Sanitation Financing Case Study Cambodia Sanitation Partners Workshop for the Bill & Melinda Gates Foundation January 22, 2014 Photo IDE

Partner Organizations iDE Sanitation Marketing Scale-up and Sanitation Financing Integration PATH Sanitation Financing Model Creation and Pilot Testing MFIs VisionFund in Kandal Kredit in Prey Veng IDinsight Researched Sanitation Finance Donors WSP, The Bill & Melinda Gates Foundation, The Stone Family Foundation

($40 excluding installation and superstructure) Overview Increase uptake of latrines by developing a loan product that addresses household cash constraints Optimize the operational model with MFI partners to offer latrine loans to rural households Track and analyze commercial and economic consequences of MFI partners offering latrine loans Product Manufacturers Location MFIs Duration “The Easy Latrine” – Pour Flush, Offset Pit Independent Latrine Businesses (4-8 per province) Kandal Province Prey Veng Province VisionFund in Kandal Kredit in Prey Veng Kandal: July ’12 - Mar ’13 Prey Veng: Nov ‘12 – July ‘13 Easy Latrine ($40 excluding installation and superstructure) 11/7/2018

Loan Details Kandal Prey Veng Basic Structure Group Loans (2-10 households) Group Loans (3-6 households), Individual Loans (1 district) Repayment Location Village Group Loans: Village Individual Loans: Branch (initially but later changed to village) Size $20-$350 $40-$250 Duration 6-12 months Repayment Method Declining or Balloon Group Loans: Balloon Individual Loans: Declining Interest Rate (per month) 2.6%-2.8% Group Loans: 2.85% Individual Loans: 1.65%-2.85% Disbursement Small Loans: To Supplier Large Loans: To Household 11/7/2018

Field Personnel (per province) MFI Partner IDE, PATH & Latrine Businesses Provincial Manager Responsible for all operations in province (Part-time with pilot) Financial Advisor (IDE Staff) Responsible for training latrine businesses, sales agents, and coordination with MFI (1 full-time with pilot) District Managers Responsible for all operations within their districts (Part-time with pilot) Latrine Businesses (Independent) Responsible for managing their business including constructing and delivering latrines (4-8 part-time with pilot) “Dedicated” Loan Officers Responsible for assessing and approving all customer loans (Part-time with pilot) Sales Agents (Independent) Responsible for selling latrines to customers (2-3 per latrine business, 8-20 total, part-time with pilot) “Normal” Loan Officers Responsible for servicing all customer loans (Role rotates between many, part-time with pilot) Construction Engineer (IDE Staff) Responsible for regional technical construction issues (1 part-time with pilot) Village Organizers Responsible for organizing village meetings and serve as a local representative (Part-time with pilot if available) Commercial Advisor (PATH Staff) Responsible for field oversight and technical advisory (1 part-time with pilot) 1/22/2014

Operational Model 1. Latrine business manufacture latrines 2. Sales agents perform group meetings for direct sales to villages 3. MFIs fill-out loan applications immediately after meeting 4. Latrine business delivers latrines 1-3 days after loans approved 5. MFI pays latrine business directly for latrines 6. MFI services loans each month 7. Latrine business services latrines as needed Photos PATH 1/22/2014

From PwC Financial Review Key Results From PwC Financial Review Kandal: 941 loans Prey Veng: 1,062 loans Kandal: 65% avg. closing rate Prey Veng: 45% avg. closing rate The loan product offered an attractive customer acquisition strategy for each MFI: 72% of VisionFund loans were to new customers 64% of Kredit loans were to new customers 100% repayment rate of all sanitation loans at endline Loan product was profitable for both MFI partners: VisionFund cost recovery = 113% Kredit cost recovery = 116% Offering latrine loans qualifies MFI partners for below market rate loans from Kiva Kiva loans MFI funds at 0% vs. average borrowing cost of approximately 9% 11/7/2018

From PwC Financial Review Key Results - Equity From PwC Financial Review Kandal: 53% of households below Cambodian National Poverty Line 21% below USAID Extreme Poverty Line This is three times the representation in comparison to VisionFund’s full portfolio Prey Veng: 11% of households ID Poor 21% were ID Poor 2 Prey Veng as a province has 12% ID Poor 1 and 15% ID Poor 2 according to MoP 1/22/2014

Financing Causes a FOUR FOLD Increase in Sales at Market Price 1/22/2014

Financing Dramatically Increases Sales at Most Prices 1/22/2014

Financing decreases sales and marketing cost-per-latrine sold by as much as 70%. 1/22/2014 11

Q & A 11/7/2018

SanFin: Key Pilot Results 11/7/2018