Last-mile infrastructure for water provision in developing countries

The last-mile market segment refers to peri-urban and rural areas, which remain unserved by most water operators. Decentralized water technologies can provide cost-effective and sustainable means of accelerating national and global strategies (e.g. the Sustainable Development Goals) to provide access to safe drinking water without the substantial investment typically needed for conventional centralized water infrastructure. Digital technologies are enabling new, commercially feasible, business models and decentralized infrastructure options that can enable the provision of access to clean water for last-mile customers.

An example of a company that has commercialized an innovative business model for last-mile water provision is UNTAPPED – a Kenyan start-up that combines smart water technology with innovative funding and financing mechanisms to provide sustainable water access to the last-mile market segment. UNTAPPED uses (among other things) the CityTaps solution, which is a low-cost digital metering and billing platform designed for the urban poor.

Benefit sharing: Developing countries often lack access to clean and safe drinking water, especially in non-urban areas. More than 785 million people lack access to basic water services, 80% of whom live in rural areas[1]. Provision of last-mile water infrastructure – as is the case with UNTAPPED – combines innovative technologies, financing and delivery models to increase access of an essential service to the communities that need it most.

UNTAPPED and Mathira Water and Sanitation Company (MAWASCO) ran a proof-of-concept project in Malindi, a coastal town in Kenya with a population of over 300,000. UNTAPPED provided water access to the community by installing 6,500 pay-as-you-go smart meters on an 18-month capital lease. UNTAPPED is expanding their metering service across Kenya to service an additional 550,000 customers by 2021.

Similarly, in 2016, CityTap piloted its smart, pre-paid water meter (CTSuites) in Niger with the local water utility and has since expanded from 20 to 1,325 CTSuites. This has positively impacted more than 13,000 people in the local community. By the end of 2020, CityTaps expects to impact nearly 100,000 people in Niger through the installation of 10,000 additional CTSuites.

Environmental resilience: Last-mile water provision is typically delivered through decentralized treatment and distribution systems such as kiosks, water “ATMs” or pay-as-you-go metering. Fit-for-purpose, decentralized solutions designed for peri-urban and rural water market segments in developing countries will typically have a lower energy consumption than conventional solutions adopted by the developed world. Lower energy requirements of decentralized treatment also enable off-grid operation and the use of alternative/renewable energy sources.

Social acceptability: The business model for last-mile service provision typically makes use of the local entrepreneurial landscape to provide the water service to the community and operate and maintain the assets. This promotes local ownership and ensures that services and stakeholder/customer engagement adhere to local practices. Generally, these local water providers operate as an area-monopoly where they are the sole provider for a particular area. There is a risk that this may lead to predatory pricing where communities overpay for water services. Regulatory bodies will need to be created to scrutinize and ensure appropriate pricing for last-mile operators. Given the decentralized model and the option for private entities to provide water, this may not be an issue where there will be competition from different “kiosks” and providers.

Economic and institutional effectiveness: Conventional solutions to provide clean and safe drinking water are known and available to peri-urban and rural regions in developing countries but they are often unaffordable, and financing last-mile infrastructure is challenging due to low confidence in the ability of last-mile water customers to pay for services.

UNTAPPED has transformed this opportunity in three ways:

  • By using ultra-low-cost digital water metering technology and a billing platform to allow customers to pay-as-you-go (and allow the water operator to automatically recover tariffs)
  • By providing up-front financing for the infrastructure and leasing it to the water operator over a set period
  • Building local businesses by partnering with local operators and building their capability through training

Over three years, MAWASCO recovered billing arrears and saved operating costs while covering their equipment lease payments. Moreover, the cash flow going through the UNTAPPED Digital Payments Platform was at 5.4 times lease payments.

Similarly, with CityTaps, households reported that they are better able to manage their water budget. The water utility in Niger experienced commercial benefits from expanding their customer base and increasing the number of subscribers. Of these subscribers, 98% have said they would recommend CTSuite to a neighbour, while 72% of their neighbours have said they would like to try the solution.

Future proofing: Last-mile water solutions avoid the prohibitive upfront expense of large centralized treatment plants and piping projects through scalable, portable and quickly deployable plants. Furthermore, UNTAPPED provides local operator training and on-the-ground support to ensure that planning through to maintenance is undertaken using best practice.

Critical mass potential: The nature of the last-mile service provision model is that it needs to be fit-for-purpose; in this case, each project will be different. However, the problem of clean water access in peri-urban and rural communities is common across the developing world and therefore addressing last-mile water provision can generate meaningful impact at scale globally.

On the technology side, digital metering and billing platforms (as with those used by UNTAPPED and CityTaps) can be scaled up across projects and regions.

[1] UNICEF. Progress on household drinking water, sanitation and hygiene: 2000-2017. 2017. Accessed 10 April 2020