse government institutions (including two
mass organisations the Lao Womens Union and the Lao Youth
Union)
13
were also completely new, so took longer to sensitise
and train to deliver the project inputs to communities and
other stakeholders.
Further a number of the participatory identified target villages
were later found not to be compliant with the agreed
selection criteria in having previous subsidise approaches
which make CLTS difficult to implement. The scale of the
project and wide dispersion of the target villages did not
contribute to frequent and effective following up in the
beginning, though progress was being made by the end of
December 2011.
Conclusions
So what can we concluded from the research? As mentioned
it only provided a snapshot of what was and is going on in the
country up to the end of 2011. It is felt that it is reasonably
representative of the range of sanitation financing models and
approaches being utilised in the country at that time. Some of
the approaches are embryonic in nature, namely experiences
with indirect subsidies through either stand-alone interventions
or blended approaches involving CLTS and/or sanitation
marketing. As are the experiences with the corporate social
responsibility (subsidy) model being implemented by the Birla
Lao Company.
The research was considered challenging in that it
endeavoured to obtain information on a range of sanitation
financing models and approaches and primarily relied on a
mix of key informants from involved, responsible and
implementing agencies and organisations as well as limited
fact finding and validation from on the ground from direct
beneficiaries in villages where approaches had been applied.
Other potential stakeholders were also consulted, including a
number of the emerging micro financing institutions and banks
operating in the province and districts to see if they had
provided or were aware of providing loans and credits for
sanitation, to which all responded none of aware of loans
being provided specifically for sanitation.
Information from key informants was often inconsistent, and
incomplete, evident by some of the projects informants made
reference to, with some being quiet small in nature, or
undertake and or initiated nearly a decade previously for
example the referencing of the Oxfam, CIDSE and Lao Red
Cross supported projects, though this may have come about
because they were some of the few projects in a district that
had sanitation components. Additionally it was observed that
one of the biggest WASH projects undertaken in the province
and some of the visited districts with a Belgian supported
project between 2004-2008 through Nam Saat, which was not
referred to though this project sanitation approach was a
grant subsidy model?
All the projects approaches and models have contributed to
increasing the overall sanitation coverage in the province to
some degree with 6,838 households (~41,000 people) in 235
villages likely benefiting from improved sanitation, through an
investment of at least 4.5 billion Lao Kip, ~US$562,000, with
roughly the same amount again likely being investment by
households in additionally building materials and labour.
In terms of the three broad grouping of models, direct
subsidies, revolving funds/ credit based approaches and
indirect subsidies. All are likely useful though their application
needs to be better targeted.
Direct Subsidies
There is likely a continued need for some direct subsidies for
sanitation, but these needs to be better focused and
effectively applied, targeting only poor and vulnerable
households and remote communities with limited access to
district centres, as sufficient information is now available
through the Department of Planning and Investments
information system to better target interventions. It was
reported that some approaches were poorly targeted
resulting in some of the supported project activities being
implemented in predominately none-poor villages; even after
a participatory multistakeholders consultation process on
targeting using a reasonable set of criteria. So supporting
organisations may need to consider independently verifying
proposed locations where projects and interventions are
suggested for to go before proceeding.
Additionally because of the limited financial resources being
made available, which is also likely to decrease in the coming
years as grant/subsidy based approaches are increasingly
being called into question, because of their limited results and
sadly all too frequently being poorly targeted and generally
benefitting non-poor and needy households, who could
actually afford the necessary investments if they prioritised and
valued the benefits that improved sanitation provide more.
Subsidies should possibly only come into use after households
and communities have committed to making sanitation
improvements through either developing and implementing
hygiene and sanitation plans (possibly developed through the
use of Participatory Hygiene and Sanitation Transformation-
PHAST approach
14
) or getting onto the sanitation ladder and
communities making progress to being and maintaining open
defecation free (ODF) status villages. This is likely to have time
factor implications for projects in terms of a number of years
rather than the reported experience from the Pro-Poor WASH
project which appear to have telescoped this approach into
a far too shorten timeframe, with little evidence or opportunity
for CLTS to succeed or make progress.
Revolving Funds
Revolving funds are increasingly becoming a prevalent and
favoured approach because they cater to households willing
and wanting to making sanitation improvements but lacking
the immediately available financial resources. They can also
leverage additional financing from households, and because
funds are theoretically revolved they have the potential to
increase coverage through multiple applications.
Reported experiences in the province indicate some
complications with the current application of the revolving
funds models across both urban and rural areas. In that there
are difficulties in recoup repayments to the central fund in
targeted areas. In urban areas an average of 37% of the
provided funds for sanitation loans between 2005-2010 had
been repaid. While in rural areas the district averaged
repayments/ revolving was just 10% though it was noted that
Page 9 of 15
there were some exceptional villages in the 51 villages where it
was applied between 2005-2010, where a high percentage of
the provided funds had been repaid and revolved.
The average value of loans in urban areas across all phases
was 950,000 Kip/~US$119 and ranged from 700,000-1,070,000
Kip (US$88-US$134), while in rural areas, revolving fund loan
averages were 538,000 Kip/ US$67 and ranged from 400,000 to
652,000 Kip (US$50-US$82) areas.
Across both urban and rural areas, reported repayment terms
generally appear to have no interest or penalty clauses
applied for their operation or late and the repayment terms
ranged from four months to 18 month across different
organisations or projects, with longer terms now being applied
in response to delayed repayments.
It appears that repayment plans associated with the
household contracts/ agreements are frequently reneged
upon, or delayed even through reported average month
repayment were reasonable. Sometimes this deficiency was
compounded by the agencies and organisation providing
and supporting the model in establishing weak local/
community based structures with limited ability to recoup the
funds to revolve, while the implementing agencies may have
issued the loans in the first place.
Credit Based Approaches
It was evident that private sector sanitation provision and
financing is increasing across the province with a number of
innovative entrepreneurs/businesses taking the lead in some of
the districts which needs to be encouraged and supported.
They have some challenges. The repayment rates for credit
funds were significantly higher with 81% of used funds (the
reported combined amount of 524 million Kip (~US$65,500)
across three enterprises) being repaid. It repayments are
made within the agree timeframe no interest or penalty is
charged if delayed or beyond the fixed term an average of a
10% monthly charge is applied.
Overall revolving funds are not optimally implemented, even
though repayment terms were reasonable. While credit based
approaches appear to be working reasonably well. There is
little or no incentive or motivate for locally involved community
stakeholders to ensure that funds are repaid on time and
made available for further sanitation loans.

