Beyond Aid: Strengthening Sanitation and Hygiene Markets Through Multi-Stakeholder Collaboration

By Erin McCusker – Senior Vice President, Leader, SATO and LIXIL Public Partners, LIXIL

The future of the water, sanitation, and hygiene (WASH) sector is at a crossroads. Earlier this year, significant funders in the WASH sector began cutting back on international aid. The United States’s USAID, one of the most significant donors with an annual investment of approximately US$1billion in WASH alone^[1], officially ceased all operations in July, impacting an entire ecosystem of active projects and local economies. However, the US was not the only international WASH donor with significant reductions in investment as the implications of the policy shift cascaded further to global bilateral and multilateral organisations. The United Kingdom’s Labour Government announced plans to cut its aid budget from 0.5 per cent of gross national income to 0.3 per cent^[2] – a shift that reduces its total aid budget by approximately £6 billion a year (US$8.13bn.) France cut its aid budget by €2.1billion^[3] (US$2.46bn;) Germany’s humanitarian aid budget was more than halved^[4] and Sweden pulled back on its development aid budget by approximately US$1bn^[5].

I will continue to underscore, in any forum I can, that basic safe access to water, and toilets and hygiene, is foundational. There is significant evidence on the cruciality of WASH in any economic or societal development – you simply cannot achieve national or societal priorities in health, education, or the economy without addressing the basic needs of water, sanitation, and hygiene^[6].

International aid was a vital catalyst that helped unlock and drive WASH progress over many decades, complementing government investment at a local level and creating platforms for more diverse investment from the private sector. And so now, as countries and markets adapt to be less reliant on international aid, we have a collective opportunity for new and stronger multi-stakeholder collaborations to thrive: partnerships between national and local governments and multilateral organisations, underpinned by private sector investments, designing and creating sustainable and affordable market-based approaches to sanitation and hygiene.

National governments must now lead by reaffirming the criticality of safe water, sanitation, and hygiene. To achieve national social, health, and economic priorities and drive toward our collective global goals, resources for WASH must be allocated and prioritised in national planning and budgets. To not do so, risks the ability to achieve any national priorities. Although previously thought of as a cost burden, unlocking the sanitation economy creates vastly more economic opportunity.

As Kevin Starr so clearly articulated, “We need a whole new approach toward helping governments achieve their ends in their way.”^[7] I would argue that market-based approaches and collaboration with the private sector to innovate solutions and models affordably achieve societal priorities.

Market-based approaches create a sustainable ecosystem complemented by public sector investment. Market-based approaches are no longer just one of the best ways to drive sanitation and hygiene progress – they are the way. Market-based models offer a more holistic approach to development, looking at the structural barriers in place to access sanitation and hygiene – whether that’s geographical accessibility, price, availability of skilled labour, regulatory hurdles, or a simple lack of awareness. Public and private sector partners work together to identify what is best aligned with their local needs, and to raise awareness of and demand for available sanitation and hygiene solutions delivered by reliable supply chains to unlock impact in communities. An investment in the sanitation economy creates jobs and employment opportunities and ultimately empowers individuals as economic consumers with choices rather than just as recipients of aid.

Institutions and community settings such as schools and healthcare facilities deserve particular attention. For example, national governments have a moral obligation as well as an economic imperative to drive access to education; however, a key barrier to school attendance and, ultimately, educational outcomes is access to sanitation and hygiene. Schoolchildren, particularly girls who may be experiencing their menstrual period for the first time, need a safe and dignified space to practice safe sanitation. Without it, the risk of absenteeism increases, creating significant negative social and economic effects for the next generation.

Entrepreneurship and economic development are a similar case in point. Market-based solutions help create an environment that provides opportunities for individuals to pursue careers in sanitation and hygiene, whether that be in sales and installation of sanitation products or the provision of sanitation and hygiene services such as pit emptying. In some markets across Asia and Africa, sanitation and hygiene can be a fantastic driver of social mobility. It brings new, skilled jobs to rural areas that don’t just create positive financial outcomes for individuals but also improve health for their families and communities.

To create such an environment requires national governments to help address structural barriers to market growth; multilateral businesses to work with local communities to build understanding and awareness; and the private sector to support entrepreneurs with a steady supply of products for them to grow their businesses or support with sanitation financing. Without ambitious entrepreneurs who want to be proactive in driving sales of sanitation and hygiene products, it is challenging to move past community reliance on aid.

Even before recent changes in the international aid landscape, the shift from project-based investments in WASH to sustainable, market-based models was already underway and gaining momentum. We need to keep this momentum and shift responsibility from international aid to national governments who look after the interests of their communities. Multi-lateral organisations can continue to raise awareness of the benefits of sanitation and hygiene, and ensure those most vulnerable are prioritised, while the private sector is commercially motivated to create innovative solutions, build supply chains, and help drive demand.

Some aid will always be needed. Market-based can’t solve every issue; some families will never be able to afford solutions regardless of how inexpensive. As priorities are set, support from multilateral organisations to support governments to ensure safe toilets, handwashing, and menstrual hygiene even to the most underserved of our communities will be needed.

Multi-stakeholder engagement in sanitation should be a priority for all because it matters for all. At LIXIL, we believe in market-based approaches to sanitation and hygiene and are ready to collaborate and partner to bring innovations and solutions into all communities. For more than a decade, SATO has played a pivotal role in creating and developing markets. We’ve partnered with governments and multilaterals to deliver impact at scale: impact that has seen thousands of entrepreneurs and SMEs empowered to sell our products while unlocking happier, healthier lives for more than 80 million people. We’ve further partnered with like-minded private sector companies such as with the Toilet Board Coalition: our collective efforts and engagement can truly unlock the sanitation economy.

Despite the aid cuts, LIXIL is not slowing down. We take a long-term view of the sector and believe that now, more than ever, there is an opportunity for multi-stakeholder engagement. We want governments and multilateral organisations to join us in strengthening market-based models. We already do this with our partners. For instance, we work with them on the ground in our markets to provide training and upskilling for local entrepreneurs. We also work with microfinance institutions to address the financial barriers to improving sanitation for consumers and entrepreneurs. This is supported by work from multilateral organisations who raise awareness of the benefits of sanitation and hygiene – and SATO – which helps create a fertile environment for entrepreneurs to flourish and markets to develop.

As we look beyond the uncertainty created by international aid cuts, national governments, multilaterals, and businesses must unite to create a new era of impact. LIXIL will be there, but we can’t address the challenges alone. Let’s start: in a market, on a specific challenge – we are here and ready to solve it together.

 

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[1] https://www.developmentaid.org/news-stream/post/189906/usaid-water-and-sanitation-programs
[2] https://www.chathamhouse.org/2025/03/first-usaid-closes-then-uk-cuts-aid-what-western-retreat-foreign-aid-could-mean
[3] https://www.lemonde.fr/en/opinion/article/2025/02/05/in-the-us-as-in-france-the-whole-philosophy-of-foreign-development-aid-is-under-threat_6737794_23.html
[4] https://www.devex.com/news/germany-plans-billions-in-cuts-to-development-humanitarian-aid-108259
[5] https://donortracker.org/policy_updates?policy=sweden-slashes-oda-budget-amid-domestic-priorities-2024
[6] McCusker, Erin. (2025 January 15) “Why are we still talking about toilets? Because we must.” Fast Company. https://www.fastcompany.com/91261572/why-are-we-still-talking-about-toilets-because-we-must
[7] Starr, Kevin. (21 May 2025) “Big Aid is Over” (SSIR) https://ssir.org/articles/entry/big-aid-is-over