TheSustainableVillageWaterSystemsProgram(SVWSP)forTanzania

TheFranchiseModel

AbouttheSustainableVillageWaterSystemsProgram(SVWSP)Program

The Sustainable Village Water Systems Program (SVWSP) is a multi-faceted initiative aimed at

makingmeasureable,far-reachingprogresstowardwaterandfoodsecurityinTanzania.ItisledbyThe

Ohio State University (OSU) and the University of Dodoma in Tanzania (UDOM) and executed with

government, industry and NGO partners. The program consists of a group of interrelated efforts

designedtobothnurturesustainabledevelopmentintheenergyandwatersectorsinTanzaniaandto

developtheworkforcethatwillbeabletoturnwaterandenergyintobusiness,prosperity,healthand

wellness.

The centerpiece of the SVWSP is a national water point rehabilitation effort that focuses on

providingsustainableaccesstowater,sanitation,andrenewableenergyforruralvillages identifiedby

theTanzanianMinistryofWater.Giventhatoneofthemainfactorsinruralwatersystemfailureislack

ofcapacityformaintenanceandrepair,akeyelementtoensurethesustainabilityofthewatersystem

willbeafranchise-basedfor-profitbusinessmodel.Thenewlyestablishedfranchisesystemwillcreate

mechanismsand incentives to independentlymaintainwaterpointsandcreateneweconomicactivity

tiedtothecontinuedfunctioningofthewatersystem.Oncearehabilitatedwatersystemisinplace,a

community’s assets, institutions, and training networks can be utilized to create new jobs, support

additional infrastructure development in the community, and establish alternate revenue streams.

Designed into each system will be the capabilities to support one pilot economic activity for the

community, such as brick-making, mobile charging stations, aquaponics, livestock, or other forms of

high-value agriculture. The goal is not simply to provide clean water, but also spur economic

developmentthatcreatessignificantandsustainablechangeineachcommunity.

Apriority focusof theSVWSP is to stronglyengagewomen in their communities.Womenwill be

encouragedtobecomefranchise-ownersoroperators,trainersandengageintheeconomicactivitythat

resultsfromtheprogram.Sincewomenbeartheprimaryresponsibilityofgatheringwaterandwillreap

thegreatestbenefitfromtheVillageWaterSystem,theyarethebiggeststakeholdersinthesuccessof

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theproject.Encouragingparticipationfromwomenhasbeenkeytothesuccessofotherwaterprojects

inAfrica.

“The[HESAWA]waterprojectsarereducingwomen'sworkloads,distancetravelledandliberate

timeforwomenwhonowcanparticipate inotheractivities.Womenhavemadeasustainable

contribution to the program, mainly taking up roles based on the social division of labor.

However, this is changing as bothmen andwomen have equal access to training to become

villagehealthworkersandwaterpumpcaretakersonabasisofequalparticipation.”

-UNESCOreportonHESAWAprogram,Tanzania(UNESCO,n.d.)

The initialphaseof theSVWSPwill target125villagesandtownsacrossTanzania,primarily in the

northwestandcentral regionsof the country.Upon successful completionof thepilot, theTanzanian

government has committed to fund an additional 5,000water points. In addition, this initial 125-site

pilotwillallowforon-the-groundlessonslearnedtobeappliedtosubsequentsites.

AVillageWaterSystem–ASystemsApproach

EachVillageWaterSystemwillconsistofawell,asolar-poweredpump,watertank(s),watertaps,

and piping to distributed tap stands, as dictated by the population dispersion and the needs of the

modeleconomicactivitychosenbythatcommunity.Forlargercommunitiesandundercertainaquifer

conditions,additionalwellsandpumpswillbeconstructedasneeded.Thegoal is tohaveasourceof

waterwithin400metersofallhouseholds,wherefeasible,andcapacitytoprovide25litersperperson

per day for domestic needs, as stated in the Tanzania NationalWater Sector Development Strategy

(2008).AcoresetofengineeringdesignswillserveasthetemplateforeachVillageWaterSystem.This

design will be modified as necessary to account for local characteristics such as water table depth,

aquiferyieldandrechargerate,topography,populationconcentration,presenceoflivestock,andother

factors impacting thewater point such as existing infrastructure or sources of contamination.Where

possible,non-functioningwaterpointswillberehabilitated.Onacase-by-casebasis,anewwellmaybe

installedwhenitrepresentsthemostcost-effectiveandsustainableapproach.

“Improveaffordabilitybyrightsizing:designandbuildassetsthatareappropriateforsmall-scale

networks, so that cost-recovery prices can be kept as low as possible. Realistically assess

demand and adopt design, construction standards and procurement rules to align network

designwithit.”

–WorldBankcasestudyreview(SyandWarner,2014).

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The Village Water Systems will use a standardized set of core parts in order to decrease the

complexityofthedesign,thesupplychain,andtherepair/maintenancenetwork.Preferredvendorswill

beidentifiedthatcanreliablyprovidesparepartsincountry,withpartwarranties.

Theobjectivesofthepreferredvendorsystemare:

• to develop a reliable, long-term supply chain that can support a large, multi-year water point

rehabilitationprojectinTanzaniainvolvingupto5,000solarpumpsystems;

• to support standardization ofwater systemdesign, implementation, operations andmaintenance

within-countryrepaircapacity,sparepartswarehousingandlogistics;

• tosecurethelowestpossiblepricesforwatersystemcomponentsandconstructionmaterials;and

• tosecureMasterOrderingAgreementsto lock-in long-termprices,standardorderinganddelivery

arrangements,warrantyprovisions,repairtimes,andothercommitments.

Tanzanianmanufacturersandsupplierswillbeprioritizedwheneverpossible.MajiTechEngineeringhas

beenselectedastheSVWSPin-countryconstructionvendorandwillprocureconstructionmaterialsand

equipmentfromthepreferredvendors.Thecurrentlistofproposedvendorsis:

MaterialsList PreferredVendors

SolarWaterPumpingSystems•Electricmotors•Controllers•Sensorsanddatacommunication

•Lorentz•Grondfos•PEnA

SolarPanels

•Tata•PEnA•ReneSola•STGInternational

PVCCasing •Plasco•Kibico

Cement

•NdolaEngineeringWorks•CementDistributorsCo.•MbeyaCementCo.•TangaCementCo

WaterStorageTanks

•Kiboko•Silafrica•TriTank•PolyTank

TheVillageWaterSystemwillbedesignedtoalsosupportthepiloteconomicactivitythatischosen

byeachcommunity,e.g.brick-making,aquaponics,cell-phonechargingstations,enhancedagriculture.

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Forinstance,ifthecommunitydecidestogrowfruittrees,thenthewatersystemwillbesitedandsized

toprovidewaterforthisactivity.Theeconomicactivitychosenwillneedtofitwithintheconstraintsof

the soil conditions, climate, the yield and quality of the aquifer, and the community needs and

capabilities.

Sanitation facilities will also be constructed or rehabilitated in each village and supported by

activitiestopromotehealthyhygienepractices.

“Good sanitation and hygiene practices are essential to prevent contamination of water

resources. Therefore,water supplyand sanitationprojects andhygienepromotion shouldbe

viewedas interdependentactivities. Implementing themtogether leads to thegreatesthealth

benefitandisconsideredabestpracticeinthesector.”

-USAIDWaterSupplyandSanitationSectorGuidelines(TheCadmusGroupInc,2015).

Sanitation efforts will focus on providing improved sanitation to schools and health clinics, and

developingasupplychainforconstructionmaterialsandspareparts.

