Mobile money and water services in East Africa

The unprecedented growth in Africa’s mobile communications sector offers new opportunities to address the continent’s persistent water service challenges, claims a new article published in Water International, a collaboration between past and current students at the School of Geography and the Environment.

The article is co-authored by two current DPhil students, Tim Foster and Aaron Krolikowski, a current student of the MSc Water Science, Policy and Management, Cliff Nyaga, and a former MSc student, Ilana Cohen. The research stems from Oxford University’s thriving mobile/water for development (mw4d) initiative.

The concept of mobile money is simple – money can be transferred between electronic accounts and the payment system can be easily accessed using a standard mobile phone.

A number of water service providers in Africa have started offering their customers mobile money as a payment option. This alluring marriage between water services and mobile technology offers many potential benefits.

For customers, mobile money provides an easy, fast and convenient payment method, particularly for the millions of people without a bank account or a branch nearby. For water utilities, the direct electronic transfer of money should reduce transaction costs and improve their revenue collection; savings which could then be channelled into extending coverage and improving the quality of services.

This could go some way towards addressing the considerable challenges faced by Africa’s water service sector. Service providers are commonly caught in a downward spiral of deteriorating finances, infrastructure, and operational performance. In urban areas, the expansion of service coverage is failing to keep apace with population growth, meaning that the number of urban Africans without access to a safe water supply is actually increasing.

However, there is very little evidence to determine whether the alleged benefits of mobile water payments are being seen. The new research by Oxford University investigates the impacts of mobile water payments in East Africa and explores customer behaviour and barriers to uptake.

The study shows that uptake of mobile water payments is surprisingly low.  In Dar es Salaam, a free mobile payment option has failed to attract more than 1% of customers. There are a number of reasons for its limited success, including low customer awareness, lack of utility receipts for proof of payment, and high transaction tariffs charged by mobile network operators then passed on to customers.

However, one success story shines. In the community of Kiamumbi in Kenya, a remarkable 80% of customers opt to pay their water bills with mobile money. The research confirms that these customers make considerable savings of time and money, and are also more likely to pay their bills on time.

Fortunately, the common barriers to wider uptake of mobile water payments can be tackled by the water service providers themselves. Once behavioural and operational constraints are overcome, the real test will be whether the savings made through the use of this payment tool are translated into improved access to and sustainability of water services.

Reference

Foster, T., Hope, R., Thomas, M., Cohen, I., Krolikowski, A. and Nyaga, C. (2012) Impacts and implications of mobile water payments in East Africa. Water International. DOI:10.1080/02508060.2012.738409

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *