For most actors, their business faces some seasonality, but there is a key difference:
81% of material suppliers and 66% of masons state they are busier in dry season; yet
73% of concrete producers report being busier in wet season.
For many areas, road conditions in wet season are such that materials are not available. Furthermore, more construction is possible when it is not raining. Hence seasonality can be a supply issue. However, demand also plays a part: many rural households might have more income in dry season (that is, post-harvest) and hence there is more demand for construction materials and services. On the other hand, in some areas open defecation might be less possible in wet season – for example, because usual defecation locations are flooded –resulting in greater demand for latrines (but latrines are not a major part of most actors’ business).
It is to be expected that businesses would be busier in dry season. The finding that concrete producers are busier instead in wet season is therefore curious. Perhaps they experience stronger demand for other products during this time, such as for rainwater storage. Some other studies have also found that wet season can be a busier time for the supply chain (EMC 2009, for example).
The implications of this finding are discussed in the Findings section below.
Reaching the rural poor
The sanitation supply chain in Lao PDR often does not serve the rural poor. In part this is because of the high cost of latrines (see above). However, it is also the case that many areas simply do not have access to the necessary materials and services. This section discusses the availability of materials and services, the willingness of actors to sell lower-cost latrines, and the geographic reach of the supply chain.
Many construction material suppliers reported that certain materials often were not available, particularly in the rainy season. Nearly 43% reported problems with material availability, including cement, steel, and zinc sheeting. This appears to particularly be a problem in the districts of Sing, Long, Meung, Salavan, Ta-Oy, Kaleum, Sanamsay and Khamkeut. One supplier (in Sanamsay, Attapeu) reported that they sometimes have to wait about one month for cement, when road conditions are bad.
Around 20 masons (30%) state that some materials are not readily available. These masons are in Salavan, Dakcheung, Phouvong, Vienthong, Atsaphone, Xonnabuly, and Xaychamphone. The materials that are often not readily available are sand and gravel, but also cement and steel. Generally, pans do seem to be available in most districts. However, masons in Xaychamphone believe that it might be necessary to source other materials (such as cement, PVC pipe and concrete rings) from up to 150km away. One mason in Long mentioned that no one locally makes concrete rings.
The WSP - Sanitation Consumer Behavior Study asked villagers in poor rural areas about the local availability of masons to build latrines. Surprisingly, villagers in the South were more likely to report that a skilled mason was available (Table 34). This could be because villagers in the South use a lower skill threshold (that is, more masons might qualify as “skilled” in villagers’ minds and hence they would be more likely to answer ‘yes’ to this question). This is supported by the fact that 74% of latrine-owning households in the South stated that it is difficult to find masons in their village to repair latrines, compared with 43% in the North and 36% in the Center (WSP - Sanitation Consumer Behavior Study).
Borikhamxay has the highest level of reported skilled mason availability. Around one-third of villagers in all other provinces believe their village has a skilled mason who can build a latrine.37
Table 34: Availability of skilled and knowledgeable masons in poor rural villages
Region – Province
There are skilled masons in our village who know how to build improved latrines including underground parts
Note: only rural poor households interviewed for this data. Districts are not the same as the supply chain sample.
Source: WSP - Sanitation Consumer Behavior Study
Preparedness to sell to poor and remote communities
Fifty-six materials suppliers (82%) said they would be prepared to sell more latrine products for a lower margin if volumes were a lot higher.38 However, Hystra (2012) found that “marketing innovative products to the BoP [bottom of the pyramid] must be a high gross margin business if it is to ever be sustainable. Volume will not compensate for low margins, given the geographic dispersion of the market and the required village level marketing efforts.”
Ten suppliers (16% of those answering) said that they would not be prepared to sell to remote or poor communities. Mainly they viewed this as just not possible, due to road conditions. All the others were prepared to sell to remote and poor villages, some only provided that it was profitable.
Similarly, 13% of concrete producers interviewed said that would not be prepared to sell to remote or poor communities. A number of those that said they would supply these communities stated they would do so only if they were paid for the cost of delivery or if the customer arranged their own delivery.
Nearly two-thirds of masons report that they charge a higher fee when they have to travel far for work. Many report charging an additional 20%; others report an additional 700,000 LAK (US$87, about 25% extra on typical labor costs) for building a latrine not in their local area.
The reach of the chain
The WSP - Sanitation Consumer Behavior Study found that among the latrine owners who purchased sanitary hardware (e.g. a ceramic pan) for latrine construction, 76% traveled to other towns in the same district and 11% traveled to other districts to purchase the products. On average, latrine owners traveled two hours (including the return trip) to go to nearby markets outside of their village to purchase latrine construction materials. Travel costs largely depend on their distance from the city, and the availability and choice of transport mode.
“Our village is very far from the construction shop, and we have no transportation to go there to get the materials” (Villager in Vienthong district).