TheNeedforaFranchiseModel

Water points in rural Africa currently face a high failure rate (40% according to a 2015 Tanzania

WaterPointMappingexercise), inpartbecausecommunitiesarenotalwaysable tomanagethemon

their own. To accomplish the goal of developing a sustainable system, we are proposing the

implementation of a franchisemodel. The core philosophy behind the establishment of a franchise-

basedsystemforwaterdeliveryandmaintenanceisthatawaterpointismorelikelytobesustainableif

individualshaveavestedeconomicinterestinthecontinualflowofwater.

“Avibrantanddiverselocalprivatesectoriscriticaltothedeliveryof[water]services,asa

largebodyofresearchconductedoverthepastdecadeshows.”

-WorldBankreport,(SyandWarner,2014).

AspointedoutinaWaterforPeopleliteraturereview(Foster,2012,p.20),amarket-basedapproach

aligns commercial incentiveswith sustainability objectives. The SVWSPmodel creates incentives and

controls to unlock these freemarket advantageswhile protecting the basic right of a community to

cleanwateraccess. Webelievethismodelcaneffectivelyaddressseveralexistingproblemsthatcan

preventlong-termsustainabilityofwaterprojects:

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• Lack of financial resources: the proposed franchise system establishes controls,metrics, and

incentivesthataddresstheunderlyingissuesthatleadtoalackofsustainability.

“[Thisstudy]didnotfindanyevidenceatthevillagelevelthatfindingpartswasamajor

problem;thebottleneckisfindingthefundstopayforthem.”

–WaterAidTanzaniareport,(Moon,2006).

“Theclearestresultfromthestudyisthatitispoorfinancialmanagementthatis

underminingsustainabilityintheareastudied.”

-WaterAidTanzaniareport,(Haysom,2006).

• Lackof knowledgeand institutional capacity: pre-installation andongoing training aswell as

written service contractswill equip the community and franchisepartnerswith thenecessary

skillsandstructuretoindependentlymanageVillageWaterSystems.

“[An]importantaspectistheneedforcapacitybuildingandinstitutionalstrengthening…

capacityofinstitutionsmustbeconsiderediftheyaretobeabletofulfillthenecessary

supportroleeffectively,andappropriateinstitutionalstrengtheningmayberequiredat

variousstages.”

-RuralWaterSupplyinAfrica,(HarveyandReed,2004).

• Lack of access to service and parts: the components of the Village Water Systems will be

standardized and the franchisees will maintain a supply of commonly needed parts and be

professionally trained to do preventativemaintenance andminor repairs. The franchisorwill

committotrainingmechanics,maintainingasupplychainforpartsdistribution,andperforming

major repairs. The burden on the community therefore will be reduced by having service

deliveryprovidedbyprofessionallystaffedorganizationswithqualifiedandcertifiedtechnicians

(Carter,2012).

“StandardizationofTechnologies.Thewidedispersionoftechnologiesposescostsinterms

ofavailabilityofsparepartsandthelocalknowledgetodealwiththedifferenttechnologies.

Standardizingtechnologiesandsettingminimumstandards,suchashandpumpsmay

reducethecostofsparepartswhereaseconomiesofscalemayalsohaveapositiveimpact

onthepriceofsuchtechnologies.”

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-WorldBankPublicExpenditureReviewoftheWaterSector,Tanzania,(vanden

Berg,etal.,2009).

TheSVWSPFranchiseModel

Afranchisesystemisoneinwhichaparty(thefranchisee)paysanotherparty(thefranchisor)afee

to license the right to proprietary knowledge, products, processes, or trademarks in order to sell a

product or service under the franchisor’s name. A franchise system provides benefits of scale and

consistent branding at the franchisor level, while enabling local entrepreneurs to implement the

business model at the community level. A franchise system helps implement a brand promise and

standardofqualitythroughoutthesystem,whichconsumerscanrelyon.Thefranchisorestablishesthe

franchisesystemandbrandstandards,provides thenecessary intellectualproperty, systems, logistics,

and traininganddevelopmentwhile the franchiseemanagesday-to-dayoperations. Franchised-based

models in theWASH (water, sanitationandhygiene) sectorarenotnewto thedevelopingworld.For

example, Sarvajal runs a franchised water kiosk system in mid-sized villages in India. Sanergy has

developed a franchised brand of fee-for-use toilets in urban Kenya. Jibu sells bottled purified water

through franchisee kiosks in urban areas of Rwanda and Uganda. Water Health International (WHI)

builds and operates branded clean water centers in India, Bangladesh, Philippines, and Ghana that

exhibitsomeaspectsofafranchisemodel.

Franchisee

Franchisor

Franchisee Franchisee

Franchisee

Figure1:FranchiseSystemDesign

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Inourmodel, therewill likelybeoneor two franchisors responsible forallVillageWaterSystems

installed inTanzania. AsshowninFigure1,thefranchisorwillpartnerwithmanyfranchisees,eachof

whomwillmanageeitheroneVillageWaterSystemoraclusterofthem.Severalpartiesareinvolvedin

theproposedfranchisemodel,whichcreateschecksandbalanceswithinthesystem.Thishelpsmitigate

the risk of fraudulent behavior and decreases the need for outside intervention to ensure ongoing

sustainability.

“Theserviceprovider,regulator,userandassetholderhaveimportantlydifferentinterestswith

respecttoawatersupply.Wheretheserolesareeachperformedbydifferentmembersofthe

village,stakeholders,intheirrespectivecapacity,canpursuetheinterestsoftheirpositionfree

ofinternalconflict,therebybetterfulfillingtherequirementsofthatrole.”

-WaterAidTanzania,(Haysom,2006)

The detailed roles and responsibilities of each party in the model and the reporting structure are

providedintheAppendices,butinshort,theresponsibilitiesofthekeyrolesareasfollows:

• Franchisor:anewlycreatedentity,backedbyanin-countrymanagementteamwithextensive

businessexperience.Thefranchisorisprimarilyinthebusinessofsupportingthefranchisees

andtheirnumberonepriorityisthesuccessofthelocalfranchisees.Thefranchisoris

responsibleforidentifyingandrecruitingfranchiseesaswellasprovidingthetraining,

marketing,andfieldsupportnecessaryforthefranchiseestobesuccessful.Theywillalso

maintainasupplychainbyworkingwiththepreferredvendorstoorderreplacementpartsand

distributethemtothefranchisees.Thiswilllikelybeimplementedwithseveralpartsdepots

strategicallylocatedthroughoutthecountrywhichstockthehighercost,longerleadtimeparts.

Thefranchisorwillalsoemployanetworkoflocalareamechanicstoconductmajorrepairson

thewaterpointsandacadreoffieldsupportconsultantswhowillprovidebusinesssupportto

thefranchisees.

• Franchisee:anewlycreatedsmallbusinesswhoisprimarilyinthebusinessofdeliveringtheend

producttoconsumers.Theyareresponsiblefortheday-to-daymanagementofthewater

points.Tasksrequiredtofulfillthisroleincludecollectionofuserfees,employingandmanaging

attendantsandsecuritypersonnel,keepingfinancialrecords,conductinglocalmarketingefforts,

completingminorrepairwork,maintainingtheequipmentandsiteincleanworkingorder,and

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cultivatingrelationshipswiththelocalCOWSO.Thefranchiseewillalsohaveasupplyoflower-

cost/high-usepartsandsupplieson-hand.

