Business models for rural water sustainability Tim Foster, Institute for Sustainable Futures, University of Technology Sydney 29th November 2016

Growing interest in new business models for rural water service delivery...

… driven by concerns about the status quo

1. Data drawn national waterpoint inventories in Uganda, Liberia, Malawi, Benin, Mali, Eritrea, Mozambique, Burkina Faso, Sierra Leone, Tanzania and Zimbabwe

Can the SDG of universal access to safe drinking water by 2030 achieved with a business-as-usual approach?

77.6% 69.8%

0%10%20%30%40%50%60%70%80%90%

100%

Handpumps(n=265,228)

Standpipes &kiosks

(n=95,457)

Waterpoint functionality rate in 11 African countries1

0100200300400500600700800900

1,000

1990 1995 2000 2005 2010 2015 2020 2025 2030M

illio

ns

Access to improved water sources in rural Africa

Total population

Population with improved water source

Population with unimproved water source

Trajectory for universal access by 2030

4.7% (29m)

51.4% (316m)

0

10

20

30

40

50

60

1990 1995 2000 2005 2010 2015

%

Access to improved water sources in rural sub-Saharan Africa1

Piped on Premises Other improved

Water service delivery costs in rural sub-Saharan Africa likely exceed $1b per year, and will continue to grow

1. Data drawn from WHO/UNICEF Joint Monitoring Programme (2015). 2. Estimate from Macarthur (2014). This corresponds with number of users of boreholes & protected wells, as calculated from JMP country files. 3. Based on mid-points of annual O&M cost requirement of US $2-3 per person (WASHCost 2011, adjusted to 2014 values). 4. Calculated from JMP country files. 5. Based on mid-points of annual O&M cost requirement of US $2-12 per person (WASHCost 2011, adjusted to 2014 values).

184m handpump users2

• O&M costs:3 ~$485m p.a.

70m standpipe users4

• O&M costs:5 ~$490m p.a.

29m with piped connections

• O&M costs:5 ~$205m p.a.

Policies and plans widely assume that rural water users will cover the bulk of O&M costs

0

10

20

30

40

50

60

70

80

Tanzania Kenya Uganda Liberia SierraLeone

% rural waterpoints with revenue collection

Standpipes/kiosks Handpumps

But services often stuck in a vicious cycle of poor operational and financial performance

0 10 20 30 40 50 60 70 80 90

Liberia Zimbabwe

Lesotho Malawi Zambia

Mali South Africa Madagascar

Tanzania Nigeria

Weighted avg Kenya

Burkina Faso Uganda

Mozambique Ghana

Botswana Senegal

Benin Namibia

Cape Verde

% rural households paying for water (n=17,515)

8%

22%

13%

24%

10%

16%

34%

25%

43%

26%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Kenya Liberia Sierra Leone Tanzania Uganda

% non-functional rural waterpoints (n=183,149)

With revenue collection Without revenue collection

FundiFix maintenance

business, Kenya

Maintenance subscription scheme, Tanzania

Privately operated piped schemes, West Africa

Privately operated piped schemes, East Africa

Waterpoint maintenance subscription scheme, Turkana

Diversity of approaches and business models emerging across different regions and technologies

Handpump Mechanic Associations, Uganda

Privately operated metered handpumps, Uganda

Grundfos Lifelink, Kenya

Professionalising handpump mechanics,

Sierra Leone

Safe Water Stations, Ghana

FundiFix maintenance

business, Kenya

Maintenance subscription scheme, Tanzania

Privately operated piped schemes, West Africa

Privately operated piped schemes, East Africa

Maintenance subscription scheme, Turkana

Diversity of approaches and business models emerging across different regions and technologies

Handpump Mechanic Associations, Uganda

Privately operated of metered handpumps, Uganda

Grundfos Lifelink, Kenya

Professionalising handpump mechanics,

Sierra Leone

Safe Water Stations, Ghana

To what extent and under what conditions can emerging business models improve operational and

financial sustainability of rural water services?

• Sustainability of rural water supplies a major concern, driving a growing interest in service delivery innovation

– Annual O&M costs in rural Africa US$1 bn+

– Users expected to cover the bulk of this cost

– Services often stuck in a vicious cycle of poor operational and financial performance

• In response, new and diverse business models emerging

– To what extent can they improve operational and/or financial performance?

– Are water users always willing and able to pay the tariffs needed to cover the full cost of O&M and ensure financial viability? If not, how can services be supported to provide equitable and affordable access, and who will plug the revenue gap?

– How scalable and replicable are the different approaches, and under what conditions?

– Do business models encourage investment in system upgrades and expansions?

– How can these business models be catalysed, supported and regulated?

Summary