The Sanitation Financing Pyramid
The primary concern facing all development programs is how projects can become sustainable, especially in light of dwindling foreign aid budgets from the donor end and, in the case of sanitation, low priority on the government end. Therefore, due to the limited funding, and presumably increasingly dwindling resources, it is important to make the best use of funds. The sanitation financing pyramid provides program funders with a general idea of how resources should be divided for sanitation programs. The base of the pyramid, “software subsidies for market development,” suggest that these subsidy types should form the foundation of sanitation programs. Without using software for demand and supply generating purposes, there would be no market to provide access to affordable options for sanitation. Furthermore, when software helps these options to become available, household resources are likely to be used to finance the purchase. The second level of available funding should be used to provide assistance to villagers that are capable of contributing some funds towards their own sanitation but would need financial assistance in the form of loans or credit schemes. Output based aid can also be applied here as cash transfer or grant to communities that declare open defecation free (ODF) status. Finally, targeted hardware subsidies, which are at the top of the pyramid because they should be applied on a limited basis, can help to support those at the bottom of the income pyramid who are often unable to contribute funds toward their household sanitation.
The application of this funding pyramid is context specific, i.e. dependent on the amount of resources the NGO, donor, or government has. However, this pyramid shows a figurative representation of how funding should be divided amongst different mechanisms to not only increase the sustainability of the program, but also sustainably use available funds. Ultimately, there are challenges that the sanitation sector will need to overcome in order to come close to meeting the sanitation MDG set for 2015, but to also successfully confront the global sanitation crisis.