• CommunityOwnedWaterSupplyOrganization(COWSO):acommunity-basedorganization

thatrepresentsownershipofthephysicalassetsandwhosemainpurposeistorepresentthe

community’sinterestsandperformalocaloversightroleovertheperformanceofthefranchisor

andfranchisee.InmanycommunitiesaformofCOWSOalreadyexistsatthevillagelevel,so

thesenewresponsibilitiescanbeincludedwiththoseoftheexistingorganization.

AstandardFranchiseAgreementwillbedevelopedwhichisacontractbetweenthefranchiseeand

franchisorandgovernstherelationshipbetweenthem.Thisdocumentwillprovidetheguardrailstothe

franchiseeforrunningtheoperationandhighlightthesupportprovidedbythefranchisor.Inaddition,a

WaterServicesAgreement(WSA),developedforeachVillageWaterSystem,willcodifytheSVWSP

franchisesystem.TheWSAwillbethelegalbasisforoperatingthewaterpointandwillprovidea

transparentrelationshipbetweenthecommunityandthefranchisepartners.Inthisway,the

community’srighttowaterwillberespectedandfinancialincentivestoprovidethiswaterwillbe

createdforthefranchisepartners.

Pre-InstallationActivity

BeforeaVillageWaterSystemisinstalled,asiteassessmentwillbeconductedtolearnmoreabout

theexistinghardware(infrastructureandwaterassets)andsoftware(humanandinstitutionalcapacity).

The site assessments will review in-place infrastructure, engineering constraints, existence and

capabilitiesofcommunityorganizations(COWSOs),currentwatermanagementstructures,andexisting

sources / uses of water. In addition, the local presence of NGOswill be surveyedwith the intent of

leveragingtheirknowledgeofthecommunity,particularlywithregardtoareasofgreatestopportunity

for economic development, and to develop a partnership throughwhich the community can receive

support and training as described below. The community will also be consulted to determine which

modeleconomicactivitywillbesupportedbytheproposedwatersystem.Theseassessmentswillhelp

determine the level of investment needed to rehabilitate the existing water point and whether

additionalboreholeswillbeneededtoadequatelyprovidethecommunitywithenoughwaterforboth

domestic and enhanced economic uses. The assessmentswill also help start the process of building

communitysupportandbuy-infortheVillageWaterSystemandtheaccompanyingfranchisemodelthat

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willhelpassurethesustainabilityofthewaterandtheeconomicdevelopment.Todate,45siteshave

alreadybeenassessed.

Aftertheassessment,butstillpriortoinstallingaVillageWaterSystem,trainingwillbeconductedin

order to increase the human and institutional capacity within the community. This approach follows

best practices in the development field as noted in USAID Water Supply and Sanitation Sector

Guidelines: “Also important are educational and participatory efforts to encourage sustainable

behavioralpractices”(TheCadmusGroupInc.,2015).

Itwillbe importanttoconductatransparentprocess indevelopingtheWaterServicesAgreement

sothatthecommunityfullyunderstandsthecostsandbenefitsthatthefranchisesystemwillcreate.A

respectedpartywhothecommunityviewsasindependentorimpartialshouldbeinvolved,sinceaspects

ofwaterpointmanagementand feecollectionwillbe takenoutof thecommunity’scontrolandgiven

over to a private operator. This role may be filled by a local NGO that is active in the area or a

communityleader.Thegoalofthisprocessistoinvolvethecommunityinordertogaintheirbuy-inand

createasenseofownershipovertheprocessandsubsequentoutcomes.

Another importantpre-installationactivitywill be improving the community’s knowledgeof clean

water, sanitation, and associated health outcomes. A case study review by Hystra found that social

marketingtotheeconomicallydisadvantagedshouldbeagrowingemphasisofsocialentrepreneurship

in order to increase penetration and create lasting change (de Carvalho, et al., 2011). These initial

effortswill likely beNGO-led, though contracted by the franchisor, andwill focus on general health,

hygiene,andsanitationtrainingforthecommunityatlarge,withanemphasisoninvolvinglocalwomen

astrainers.Thecoreideaistocreateanetworkeffectthroughinvolvementofthewomeninthelocal

community, thereby changing the perceptions and practices for the next generation. Community

members will learn best practices for hygiene and sanitation. Subsequent social marketing efforts

emphasizingthehealthandeconomicbenefitsofcleanwaterwillbecarriedoutbythe franchisee (in

conjunctionwiththefranchisor)tostimulatedemandfortheservice.

MembersoftheCOWSOwillneedtobetrainedtofulfilltheirfinancialmanagement,reporting,and

oversight roles specific to the franchise system. Even in communities where COWSOs already exist,

training will be provided to ensure sufficient capabilities exist and to enable a smoothmanagement

transitiontothenewfranchisesystem.Thiswilllikelyneedtobeledbyanindependentparty,suchasa

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localNGO,inordertoavoidanyperceptionsofaconflictofinterestbetweenthefranchisepartnersand

thisoversightrole.

SelectionandTrainingofFranchisees

Recruitmentandselectionoffranchiseeswillbecrucialtothesuccessofthefranchisesystem.Alist

ofqualificationswill bedevelopedbasedon the requirementsof the franchisee role. Identifying local

womencapableoffulfillingthisrolewillbeapriorityoftherecruitmentandselectionprocess.Insome

locations it might be difficult to find someone whomeets all qualifications. This will likely require a

higherlevelofinvolvementfromthefranchisortoensuresuccessofthelocalfranchise.Ataminimum,

localfranchiseeswillneedtobehighlymotivated,well-respectedinthecommunity,andhavethedesire

and capacity to learn how to run a small business as opposed to simply being an employee of the

franchisor.

Whilerecruitmenteffortsof local franchiseeswill focuson identifyingpeoplecapableoffillingthe

role,on-boardtrainingwillstillneedtobeconductedtoensuretheyareequippedwiththenecessary

skillstorunthefranchise.Thistrainingwillhelpdevelopgeneralbusinessskills,includingaccountingand

financialmanagement,aswellasskillsspecifictooperatingandmaintainingtheVillageWaterSystem.

Additionally, responsibility for ongoing social marketing of clean water will fall in-part to the local

franchisee.Upfronttrainingforfranchiseeswillbeprovidedbythefranchisor.However,thistrainingwill

notbesufficientformostfranchiseestoreachtheirfullpotential.Ongoingoperationalsupportwillalso

need to be provided to help the franchisees learn frombest practices and continue to improve their

profitability. Therefore the franchisor will employ Field Support Consultants who will help the

franchiseesonanongoingbasis(theirroleisdescribedinthenextsection).

FranchisorWorkforceDevelopment

Thefranchisorwilltrainandemployanetworkoffull-timelocalareamechanics.Eachmechanicwill

beresponsibleforaclusterofvillages,withthenumberbasedonrequiredmaintenanceschedulesand

routeoptimization.Thefranchisorwillberesponsiblefortrainingandcertifyingthemechanicsthrough

an education program conducted by UDOM or the franchisor. This training program will provide a

standardizedcertificate that lendscredibility to theskillsof themechanicsandactsasaguarantee to

the quality of the support system for the water pumps. In addition to knowledge transfer and the

creationofjobs,thiswillalsoaddresstheneedforskilledlaborthatpreventsmanypumpsfrombeing

repaired.

