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Reaching the poor through a targeted subsidy pilot

iDE Cambodia has developed a market-based approach to household sanitation that has proven very effective in boosting rural latrine sales. By late 2015, latrine businesses supported by iDE successfully sold more than 180,000 latrines to rural Cambodians at market price.

Facilitating the sale of unsubsidized latrines helped iDE avoid many of the market-distorting effects associated with subsidy programs while selling 22% of their latrines to the poorest Cambodians. Yet iDE remains dedicated to penetrating the poorer segments even further through an innovative approach combining microfinance and smart subsidies, minimizing market distortion.

In November 2015, iDE launched its Targeted Subsidy Pilot in three districts in Kandal province. In collaboration with Amplify Markets and Causal Design, the program tests an innovative delivery mechanism for targeted subsidy through a micro-credit scheme.  Government-identified poor households are targeted through regular sales events and are able to purchase latrines at a discounted price. Instead of creating a standalone subsidy program, which can be inefficient and costly to administer, the pilot offers discounted latrines alongside market priced latrines with the option of financing for all approved purchasers.

The Targeted Subsidy Pilot leverages the existing iDE sales force, supply chain, and previously used micro-financing partner. Through this pilot, iDE hopes to build on best practices and develop a scalable strategy to serve the rural poor with smart subsidies and loans while ensuring long-term engagement of the private sector.