Health and Hygiene

Safe sanitation: global access is essential, but how do households pay for it?

5 min


Barbara Toizer and Elene Cloete

Access to sanitation is a basic human right. Yet safe sanitation is unaffordable for over 40% of the world’s population. This blog explores options for financing household sanitation in the Global South and shows why community participation is so important to the success of finance schemes.

The United Nations’ sixth sustainable development goal (SDG6) presses for equitable access to sanitation and hygiene for all by the year 2030. Yet, in 2022, 3.5 billion people lacked access to safely managed sanitation, confirming that the world is alarmingly off-track in reaching this target. The world would have to accelerate its efforts, and work up to six times faster to succeed.

Thus, there is an urgent call to funders, government agencies, and non-profit and civil society organizations to not only intensify current interventions but to remain constantly curious for alternative solutions for improved sanitation access. 

One of the main barriers to accessible quality sanitation is its high cost. When households do not have a big enough lump sum to build a complete and safe toilet, they often turn to lower-cost alternatives, including less safe latrines, shared latrines, and open defecation.

Financial interventions are therefore a popular method of increasing sanitation access, and are an alternative to other common interventions, such as behavior change programs (e.g., Community-Led Total Sanitation, which discourages open defecation) and market development (e.g., tax incentives to encourage enterprises to service rural areas).

Sanitation finance interventions aim to either make sanitation facilities affordable or provide financial incentives to encourage safer sanitation. In fact, multiple studies have found that interventions that provide monetary investments, subsidies, or sanitation infrastructure tend to result in more latrine coverage, access, and usage than either Community-Led Total Sanitation or education-only interventions.

Subsidies for sanitation

Early financing approaches in the 1980s often fully subsidized the construction of low-cost sanitation facilities. However, these approaches struggled to remain sustainable, due to the lack of funding for ongoing maintenance, difficulties identifying households in need, perceptions of corruption, the inability to meet user preferences, and the high cost of bringing fully subsidized infrastructure to scale. 

Given the limitations of full subsidies, many interventions now partially subsidize sanitation solutions, using a variety of mechanisms including: cash, vouchers, tax credits, or the provision of facilities themselves. Subsidies can be provided directly to households or to local governments, utility companies, or small-scale operators with the goal of reducing costs for households.

Sometimes, subsidies are provided as rebates or are output-based, meaning that they are only given after certain outcomes are met, such as the active use of latrines. Although funds are typically provided by external organizations, sometimes the funds from purchases by wealthier households are used to subsidize poorer households’ purchases.

Subsidies have successfully increased access to sanitation. For example, International Development Enterprises’ (iDE) Water for Women-funded WASH-SUP2 project and the EU’s GREEN Project found that offering 50% subsidies to households in rural Cambodia increased the likelihood that the household would purchase a latrine by 31%.

Microfinance for sanitation

Besides subsidies, nonprofit organizations have recently started to offer private investments to households to finance sanitation facilities. Households later repay the loan, as well as interest, to the lender. This approach is modeled on microfinance programs, in which Microfinance Institutions administer small loans to support entrepreneurial activities.

In the context of sanitation, microfinance programs have shown to be effective. In Cambodia, researchers from iDE found that households were four times as likely to purchase a latrine with a microloan than with a cash payment on delivery. However, research has also found that although households want to take out a loan to finance sanitation facilities, many (especially poor households) do not have access to microfinancing.

Community-led loans for sanitation

Despite their success in achieving increased latrine coverage, one limitation of sanitation microfinancing is that it often relies on ongoing external funding, which can come with high interest rates and short repayment periods. Community-led development techniques may provide another direction for sanitation microfinancing.

In 2019 and 2020, three Philippine Community-Based Organizations (CBOs), supported by Outreach International (OI) and Outreach Philippines Inc., implemented community-led sanitation loan projects. With community-designed and developed project proposals, they requested funds from OI to build sanitation units for 121 families.

However, instead of providing families with all the funds they needed, the CBOs subsidized 60% of the building costs, with project participants paying the remaining 40% back to the CBO over five years at a 3% interest rate.

The three CBOs have since constructed 118 latrines serving over 722 individuals. As of December 2023, participants have repaid 344,024.00 Philippine Pesos (₱)(US$6,254.98), or 56% of the expected repayment sum.

Using this financing structure, CBOs decided how to administer the loans and structure the repayment. One benefit of this autonomy is that CBOs could choose not only to fund the construction of new latrines, but also their repair and maintenance. The flexibility also allows CBOs to provide grace to households in extenuating circumstances, for example, they paused payments for six months in 2020 during the initial spread of COVID-19. Additionally, one CBO chose to collect payments once a year, while the other two CBOs collected it once a month.

In addition to flexibility in loan structure, community-led sanitation microfinancing allows repayments, as well as any interest accrued, to reside within the community group to spend on other concerns. Thus far, the CBOs have used this recouped capital to provide electricity to their community center and establish broader microloan programs, among other projects. Operating on shorter 2-to-3 month timelines, these loans provide smaller sums of ₱1,000 to ₱2,500 (US$18.18 to US$45.45). The CBOs have supported around 117 households across the three communities and accumulated interest worth ₱84,907 (US$1,543.76).

Community involvement

The importance of involving communities in the development of financing programs is further illustrated by the Sustainable Sanitation and Hygiene for All (SSH4A) program. Since 2008, when the development organization SNV began implementing the program, SSH4A has operated in 135 districts in 18 countries in Asia and Africa. One aspect of SSH4A includes finance mechanisms. In Tanzania, for example, SNV established a revolving fund for entrepreneurs to increase latrine production. Although initially successful, entrepreneurs chose to stop accessing the fund out of concern over defaulting on the loans. This shows how community participation can help ensure users’ concerns are addressed.

Reaching sanitation equity by 2030 requires global investment. Given that affordability is the main barrier to quality sanitation, interventions that alleviate the cost burden for households are an important component of plans to reach this target. Interventions must support sustainable access to sanitation, in order to maintain any gains made over time.

One way to ensure that our sanitation targets are sustainable is to invest in solutions that are authentically community-led. We have seen the benefits of community-led approaches in both our own research in the Philippines and that of others. We therefore hope that more attention is focused on locally driven solutions to sanitation challenges. Scaling these can lead to better outcomes than one-size-fits-all solutions.

Barbara Toizer
Research Assistant, Outreach International
Elene Cloete
Senior Director of Research and Advocacy, Outreach International