Securing a conducive environment for WASH markets: the role of local government

Local governments play critical, yet under-recognized, roles in supporting or constraining the development of emerging water, sanitation, and hygiene (WASH) markets. The focus of market approaches to date has been primarily on small-scale businesses and social enterprises themselves, rather than on addressing the broader institutional environment. This study, drawing on experiences in Vietnam, Cambodia, and Indonesia, examined the political economy affecting support to WASH market actors, including the perspective and role of local governments. Semi-structured interviews were conducted with rural water supply enterprises and sanitation entrepreneurs, non-governmental organizations, and government officials. Qualitative analysis yielded key themes as regards political economy dynamics and identification of a breadth of pertinent roles for local governments. This study formed part of a larger research initiative funded through the Australian aid programme, focused on small-scale enterprise and led by the University of Technology Sydney. The findings demonstrate important local government roles, including: training and business development support to enterprises; linking demand and supply by promoting local enterprises; supporting associations of entrepreneurs; providing targeted subsidies or financing to catalyse private sector engagement or to facilitate access for the poor and disadvantaged; and setting and monitoring quality standards and accreditation of products and services. In particular, balancing an enabling or supporting role with the need to ensure appropriate regulatory functions are in place provided a point of tension (and sometimes confusion) for local governments. Key motivators driving local government engagement with enterprises included coverage targets. Various constraints limited their support, including lack of clarity on their role, availability of relevant skills, and perceptions that WASH market systems and private sector engagement should arise spontaneously. These findings inform gaps in development agency programming when it comes to WASH markets in terms of the need to work more strategically with local government actors, rather than solely directing efforts towards enterprises themselves. This study suggests a way forward in progressing more systemic interventions to support WASH markets in ways that facilitate local governments and related stakeholders to play more effective roles and achieve greater and more equitable development outcomes.