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



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Business owners outside district and provincial capitals are more likely to have other business interests (52%) compared to shops in district capitals (39%) (Table 6). This perhaps shows that the income generated from the shop is insufficient and has to be supplemented by other activities.7 This is particularly the case in the southern provinces of Salavan and Sekong — two provinces with among the lowest rates of improved sanitation coverage in Lao PDR.

Table 6: Other business activities – material suppliers (n=68)



Region – Province

Do you have other business activity? % answering Yes

Suppliers outside capital district

Suppliers inside capital district

Northern

60%

40%

Bokeo

83%

40%

Luangnamtha

44%

na

Central

32%

na

Borikhamxay

22%

na

Savannakhet

40%

na

Southern

69%

38%

Attapeu

50%

0%

Salavan

100%

33%

Sekong

100%

60%

Total sample

52%

39%

Of the 68 material suppliers interviewed, 50 were outside the provincial capital districts and 18 were within them.

Note: Research was not conducted in the capitals of Luangnamtha, Borikhamxay, and Savannakhet.

The most common other activity of material suppliers is running a grocery store (Table 7). Construction work and mechanic (such as motorbike repair shop) are next most common other activities, followed by running a petrol station and operating a guesthouse.

Table 7: Types of other businesses owned by material suppliers (n=68)



Most common

other business activities”



% of sample

Grocery store

13%

Construction

6%

Mechanic

6%

Fuel station

4%

Guesthouse

4%

For their source of the capital to start the business, “saving money” and “loan from bank” are the most common options. Nearly 80% of material supplies started their business with only their savings, while 16% used a combination of savings and a loan from a bank. Only 5% began their business only with a bank loan (). Almost no business owners mentioned “borrow money from family/friends” or other source of capital. The Central region has a significantly lower percentage of businesses financed by bank loan, compared to the Northern and the Southern ones (finance is discussed in more detail in Section 9).



Table 8: Source of capital – material suppliers (% of total) (n=68)

Region – Province

Where did you obtain the money to start your business?

Only saved money

Only loan from bank

Saved money & loan from bank

Northern

35%

30%

30%

Bokeo

55%

18%

27%

Luangnamtha

11%

44%

33%

Central

79%

5%

16%

Borikhamxay

78%

0%

11%

Savannakhet

80%

10%

20%

Southern

38%

14%

48%

Attapeu

42%

8%

50%

Salavan

40%

20%

40%

Sekong

29%

14%

57%

Total sample

79%

5%

16%

For all building material suppliers interviewed, latrines are a small part of their overall business – but estimating how small is not possible. Many of them do not know how important latrines are to their business (since they do not always know for what purpose materials are bought). Latrine pans alone are likely to account for less than 5% of revenues for most suppliers.8 The material suppliers interviewed estimate that they sold a total of 18,300 latrine pans and bowls in 2013.9 Around 92% of these were squat pans, the vast majority made in Thailand.

Typically, the business’s finances are managed by women (58%, reflecting also the majority of business owners that were women), while the men managed the finances only in 24% of the cases. In the remaining businesses (18%), both partners take care of the financial aspects of the business.



Table 9: Gender of the person who manages the business’s accounts/finances (% of total) (n=68)

Region – Province

Woman

Man

Both Partners

Northern

55%

30%

15%

Bokeo

55%

27%

18%

Luangnamtha

56%

33%

11%

Central

68%

16%

16%

Borikhamxay

78%

0%

22%

Savannakhet

60%

30%

10%

Southern

55%

24%

21%

Attapeu

75%

0%

25%

Salavan

30%

60%

10%

Sekong

57%

14%

29%

Total sample

58%

24%

18%

Most of the material suppliers interviewed are “formal” businesses (that is, they are officially registered). Around 12% of materials supply businesses outside district capitals are not formally registered compared with only 1% inside the capitals. This has some implications for accessing formal credit (see below).

In the Northern region, almost no business is purely a wholesaler; even large material suppliers sell direct to households. Government or NGO programs are a part of the chain, sometimes acting as an intermediary between suppliers and households (see section 8 for a discussion of this issue). In the Northern region, on average, 55% of the customers of large construction material suppliers are households, 25% are construction companies, 12% Government or NGO programs, and the remainder are other materials suppliers (Figure 5). Small material suppliers sell mostly to households (86%) with the rest to programs or other material suppliers.



Figure 5: Supply chain flow for building materials – Northern Provinces (n=20)

Note: Percentages are number of customers or transactions, not revenue.

In the Central region, households are a larger proportion of customers for large and small material suppliers than in the Northern provinces. Government and NGOs account for a similar proportion than in the north. Sales to construction companies are very small in the Central provinces compared with the north.

Figure 6 Supply chain flow for building materials – Central Provinces (n=19)



Note: Percentages are number of customers or transactions, not revenue.

In the South, households account for a similar proportion of sales as in the central provinces. However, Government and NGO programs are less important to large material suppliers, replaced in importance by small material suppliers and construction companies.

Figure 7 Supply chain flow for building materials– Southern Provinces (n=29)



Note: Percentages are number of customers or transactions, not revenue.

The above diagrams illustrate the customers of Lao material suppliers. However it should be noted that households often buy directly from material suppliers in Thailand and Viet Nam, bypassing the local supply chain. Households also sometimes obtain latrines or latrines components from government or development partners. These issues are discussed later in this report.



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