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