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Thefranchisorwillalsotrainandemployanetworkoffieldsupportconsultants.Thisfieldstaffwill

actasthedirectcommunicationlinebetweenthefranchisorandthefranchisees.Theirprimarygoalisto

helpthefranchiseebeasprofitableaspossible,whileoperatingwithinthetermsoftheWaterServices

Agreementandthefranchiseagreement.Itisimportanttonotethatthisroleisnotintendedtobethe

franchisee’ssupervisororboss,butratheraconsultantwhoisanemployeeofthefranchisorandableto

provide support to the franchisees. The field support consultant will provide business consulting on

costs, staffing,marketing, and record keepingwith the end goal of improving the profitability of the

franchisee. They will also ensure that brand standards aremaintained at the local level and identify

problemsatafranchiseelevelbeforetheyleadtonon-performanceordefault.Fieldsupportconsultants

willneedtobehighlyeducatedindividualswhohavegreatinterpersonalskillsandarewillingtotravel

throughouttheirregiontovisiteachsiteonaregularbasis.

FranchiseSystemFinancialFlows

Figure2showsthefinancialflowsintheFranchiseModel. Theflowoffundsneedtobedesigned

with3keyideasinmind:

• IncentivesneedtobedesignedtoencourageallpartiestokeeptheVillageWaterSystemupand

runningandformaintenanceissuestobeaddressedquickly.

• Checksandbalancesneedtobeinplacesothatthecommunityisconfidentthateachpartyis

actingintheirbestinterest.

• Financial resourceshave tobeavailablewhenmajor repairsare requiredso thatdowntime is

minimized.

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Prior to the commencement of operations, the franchisor and franchisee will each submit a

refundable deposit into a Waterpoint Account for each Village Water System for which they have

enteredintoaWSA(theFranchisorBondandFranchiseeBond,respectively).Thesebondswillserveasa

guaranteefortheperformanceofthefranchiseeandfranchisor,andwillbeusedtocoverexpensesor

lossofrevenuecausedbythenon-performanceofcertainobligationsbyeitherparty.

In thenormalcourseofoperations, funds fromusertariffswillbecollectedbythefranchiseeand

distributedtothefranchisorandthecommunity’swaterfund,asfollows:

• Onadailybasis,anemployeeofthefranchiseecollectsusertariffsatthepointofsale.

• Onamonthlybasis, thefranchiseewilldeposita fixedamount (theMonthlyDeposit) intothe

communitywaterpoint’sbankaccount(theWaterpointAccount).TheMonthlyDepositamount

willbesetintheWSAandwillbesizedinordertocoveranticipatedmajorrepairs.Additionally,

over the long run, the cumulative amount could be useful for absorbing fluctuating revenue

flowsandotherseasonalityinthesystem.

• Onamonthlybasis,thefranchiseewillalsoremittheFranchiseFeetothefranchisor(TBDfixed

/%/mix).

• Revenuescollected inexcessof theMonthlyDepositandtheFranchiseFeeare for theuseof

thefranchiseetopayexpensesandretainasprofit.

UserWaterTariff

Franchisee

Franchisor

WaterpointAccount

FranchiseeAccount

Users

CreditProvider

WaterTariffs

MonthlyDeposit

FranchiseFee

Excessfunds

Loan P&IPaymentfor

Parts

FlowoffundsWatertariffscollectedbyfranchiseeareappliedinfollowingorder:1. Attendantandsecuritysalaries2. MonthlyDeposit3. FranchiseFee4. Excess(ifany)foruseat

franchiseediscretion

=Franchisepartners

=Associatedthirdparties

=Bankaccounts

=Ongoingfundsflow

=Asneededfundsflow

COWSO

FinancialOversightRole

Figure2:FlowofFunds

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Thistariffwillbebasedonaperliterrate,asagreeduponwiththecommunityintheWaterServices

Agreement. AWaterAid Tanzania report found this approach towork in the field: “Onepractice that

seemed to improve revenue collection in Dodoma was payment per bucket, as opposed to ad hoc,

annualormonthlycontributions.Thisisduetothefactthatthepaymentmethodisinescapable,simple

andtransparent”(Haysom,2006).Appendix3outlinesalternativetariffstructuresandidentifiessome

oftheadvantagesanddisadvantagesofeach.

Payment formsunderconsiderationarecash,mobilepayment services,prepaidwatercards /

tokens,orbartering inpastoral areas.Cashhas thebenefitofuniversal accessandeaseofusebut is

easytomisappropriate.Mobilepaymentservicesaremoresecureandtransparentbutrequiretheuser

toownamobilephoneandhavecellular serviceat the timeofpayment.Prepaidcards / tokensalso

reducethelikelihoodoftheftbutaddalayerofcomplexityandexpensetothesystem.Mobilemoney

services such as M-Pesa also incur fees for the user and the franchise partners, and only 35% of

Tanzanian households have an account (Economides and Jeziorski, 2015). To the extent that a low

burden/costprepaidcardsystemcanbeimplemented,thisislikelythebestformofpaymenttoensure

universalaccessaswellastransparencyandfinancialcontrol.Sarvajalusesaprepaidcardasacashless

pointofsalepaymentsystemutilizingcloud-basedRFID(radiofrequencyidentification)-enabledwater

vending machines in each of the villages. A realistic approach will likely combine a prepaid card or

mobiletechnologywhileretainingtheabilityforconsumerstopaycashonsiteintheshorttermwhile

migrating to a technology-based transfer for long term sustainability. The paymentwill also need to

accommodateoptionsfornon-cashpayment,forinstancepayingwithlivestock,cropsorbarteringother

services.

Oncethesystemisin-place,themodelcanbeadjustedtocreatetieredpricingbasedonserviceand

consumptionneeds.Forinstance,adeliverysystemcanbesetuptodeliverwatertoahouseholdforan

added fee, thereby freeing time for the woman of the household to pursue alternate employment

opportunities or engage in educational activities. Additionally, depending on the purchase pattern

duringtheday,differentiatedpricingmodelscanbeusedasawaytospreadthedemandevenlyacross

thedayforbetterutilizationandtosuittheconvenienceneedsofthecustomer.Forexample,watercan

bechargedatapremiumduringtherushhourssuchasmorningoreveningtimewhilealowerratecan

beappliedduringtheafternoon.Inadditiontoincreasingtheprofitabilityofthemodel,thisopportunity

also provides an option for low-income households to have access to clean water by leveraging the

differentiatedpricingwithslightmodificationsintheirneeds.

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RepairsandMaintenance

Repair and maintenance responsibilities for the VillageWater Systems will be split between the

franchiseeand the franchisor. The franchiseewill be responsible forminor repairsandmaintenance,

whichincludeskeepingallabove-groundinfrastructureingoodworkingorder.Theywillbesupportedin

thisrolebytrainingprovidedbythefranchisor,aswellasoperationalhandbooksinEnglish,Swahili,and

pictorialformat.Thefranchiseewillkeepastockofroutineparts(listTBD)sothatthereisnodelayin

addressingroutinemaintenanceissues.Thefranchiseewillalsohaveatechnicalsupportnumbertocall

(staffedbythefranchisor)iftheyhaveanyquestions.

The franchisor will be responsible for conducting site inspections on a regular basis, completing

moresignificantrepairstotheelectricalsystemsorin-groundpumpingsystems,andmaintainingaparts

supply chain.Asnotedabove, there shouldbe regional parts/supplydepots to facilitate rapid access.

Thefranchisorwillemployanetworkof localareamechanicswhowillvisiteachVillageWaterSystem

on a regular schedule in order to inspect the condition of the infrastructure and perform scheduled

preventativemaintenance. These routinemaintenance visitswill keep thewarranty agreementswith

thepreferredvendorsingoodstandingandwillhelptoreducetheoverallrepairandmaintenancecosts

associatedwith theequipment.Themechanicswill alsovisit villages,asneededat the requestof the

franchisee,tocompleterepairsbeyondtheexpertiseofthefranchisee.

The franchisor will also manage a supply chain of parts and components. To standardize all the

maintenance/repairparts in thesystem, the franchisorwillorderparts froma listofvettedpreferred

vendors, as described above. The supply chain will be designed so that major components can be

deliveredto thecommunityandthemechaniccanmakeanynecessary repairswithin96hours (note:

this number might be modified as the on-the-ground details of the supply chain and transportation

networkaredetermined).An inventoryofminorparts suchasgaskets, tap spouts, andpipingwill be

keptonhandbythefranchiseeandre-orderedinbatchesfromthefranchisor.

Allpartswillbepurchasedbythefranchiseethroughthefranchisorinordertotakeadvantagesof

purchasingeconomieswithpreferredvendersand tomaintainanacceptable standardofqualitywith

replacement parts. The labor of the local area mechanics will be provided to the franchisee by the

franchisor as part of the Franchise Fee. No additional payment will be required for their routine

inspections or one-off maintenance visits. It is important to create a fee structure that does not

discourageafranchiseefromsolicitingtheservicesofthetrainedmechanicswhennecessary.However,

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theremayneedtobe limitsplacedonthenumberoffreeon-demandmechanicvisitssothattheydo

notbecomeoverburdenedwithunnecessaryrequestsbythefranchisees.

FinancingforWaterVillageSystemRepairs

Whenmajorrepairsarenecessary,fundswillbewithdrawnfromtheWaterPointAccountandpaid

tothefranchisorfornecessarypartsandlabor.TheCOWSO,franchisee,andfranchisormustallapprove

disbursementsfromtheWaterPointAccount.Thismulti-partysign-offaddsaccountabilityandwillhelp

prevent siphoningof funds forpurposesother than repairing the infrastructure. If funds in theWater

Point Account are insufficient to cover the cost of necessary parts, a third party credit provider will

guaranteetoarrangefinancingtocoverthecostofthereplacementparts.Thetermsofcreditextended

totheWaterPointAccountwillbeestablishedaspartoftheWSAinordertoavoidrepairdelaysasa

resultof arrangingornegotiating financing terms.The thirdparty creditproviderwill beable topool

waterpointloansacrosstheentirefranchisesysteminordertomitigateriskfromanysinglesite.Loan

repaymentswill bemade frommonthly disbursements from theWater PointAccount, not to exceed

50%oftheMonthlyDeposit(toensurefundsintheWaterPointAccountcontinuetobuildwhileloans

areoutstanding).

Analternativesourceoffinancingcouldbederivedthroughchargingaper-welllicensefeefromthe

franchisees, which would be pooled across water points. These funds would be used to provide

financingtorepairwaterpointsiffundsfromtheWaterPointAccountareinsufficient(conceptderived

fromFoster,2012).

BrandingandMarketing

Thefranchisesystemwillbepresentedasasinglebrandacrosstheentiresystem.Utilizingasingle

brandingimagewillaidinmarketingeffortsthattoutthequalityofthewaterandthebenefitsofpaying

forcleanwaterfromthefranchiseasopposedtousingfreeunimprovedwatersources.

Thebrandingwillstandforquality,reliability,andaffordability.Qualityisdeliveredtotheconsumer

byhavinghighstandardsforcleanliness,clarity,andtaste.Reliabilitywillbedeliveredbywaterflowing

every day of the week withminimal downtimes for repairs. Affordability does notmean free, but a

reasonablerateenabledbytheefficientdeliveryofwatercreatedbytheSVWSPfranchisesystem.

16

PerformanceIncentives

“The introduction of a private operator (PO) also served to dramatically improve revenue

collection….Flat-ratecontributionsandapunitivebondarehighlightedasimportantelements

oftheprivateoperator’scontract.”

-WaterAidTanzaniareport,(Haysom,2006).

Paymentstothefranchiseeandfranchisorwithinthefranchisesystemaredesignedtoincentivizeall

parties tokeeptheVillageWaterSystems ingoodworkingorder.Byrequiringa fixedpaymenttothe

WaterPointAccountregardlessofcollections,profitforthefranchisepartners isdependentonahigh

level of performance. In addition, non-performance can lead to a deduction from the franchisee and

FranchisorBondsandalossofinvestmentforthefranchisepartners.

Boththe franchiseeand franchisorwillhaveadditionalperformance incentivesandpenaltiesbuilt

intotheWSA,basedonimportantperformancemetrics.HarveyandReedcitethesetypesofclausesas

importantforprivateoperatorarrangements:“Contractswithprivatecontractorsshouldbedevisedto

ensureservicequalitystandardsandtopermittheenforcementoffinesorpenaltiesforfailuretomeet

standards”(HarveyandReed,2004).

Incentive1:Akeytowatersystemsustainabilityisahighlevelofservice.Inordertofurtherincentivize

thefranchisortoactswiftlyandcomprehensivelyinthecaseofanoutage,apenaltymechanismwillbe

putinplaceasfollows:

• Afterareportedoutage,thefranchisorwillhavea96hourgraceperiodtorestoreservice(may

vary depending on the severity of the issue). After this grace period, the franchisor will be

required to deposit, into theWater PointAccount, the daily-proratedportionof theMonthly

Deposituntilserviceisrestored.

• Thefranchisorandfranchiseewillbeheldaccountableforthenumberofoperationaldaysper

month.Additionalpenaltieswillbeputinplaceifwaterisnotavailabletotheend-consumers

formorethan6dayspermonth(the6-daybufferperiodiscontingentonthefeedbackfromthe

pilotstudypertainingtothewaterpointlocationsandrealisticresponsivenessofthein-country

supplychain).

17

Thesepenaltieswill both incentivize the franchisor to restore service in a timelymanner andwill

helpmaintain long-term financial sustainability of the VillageWater System by depositing additional

fundsintotheWaterPointAccount.

Incentive2:Twonecessarycontributorsto financialsustainabilityofeachVillageWaterSystemare(i)

consistentcollectionoftariffsand(ii)depositofthesecollectionsintoasecureaccount.

• Abenchmarktariffcollectionpercentage(actualrevenuedividedbyrevenuebasedonmetered

flow)willbesetforthefranchiseetoachieve.Iffranchiseerevenueisbelowthisbenchmark,the

franchisee will be required to fund the deficit from their share of excess proceeds to make

wholetheMonthlyDepositandFranchiseFeepayments.

While there is a concern that a private operator would siphon off funds for themselves, a 2006

WaterAidTanzaniastudyfoundthatprivateoperatorsaremuchmorelikelytoprovidegreaterefficiency

infundcollectionsthanautonomouswater-committeemanagedsites(WaterAidTZ,Moon).

MitigatingtheRiskstotheSustainabilityoftheSystem

Aswithanylarge-scaleandinnovativeproject,thereareseveralriskstothelong-termsustainability

ofthisbusinessmodel.Wehavetriedtopredictthepotentialissuesandbuildmechanismstomitigate

theserisks.

Inadequateyield fromthewaterpoint tomeetdemand –Thewater flowmightnotbe sufficient to

meetdemand,decreaseovertime,and/orthewaterqualitymaybecomeunacceptable.

• Pre-construction site assessments will be conducted to determine population, demand and

aquifer yield estimates in order to properly size and locate thewater systems.Water quality

testing will also be conducted to verify that the water meets acceptable standards for

consumption.

