The Operating Model That is Delivering Sustainable Sanitation in Ethiopia

This case study explores how SATO’s seeding supported IGA, the commercial arm of PSI Ethiopia to cultivate market growth and mitigate risk in the sanitation market. This provides an alternative model for sustainable sanitation access initiatives that have traditionally relied on international donor assistance.

Context

Between 2017 and 2023 PSI Ethiopia developed supply chains for affordable, high-quality sanitation products, including SATO solutions, across 63 woredas (districts). These efforts not only addressed sanitation needs but also nurtured a growing ecosystem of suppliers, distributors, and skilled sanitation workers.

This initiative covered about 5% of the country, and future phases were planned to increase geographic reach. However, the winding down of foreign assistance meant future projects were not implemented and leaving fledgling business networks without support. Recognising these risks, SATO and PSI Ethiopia, through its then newly established commercial arm IGA, formed a commercial partnership to build on previous progress and grow the national market. This transition aimed to establish a purely market-based model that could thrive without subsidized support.

Challenge

The shift to a commercial, self-sustaining market approach involved tackling multiple challenges:

Leveraging the networks built among business stakeholders and local governments to keep the supply chain in place and growing,
Expanding the availability of sanitation solutions to underserved regions, with limited existing infrastructure and product knowledge,
Maintaining demand, especially among rural, low-income groups who have low purchasing power and competing priorities
Addressing the high and import tax on plastic products (the material basis for SATO solutions), which increased prices and could make solutions unaffordable for target populations

Objectives

SATO and IGA’s strategic partnership covered several objectives:

Secure and grow the continuity of business operations by transitioning temporary and project-driven networks into commercial supply chains owned by local businesses
Scale-up market reach by expanding distribution from 5% national coverage to all 12 of Ethiopia’s regions, targeting previously unreached households and institutions.
Demonstrate that delivering sustainable sanitation access can be commercially viable without public or donor projects,
Maintain enabling policy environments and community demand through coordination with government and development organizations (such as UNICEF and its “Make A Splash!” partnership),
Feed innovation and maintain flexibility by leveraging market and consumer feedback to refine product offerings, pricing strategies, and marketing approaches while remaining adaptable to regulatory and policy changes.

Rollout

The collaboration implemented as follows:

An exclusive distribution agreement where IGA committed to being SATO’s sole commercial importer and nationwide distributor in Ethiopia for sanitation solutions, promising to purchase and resell at least 63,000 SATO units in the first year of operation
To jumpstart IGA’s operations, SATO provided an initial working capital of 32,000 SATO units, giving IGA the inventory and flexibility to supply both routine and bulk buyers.
IGA utilized the network of small businesses, including retailers and skilled masons engaged under the earlier project. IGA also leveraged logistics and commercial infrastructure to reach remote areas, using targeted promotions and bulk discounts to incentivize uptake in hard-to-reach locations.
The partnership focused on institutional clients such as schools, healthcare facilities, and churches to maximize product reach, commercial results, and to product viability in communities, along with demand driven by organizations such as UNICEF,
Data collection and customer feedback mechanisms were established to identify product gaps, service bottlenecks, and new market opportunities, including responding to rising demand for newer product variants.

Results

The SATO-IGA partnership exceeded its targets:

IGA distributed 94,000 units nationwide, surpassing its one-year target of 63,000 and demonstrating demand creation and a growing market.
Through this partnership, IGA achieved complete national coverage with expansion to all 12 of Ethiopia’s regions
The initial seeding encouraged IGA to diversify its offerings, introducing not only SATO’s standard Pans and Stools but also the new SATO Flex – responding to user and institutional feedback for varied sanitation needs.
An estimated 668,000 Ethiopians have been reached since the first year, with SATO ensuring their access to improved sanitation.
The partnership has maintained and grown a network of distributors, retailers, and masons who continue to serve a growing demand for sanitation and hygiene solutions

Learnings

The Ethiopia IGA-SATO case illuminates vital insights for sustainable social business in emerging markets:

Commercially driven models take over from project-driven approaches, where actors remain engaged and incentivized
Providing in-kind seeding support to IGA created trust and lowered the risk among distributors and government actors to continue working together and coordinating growth in supply and demand.
Positioning sanitation as both a social good and a stand-alone business fosters broad buy-in from public, private, and non-governmental stakeholders,
Responsive strategies that anticipate and address regulatory changes (such as import taxes through advocacy by PSI Ethiopia), shifting consumer preferences, and infrastructure limitations are keys to success.

"A meaningful partnership accelerates change, and together, we have the power to transform lives. Our partnership with SATO is a testament to this remarkable impact of partnership, which has provided over XXX sanitation products and touched the lives of more than one million Ethiopians so far, paving the way for better, affordable WASH access for households across the country."

Ruth Woldetensay, Acting Country Representative, PSI Ethiopia