Indirect Subsidies
Experience with these approaches, namely Community Led
Total Sanitation-CLTS and Sanitation Marketing was very new
with only about a years worth of experience gained by the
end of 2011.
Being a wholly new set up, involving a diverse multi
stakeholder approach, the set up and training of provincial
and district teams took longer than expected and resulting
capacities were still quite limited.
The applied CLTS approach ran into difficulties in that the
timing and follow up of triggering was limited due to the
dispersed nature of the villages and the actual targeting of 80
the villages, in that, in some of the districts the targeted
villages, already had some sanitation interventions (usually
subsidy based approaches) from other actors even though the
selection criteria had asked for these to be avoid, targeted
villages were also often widely dispersed across the districts,
requiring far long travelling times. Further the province and
some of the targeted districts suffered their worst flooding in
forty years and 25 were design disaster affected villages and
the resulting economic impacts set back the progress as
sanitation slipped down household priority list.
The sanitation supply chain component was also innovative
and identified supply issues in that the supply of sanitation
materials was partly limited because of the lack of ring moulds
both in number and quality due to wear and tear, as well as
transportation issues. The indirect subsidy approach financed a
revolving fund to enable suppliers to purchase additional
quality moulds.
It also developed and rolled out an innovative sanitation pan
stand which reduced the overall sanitation construction costs,
as the pan stand replaced the need for larger structures to
hold the ceramic pan. The approach also piloted the use of
cast in situ moulds for use in more remote villages which
enabled the communities to install and case rings in place
rather than transporting them. Lastly the approach support a
marketing initiative, training the suppliers and piloting the joint
development and usage of simply sanitation communication
materials (leaflets) which could communicate material needs
and costs directly to households which was starting to have an
effect at the end of 2011 with demands starting to pick up.
The innovative sanitation pan stand, prior to
and after installation (photos RD)
The cast-in-situ mould
three panel version,
(photos RD.

Overall, all the models have some strengths and weaknesses,
and it is clear that how and where they are applied and how
they are followed up on is critical for them to have an impact.
The private sector credit model probably has greater potential
as it is a commercial model, with the interviewed owners
feeling it provides opportunities for them. It should be noted
that most of the other development assistance models have
additional (hidden) support costs which are not evident, and
on which little or no comparative information was made
available.
There is also a need to better understand where progress is
being made or not, regardless of how, as self-supply is and will
increasingly be an important but as yet unmonitored driver of
sanitation progress in the province and country.


About the Author
D. OLeary holds a M.Sc. in Rural Regional Resources Planning
with over 20 years of professional experience, including extensive
involvement in the water sanitation and hygiene sector across
both urban and rural areas in South East Asia. A proven innovator
and facilitator in targeting basic services, as well as a practiced
capacity development professional across a range of sectors.
Contact details though LinkedIn:
https:/ / www.linkedin.com/ profile/view?id=17623360&trk=nav_responsive_ta
b_profile

Page 10of 15
Annex 1 Process Summaries, Achievements and Identified Challengesby Implementers
Locations and Implementers Provided supported Reported Process Performance and Identified Challenges &Issues
REVOLVING FUNDs

N
a
m

P
a
p
a

,

U
r
b
a
n

W
a
t
e
r

S
u
p
p
l
y

S
t
a
t
e

E
n
t
e
r
p
r
i
s
e


Outhoumphone, Phine,
Atsaphangthong & Villabouly
Districts Centres

Revolving fundsfor villagesmaking
up DistrictsCentres, progressively
covering at least four District
Centres(DCs) by 2011

Latrine revolving fundsstated in
2004 under the Community Access
Water Supply and Sanitation
Programme for small town
development and later Small
Townswater and Sanitation
Projects
Reported average cost
of sanitation material
sets1,070,000 Kip (US$
134).