• Monitoringsystemswillbeput inplacetoregularlyassesstheflowofwater inandoutofthe

borehole,sothatthefranchiseeandfranchisorcangetregularinformationontheperformance

ofthewellandcanproactivelyforeseeissues,forexampletheaquiferdrying-uportheborehole

siltingup.Inaddition,atechnicianhiredbythefranchisorwillregularlyvisiteachwaterpointto

assesstheflowandqualityofthewater.Thiswillhelpproactivelyaddressany issueswiththe

siteandanticipatetheneedfornewdrillingbeforeitarises.

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Insufficientdemandfromthecommunityatthegivenprice -Somecommunitiesmaybereluctantto

pay forwater,particularly if theyhavereceived it for free in thepast. Inaddition,notallcommunity

memberswillbeabletopayorfeelthatthewaterisworthspendingpreciousresourceson.

• Severalactivitieswillhelpstimulatedemand:

o During the pre-installation phase of the project, NGO partners will be contracted to

conductcommunityeducationandawarenessprogramsaroundthebenefitsofcleanwater

(asopposedtopreviouslyaccessed“free”butillness-causingwatersources).

o Onanongoingbasis,NGOpartnerswillprovidesanitationandhygienetrainingtoensure

that good practices reinforce the health benefits of clean water. Alternately, after the

initial trainingby theNGOs, localwomen in thecommunitycanbeemployed tobecome

thechampionintheircircles,spearheadingongoingawarenesseffortsandmotivatingthe

localcommunityforchange.

o ThetariffratewillbeagreeduponinadvanceintheWSAsothatallpartiesareawareand

issuesofinequitycanbeaddressedpriortoinstallation.

o Consistentbrandingacrossthefranchisesystemwillbuildtrustinthequalityandreliability

ofthewaterservicesprovided.

o The systems approach to SVWSP includes creating economic opportunities for people in

thecommunitybycreatingnewbusinessactivities. Thegoal isfortheseopportunitiesto

improvehouseholdincomes,makingiteasiertospendmoneyonwater.

• Atiered-pricingmodelcanbeusedsothattheprice is lowestat thewaterpoint location,but

consumerscanchoosetopaymoretohavethewaterdelivered.Waterrequiredforeconomic

activitieswill alsobechargedatahigherprice.Thismodel takes intoaccounta formofprice

subsidizationtocreatelow-costoptionsforconsumers.

Misappropriationofrevenue,eitherviauncollectedfeesortheftoffees

• Sensorswill be installed in each system tomonitor the amount ofwater pumped,which can

then be compared to the revenue collected in order to enforce the franchisee’s benchmark

collectionspercentagerequirement.

• MonthlyreportsfromtheCOWSO,franchisee,andfranchisoraresubmittedtothedistrictwater

engineer.Multiple levelsofreportingfrompartieswithvariedinterestswillhelptodiscourage

dishonestyasthiswouldbeevidentinirreconcilablereports,whichcouldbeauditedbyathird

party(e.g.-districtwaterministryorNGO).

19

• Onlyemployeesof the franchiseewillhaveaccess to thepumpandwater tap, socommunity

membersshouldnotbeabletoobtainwaterwithout firstpaying for it.Theemployeesof the

franchiseewouldberesponsibleforoperatingthepumponaday-to-daybasis,therebylimiting

thescopeforunauthorizedwaterconsumption.

• Mechanisms will be created within the community to provide an allocation of water for the

extremelypooranddisadvantaged.Thiswillreducethesocialpressuretoprovidewaterfreeof

chargetothoseunabletopayandwillbeaccountedforinthefinancialviabilityofthesystem.

Frequentequipmentbreakdowns

• The franchise system establishes the franchisor as a capable party responsible for all major

repairs.

• Delaysduetoroutinerepairandmaintenanceissueswillbeminimizedasthefranchiseeswillbe

trainedtoconducttheworkandwillhaveaninventoryofpartsonhand.

• Thefranchisorisrequiredtoconductregularlyscheduledinspectionsandroutinemaintenance

topreventavoidableequipmentbreakdowns.

• The franchisee is incentivized to completeminor repairs and reportmajor repairs in a timely

mannerasdowntimedirectlyaffectstheirrevenues.

• The franchisor is incentivized to complete repairs in a timelymanner due to the operational

dayspenaltymechanism.

• On-site pumpoperators are trainedon appropriate use of the system to avoid over-pumping

(e.g.bymanually turningon the solar-poweredpump forprolongedperiodsof time)orother

inappropriateuse

• NGOpartnersprovidetrainingonthehealthandeconomicbenefitsoftheentireVillageWater

Systemtodiscouragetheft,repurposingofpartsorothermisconduct.

Lackofthirdpartyserviceproviders-HarveyandReednotethat“Privatesectorprovisionofsparesis

not, in general, a viable option on the basis of profit alone.Where spares supply is linked to other

privatesectoractivitiessuchastechnicalservicesforconstruction,operationandmaintenance,andthe

provisionofpumpsandequipment,itismuchmorelikelytobesustained”(HarveyandReed,2004).

• Multiple responsibilities and sourcesof cash flowhavebeenbundled into the franchisor role.

Thisapproachensures that the franchisorwillhaveconsistent revenuestreamsandthatvital,

20

but lessprofitable, functionswillstillbeundertaken,sincefailuretoperformonedutyputsat

riskthefranchisor’srightstotheothersourcesofcash.

Seasonality -Franchiseesare likelytoexperienceseasonality indemandforwaterduetovariations in

rainfallduringtherainyanddryseasons.Duringperiodsofhighrainfall,alternativesourcesofwaterare

availableandpresenta compelling cost-benefit trade-off for the ruralpoor.AWorldBank case study

reportonprivateoperatorsnotesthatconsumers“aresavvyaboutmakingtrade-offsbetweenpriceand

valueinchoosingtheirwatersource”(SyandWarner,2014).GrundfosLIFELINKinstallationshaveseena

65%decreaseindemandduringthesixwettestmonths,whileVergnet-managedwatersalesinBurkina

Fasowere28%lowerduringtherainyseason.

• The requiredamountof theFranchisee’sMonthlyDeposit canbestructured tobevariable to

account for these revenue fluctuations.However, someexpenseswillnotbe seasonal, likean

attendant’ssalary,scheduledmaintenance,andrepairs,sofranchiseeswillneedtopreparefor

this.

• Tariffs can be varied throughout the year to try and smooth revenues for the franchisee,

potentially encouraging a differentmix of domestic and commercial consumption during the

year.

Unanticipated delays to franchisor breakeven – The franchisor businessmodel requires aminimum

level of services regardless of thenumberof franchisees. This could result in an initially high level of

fixedcosts relative to thenumberofpositivecash flowwaterpoints.Awidegeographicdispersionof

theinitial125pilotsitesmightrequirethatfieldconsultantsandmechanicsareemployedinareasthat

donothaveenoughsitestosupporttheirsalaries. Ifsitedevelopmentdoesnotproceedasquicklyas

planned,thesefixedcostsmayresultinoperatinglossesforthefranchisorforlongerthananticipated.

Forthisreason,thefranchisorwillneedtobewellcapitalizedandrunbymanagementwithalong-term

viewandcommitmenttomakingthesystemviable.Withoutsufficientsupportfromthefranchisor,the

franchiseeswillfailaswell.

