Why Do Some Latrine Business Owners Drop Out?
Even though it appears that the sanitation business is generally profitable, there have been a large number of ‘dropouts’. 191 of the 329 Latrine Business Owners (LBOs) engaged by iDE (58%) are no longer active. A significant portion of the currently inactive LBOs were quite successful. They had a good sales record and had become quite profitable before deciding to discontinue latrine sales.
Profit potential alone may not be a strong enough incentive to continue with the latrine business.
Qualitative research suggests possible reasons for this:
- Latrine sales are seasonal. In many cases, sales peak twice a year: after the Cambodian New Year in April and after harvest season (this varies depending on the region). Some LBOs are only interested in producing heavily at those times, focusing on other more profitable activities during the rest of the year.
- Some LBOs were supported through subsidized sales, usually through an NGO-run project, with sales guaranteed at a fixed (generally high) price. Once the subsidy project is over, LBOs find it difficult to turn a profit, which often leads to the discontinuation of sales to focus on other business activities.
- Some LBOs may have found other, possibly more sustainable sources of cash income (i.e. diversifying their portfolio with multi-season products/services). SMSU’s value to the LBOs is that latrine sales provided them with consistent, easy access to cash. Once LBOs find new sources of sustainable income, the value of continuing latrine sales begins to diminish.