Africa’s mobile revolution can help address one of its oldest challenges – sustainable water services. Mobile money is a key driver in this innovative landscape expanding access to financial services to the poor and unbanked. With an annual financing gap to meet the African water supply and sanitation Millennium Development Goal of USD 9 billion, mobile water payments present a promising new approach to improve financial performance for water service providers, offer time and cost savings to water users, and increase customer loyalty for mobile network operators.
This report examines the impacts and implications of mobile water payments from Kenya, Uganda, Tanzania and Zambia. Evidence from 20 urban water service providers serving over 12.5 million customers is evaluated against the deployment strategies of mobile network operators and the responses of national water service regulators. Three research objectives inform the study design: evaluation of adoption levels and the associated motivations and barriers to uptake; assessing the distribution of costs and benefits across water service providers, mobile network operators and urban water customers; and exploring new mobile payment applications and design modifications that could better meet the needs of the urban poor. Our findings reveal low mobile water payments adoption rates with only one water service provider achieving over 10 per cent uptake from its consumer base. Key barriers to adoption include delayed reconciliation of billing systems, limited customer awareness, lack of physical proof of payment, high transaction tariffs, and convenience of alternative pay points. All these barriers can be overcome as exemplified by one small and privately-run scheme in Kenya where 76 per cent of customers have adopted the mobile bill payment option. In this case, high time and cost savings were revealed as principal motivations for mobile water payment adoption, with women benefiting most from time savings. There was no evidence that levels of wealth, education or water service satisfaction are significant predictors of choosing to pay by mobile transaction. However, mobile water payers were more likely to be already paying their electricity bill via a mobile transaction or in full-time or self-employment, which reinforces time and cost saving benefits. Of note, scheme ownership, size and location illustrated important contextual factors influencing adoption in contrast to our wider sample. Despite a compelling value proposition for a range of actors, technological, behavioural and structural
constraints currently hinder greater customer uptake of mobile water payments throughout the region. Where these constraints are released mobile paying customers enjoy considerable savings in the time and money costs usually incurred when settling water bills at physical pay points. Water service providers strengthen their financial base through timelier bill payments, higher collection efficiencies and lower administrative costs. Finally, mobile network operators are rewarded with direct revenue and customer churn reduction. Key determinants which shape the distribution of these costs and benefits include transaction tariff structure, regulatory position, and competition amongst mobile money providers. Conclusion: by identifying mobile payment applications that could reach and benefit low-income and vulnerable groups in both urban and rural areas to help tackle ongoing service delivery challenges relating to public standpipes, pre-paid metering and rural water supplies. [authors abstract]