Supply Chain Analysis for Rural Sanitation Products and Services in Lao pdr

Introduction

1. Lao PDR Overview

Despite this strong economic growth, Lao PDR remains one of the poorest countries in the region (Figure 1). Furthermore, the average data in Figure 1 masks considerable poverty. In 2012, 33.9% of Laotians lived on less than 1.25 International Dollars per day (World Bank 2012) and about 11% of Lao PDR’s 1.1 million households live under the official poverty line³. Life expectancy at birth is 67.8 years. In 2010, nearly one-third of children under age five were moderately or severely under-weight for their age (UNICEF 2012).

Note: Current international dollars. PPP adjusts GDP for relative differences in living costs.

Source: IMF, World Economic Outlook Database, October 2013.

The Lao PDR economy is largely agrarian, with agriculture accounting for about 26% of GDP and employing 77% of the population.⁴ The total population of rural communities currently exceeds 4.4 million. In many remote areas road quality is an issue – around 81% of villages are accessible year-round. Nearly one-third of households do not have access to improved sanitation (see below).

Despite still being a least developed country (LDC), Lao PDR has made significant progress in poverty alleviation over the past two decades. The country is on course to achieve the Millennium Development Goal (MDG) target of halving poverty by 2015. According to the outcomes of 11^th high level round table meeting regarding the progress of the MDGs, Development Partners welcomed the commitment of the Government to strengthen health systems and improve health governance, as well as commitments to ensure free access to Maternal and Child Health services (UNDP 2013).

2. Sanitation in Lao PDR

Figure 2: Households Using Improved Sanitation Facilities, by Wealth Quintile, 2012

Source: LSIS 2012.

Since households in rural communities tend to be poorer than urban households, it is rural regions that have the lowest access to improved sanitation. Around 42% of those in rural communities in Lao PDR practice open-defecation (OD), compared to only 4% in urban areas (Table 1). However, there has been significant improvement in rural communities – 73% of rural households practiced OD as recently as 2000 (WHO-UNICEF 2014). The most common improved facilities in rural areas are flush toilets to a pit (33%) and to a septic tank (14%) (WHO-UNICEF 2014).

Table 1: Lao PDR sanitation coverage

Rural households with road access are more than twice as likely to use improved facilities as those without road access (LSIS 2012). Road quality is important in the sanitation supply chain. It effects the costs of materials for constructing latrines – and hence the affordability of latrines – and also whether the supply reaches certain communities at all. Many businesses in the sanitation supply chain cite road quality as a constraint (see Section 10 below).

Similarly, there are geographic differences in sanitation coverage: residents of the South region are much less likely than others to have access to improved facilities: 35% of households using improved sanitation facilities compared with 61% in the Northern region, and 68% in the Central region (LSIS 2012).

Poverty and vulnerability are strongly tied to ethnicity and gender in Laos, with rural ethnic minority women experiencing the greatest disadvantages with respect to livelihoods, education, health and participation in society. Studies have found remote ethnic groups represent one-third of the population but over half of the poor (ADB/NSC, 2006) and the great proportion of the population with no access to improved sanitation. While 74% of households have access to improved facilities where the household head is from the Lao-Tai ethno-linguistic group, access is only 30% where the head is Mon-Khmer, 46% where the head is Hmong-Mien, and 30% where the head is Chinese-Tibetan (LSIS 2012).

Yet the benefits of improved sanitation are significant, extending beyond the individual household and village. WSP found that poor sanitation costs Lao PDR the equivalent of 5.6% of GDP — around US$34 per person per year (WSP 2013). The majority of these losses are health-related costs. WSP evaluated the economic costs and benefits of a variety of latrine options in rural and urban sites. All options were found to have a net benefit. Shared wet pit latrines in rural areas were found to have the largest net benefit, but private wet and dry pit latrines also deliver significant economic benefits.

Figure 3: The impact of improved sanitation