Lessons Learned in Scaling Digital Solutions in the Water Sector

"Digitalization is transforming how utilities function and how water services are delivered," the GSM Association (GSMA) asserts in a report focusing on scaling digital solutions in the water sector. The report adds: "New technologies not only enable existing systems to operate more efficiently, but also make new service delivery models possible. Some innovations are already available in the water sector, with some solutions scaling, while newer ones are developing."

GSMA's Mobile for Development (M4D) Utilities program works to unlock business models that leverage mobile technology to deliver better and more affordable energy, water and sanitation services in emerging markets. The UK-based organization, which represents the interests of mobile operators worldwide, points out that "Through our Innovation Fund we have provided catalytic support to start-ups, non-governmental organizations, and utilities across Asia and Africa to trial and scale new models." What is more, "This support has helped validate and launch a variety of digital solutions to expand and improve water services." The report examines the experiences of two past Innovation Fund grantees, Wonderkid and CityTaps whose journeys to scale hold lessons for all seeking to accelerate digitalization.

"Both companies are business-to-business (B2B) service providers," the report explains. "Wonderkid provides bespoke software solutions to 40 water utilities in Kenya and other African markets. CityTaps provides pay-as-you-go (PAYG) digital metering solutions to utilities. Currently operating in West Africa and Central America, CityTaps is looking to expand in the Kenyan market. Based on the experiences of these two grantees, we identify some critical considerations for innovators at different stages, from ideation to validation, iteration, refinement, scaling and widespread adoption. Their experiences also highlight some of the strategies and critical stages at which different actors can support innovators to scale, such as funders and the public sector."

The GSMA presents the following supporting actions for key stakeholder groups segmented into five categories:

Funders and Donors

• Invest in developing digital ecosystems as well as specific solutions and businesses;
• Support the development of digital skills within utilities and among their users; and
• Structure support to innovators such that capital is available both at the ideation and scaling stages.

Innovators

• Be conscious of the capital costs faced by utilities, and structure product offerings to account for these; Maintain a lean approach to the iteration process and develop an adaptable business model; and
• Focus on building trust and awareness to drive service adoption.

Utilities

• Mark out a pathway and take steps towards progressive adoption;
• Make investments in digital readiness;
• Demonstrate leadership in digital adoption; and
• Invest in customer education and promotional campaigns to drive adoption.

Mobile Network Operators (MNOs)

• Pursue partnerships to enhance customer base, product offering and brand image;
• Create partnerships with utility service providers to encourage service uptake in new markets; and
• Focus on creating a more accessible environment for third parties.

Government and Regulators

• Put in place strong performance management systems. This is what creates some incentives for performance improvements; and
• Ensure that policy allows for utility service providers to form partnerships with innovators and improve their service offering.

Having watched the rapid digitalization in low- and middle-income countries (LMICs) over the past few years, I concur with the report's conclusion:

No single actor can scale digitalization without working with others. Governments, utilities, innovators, MNOs and donors all have unique capabilities and capacity, and it is only by working together that the full benefits of digitalization can be realized. While new innovations are always emerging, there are already many viable technologies in the water sector that have yet to see widespread adoption. These technologies provide the opportunity to tackle long-standing and intractable challenges in the water sector, and benefit hundreds of millions of people who still lack access to a safe, affordable and reliable water source.

Do you agree with the recommended supporting actions for key stakeholder groups? What are your recommendations for transforming how utilities function through digitalization?

If interested in learning more about PAYG as a business model in delivering utilities to people in LMICs, I recommend reading "GSMA Report Explores the Value of Pay-as-You-Go Solar for Mobile Operators in Africa" previously published on this blog.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

GSMA Report Explores the Value of Pay-as-You-Go Solar for Mobile Operators in Africa

On a trip to Africa just a few years ago, I was unable to recharge my mobile phone because the power was temporary unavailable in the city that I was visiting. This experience was a reminder that the value of a mobile phone to an individual is diminished if she is unable to keep device charged on a regular basis. Given the ubiquity of mobile phones in developing countries and their important value not just as a communication tool, but their use for utilizing value-added services such as education, business management, and mobile banking.