Reported to follow a six step process:
i. Undertaking hygiene education to increase
awarenessand create demand.
ii. Conducting needsassessment and choosing
/ agreeing on three toilet designs/ options
15
.
iii. Assesshousehold potential and generate
project name list based on the (projects
agreed) poverty criteria
16
.
iv. Household and community contracting
(materialsto be provided, repayment terms
varying from 1-2 years.
v. Provision of materialssets
17

vi. Provide village fund committeeswith
repayment listsfor follow ups
Achievements
587 Households latrines provided across 39 urban villages making up five
districtcentre by late 2011Note activities reported as still in progress.
1
st
batch, Outhoumphone DC (2004) 19 villages164 households
2
nd
batch, Phine DC (2007), 5 villages46 households
3
rd
, batch, Atsaphangthong & Villabouly DC (2010), 5 villages 146 households
through two cycles
4
th
batch Atsaphangthong (2011) five villages 176 HHs so far , as started in
2011
Total reported investment (to date end of 2011) for sanitation in the province
was 864,000,000 Kip (~US$108,000) over six years through various urban
projectsand phasesof projects.
Reported Challenges
i. Repayment rates of sanitation loans across all project villages running at
an average of 35%(end of 2011) due to
a. The reported inability of householdsto repay due to being poor?
b. Households consider the loans as free money from development aid
projects
ii. Limited or no revolving of funds due to high levels of repayment
delinquency
iii. No resources for local village fund committees to functions so limited
follow up
iv. Inadequate training to village fund committee















W
o
r
l
d

V
i
s
i
o
n

SavannakhetPeoples Livelihood
ImprovementProject(SPLIP) 2005-
2008(with sanitation revolving
funding (SRFs) started in 2007)

ADPs, in four districts, namely Nong
(1 village), Phalanxai (5),
Atsaphone (17) Thapangthong (4)
Ongoing and recent Integrated
rural development model Area
DevelopmentProgrammes (ADPs)
since 2008- ongoing SRFssince the
beginning
For household toiletsan
allocation of between
400,-600,000 Kip (US$50-
75) per set for
supported materials.
Currently Following a seven-step process:
i. Awarenessraising on sanitation
ii. Assessing village sanitation needs, and informing
on improved Sanitation
iii. Establishing Community Structure (1-2 person
committee +Maiban-Village Leader)
iv. Community Contracting involving all parties
(village representative , District offices,
Kumbaans) with provision of
a. 100%grantsfor Government identified Poor
Families
18

b. Other (non-poor) households, loansfrom fund
for 100%of material cost repayable over 12
months with payment of 33-50,000Kip/ per
month (~US$4-6/ p.m.), upon complete
repayment fundstransfersto Village
Development Fund (VDF)
v. The provision of a set of sanitation and
construction materials
19
.
vi. Following up on constructions
vii. Monitoring of repayment collection and
submission of borrower accountsto
management committee
Achievements
Based on five yearsof implementation
894 households toilets constructed across48 villages, in five districts
Total reported investment (to date end of 2011) ~536,400,000 Kip
(~US$67,050) over five years.
Reported Challenges
i. Elevated delinquency (non-repayment) rate, with an average of40% of
investments notbeing repaid per village fund, due to :
a. Competing demand for household funds(sanitation not a priority),
resulting in extended repayment periods.
b. Awarenessof other villageswho had received free toilets, so
reluctance to repay.
Identified Issues
i. No interest/ penalty provisionsfor delayed or prolonged repayments.
ii. No remuneration/ motivation for management committeesto follow up
on repayment delinquency.
iii. Even though sanitation material setswere provided or purchased for
some households, unitsremained uninstalled or materialsprovided used
for other purposes.
iv. Once repaymentsmade, limited or no reissuing/ revolving (by the villages
development funds) for sanitation purposes. Though VDF representative
stated that were no demandsfor sanitation loans?

Xonabuly District2004-2006

Oxfam Belgium (OxB) support
funds
The district Nam Saat
reported a revolving
fund initiative supported
by OxB, in the mid 2000s
Conducted technical training on toilet construction.
Provided toilet construction material sets
20
cost
~652,000 kip, (~US$82)
Repayment period waswithin 12 months, no interest
Achievement
23 HH toilets were constructed across three village as the firstround ofthe
fund
Page 11of 15
Locations and Implementers Provided supported Reported Process Performance and Identified Challenges &Issues
but depended on market value,
Reported Challenges
The fundswere reported to have never revolved, so just 23 HH benefiting.

