What is happening in Simango and why?
Over the past four years, I have been studying the idea of cost recovery of water projects in rural areas, with the Simango area as a case study for the research. I would argue that a main, if not the main challenge for expanding water services in rural areas of Africa is that sound business principles are not a part of the sector. Most wells are drilled by subsidized government programs or charity through Non-Governmental Organizations, since the users are not able to pay for the full costs of these improvements. As a general rule of thumb, most rural communities are asked to pay for the Operation & Maintenance of their water services. For the ubiquitous hand-pump, this is only a small fraction of the total costs and includes the costs of spare pump parts, fuel for maintenance vehicles, etc. Yet even these costs are often unrecovered by water projects. One well in the Simango area, for example, was drilled by Water Aid in 2009. Since then, the program was able to recover $50 from 39 households, while the goal was over $700. This is first-hand knowledge. But the wider figures agree: one study of Sub-Saharan Africa found that between 35 and 80% of “improved” water sources in 11 countries were not even operating¹
What this means for water development programs and the rural water sector is that the power of one dollar spent on a program is tremendously weakened through the need to invest on maintaining the status quo, instead of multiplied through revenue and project replication so common to traditional business models.
The main challenge is to develop and test a sound business strategy for the rural water sector.
¹See Table 1, column furthest to the right on page 7 of This Document
Yale Presentation in Powerpoint form, for a presentation I’m giving at the Unite for Sight Global Health and Innovation Conference at Yale in late April, 2012.