Ethiopia increased the availability of latrines notably, but the sanitation facilities rarely meet hygienic standards. Therefore, the market-based sanitation (MBS) programme has been implemented across the country for nearly a decade to expand the market and boost the demand for hygienic sanitation products and services. While it does not seem that the MBS would bring any notable change in sanitation conditions so far, its implementation challenges are not adequately understood. To address this gap, this article delves into the grassroots-level implementation of MBS in the Wolaita zone. The study relies on qualitative data gathered through interviews with various stakeholders, examining both demand- and supply-side challenges. Some issues identified were external to MBS implementation, such as high inflation and an unstable political and security situation in Ethiopia. Additionally, the study reveals that more general deficiencies of the Ethiopian health extension program, including the stress and discouragement of local change agents (health extension workers, health development army members) due to workloads and low remuneration, have adversely impacted MBS delivery. The implementation of MBS has also not effectively addressed the affordability of hygienic sanitation products. On the supply side, economic constraints and organizational inefficiencies have hindered the development of the sanitation market, preventing it from reaching a critical mass. Our research suggests that MBS alone will not suffice to improve sanitation in Ethiopia.