According to a study produced by the GSMA's Mobile for Development Utilities program, which aims to improve access to basic energy, water and sanitation services in underserved communities using mobile technology and infrastructure, the pay-as-you-go (PAYG) "solar model has spread rapidly across developing countries as a means of delivering energy services. Over one million PAYG devices were sold during the first six months of 2019. The growth of PAYG solar has only been possible with the rapid growth of mobile money and mobile connectivity that allows customers to pay by instalments, and companies to remotely control and monitor the solar home systems (SHS). And in turn, the PAYG solar industry has helped to drive the adoption and use of mobile money, by giving customers a regular and essential use case. Solar energy provides mobile subscribers with a convenient, safe and affordable way to keep their phones charged."

Available in English and Français, the report explains that it is "the first multi-country analysis to quantify the value of that synergy for the mobile industry. This was done by looking at mobile usage data from cohorts of PAYG customers starting six months before, and through the first six months of making SHS payments, and comparing this same analysis to a control group (not using PAYG solar). Five mobile operators from Uganda, Rwanda, Benin, Côte d’Ivoire, and Zambia worked with us to provide aggregated and anonymized mobile money and GSM data in order to measure the commercial value that the PAYG solar industry has for the mobile industry. The key findings from this analysis are as follows:"

PAYG solar customers show significantly increased mobile money usage, beyond just solar payments

"Across markets there is a clear trend showing that PAYG solar customers increase their mobile money usage from 27 percent up to 113 percent," the report says. "Customers made more mobile money transactions not only to pay for the solar home systems, but more transactions overall. This shows that PAYG solar can drive a range of mobile money transactions, and therefore makes a very important use case to develop mobile money ecosystems."

PAYG solar drives adoption of mobile money

"Across markets, 21 to 31 percent of PAYG solar customers were new to mobile money, or reactivated their accounts (after being inactive for 90 days or more)," notes the report. "This demonstrates that PAYG solar companies are laying the foundation of mobile money by introducing, or re-introducing customers to the service through their agents, and providing them with the essential training to keep making their payments for each PAYG solar instalment."

PAYG solar customers yield increased overall revenue for mobile operators

"It is striking that overall revenue did increase at higher rates than the control group in all markets. This shows that PAYG solar customers increase their usage of other mobile services, such as voice, SMS, and data more than other customers. Specifically, in two markets where we had data (Côte d’Ivoire and Uganda), PAYG solar customers significantly increased their usage of mobile data. This finding is particularly important because it shows that in an era where mobile operators are struggling with declining voice revenues, PAYG solar can lead to broader digital inclusion."

PAYG solar demonstrates the case for strengthening and broadening collaboration

The report asserts that "[t]hese findings provide robust evidence for the immense value that PAYG solar has for mobile operators to grow their business - helping them to reach more consumers and deepening their use of mobile services. Nonetheless, there are limitations to this kind of study, and we faced gaps in the data, for example we found it difficult to measure the impact of PAYG solar on reducing customer churn for mobile operators due to the limited timeframe of the study."

In addition to the aforementioned findings, the report presents three key actions for the mobile industry to stimulate PAYG partnerships:

1. "For mobile operators already working with PAYG solar providers, there's a need to look at how deeper collaboration with these partners can further drive these mutual benefits.
2. "For all mobile operators, investing in mobile money as a full business platform is essential to attract innovative service providers, and allow them to quickly and affordably put it to work.
3. "Mobile operators can gain unique business intelligence on their partnerships from their data."

Lastly, I share in the "hope that this analysis provides the groundwork for deeper research on synergies between mobile operators and PAYG solar providers, as well as other PAYG services that are gaining traction in emerging markets, such as prepaid water and cooking gas."

What recommendations do you have for how mobile operators can support sustainable development initiatives?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.