V
i
l
l
a
g
e

D
e
v
e
l
o
p
m
e
n
t

F
u
n
d
s
-
V
D
F

Atsaphon District
Phine District

(Interviewswith specific village
development fundsin these
district, but existing in all districtsin
the province )
Department of Industry
and Commerce supports
the establishment of
VDFsasdo some of
development
organisation such as
World Vision, who
mentioned that
repaymentsfrom
revolving were paid to
the VDF
Many villageshave been supported by the
Department of Industry and Commerce and othersin
districtsto establish village development fundsutilising
saving and credit based approaches.
These fundscollect moniesfrom membersand (DIC
officialsmet with listed some of the standard
requirement they promoted through their model
A Minimum of monthly savings, usually 10,000 kip
/ member /month
Initial loan sizeslimited 100,000 - 5,000,000 kip,
with a maximum period of 6 months,
Variable interest rates: (i) For Member for
agricultural activities2%per month (p.m.); and
(ii) for small businessactivities3%; and a flat 6%
p.m. for non-members,
All loansrequire collateral and based on income
calculations

All the village development fundsmet by the researcher with stated that
they had not provided any credit and loansfor sanitation to their knowledge.
Reported capital fundspotentially available were significant.
The lack of reported sanitation financing from thissourceswasdue to the
lack of official guidance to VDFsto allow for the issuing of loansfor sanitation
and other purposes. Asavailable manualsonly listed three purposesfor (i)
agricultural, (ii) businessand (iii) Emergency purposesand management
committee were reluctant to go outside what they felt were the permitted
boundaries.


PRIVATESECTORCREDITINITIATIVES

A number of emerging private
sector entrepreneurswere
identified asbeing active in
different districtsin the province.
Often operating through Public
Private PartnershipsMemorandums
of Understanding (MoUs)

The following are examplesof
those reviewed.

Atsaphongthong District, 2009-

The Nang Chouk Material Shop
(NCMS)
NCMSprovided two
sanitation packages
(mid 2011) which were
being promoted one
costing 265,000 Kip
(~US$33 )(but no
transportation and the
other costing between
290,000- 310,000 Kip
(~US$36-39) with the
supplier transporting the
materialsto the village
depending on the
distance / accessibility


The NCMSstated that they developed their approach
by working closely with the district health and itsNam
Saat officeswith whom they have a Memorandum of
Understanding (MoU).
They collaborated with the DHO/ Nam Saat who are
responsible for promoting sanitation in rural villages
and disseminate information about the model to
villagersand village authorities. The owner
summarised the processasfollows
i. Following the signing of the MoU the DHO/ Nam
Saat staff identified villageswhere households
were interested in obtaining sanitation.
ii. Based on a simple household contract drawn up
by NCMSin consultation with the DHO and other
district offices.
iii. The householdscontractsissigned and
endorsed/ witnessed by village leader and DHO,
iv. Once enough householdshave agree a
consignment of material set
21
sisprepared and
either collected by villagersor delivered.
The termsof the contract were described asfollowed,
a) All credit paid within three months
b) If late an interest charge of 10%per additional
month, and possible lossof collateral,
c) Al household contractswitnessed and agreed
to by village leadersand DHO and each hasa
copy of the contract
Achievements to date by CNMS
Activities in seven villages with 373 household obtaining material sets
across the seven villages by mid-2011.
Ongoing activitiesand expansion plansasper the MoU to be active in
22 villageswith good road accessand 26 villageswith difficult or in
remote locationsin the district to cover 48 villagesin all.
Reported Challenges
i. Differencesin the list of householdswho agreed to borrow for sanitation.
ii. Delinquency and delaysin repaymentsand or construction of toilets,
and the reasonsgiven were:
a. Borrowersdid not have enough money to make repaymentson time,
asked for (and usually given) extensionsin repayment period.
b. The quantitiesof materialsdelivered/received were lessthan the
quantitiesdescribed in the contract.
c. The construction hasnot yet started due to ongoing livelihood
demandson households, farmerswaiting for post-harvest period.
d. Borrowershave other debt commitment which they prioritise before
the sanitation loan and so have not made repayments.
iii. When sanitation materialsare deliver to a village only to one location so
can be difficult to distribute throughout dispersed villages.
iv. No remuneration/ motivation for village/ district personnel to effectively
monitor or resolve issues
v. The field researcher felt that the approach lacked an effective
assessment of household ability to pay which contributed to repayment
issues.
The businesshastaken back some unused and unpaid for materialsdue to
being unable to find suitable solutionswith some householdsbecause of a
refusal to pay. Thiscallsinto question how the borrower agreed listswere
facilitated and generated in the first place.

