Difference between revisions of "Plat du jour"

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'''Re: Mobile telephony vs rural water supply'''
 
'''Re: Mobile telephony vs rural water supply'''
 
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Response to: http://www.wateraid.org/news/blogs/2016/october/why-can-people-get-access-to-mobile-phones-and-not-safe-water
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Response to [[this article|http://www.wateraid.org/news/blogs/2016/october/why-can-people-get-access-to-mobile-phones-and-not-safe-water]]
 
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If you want to look at a natural experiment, why don’t you check out Anambra State in Nigeria, where there are no public water services of any kind (last time I checked).
 
If you want to look at a natural experiment, why don’t you check out Anambra State in Nigeria, where there are no public water services of any kind (last time I checked).

Revision as of 08:32, 13 October 2016

Re: Mobile telephony vs rural water supply

Response to http://www.wateraid.org/news/blogs/2016/october/why-can-people-get-access-to-mobile-phones-and-not-safe-water

If you want to look at a natural experiment, why don’t you check out Anambra State in Nigeria, where there are no public water services of any kind (last time I checked).

Water services are provided by borehole and tanker, by entrepreneurs / private operators, often under contract with town councils. The private sector does not appear to be interested in laying piped networks, although it is clearly a more efficient way of delivering water than by tanker. Why do you think this is the case?

I’d propose some things which are striking about this “natural experiment” in rural (and urban) water provision

1. It’s low capex / low fixed cost, high opex / high variable cost
2. What capex there is can be moved (apart from the borehole casing). Pumps, gensets and trucks are all mobile assets.
3. It’s a profitable business which attracts investment and makes full cost recovery (plus profits)
4. It’s competitive and delivers a good service for customers (who all have the number of a tanker driver)
5. It’s economically inefficient and has few economies of scale, customers all need water tanks etc.

Here is an idea:

Mobile telephony has high capex / fixed costs, but note that assets are mobile. You can actually disassemble and move towers (albeit at a cost). The expensive (I assume) parts of the kit (generators, transmitters, etc) are also mobile.

Perhaps the inhibiting factor in piped water supply is the pipe? The device which offers considerable economies of scale and productivity gains also massively increases the risk for the operator, because her “capital” is buried and uneconomical to remove (and liquidate). So piped water supplies are very vulnerable to expropriation / political predation. Because of this, private investors simply don’t build them, despite the high returns to scale.

Another potential reason is that mobile assets offer better security for financing. However I can’t imagine many formal financing institutions are involved with these suppliers, and informal finance could probably be mobilised for pipes if there were demand for it. I suspect supply of finance / security is not the problem here.

Of course, public investors can (and do) build piped networks – but public institutions suffer from principal-agent and patronage problems which (usually) defeat them. Saying that we should “focus on service quality” misses the point that these institutions cannot focus on service because they do not employ people based on their ability to deliver services, they employ people based on who they are (patronage). They do not attempt to resolve principal-agent problems because service delivery is not their raison d’être – patronage is. Everyone in the sector knows this – but because it’s not something that outsiders can fix we like to focus on (i.e. invent) “problems” we can fix. This keeps us employed, after all (speaking of principal-agent problems…).

I don’t think this is about the weight of water, capacity, training, lack of finance, logistics, supply chains etc. None of those things stop coca cola (or mobile telephony), or the many profitable water operators of Anambra State and elsewhere.

It’s about a public institution (government or a CBO) actually being able to deliver a service itself, or allowing a private operator to invest in pipes without the threat of expropriation (what you refer to as an “enabling environment”). Neither of these problems – which would allow effective public or private provision – can be solved by outsiders.

So, given we can’t seem to leave this problem alone, what could we do to help?

Have you (or has anyone for that matter) ever tried funding the risky part of the investment (the pipes) for existing private water suppliers? Just pay for some pipes for an existing borehole guy (in South East Nigeria, say) and see what happens. It might be that repairing / replacing the pipes doesn’t happen because of the long payback time / risk of expropriation. But then we would at least know what we are up against – a question of property rights and political predation. Community work could then be focused on defending property rights rather than (say) workshops on O&M or book-keeping. There are millions of small businesses with electro-mechanical assets in Africa that run perfectly well without ever having attended an O&M or book-keeping workshop… To give one example, a miller I met in Nigeria explained his O&M (and return on investment) cost model: “One third of revenues for the machine, one third for the owner, and one third for me”.

It doesn’t really need to be more complicated than that, and so I don’t think “capacity” is the problem here, but “capacity” is what we outsiders bring and so we are keen to make it the problem.