Market Strategies to Meet the Needs in Basic Services

An integral component to scaling impact in inclusive market systems is increasing the provision of services for poor and vulnerable households. Poor and vulnerable households need basic services to support their path to economic development. At this year’s SEEP Conference, tracks explored market-driven business models to provide basic services for the poor and vulnerable households where public delivery channels have failed or are unlikely to be developed.

Using Market-driven Development Strategies

There are significant opportunities to address the gap in basic service provision through market-based approaches. In the session entitled, “Inclusive Market Approaches to Providing Sanitation Services,” David Bloomgarden, private sector development specialist at Inter American Development Bank, viewed the provision of sanitation services as a question of “health, dignity, and social integration.” He outlined key questions in assessing the business case for a project in basic services:

• What is the problem?
• Is it economically viable to solve the problem
• Is it scalable?

John Sauer, sanitation advisor of Water for People, operates his business on the notion that sanitation is a business. Four billion of 7 billion people in the world are affected by sanitation crises. In Uganda, for example, the pit emptying business is a $9.6 million industry. And business climate is ripe as political will is growing; there are improved products in the market, and more robust market analysis. Furthermore, Sauer noted several business opportunities in sanitation. The key areas of innovation he highlighted included reinventing the toilet, omni-ingestor (for storage, transport, and treatment), and omni-processor (for treatment and reuse).

Facilitating Change

Given these opportunities, what role can development actors play? While the private sector can deliver basic services to poor and vulnerable households, it is important that the private sector complement government efforts. Thus, facilitation becomes a central theme for this track. Session experts repeatedly said that, in increasing access to clean water, adequate housing, basic sanitation services, and electricity, development actors should play a facilitation role. A key message is not to crowd out the private sector or government but to work with these actors. Bloomgarden encouraged participants to “build an ecosystem where private sector partners offering different services (e.g., sanitation, health insurance) can intervene and work with donors, [taking] a holistic approach.”

Similarly, the session entitled, “Market Innovations in Water Provision for the Poor,” illustrated how development actors can employ market development strategies to deliver improved water access and water quality for poor communities in Kenya. There are 800 million people living in Kenya without access to water, and the government struggles to meet that demand. Panelists presented a series of case studies that outlined public-private community partnership models for sustainable operation of water projects.

The Road Ahead

In a side conversation with Microlinks, Sauer called on SEEP’s community of practitioners to meet the challenges ahead. “The SEEP network possesses a lot of the right skills that we need to tackle the water sanitation issues.” Sauer sees the aggregator role as a key gap. Practitioners in the SEEP community have the skills to create horizontal linkages and form associations, addressing a vital gap in the sanitation value chain. In addition, SEEP members and their respective microfinance institutions can make sanitation a priority lending area, which goes a long way to fully scaling market-driven business models to provide basic services.