Outhoumphone District, 2007- SCC providessupport for Sanitation credit explained as, Achievements
Page 12of 15
Locations and Implementers Provided supported Reported Process Performance and Identified Challenges &Issues

Southchay Construction Company
(SCC)
Initially gained credit/ sanitation
funding experience through
cooperating with World Vision in
2007
a sanitation package
22

priced at 500,000 Kip
(~US$62.5)
i. All household sanitation credit contractssigned
by village leadersand witnessed district planning
and investment office, and district health office
before being passed to the business,
ii. The materialsare delivered to the households
based on thiscontract which usually hasthe
following conditions
a. A repayment period of up to four months
with no interest
b. Late repaymentscharged 20%interest per
month or risk having collateral taken.
iii. Interested communitiesshould develop a
sanitation plan for multiple housesto obtain
materials, which according to the ownersthe
facilitation and development of the plan is
through the district health office / Nam Saat unit.

A total of419 sanitation loans provided across 27 villages. Initially provided
credit for 300 toiletsdistributed across21 villagesbetween 2007/ 8 linked to
the activitiesof World Vision.
Thiswasfollowed up with additional credit in 2009 for 50 toilets.
In 2011 currently had a portfolio of sanitation loansvalued at 48,560,000
(~US$6,090) of which hasbeen ~29%were significantly delayed loansaswell
asthe 69 recent sanitation loansacrosssix villages.
Reported Challenges
i. The owner indicated ongoing difficultiesin ~29%of loansmade which
were considered difficult.
ii. Mentioned a lack of support from local authoritiesin resolving difficult
loans, asno support for local officials.

Xonabuly District

Pakorb Construction Materials
Shop (PCMS)
Stated hasbeen providing
sanitation credits since 2007 also
hasand isalso involve in some
development projectssuch as
SSH4A
PCMSprovide a wide
range of tailored
options, sanitation pack
price ranged between
400,000
23
-1,230,000
(~US$50-154)
The credit processdescribed by the businessowner
was
i. The owner and district health office signed
agreement together
ii. Owner developsa simple household contract to
be backed by the village leader Maiban and
the DHO/ Nam Saat.
a. Repayment period 3-5 months
b. No interest if repayment within time but up
to 20%per month if delayed
c. Also hasan option for the use of collateral to
guarantee loan.
iii. Following dissemination of information to villages
and the generation of signed contracts
iv. The businessdeliverssetsof materialsto villages
which it isreceived and checked by the village
leader

Achievementby PCMS
300 households across 14 villages have benefits from sanitation credits
from the business.
Total reported investment of 203,000,000 Kip (~US$25,375) of which
19,000,000 Kip (US$2,375) roughly nine per cent (9%) isstill outstanding (at
the end of 2011).
Reported Challenges
Similar issueswith other modelssuch asdelaysin repaymentsetc...
DIRECTGRANTS/ SUBSIDIES
Nam
Saat
Phine District

CIDSE (Coopration Internationale
pour le Dveloppement et la
Solidarit-
Project, 1990-2005
Sanitation component of
an integrated rural
development program
undertaken with CIDSE
coordinated(CARITAS)
support
Grant subsidy fundswith 50%contributed by the
program sanitary/ construction materialsfor selected
householdswith 50%contributed by beneficiaries
(labour and local materials, sand gravel wood etc).
Sanitation material sets
24
supported
Achievement
122 households toiletconstructed in 8 of17 villageswhere activitieswere
targeted, On average the project increased village sanitation coverage by
26% ranging from 3%-85%HH coverage.

Phalanxai district
2010

Birla-Lao Farm and Plantation
Company

A Corporate Social
Responsibilities(CSR)
component of a large
agro/ industrial forestry
projects
Because the land concessionsprovided to the
company, these may result in exclusion from certain
areasand accessto previousnatural resourcesfor
some villages. The company isproviding some
mitigation through improved accessto basic services,
including sanitation. Identified and agreed
householdsand village will be provided with a set of
sanitation materials
25

Achievement
Reported to be providing 238 sanitation materials kits to households in two
villagesin Nalai (210) and Nalainoy (20) villages.
Reported Challenges
i. Inability to obtain sufficient quantitiesof sanitation materialsin one go to
support the intention, so phased delivery required.
ii. Once material delivered household dont alwaysinstall the toilet, many
HHswaiting for opportune time while othersare waiting till they have
additional resourcesto provide the superstructure.

Page 13of 15
Locations and Implementers Provided supported Reported Process Performance and Identified Challenges &Issues
N
a
m

S
a
a
t

Sepone and Villabouly districts
2010-2012

Pro-Poor WASH Project supported
by SNV NetherlandsDevelopment
Organisation
The intended
approaches
encouraged and sought
an equal contribution
from targeted
householdsacross25
villagesin the two
districts.
Nam Saat covered the
cost of 250,000 Kip
($US31.5)
Awarenessraising on sanitation and hygiene in
villagesand schools.
Including community led total sanitation CLTSto
sensitise people to the priority need for sanitation and
hygiene and training on toilet construction.
Followed up by promotion of cost sharing approach
and toilet construction training to move households
up the sanitation ladder. Householdsand the project
each providing 250,000 Kip (~US$31.5) for the
sanitation componentscombined to 500,000Kip
(~US$64).

