WILLINGNESS AND ABILITY TO PAY FOR SANITATION LOANS IN RURAL KENYA Josphat Martin Muchangi 1, Dr. George Kimathi 1, Vincent Ouma 1, David Makau 1 1. AMREF Kenya

Outline Background information Objectives Methodology Results Discussions Conclusion Recommendations 2

Definition of terms Community-Led Total Sanitation (CLTS): - integrated approach to achieving and sustaining open defecation free (ODF) status. Contingent valuation: - is a survey technique for the valuation of non-market resources, such as environmental preservation Sanitation: - Provision of facilities and services for the safe disposal of human urine and faeces. WTP:- The maximum amount that an individual state are willing to pay for good or service (DFID, 1997) 3

Background Information Diarrheal due to poor sanitation practices is a major cause of death in Africa accounting for 11% of under 5 mortalities (Lui et al, 2000) Sanitation scale up through CLTS is challenged by poor construction standards of sanitation facilities (WSP,2012) Innovative programmes have been developed to address the social-economic determinants of sanitation through financial inclusion and direct sanitation marketing. Estimated, 50% Kenyan household are willing to invest in improving sanitation (WSP, 2006). 4

Objectives Broad Objective –To estimate the Willingness and Ability to Pay (W/ATP) for sanitation loans in Busia County - Kenya. Specific Objectives –To determine the willingness of communities to borrow and repay loans for improved sanitation. –To assess the link between willingness and ability to pay for different sanitation systems 5

Methodology(1) Study was conducted in Busia covering all the sub-counties Study design was a descriptive cross-sectional Sample size was 532 households calculated: 6

Methodology (2) - Sampling Villages selected BUSIA 743,946 Bunyala 68,521 Butula 120,262 Samia 86,700 Nambale 127,254 Teso. N 100,684 Teso. S 132,848 Busia 107,676 Sample size First households selected randomly the rest selected by an interval calculated based on the household numbers per village

Methodology (3) Data collection instruments were semi-structured questionnaires and interview guides based on principles of contingent valuation method (CVM) Data was analysed using both quantitative techniques using SPSS Vs 18 To test for significance, p-value was set at 0.05 Interviewee were preferably the household head alternatively consenting adult was considered 8

Results (1) Demographic and other Characteristics 9 Demographic and other Characteristics N= 532N=285N=247P Total (100%)Male (53.6%)Female (46.4%) Education level No education67(13%)21(4%)46(9%) Primary307(58%)170(32%)137(26%) Secondary128(24%)75(14%)53(10%) College22(4%)15(3%)7(1%) University4(1%) 0(0%) Others4(1%)1(0%)3(1%) Employment Status Employed47(9%)31(6%)16(3%) Unemployed146(27%)60(11%)86(16%) self employed339(64%)194(36%)145(27%) Monthly income <50072(14%)34(6%)38(7%) (18%)49(9%)48(9%) (16%)40(8%)47(9%) (15%)48(9%)34(6%) (10%)32(6%)22(4%) (8%)26(5%)19(4%) ≥500195(18%)56(11%)39(7%)

Results (2) Saving characteristics, willingness to pay and sources of payments for sanitation loans 10 Majority of the population in the area of study 369(69.4%) did not belong to any saving and lending groups with no significant difference between male and female P=0.752 However, 84.4% were willing to take up the sanitation loans 68.3% of the respondents were willing to repay the loans at a rate of 1000Kshs per month The main source of repayment for loans would be farm produce at 47%

Results (3) The link between willingness and ability to pay 11 Parameter Estimates willingness to take a loan to construct an improved latrine BStd. Error WaldDfSig.Exp(B)95% Confidence Interval for Exp(B) Lower Bound Upper Bound yesIntercept sex Employments status Income Education No single factor isolated to significantly link ability and willingness to pay for sanitation loans (P>0.05) The relationship between willingness and ability to pay is a complex interaction of multiple factors mainly the value of a product.

Discussions Most of the people in the area earn less than a dollar daily which conforms to earlier findings (Busia county factsheet, 2011) The study notes majority had low education levels. Low education levels inversely affect the ability to pay Todd R. Stinebrickner (1998) The high level of willingness to pay contradicts results by McKenzie, and Woodruff (2009a) which show that willingness to pay is influenced by a perception of affordability Associations between willingness and ability was weak which conforms to studies (Baron, 2007) 12

Conclusion The study notes that additional elements to socio- economic and demographic profiles are needed to estimate willingness and ability to pay more accurately. The contribution of the on going sanitation socio- marketing campaigns for improved sanitation may have by far influenced the willingness for improved sanitation facilities The high levels of willingness provides an opportunity to explore sanitation businesses further. Key to this would be appropriate demand and supply sides development 13

Recommendations Development of a variety of sanitation loan products and repayment tariffs responding to socio-economic and geographical differences in the area. Development of market strategies based on deep analysis of demand and the supply side for sanitation; while observing the principles of making markets work for the poor Further research to explore definitive predictors of willingness and ability to pay in the area 14 To the banks and lending institutions To the sanitation promotion practitioners

Acknowledgement Mr. Fwamba 1 Public health officers in Busia county 1 Community Health workers involved in data collection 2 Marjolein Ooijevaar 3 Valentin Post 4 Royal Dutch Government 15

16 Thank You