The field research was limited to areas where the supply chain exists. That is, we generally did not go into areas where the supply chain is absent because, obviously, there would be no actors to interview there. However, we did ask actors about their geographic reach (how far away they had customers and areas they were able to serve). For southern provinces we asked suppliers if they had, or were able to, sell to some specific poor villages (villages in those districts surveyed by the WSP - Sanitation Consumer Behavior Study).
In some areas there we simply fewer actors to interview, such as Dakcheung and Ta-Oy. Not surprisingly, these districts also have low rates of improved sanitation coverage.
Some building materials suppliers in Sing district claim that they sell to all villages in the district. Another, in Singajalern, states that most of his customers are nearby but estimates that his furthest customer is 45km away. Four of the five suppliers interviewed in Sing report having customers in Long district.
In Long district, material suppliers state that they supply to Xiengkok, Sompan,Phonsamphanh, Jalernxay, That, Chomjaeng, Donyaaeng, Luangphakham, Poungxai, Xiengkok-old, and Sala villages.
In Houay Xai, materials suppliers sell not only around the district but also to Mueng. One reports having customers as far away as Luangnamtha, Oudomxay and Luang Prabang.
Suppliers in Phaoudom report selling to the following villages: Viengkhamyai, Kenkham , Homsouk, Mokso, Hokso, Viengkham, Houaykhoun, Houaysang, Xayoudom, Homsouk, Viengphattana, Somsavang, Phonlard, Pounglard, Phaoudom, and Thinkeo. Two suppliers in Phaoudom report that their furthest customers are in Mokkho village, 70km away and another sells to Hukhom village about 40km away.
The two suppliers in Meung district sell to locally and also to Nummeung, Phonsavang, Huaythad, Huaynumkha, Phonsavang, Phangam, and Houay Yo, Their furthest customers are 15km away, in Xiengdao and Huaynumkha.
In Samoi district, suppliers report that they have supplied A-ho and Meo villages. Thedsaban can be supplied year-round, but A-ho and Meo can only be supplied in the dry season.
In Ta-Oy, the villages of Pajoudon, Pi ko, Thong Sa, Ka Ten, and Sabongkok hai have been supplied and are accessible all year. Ta Poun Phu and Houn Yai have not been supplied by those interviewed, but could be in dry season only.
In Kaluem district, Keangkui and Keangkien villages have been supplied by those interviewed, but Songkhone and Tangpa cannot be supplied.
Dakcheung district is 100km from Sekong. It is not accessible from June to October. Suppliers there have sold to the following villages: Tangbrong, Xiengloaung or Liengloaung, Nonsavanh, Darkta Ork Yai, Xiengmai, and Darktring; all in dry season only except Tangbrong.
In Sanxay district, suppliers have provided materials to Dark Hied, Moon, Dak Mor/ Vang Say, Dak Bang, and Som Boon in dry season. They say that most materials for all of these villages are delivered from Saysettha district.
Material suppliers in Puovong district have sold to Vonglakhone and Vongvilaytai villages.
Nearly 84% of building material suppliers stated that they have a regular supplier for their products. Most of these stated the reason as being the relationship they have with the supplier. Many also said it was because the supplier provides credit. Only 26% said it was because they offered discounts for bulk purchases. Many materials shops interviewed purchase the bulk of their stock range from a single supplier (although cement, sand and steel will often be provided by other, specialist, suppliers). However, a number of shops have different suppliers for different products, even buying pans and PVC pipe, for example, from different suppliers.
Despite more potential suppliers for cement than other inputs, nearly 87% of concrete producers stated having a regular supplier for cement. All but one of these stated that the reason was their relationship with the supplier. About half also say they buy from this supplier because they offer credit. One-fifth reported receiving discounts for bulk purchases. Interestingly, none stated that they bought from this supplier because they were cheaper.
Although masons don’t always buy the construction materials themselves, they do have relationships with material suppliers and concrete producers. Nearly half of masons interviewed (48%) said they regularly buy from a particular material supplier. The rate was particularly high in the Central provinces (81%) than the North (18%) and the South (32%). The main reasons given for buying from the supplier is that they can get a discount or simply that they know the supplier (sometimes they are related). Some said that they had “no other choice”.
The use of credit is quite common in the supply chain, although the terms are limited. Typically credit is only available for larger orders, and it is not offered to all customers.
Nearly 81% of material suppliers provide credit to their customers, and 93% receive credit from their upstream suppliers. In both cases it is typically interest-free, with repayment due in 1 to 4 weeks.
Over 60% of concrete producers give credit to their customers, and 89% receive credit from their suppliers. Again, it is usually interest-free, they offer their customers from 1 week to up to 6 months to pay. Their suppliers typically require payment in 7 to 90 days.
Nearly half (47%) of masons provide credit to their customers, and 58% report receiving credit from material suppliers (though they typically do not buy latrine materials themselves). Both are interest-free, up to 90 days.
Figure 19: Percent of actors offering credit (delayed payment) to customers
Some actors complain about customers not paying for their products and services (discussed more in Section 10).