How Social Franchises Are Addressing Complex Problems in the Developing World

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2 How Social Franchises Are Addressing Complex Problems in the Developing World

3 Marty Kress Executive Director, Global Water Institute The Ohio State University

4 Making a Difference: Sustainable Water Systems for Rural Communities in Tanzania

5 KEY TAKEAWAYS FROM THIS SESSION: Only 40% of rural Tanzanians have access to water despite billions in investments Tanzania has ~30,000 inoperable water points Failures result from poor management to lack of technicians and supply chains The OSU Global Water Institute has a marketbased solution, social franchising

6 A CRISIS AFFECTING MILLIONS 40% of rural Tanzanians have access to improved water Only 24% of medical delivery rooms have an improved water source at the facility, soap for hand washing and an adequate toilet Only 11% of people in rural areas have access to improved sanitation Few schools in the country have functioning hand-washing facilities (<10%)

7 WHY HAVE PAST EFFORTS FAILED?

8 THE SUSTAINABLE VILLAGE WATER SYSTEMS PROGRAM Current effort: 40 villages Average population: 3,000 Aiming for 20 L/d/person delivered within 30 mins of home

9 THE PHYSICAL WATER SYSTEM Taps PV Solar Panels Storage tank Customer interface: e-pay system Piping Digital sensors (connect with cloud) Pump

10 WATER SERVICES FRANCHISE MODEL: KEY STAKEHOLDERS Ownership & Stewardship Operations & Management Target: 350 Operational Days Per Year

11 A SINGLE FRANCHISEE CAN OPERATE IN MORE THAN ONE VILLAGE Franchisor Franchisee Franchisee Franchisee Franchisee Village Water System Village Water System Village Water System Village Water System Village Water System Village Water System Village Water System

12 HOW THE MONEY FLOWS Franchisor Capital Replacement Account Franchisee Franchisee Profit Community Org.

13 WHAT VALUE DOES THE FRANCHISOR PROVIDE? High standard of service Negotiated low prices on parts and help accessing credit Manages Field Consultants Business training and support to franchisees Certified parts are available when needed Qualified technicians available and incentivized to act quickly Monitoring services Monitoring of sensors aids in maintenance and also provides data to District

14 WHAT VALUE DOES THE FRANCHISEE PROVIDE? Skills to operate professionally Deposits into capital replacement account help assure money is available when needed System is maintained to maximize water availability Community can count on consistency and reliability of water availability

15 WHAT VALUE DOES THE COMMUNITY WATER MANAGEMENT ORGANIZATION PROVIDE? Represents the community s interests. Provide oversight of both the franchisee and franchisor Report issues to the District Engineer District personnel work with franchisee and franchisor to fix the problem Assures that the franchisee makes required deposits into Capital Replacement Account Signs-off on withdrawals from Capital Replacement Account (as does the franchisee)

16 WHAT VALUE DOES THE COMMUNITY WATER MANAGEMENT ORGANIZATION PROVIDE? Represents the government Provides oversight and consistency of the model Helps remedy issues raised by the community water organization Approves expenditures from the Capital Replacement Account to pay for major repairs Monitoring of operational status of system

17 REPAIR AND MAINTENANCE The franchisee will be expected to do regular maintenance and perform small repairs, and will maintain a stock of routine spare parts. The franchisor will conduct regular site assessments, be called for major repairs, and also manage the supply chain of major parts. Financing for repairs will come from the capital replacement account. If there is not enough money in the capital replacement account to cover repairs, the franchisor will help the community secure a loan using the capital account as collateral. Franchisee is incentivized to keep the system operating Needs revenue to be profitable Penalized if system is not operational at least 350 days/year Can be replaced by community or District Franchisee is incentivized to keep the system operating he/she is penalized if they do not respond within a specified number of days.

18 HOW DO WE ADDRESS THE KNOWN RISKS? Inadequate yield from water point Pre-construction site assessments Continuous monitoring of water usage and water level Insufficient demand from community Create awareness about clean water Pricing decision will incorporate local community s feedback Propagating the brand of clean and safe water Misappropriation of funds Sensors to monitor water pumped for proper accounting. Preparation and audit of monthly reports Restricted access to pumping system Frequent equipment breakdowns Penalties and incentives to ensure routine maintenance and early repairs Network of maintenance technicians managed by franchisor Lack of qualified people to fill roles Proper training of local individuals Increasing motivational levels

19 COMMUNITY ENGAGEMENT PROCESS Why is community engagement an essential component? Community is not simply a water services customer Under Tanzanian law, rural communities own and manage their water supply systems can t introduce a water service without community approval How communities choose to manage the system is reflective of local cultural, economic and political dynamics and histories Need to work with community to ensure that any new management model will be supported

20 THE SVWSP COMMUNITY ENGAGEMENT PROCESS 1. Preliminary site assessment of community demographics and any existing water system infrastructure 2. Letter of support sent from Ministry of Water and Irrigation s national office requesting cooperation at regional and district levels 3. Meet with regional / district officers to secure PO-RALG support and discuss project specifics 4. Meet with village leadership to discuss project, in collaboration with district officers 5. Meet with wider community to discuss project specifics, including introduction of signed agreements could require several meetings 6. With leadership s approval, conduct detailed site assessment to inform site-specific design (including pump test and WQ testing) 7. Review site-specific design with village leadership and sign agreements

21 SIGNED AGREEMENTS Culmination of community engagement process Provide mechanism for discussion of details around how to ensure technical and financial water system sustainability reduce risk Private Operator Contract Signatories: Village Council Chairman, Private operator / franchisee, District Water Engineer Franchisee responsibilities include tariff agreed upon with community, details of required bank accounts and flow of funds, operational parameters for water system and downtimes Village Council responsibilities include providing for most vulnerable community members, providing security for infrastructure, marketing use of the system among community members, and auditing franchisee Village Project Agreement Signatories: Village Council Chairman, District Water Engineer, SVWSP Project Manager Village Council responsibilities include supporting new water management model, signing private operator contract buying into franchise concept

22 BENEFITS PROVIDED BY THE MODEL Sustainable access to clean water Financial transparency Increasing business capacity economic engine Access to spare parts -- supply chains Empowering women (entrepreneurs and customers) Water level sensors: responsible groundwater management Sustainable business solution to failure modes

23 THE REAL BENEFIT Sales

24 KEY TAKEAWAYS FROM THIS SESSION: Only 40% of rural Tanzanians have access to water despite billions in investments Tanzania has ~30,000 inoperable water points Failures result from poor management to lack of technicians and supply chains The OSU Global Water Institute has a marketbased solution, social franchising

25 Thank you! Marty Kress, Executive Director