Inabilitytofindqualifiedpeopletofillnecessaryroles–thefranchisesystemdependsonhavinghighly

capableindividualstofillseveralkeyroles–franchisormanagement,franchiseemanagement,andfield

supportconsultants.To theextent that thesepeoplearedifficult to find inall regionsof thecountry,

training costs will need to be higher or salariesmay need to be higher than anticipated in order to

attractahighlyindemandworkforce.

21

IssuesRequiringFurtherExploration

WhiletheFranchisingConceptTeamhasputalotoftimeintodevelopingtheseideasand

gettinginitialinputfromexperts,wecontinuetocollectfeedbackandrefinetheconceptandthe

details.WewillnotintegratetheFranchisingConceptintotheSVWSPmodeluntilweareconfidentin

everyaspectofitsdesign.TheTeamwelcomesallfeedback,critiquesandideas,butsomeoftheissues

thatweknowweneedtoaddressarethefollowing:

• Wedonotwanttodenyanyonetherighttowater,sowewouldliketohaveamechanism

inplacesothatindividualswhocannotaffordwaterarestillabletoacquiresome.

• Weknowthatitiscriticalthattheprogramhassupportfromthecommunity,soweneedto

identifythebestprocessforbuildingandsustainingcommunitybuy-in.

• Weneedtothinkthroughhowtherelationshipsbetweenalltheinvolvedpartieswillbe

managed-inparticulartherelationshipsbetweentheNGOs,theCOWSOs,thefranchisorsand

thefranchisees.

• Weneedtodeterminemanyofthefinancialdetails,suchastheamountofthemonthlydeposit

totheWaterPointAccountandtothefranchisor.Weareworkingonbuildingthedetailed

businesscasethatwilldemonstrateprofitabilityforallpartiesundervaryingassumptions.

• Notallfranchiseeswillbesuccessful,soweneedtospecifydefaultandterminationconditions

forfranchiseesandhowtomanagetheseterminationsandfindreplacements.

• Identifyingandselectingtherightpeopletorunlocalfranchiseswillbecriticaltothefinancial

sustainabilityofthesystem.Developingtherightcriteriaandapproachforrecruitmentneedsto

becompleted.

• WeneedtodeterminewhoisgoingtoprovidethetrainingtotheCOWSOsandthe

communities.WehavesuggestedthatwillbedonebyNGOs,butweneedtodeterminewhich

NGOsandhowthatprocesswillbemanaged.

• Weneedtodeterminewhattheappropriatetime-windowisforgettingrepairsdone.Wehave

stated96hoursbutisthattherightnumber,andinwhatcircumstancescanthatbeextended

withoutpenaltytothefranchisor?

• WewanttobeabletomeasurecommunityoutcomesthatresultfromputtingaVillageWater

Systeminplaceinacommunity.Forexample,wewanttoknowtheimpacttheVillageWater

22

Systemhasonhealth,educationandincomesofcommunitymembers.Weneedtodesigna

processforobtainingbaselinedataaswellascollectingrelevantdataonaperiodicbasis.

• WewanttobesurethattheUniversityofDodomaandourlocalNGOsareabletosupportthe

day-to-day training and educational requirements, and to provide the required technical and

agricultural extension-like services to the local entrepreneurs and villagers to ensure

sustainability.

• Wewanttobesurewehavebuy-infromthekeyGovernmentMinistriesfortheconceptandfor

itsproposedimplementationtimeline.

• We want to be able to ensure the long term supply of water and to execute the required

researchtodevelopmappingofsustainableyieldsfromgroundwaterandsurfacewatersources

fortheregionsinwhichwewillbedeployingsystems.

• Wewant tobe sureweprovide thevillagesand the townswith the technology theyneed to

succeed – so we are exploring innovative cell phone applications including billing/payment,

operationaldata,marketinfo,techsupport,etc.

ProvidingWaterandEconomicActivitiestoGrowtheLocalEconomy

TheSVWSPisamulti-facetedinitiativeaimedatmakingmeasureable,far-reachingprogresstoward

waterandfoodsecurityinTanzania.Therolethatthenationalwaterpointrehabilitationeffortplaysin

thatgoalistoprovideeconomicopportunitiesforlocalcommunitymembers.Itstartswithconvenient

access to clean water, which improves the health of all community members and reduces the time

womenandchildrenspendcollectingwater.Childrencannowspendmoretimeinschoolandwomen

canspendmoretimeonincome-generatingactivities.

However, the power of the SVWSP is in the systems approach that it takes to improving the

livelihoodsandopportunitiesforthevillagecommunitymembers.TheVillageWaterSystemisdesigned

to not only provide water for household use, but also provide the means for other economic

opportunities.Solarpowerinexcessofpumpingneedscanbeusedtocreateaphonechargingstation

business. Excesswaterbeyondwhat isneededfordailyconsumptioncanbeusedtodevelopabrick-

makingbusiness,engageinaquaponics,expandlivestockherdsorgrowvegetablegardensandfruittree

nurseries. Members of the community (with a focus on women) can become local franchise

owners/operatorsorcanbeemployedasattendantsatthewaterpoints.Womencantakeonrolesas

23

trainersorobtainloansfromthethirdpartycreditproviderstostartorgrowtheirownsmallbusinesses.

All these parts working collectively creates the opportunities for communities to grow their local

economy, which in turn stabilizes village support for the upkeep of the water system as it becomes

indispensable. The proposed franchise model has been designed to provide low-cost water to

consumers while putting in place themechanisms and incentives to ensure the sustainability of the

system.

AccordingtotheWorldHealthOrganization,every$1investedinwaterandsanitationcanyieldan

economicbenefitofasmuchas$34,butthisonlyhappensifthefocusoftheeffortgoesbeyondmerely

installing the infrastructure. The SVWSP Program is designed to provide not justwater, but awater

systemandabusinessmodelthathelpsassurethesustainabilityandongoingeconomicopportunitiesso

thattheinitialinvestmentcanrealizeitsfullestpotential.

24

References

TheCadmusGroupInc.(2015).SectorEnvironmentalGuidelines:WaterSupplyandSanitation.RetrievedfromUSAIDGEMSwebsite:www.usaidgems.org/bestPractice.htm.

Carter,Richard.(2012).‘MythsofRuralWaterSupply’,WaterAidandRuralWaterSupplyNetworkWebinar.

deCarvalho,Alexandre;Graf,Jessica;Kayser,Olivier;VousVouras,Christian.(2011).AccesstoSafeWaterfortheBaseofthePyramid:LessonsLearnedfrom15CaseStudies.Hystra.

Economides,NicholasandJeziorski,Przemyslaw.(2015).MobileMoneyinTanzania.NETInstituteWorkingPaperNo.#14-24.

Foster,Tim.(2012).PrivateSectorProvisionofRuralWaterServices:ADeskStudyforWaterforPeople.WaterforPeople.

Harvey,PeterandReed,Bob.(2004).RuralWaterSupplyinAfrica.Water,EngineeringandDevelopmentCentre;LoughboroughUniversity.

Haysom,Alexia.(2006).AstudyofthefactorsaffectingsustainabilityofruralwatersuppliesinTanzania.SubmittedasathesisinpartialfulfilmentoftherequirementsfortheDegreeofMScWaterManagementfromCranfieldUniversity.PublishedbyWaterAidTanzania.

Moon,Sam.(2006).PrivateoperationintheruralwatersupplyincentralTanzania:Quickfixesandslowtransitions.WaterAidTanzania.

Sy,Jemima;Warner,Robert;Jamieson,Jane.(2014).TappingtheMarkets:OpportunitiesforDomesticInvestmentsinWaterandSanitationforthePoor.Washington,DC:WorldBank.