Achievements to date
By the end of2011, 296 toilets reported constructed in eightoutofthe 25
targetvillages
Reported Challenges
i. The DHO/ Nam Saat faced significant difficultiesin sourcing adequate
quantitiesof materialsin the target districts, aslocal (district) producers
either did not have the capacitiesto produce the materialsor demand
higher prices.
ii. In the end materialswere sourced in the provincial capital some 200km
to the west of the districtsand transported to the districts! Resulting in
higher (20%) sanitation set costsborne by the project.
iii. The sanitation approach waspartially build on a variant of community
led total sanitation-CLTS, in enabling following up and support to move
up the sanitation ladder.
iv. However the ability of provincial and district Nam Saat personnel to
facilitate community dialogue post CLTSprocessin a timely manner and
later follow up wasweak, in that the activitieswere often telescoped
together with limited discernable separation, indicating a need for further
capacity building.

N
a
m

S
a
a
t

Atsaphangthong district

Supported by the Christian
Broadcasting Network-CBN

Activitiesongoing since 2004 but
sanitation component initiated
since (2009)
Providing water and
sanitation interventions
on a household member
pro-rata basisat 60,000
Kip for sanitation per
person per households.
So ~360,000 Kip per HH.
The objective of the approach isto contribute to
advancing villagesto be Model Healthy Villages-
MHVs in line with the Government of LaosMinistry of
Health criteria
26
.
The financial contributionswere used to bulk purchase
materialsfor distribution to target householdswith
householdsproviding labour and other materials
inputsusually for superstructure construction.

Achievements
304 household toilets constructed in three village completed and three
villages ongoing (Nov. 2011)
Reported Challenges
i. Obtain sufficient quantitiesof sanitation materialsin a timely manner.
ii. Construction of toiletsafter material deliver isoften delayed, asfamilies
do not prioritise sanitation issues

L
a
o

R
e
d

C
r
o
s
s

(
L
R
C
)
Phalanxai and Xaibouly district
2000-2005

NetherlandsRed Cross

The LRC in cooperation
with other red cross
affiliateshad undertaken
some sanitation activities
in the province in the
past.
On recollection they provided sanitation materialsto
householdsin targeted villages
Achievement
79 household toilets constructed in seven villages across two district
Phalanxai district: 75 toiletsconstructed in two villages
Xayabouly district 304 toiletswere constructed
N
a
m

S
a
a
t

Phine District, 2002-2006

Canadian International
Development Agency CIDA)

Aspart of an integrated district development project
of which sanitation became one component. the
project provided sanitation material sets
27
to
householdswith an average cost of 800,000Kip
(~US$100)

Achievement
724 households toilets constructed covered 37%of total number households
across13 villages.
N
a
m

S
a
a
t

Nong, Sepone Villabouly and
Xonabouly districts 2000-2009

A rolling water and sanitation
program with UNICEF support

The program provided
sanitation material sets
to selected villages
increasingly integrating
poverty based/ equity
approaches
Thisrolling program with UNICEF support, saw the end
of the then conventional approach of providing a
(limited) number of material setsfor toiletsper village.
In the latter yearsit wasbeing considered for phasing
out due observed limited impactsin villages.
Household selection wasreported based on village
authority information, households readinessand
beneficiary contribution.

Achievement
990 toilets (sanitation sets for) provided to households, across14 villagesin 4
districts.
Nong (3 villages-58 HHs), Sepone (2villages, 124 HHs) Villabouly (2 villages,
75HH) and Xonabouly (7 villages, 690 HHs)
Reported challenges
Material setsprovided were not alwaysinstalled, and were often kept for
yearstill familieshad sufficient surplusresourcesto build the superstructures

Page 14of 15
Locations and Implementers Provided supported Reported Process Performance and Identified Challenges &Issues
F
I
D
A

I
n
t
e
r
n
a
t
i
o
n
a
l


Songkhong District

Ongoing District Development
Approach focused mainly on one
district, where sanitation supported
activities were implemented
between 1998-2010 through various
phasesof the programme.
Reported average
investment cost varied
by phase since staring in
the late 1990sranged
between


Reported to have followed a seven step processin
later yearsup to 2010, namely:
i. Provided community training to increase basic
knowledge on hygiene and sanitation.
ii. Conducted village assessments(PRA) with village
authority and promoted two sanitation options
28

iii. Provided construction training to village
volunteers
iv. Poverty and vulnerability assessment of targeted
householdsto assessability to pay.
29

a. For identified poor and vulnerable households
100%support for sanitation.
b. Other household supported up to 50%of set
amount of materials.
v. Prepare Project Agreement/ Contract for village
authorities
vi. Monitored the delivery of supplied materials.
vii. Construction and usage monitoring

