Using microfinance to facilitate household investment in sanitation in rural Cambodia

Improved sanitation access is extremely low in rural Cambodia. Non-governmental organizations have helped build local supply side latrine markets to promote household latrine purchase and use, but households cite inability to pay as a key barrier to purchase. To examine the extent to which microfinance can be used to facilitate household investment in sanitation, we applied a two-pronged assessment: (1) to address the gap between interest in and use of microfinance, we conducted a pilot study to assess microfinance demand and feasibility of integration with a sanitation marketing program and (2) using a household survey (n = 935) at latrine sales events in two rural provinces, we assessed attitudes about microfinance and financing for sanitation. We found substantial stated intent to use a microfinance institution (MFI) loan to purchase a latrine (27%). Five percent of current owners used an MFI loan for latrine purchase. Credit officers attended 159 events, with 4761 individuals attending. Actual loan applications were low, with 4% of sales events attendees applying for a loan immediately following the event (mean = 1.7 loans per event). Ongoing coordination was challenging, requiring management commitment from the sanitation marketing program and commitment to social responsibility from the MFI. Given the importance of improving sanitation coverage and concomitant health impacts, linking functional sanitation markets to already operational finance markets has the potential to give individuals and households more financial flexibility. Further product research and better integration of private vendors and financing modalities are necessary to create a scalable microfinance option for sanitation markets.