Pre-paid water meters: Can the technology fund itself and increase access?

Access to water is a pressing issue in many developing countries, and delivering it continuously to thousands of rural villages is especially challenging without sufficient financing to make it all happen.

Luckily, pre-paid water meter technology may help increase water access by reducing lost revenue. The technology itself is simple and user-friendly, and there are several global manufacturers, including Lorentz, eWATERservices, Grundfos and Nairobi-based Maji Milele (using SUSTEQ)  – all of which are all helping advance the technology.  

Here’s how it all works: Water customers take a water tag (NFC) with credits added on through mobile money. They tap the tag on one of their village’s pre-paid water dispensers, and water instantly flows out of the tap. The money that customers spend on that water is then used to pay for services such as the maintenance of those dispensers, along with the many other operational and maintenance costs of a typical village water supply scheme. Furthermore, the meters themselves are efficient, fair and transparent – users know exactly how much money they are paying and how much water they’re receiving, and the village can track where the money goes.  

But while pre-paid water meters sound great on paper, whether they produce results in the real world is what’s most important. Field experiences from Tanzania and other countries now give us insight into their value proposition.

One pilot project, which received assistance from the World Bank’s Global Water Security and Sanitation Partnership (GWSP) and the Global Partnership for Results-Based Approaches (GPRBA), is seeking to expand the prevalence and use of solar-powered water pumps and pre-paid meters in existing water schemes that are powered by diesel generators. The pilot includes a 4-year service agreement to ensure sustainability, and the financing breaks down as follows:

• TIB Development Bank finances 40 percent of the project through a four-year loan to participating communities.
• SIDA and the Dutch government, via the World Bank’s Global Partnership for Results-Based Approaches (GPRBA), finances the remaining 60 percent of the project through a grant.

The bet is that rural communities can repay that 40 percent of the investment without needing to increase the existing price of water. And while the project is still under implementation, there are signs that the bet may already be paying off. Anecdotally, revenue collection with pre-paid meters in rural villages in Tanzania has increased anywhere from 50-400 percent – a success that, with sustainable approaches and economies of scale, can advance blended finance. Moreover, the project is expected to lead to lower carbon dioxide emissions and substantial life-cycle cost savings.

Evolving the concept

But that pilot project isn’t the end of Tanzania’s foray into installing paid water meters. In fact, the initial pilot has led to an increasing interest in the technology from the Rural Water Supply and Sanitation Agency (RUWASA), as well as other rural communities and decision-makers. Furthermore, RUWASA recently probed the World Bank to conduct a scoping study to chart the best path forward on a project aiming to install up to 35,000 prepaid mobile-money-enabled pre-paid water meters in 4,400 villages, potentially benefitting 8.8 million customers. Preliminary findings indicate that pre-paid meters may actually have a payback period of less than two years. The overarching idea is to extend the 4-year loan and 60 percent grant from the above-mentioned pilot to a 15-year loan with a zero percent grant. The financial modeling in the study indicates that this is achievable through economies of scale, in which hundreds of villages would participate voluntarily. The pre-paid meters would play a critical role in such a project, as they would ensure water payments are made and allow for the remote monitoring of revenue collection, as well as the entire water pumping operation.

But Tanzania is not alone in trying to figure out how to expand rural water access in a financially sound manner. With the installment of pre-paid water meters, however, it’s demonstrating to other developing countries that sustainable and innovative solutions to water access gaps do exist, and that the sooner stakeholders work to devise and implement them, the better off individuals and communities will be in the short and long term. We hope to keep you updated as these approaches evolve.