Safe Water Network and CGAP Evaluate Benefits of Mobile-money-enabled Smart Meters in Ghana
Safe Water Network is committed to making water provision as financially and operationally sustainable as possible. A path to such sustainability may be possible through digital finance, a growing trend in the financial sector that grants individuals and companies access to payments, savings, and credit products without the need for a physical bank. Through digitization, a person’s smartphone can serve as a wallet, a checkbook, and an accounting ledger. As mobile technology becomes more affordable, it becomes more accessible to the world’s underserved populations, providing digital access to and use of formal financial services for those who had previously been excluded. In applying digital finance to the water sector, the Consultative Group to Assist the Poor (CGAP) argues that it will be necessary to “link innovative technology with improved ways of delivering” service.
Safe Water Network is improving financial viability of water stations through the provision of water supply to on-demand and on-premises scenarios through household connections fed from a nearby water enterprise. There are several reasons for pursuing such connections. When considering social benefit, an increase in the service level of water supply will allow consumers to use more clean water for more uses (drinking, cooking, bathing, etc). This increased usage will likely result in: a reduction in water-borne diseases; a reduction in poverty, through reduced costs associated with healthcare and health-seeking behaviors; and increased time for other productive behavior, as the time spent collecting water decreases. From a financial perspective, high water volumes result in more revenue, strengthening the long-term viability of the water enterprise.
However, with household connections come increased operating expenses, particularly around meter reading and collections. Revenue is typically collected by the water enterprise operator, and this collection can take up to 25 percent of his or her workload. In fact, when operators did make the collection rounds, they were only successful in collecting 70 percent (on average) of the total revenue due. This undermines station viability through non-revenue water, unpredictable revenue, and employee dissatisfaction. Digital finance, in the form of mobile money and smart meters, is providing an innovative way to address these challenges.
As part of a new project funded through a partnership with CGAP, Safe Water Network’s Ghana team has just finished installing approximately 100 smart meters at 100 households in the towns of Tetrem and Beyin, and three surrounding communities. The smart meters will feature mobile-enabled pre-payment for a set volume of water determined by the consumer. This project will measure the level to which mobile money can improve operational efficiency in meter reading and collecting revenue from household connections, and disseminate the results from this analysis.
Having met with the local water boards and conducted customer sensitization to introduce the project, Safe Water Network’s Field Service Entity Team visited individual households to install the meters and train the residents on the new system. Most households expressed excitement about the upgrade, due to the increased convenience—and the perceived status that comes with it.
Field Service Entity Manager Charles Yeboah sees this project as a significant streamlining of operations: “A switch to mobile-money-enabled, pre-paid meters significantly reduces the burden of chasing after payments. It also frees our time to focus more on improving operational efficiencies and demand generation. Our field operators can therefore efficiently manage the increased trend in demand for household connections to ultimately improve stations’ bottom-line.”
What does Safe Water Network expect from this pilot project? At the very least, prepayments will enable full collection of all costs owed for water consumption, as opposed to sustaining losses of up to 30 percent with conventional meters. Additionally, it is expected that these smart meters will reduce water enterprises’ monthly operating costs by 5 percent, compared to those incurred using conventional household connections.
Safe Water Network is planning to conclude the data-gathering phase of this pilot in mid-September, 2017 and will be publishing findings in partnership with CGAP by the end of the year.
Of Safe Water Network’s venture into digital finance, CGAP contends that “a shift to digital collections will create cost savings and enable more profitable in-home connections. The healthier the stations are financially, the stronger their operations, creating a lasting solution for years to come.”