Don't forget the additional steps...
3. heavy rainfall causes flooding, overflow of latrine pit, contamination of drinking water supply
4. Cholera outbreak keeps latrine pit overflowing
Repeat step 4 until the population dies.
You also need enough land to dig the pits in. Your average shanty town hovel does not have a large backyard.
Millions of people are living in desperately overcrowded conditions, and your solution is tried, tested, and failed.
OTOH, I'm not sure turning toilets into an investment opportunity so the rich can extract more pennies from the poor will have an outstanding effect on the problem.