Mobile payment systems to reduce rural water risks in Africa

Lead Research Organisation: University of Oxford
Department Name: Smith School of Enterprise and the Env


Community management of handpumps has been the accepted mode of thinking for rural water supply over three decades in Africa. The paradigm underpins the hundreds of millions of US dollars invested each year to reduce institutional and operational water risks. The logic of the paradigm follows that (a) institutional risks are less where water users self-organise to manage and monitor service delivery compared to distant and unaccountable agencies, and (b) operational risks are less where local mechanics are trained to respond in timely and low-cost maintenance regimes. With one in three handpumps not functioning at any one time in Africa and 35 million more people without rural water services in 2011 compared to 1990 (WHO/UNICEF, 2014), the evidence starkly illustrates significant and widespread deficiencies in community handpump management with women and children impacted hardest. The significant but avoidable health, wealth and poverty impacts have left Africa lagging behind the global drive for universal water services with one in two rural Africans lacking improved water access.

This research project aims to improved handpump management by insuring payment risks. Like insurance products that pool risk of unanticipated but costly events, like a car break-down, flood damage to homes or a serious health problem, we proposed to apply the same approach to community handpumps in rural Kenya. Currently rural communities must work independently saving and paying for maintenance on a case by case basis. This is fine until an unexpected but costly repair emerges. Then the communities, which include a majority of households with low and variable income, simply can't pay to have their handpump repaired. They then turn to more distant, often dirty and costly water sources. Our approach brings these communities together in a shared financial model that reduces costs by sharing them amongst hundreds of handpumps. Earlier research suggests the majority of communities will pay into this 'insurance system' on a regular basis provided the handpumps are repaired in a couple of days. The project can guarantee this higher maintenance service which has reduced repair times from over a month to a couple of days. The communities love it the current trial of the maintenance service and now want to pay for this service through a local company to make it sustainable. This next phase of research is to introduce a fair payment system and monitor how communities pay over time. This will provide evidence for a more sustainable approach which the Government of Kenya supports and can be scaled up by our regional partner, UNICEF.

If successful we hope the model will provide a firmer and more sustainable financial model to keep water flowing for poor rural communities in Kenya and beyond. This will help improve the health and welfare of potentially millions of people, particularly women and girls who hit hardest when handpumps fail and they must walk miles to find alternative water supplies for their families.

Planned Impact

Who will benefit from the research?

Primary beneficiaries of this research will include
(a) 300 communities and up to 50,000 rural water users, particularly women and children;

(b) local entrepreneurs and mechanics through the establishment and capacity development in a new handpump maintenance company; and

(c) governments and donors/investors.

How will they benefit?
(a) Low-income water users who suffer most from the inability to manage the financial risk inherent in community managed handpump supplies. Rural water users currently lack any mechanism to share or transfer the risk of a handpump breakdown of an unpredictable size at an unforeseen time. Though they are least able to manage risk, it is women (through lengthier collection times) and young children (through diarrhoeal diseases) who bear the brunt of having to resort to unsafe alternatives when pumps breakdown. Sharing financial risks could enable water users to smooth unanticipated but high cost repairs by ensuring sufficient financing is always available for prompt repairs when breakdown occurs. With more than one billion rural dwellers in the developing world sourcing water from boreholes or shallow wells, the potential developmental impact of this initiative is significant.

(b) By establishing a local, handpump maintenance services company and testing it the research will build local business capacity and hopefully attract additional funds to support the model in the study site and across Kenya. Increases in financing available for repair activities will boost the commercial viability of a handpump maintenance business for small scale entrepreneurs.

(c) Governments and donors also have much to gain from a more sustainable and replicable financial model that improves the investment case and impacts for poor people. By increasing the reliability and functionality rates of handpump supplies, new financial models will mean governments and donors can deliver better value for money promoting drinking water services are maintained and accelerated for the 273 million people without water access around the world. For the Government of Kenya this approach aligns with the constitutional norm that recognises the Human Right to Water, the new Water Bill (2014/15) and Vision 2030 that aims to ensure universal drinking water supplies. For UNICEF the project aligns with their mandate to improve the living conditions of all children, particularly those most vulnerable and marginalised. African children have the highest mortality and morbidity rates in the world with significant evidence identifying the critical role of reliable and safe water to improve health and wider welfare impacts.
Description The project is completing this month with preliminary results of a successful project including:
1. The design of a pre-payment system for rural water users supported by the MPESA and Frontline SMS platforms. This is a highly novel approach with communities (not individuals) paying on a regular monthly basis for a guaranteed maintenance service to their handpumps.
2. 67 communities and one primary school have signed up (out of 300) to the FundiFix service since January 2016 and pre-pay by mobile money into the contracted service.
3. The company, FundiFix Ltd., has been registered and is performing well with local staff well known to the communities.
4. We are analysing and will publish on which of the some 300 communities sign up and will be conducting a range of social evaluations to understand factors that influence adoption.
5. A County Water Services Maintenance Fund has been registered to provide a new and sustainable financing mechanism to blend government and donor support with community payments. In a workshop last month there was very positive responses from the government and a major private sector company.
6. The third round of a panel survey has been successfully completed in November 2016 across 3,200 households in the study area.
Exploitation Route Oxford's global and regional collaboration with UNICEF is providing a strong platform to monitor and share findings at the regional and global levels.
Sectors Digital/Communication/Information Technologies (including Software),Government, Democracy and Justice

Description Article in The Economist (4 March 2017) on FundiFix model
Geographic Reach Multiple continents/international 
Policy Influence Type Influenced training of practitioners or researchers
Impact See