Getting poor customers to bundle themselves

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The McKinsey Quarterly's recent article, A Grassroots Approach to Emerging-Market Customers, introduced me to the Manila Water story. This public-private partnership has taken the brave, and often necessary, step in serving low-income consumers: changing their existing business model. From the article (free registration required):

In the Philippines, Manila Water relies on collective billing to ensure the timely payment of bills, employs small-scale entrepreneurs as couriers and pipeline contractors, supports microlending, and brings affordable water to schools and hospitals....

Manila Water devised a game-changing scheme: letting communities themselves decide if they want individual or collective installation, metering, and billing. The company offers three options: one meter per household, one meter for 3 or 4 households, and a bulk meter for 40 to 50 households. Where households band together, the connection fee (ordinarily 7,000 pesos a household) can fall by as much as 60 percent.

The McKinsey piece also describes Globe Telecom, Cemex's Patrimonio Hoy program, and Hindustan Lever's Shakti. A couple of other blogosphere reactions to the piece here and here.

Join the Conversation

Colin McKay
January 11, 2007

They're great stories, aren't they? It's a pity that such creative solutions seem to only be possible in desperate circumstances in the developing world - there are real possibilities to alleviate urban poverty in developed countries as well.

Anne Copeland Chiu
January 15, 2007

I had the pleasure of working with the Manila Water Company to help them develop on their sustainability initiatives. What was particularly rewarding about this project was that the company took the initiative to establish a Sustainable Development Cluster, comprising staff from all aspects of its business, to systematically identify the economic, environmental and social impacts and benefits arising from all of its business operations. The cluster engaged staff of all levels and from all parts of its business to brainstorm issues and challenges in developing its Sustainable Development Strategy. The strategy is an evolving framework that continues to provide a foundation for the Manila Water’s business strategy, operations, engagement with stakeholders and external reporting using the Global Reporting Initiative’s Sustainability Reporting Guidelines. Those who are interested in reading more about this project can refer to the IFC 2005 Sustainability Report (http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_2005SustRepor…) and Manila Sustainability Reports at http://www.manilawater.com/sd_newspage01.cfm?vcatcode=news&vnewsdate=20…