REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

Households do not currently prioritise such investments, given that the rate of improved
sanitation coverage remains very low throughout the country (21% according to UNICEF).
The main factors holding back such demand are not fully understood, 8 but preliminary
assessments indicate that affordability may be a key issue. For example, the WaterAid
(2010) study found that investing in an improved latrine with a temporary superstructure can
represent up to 82% of a poor household’s annual income in Dar es Salaam, whereas
obtaining a sewerage connection (where available) would represent only 41% of a poor
household’s annual income (see figures in Table 3 below). This is due to the fact that
sewerage networks are heavily subsidised by the government whereas household sanitation
is not.
Table 3: Comparative costs of sanitation options for households in Dar es Salaam
Initial costs
(construction)
Running costs
On-site sanitation = emptying
Improved latrines with temporary
superstructure
550,000 54,000 – 100,000
As a % of average yearly income 11% 1 - 2%
As a % of below poverty line yearly
income
82% 8 - 15%
Improved latrines with permanent
superstructure
750,000 75,000
As a % of average yearly income 14% 1 – 1.7%
As a % of below poverty line yearly
income
112% 9 – 13.4%
Networked sanitation = monthly tariffs (2008/09)
Pipes extension 250,000 51,422
Connection charges 26,000
As a % of average yearly income 5% 1%
As a % of below poverty line yearly
income
41% 8%
Source: Compilation by WaterAid (2010) based on DAWASCO Accounting System and interviews.
The capital and running costs for on-site sanitation solutions have been estimated based on
interviews with local experts. Capital costs for networked sanitation comprises of pipes extension
costs and connection charges from DAWASCO and running costs, i.e. sewerage tariffs, were derived
from the total revenues billed from sewerage tariffs divided by the number of active sewerage
connections.
What microfinance products could be considered?
Microfinance products could be used in order to help spread investment costs over time,
thereby making them more affordable for households. As mentioned in Box 1, microfinance
products that could be considered include loans, savings and potentially, micro-insurance
products.
In other countries, such as Vietnam, Bangladesh and India, “toilet loans” are provided to
households as a way of spreading the cost of their investment over time. These can be
provided either combined with mandatory savings or in isolation. In Vietnam, for example, a
revolving fund helped poor households in peri-urban areas finance the construction of septic
tanks or sewerage connections. The programme, which combined savings and loans, was
initially started with support from international donors but then scaled up through the
Vietnam Bank for Social Policies (see Box 6 below).
8 SHARE has recently commissioned CCI to carry out a one-year research programme on the determinants of
demand for sanitation in Tanzania.
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