Achievements
Overthe 12 years ofsanitation support(predominately in one district) 1,190
households were reported to have gained access to sanitation.
Total reported accumulative Investment wasan astonishing 1,792,900,000
Kip, (~US$224,113)
ReportChallenges
i. The organisation used partial coverage approachesprovided a limited
number of toiletsto some householdsin villages, but were unable to
provide for othershouseholdsin targeted villages(may have created
unrealistic expectationsfor free latrines).
ii. There wasa reported lack of ownership of the provided latrinesto
ensure they were well used and maintained. So the approach was
found to be unsustainable by the organisation.
iii. Not all the sanitation material setsprovided were effectively use, reasons
given were
a. Householdstoo busy to construct latrines
b. Never used a toilet before so did not know how to use one
c. Waiting on other householdsto build and use one first, before
starting.

INDIRECTSUBSIDISE
Atsaphone, Phine Phalanxai and
Xonabuly districts
Sustainable Sanitation& Hygiene
forAll (SSH44A) Project

Led by the Provincial Rural
Development & Poverty Reduction
Office (PRDO) leading a provincial
and district multistakeholder
process, with SNV Netherlands
Development Organisation

(Financed by AusAID and the
Dutch Government 2010-2011)

Piloting between mid-
2010 and the end of
2011.
Providing a Community
Led Total Sanitation
approach targeting 80
villages across four
districts

Subsidies for a limited
number (3) of
demonstration models
targeted at identified
poor households built as
part of the technical
training
i. Sanitation demand creation using a variant of
Community Led Total Sanitation (CLTS)
approaches
ii. Support and capacity building to sanitation
supply chains actors and stakeholders including;
micro, small or medium sized enterprises
(MSMEs), material fabricators, retailers and
building contractors
iii. Establishing a sanitation materials equipment
revolving fund managed by the
provincial/ district authorities for the private
sector.
iv. Targeted hygiene behaviour change on washing
hands with soap, toilet using, improving local
development approaches (Governance- pro-
poor and businessfriendly approaches).
Achievements
729 additional toilets built during one year, January to December 2011, (and
ongoing at the time of the research) which benefited an addition 839
households (110 families) decided to share sanitation usually with extended
family members in separate households in their villages. Approach
attempted to target 20 villagesper districts,
Reported Challenges
i. CLTS triggering was required to be undertaken on a number of
occasionsaslevelsof participation at eventsvaried.
ii. Later identified reluctance of facilitators and teams to use some of
the CLTS tools walk of shame and faecal transmission route
demonstration because of a lack of confidence.
a. Performance varied significant across villages and districts and
range from zero improvement to 100%
iii. Many of the targeted villages were adversely impacted by monsoon
flooding in 2011 which affected households and community
commitments to sanitation.
iv. The scale of the pilot at 80 villages was beyond the capacities of the
provincial and district team to take on, when starting from scratch
within the timeframe, as provincial and district teams needed to be
trained up first.
v. Originally agreed village targeting criteria was not adhered to by
district teams with some activities in villages where other sanitation
approacheshad also being applied.

