Finance and subsidies

iDE’s customer survey asked clients how they financed their latrine purchase. Our 2018 survey found that 8% of customers received a subsidy of some kind to purchase their latrine (almost all of which were only partial subsidies with only one percent receiving a full subsidy). When broken down across IDPoor status, only 5% of non-poor households received a subsidy, while 16% of poor (IDPoor1 and IDPoor2) households did. Less than .8% of all customers received a subsidy that came from iDE; the vast majority came from NGOs that purchased a latrine from an iDE-affiliated business and delivered it to them at a subsidized rate.[FOOTNOTE 1] Further, 23% of customers said they had to borrow money in order to finance the purchase of the latrine. Interestingly this is not necessarily the same segment of customers that received a subsidy, as only 2 percent of subsidy customers also had to borrow money to finish financing the latrine purchase. We found that 20% of non-poor customers borrowed money and 33% of poor customers did.

These results reveal a decrease in both financing and subsidy provision among iDE’s latrine customers compared to 2014, when 19% of customers purchased a latrine with a partial subsidy, and 37.8% used financing. This is potentially reflective of the tightening MFI climate within Cambodia and a shift in civil society actors’ thinking around subsidies.

There are some stark differences in finance rates between provinces. An interesting observation is that the provinces with the highest rates of borrowing money had some of the lowest rates of subsidies. While the province with the lowest rate of borrowing money (Siem Reap with only 4% of customers financing their latrine purchase) had almost triple the rate of subsidies (11%). This trend doesn’t hold across all provinces, where we see Prey Veng had a high rate of borrowing as well as the highest subsidy rate.

The challenge in the future is how to increase affordability for household sanitation purchases amid endemic levels of indebtedness in Cambodia and reluctance from microfinance institutions to provide credit for non-income generating products. iDE is currently researching multiple options, from payment installment plans to targeted subsidies (see “Households need finance options”).