UnitedNationsEducational,Scientific,andCulturalOrganization(UNESCO).(n.d.).HealthThroughSanitationandWater.RetrievedJanuary25,2016,fromwww.unesco.org/most/africa7.htm

vandenBerg,Caroline;Burke,Eileen;Chacha,Leonard;Kessy,Flora.(2009).PublicExpenditureReviewoftheWaterSector,Tanzania.TheWorldBank.

www.saner.gy

www.sarvajal.com

www.waterhealth.com

25

Appendix1:FranchisePartnerDetailedRolesandResponsibilities

Thefranchisorwillberequiredto:

1. Submitaone-timerefundabledeposit(FranchisorDeposit)intoeachWaterPointAccountpriortocommencementofoperations.

a. The Franchisor Deposit acts as a guarantee against certain services the franchisor isobligatedtoperformundertheWSA.

b. The Franchisor Deposit will be used to cover actual expenses incurred as a result offranchisor’snon-complianceornon-performanceofcertainobligationsundertheWSA

c. At theendof the contract term,or voluntary replacementof franchisorwith anotherparty,theremainderoftheFranchisorDepositwillbereturnedtothefranchisor.

2. Hireandtraincertifiedmechanics.TrainingcouldalsobeoutsourcedtoUDOM,NGOsorothersuitableproviders.

3. Haveacertifiedmechanic conducta regularly scheduledsite inspectionofeachVillageWaterSystem(frequencytobedetermined).

4. Employ field support consultants to provide business ongoing consultation services to thefranchisees.

5. Provide franchisees with field handbooks to assist in financialmanagement and operations /repairsoftheVillageWaterSystem.

6. Respond to franchisee or community service request within 48 hours (or agreed upontimeframe).

7. Guaranteecompletionofmajorrepairsbynetworkoflocalareamechanics.

8. Holdaninventoryofpartsandorderappropriatequantitiesfromthepreferredlistofapprovedvendorsformaintainingquality,timelinessandstandardofrepairs.

9. SubmittheQuarterlyFranchisorReport(describedbelow)toeachfranchiseeandCOWSO.

10. ServeasBackupFranchiseeintheeventofnon-performanceoffranchisee.

11. Identify,recruit,andprovidetrainingforfranchisees.

12. Marketservicesandbrandtolocalcommunities.

13. Provideongoingtrainingformechanics,franchisees,andCOWSOs.

14. HireNGOpartners toconduct training forcommunityawareness, sanitationandhygieneonaregularandpre-determinedbasis(e.g.quarterlyforthefirstyearandannuallythereafter).

15. Monitor the borehole and solar system sensors to help proactively anticipate issues withboreholequalityorsolarsystemperformance.

16. On a yearly basis, provide technician for assessing the yield of each water point at thecommunitylevel.

26

Thefranchiseewillberequiredto:

1. Submitaone-timerefundabledeposit(FranchiseeDeposit) intotheWaterPointAccountpriortocommencementofoperations.

a. The Franchisee Deposit acts as a guarantee against the services the franchisee isobligatedtoperform.

b. The Franchisee Deposit will be used to cover actual expenses incurred as a result offranchisee’snon-complianceornon-performanceofcertainobligationsundertheWSA

c. At theendof the contract term,or voluntary replacementof franchiseewithanotherparty,theremainderoftheFranchiseeDepositwillbereturnedtothefranchisee.

2. Submit a Monthly Franchisee Report to the COWSO, the franchisor, and the District WaterEngineer.

3. CompleteminorrepairsandmaintenancetotheVillageWaterSystem.

4. Employpersonnelforcollectionoffunds,distributionofwater,andsitesecurity(withafocusonfemaleemployment).

5. RemitMonthlyDeposittoWaterPointAccount.

6. RemitMonthlyFranchiseFeetofranchisor.

7. ReportanyoutagesormaintenanceissuesinatimelymannertothefranchisorandCOWSO.

CommunityOwnedWaterSupplyOrganization(COWSO)will:

1. GrantexclusiveoperationsandservicesarrangementtofranchiseeandfranchisorintheWaterServicesAgreement.

2. OverseeWaterPointAccountandauthorizedisbursementsforrepairs.

3. Actasliaisonbetweenfranchisepartnersandcommunitymembers.

4. Reportoutagestofranchisepartners.

5. Supportsecuritymeasuresputinplacebyfranchisee.

6. Maintainrecordofoperationaldays.

27

Appendix2:ReportingRequirements

Eachofthereportsgeneratedbythepartnerswillbecirculatedamongthefranchisepartners.

TheMonthlyFranchiseeReportwillinclude:

• Revenues

• Expenses

• Quantityofwaterpumped

• Quantityofwatersold

• Numberofoperationaldaysforperiod

• EvidenceofMonthlyDepositandFranchiseFeepayment

• Maintenanceschedule

• Concerns(ifany)

• Otherkeyinformation(ifneeded)

TheQuarterlyFranchisorReportwillinclude:

• Revenuepermonth

• Expensespermonth

• Numberofregularmaintenancevisitsperformed

• Credithistoryforeachsite

• Numberoftrainingsconductedforsocialandcommunityawarenessineachcommunity

• Numberofcertifiedmechanicsinnetwork,numberlost,numberrecruited

• Detailsaboutmajorbreakdownrepairs[ifany]

• Numberoffieldconsultantvisits

• Benchmarkingoffranchiseeperformance

• Otherkeyinformation[ifneeded]

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Appendix3-WaterTariffStructure

Threemodels were considered for the water tariff. The advantages and disadvantages are outlinedbelow.Theproposedmodelusesaperbucket/litertariffstructure(Item3below)becauseithasbeenfoundtoworkbest inpractice. Whicheversystemisadopted,however, itneedstoaccommodatetherealitythatnoteveryonehascash,somechanismswillneedtobeput inplacetoallowpeopletopaywithlivestock,cropsortobarterotherservices.

1. Flat monthly fee per household, structured as either unlimited access or a capped daily ormonthlyamount.

• An unlimited accessmodel is likely to lead to overconsumption and low revenue perliter,resultinginamismatchbetweencostsandrevenuesasadditionalstrainisimposedonthepumpswhenmorewateriswithdrawn

• Alumpsummonthlytariffmayalsobeproblematicforcommunitymemberswhohaveirregularincomeandlittleaccesstosavingsinstitutions

2. Setamountfromthecommunity

• Allowsthecommunitytocreateacollectionmethodthat theyviewasmostequitableand fair; encourages participation and a sense of ownership among communitystakeholderswhoaremoreawareoflocalsensitivities

• Likelylacksarealisticenforcementmechanismandaccountabilityintheeventofalackoffunds

• Maybesubjecttovolatilelocalpoliticaldynamics

3. Perbucket/litertariff

• Thisapproachbestmatchesrevenueswithcosts

• Transparentprocessthatiseasytoimplementatthedistributionpointasallpumpswillbefittedwithameter

• This model is already implemented in some communities in Tanzania so likely to beculturallyappropriateandacceptedbycommunitymembersasfair

• Resultsingreaterseasonalityinrevenues

• Basedontheaveragedomesticconsumptionpatterntakingintoaccountthehouseholdsize, excess consumption for other economic activities such as agriculture could bechargedatadifferentrate.Onacase-to-casebasis,pipescouldbeinstalledatthewelllocationforpumpingwaterelsewhereforothermeteredusagessuchasagricultureoraquaculture.