Page 15 of 15
References and End Notes

1
Photograph sourced from Deutsch, R., and OLeary, D.
2
Deutsch, R., (SSH4A project manager) OLeary, D., (WASH Sector Leader) with additional inputs and support from Siliphong, P., (provincial
WASH Adviser) then at SNV-Netherlands Development Organisation.
3
The list of projects is not considered complete, as it was based on reported projects by responsible officials from involved government agencies
and other development actors in the province. It was observed that some sanitation projects undertaken in the province were not mentioned
by interviewed agencies and partners which may have related to the focus districts identified and nominated for the fieldwork. However the
approaches covered by the research are likely to be representative of all the approaches being applied in the province up to 2011.
4
Updated figures from the Provincial Department of Planning and Investment, Statistical office, previous figure of 825,879 from National Statistics
Centre, Ministry of Planning and Investment (2005) National Population Census, http:/ / www.nsc.gov.la/ PopulationCensus2005.htm
5
This is an indicative number of villages in the province, as the provinces was going through a process of village consolidations in the mid to
late 2000s that saw the number of villages reduced through mergers
6
Source, Poverty Reduction Fund 2012-http:/ / www.prflaos.org/ sites/ default/ files/Map/ Savannakhet_Poverty- incidence-map-cover.jpg , based
on the Ministry of Planning and Investments Decree on Poverty and Development Standard 2010 to 2015- # 285/ PO (13/ 10/ 2009) for rural
populations.
7
Hutton G, Larsen B, Leebouapao L, Voladet S., 2009, Economic Impacts of Sanitation in Lao PDR, the World Bank, Water and Sanitation
Program (WSP). http:/ / www.wsp.org/ sites/ wsp.org/ files/ publications/ ESI_Laos_english.pdf
8
Behind Phongsaly and Saravane provinces, source data on Access to Sanitation", National Census Data 2005, National Statistic Centre,
Ministry of Planning and Investments.
9
Ryan, P., (2009) Research on Innovative Policies, Practices and Approaches for Improved Basic Sanitation and Hygiene in Laos PDR, IRC- the
International Water and Sanitation Centre for SNV.
10
It should be borne in mind the exchanges rates between the Lao Kip and the US dollar varied during the reporting period of projects starting in
the late 1990s till 2011, efforts have been made to ensure that reasonable correct exchange rates have been used
11
Various sanitation and water options, that are considered improved can be found at http:/ / www.wssinfo.org/ definitions-methods/ watsan-
categories/
12
UNICEFs supported approach was reported as ended as it was as transitioning from a grant/ direct subsidies model for limited number of
sanitation sets, to supporting more indirect subsidy model, that allowed for a more equity targeting and holistic approaches (Community
Applied Total Sanitation) for future funding and support.
13
The decentralized implementing structure involved the Provincial Government through the Provincial and district offices of (i) Rural
Development and Poverty Reduction, (ii) Nam Saat/ Health, (iii) Lao Women's Union, (iv) Lao Youth Union, (v) Education Offices, (vi) Planning
and Investment Offices
14
PHAST based approach manual can be found at http:/ / www.who.int/water_sanitation_health/ hygiene/ envsan/ phastep/ en/ and a review
of the approach at http:/ / water.worldbank.org/ shw-resource-guide/ promotion/ hygiene-promotion-approaches/ phast
15
The three options available were (i) pour flush with single pit (direct drop), (ii) Pour flush with two pits, (iii) Pour flush with three pits.
16
The urban projects utilised their criteria which do not appear to have followed the official poverty criteria set out in various Government
Poverty Decrees, as below.
17
(i) Pan, (ii) 5 concrete rings, (iii) PVC pipes (iv) Roof sheeting (v) bag of cement.
18
Based on the official criteria in the Decree on Poverty and Development Standard 2010 to 2015- # 285/ PO (13/ 10/ 2009) for rural populations.
19
Each sanitation set was reported to contain (i) Ceramic toilet pan (squat plate) (ii) 3 Concrete rings (iii) Concrete ring cover (iv) PVC pipes (v) 1
bag of cement (vi) gravel & sand (vii) 100 blocks.
20
The material sets were reported to comprised of (i) 3 rings, (ii) 1 concrete covers, (iii) 1 Ceramic toilet pan (squat plate), (iv) PVC18 mm, (v) 2
cement bags
21
Each set in 2011 was described as (i) three 80cm concrete rings, (ii) a ring cover, (iii) a squat plate, and (v)a bag of cement
22
The SCC sanitation kit composes of (i) squat pan (ii) three concrete rings, (iii) cover, (iv) PVC piping
23
The generic PCMS sanitation package consisted of (i) ceramic squat pan, (ii) 3-6 80cm concrete ring, (iii) ring cover, (iv) sections of PVC pipes
(v) bag(s) of cement. With additional quantities of blocks and brick for superstructure added.
24
Sanitation material set were reported to be made up of (i) squat plate, (ii) rings (iii) ring cover (iv) 3 cement bags, (iv) 26 meters rebar steel
6mm, (v) 2 meters PVC20mm
25
Providing toilet construction materials included (i) 3 rings 100 cm, (ii) 1 Concrete ring cover, (iii) 1 Ceramic toilet pan (squat plate), (iv) 3
cement bags and (v) PVC piping 20 mm while the with beneficiary households contributing labour,
26
GoL/ MoH Model Healthy Village Primary Health Care requirement criteria; (a) 3 cleans (personal hygiene behaviours) villages with water
supply, (b) village health volunteer, (c) village drug kit, (d) sleeping under impregnated bed net, (e) fully immunized, (f) having latrine and use,
(g) Birth and infant child care (birth spacing, breast feeding, ante natal care), (h) risk case referral and decease or birth reporting
27
The sanitation material set comprised of (i) 1 Ceramic toilet pan (squat plate), (ii) 4 rings100cm, (iii) 1 Concrete ring cover, (iv)1.3 meters
PVC100 mm and 2 meters PVC20mm, (v) 2 cement bag and 30 concrete blocks)
28
Options promoted in later years 2009-2010 were pour flush with single pit and pour flush with double pits
29
Two sets of sanitation materials made available: A for 100%subsidised households they received (i) squat pan (ii) concrete rings, (iii) ring cover,
(iv)PVC piping (v) Concrete blocks (vi) bag(s) of cement, (vii) reinforcing bars (viii) gravel and sand. B , while other received (i) pan,
(ii)concrete rings (iii) Ring cover (iv) bag of cement.



The view expressed in this paper are those of the author only and are not intended to reflect on or be attributed
to any of the actors, organisations or institutions mentioned in the paper.