The Franchise Model - Global Water...
Transcript of The Franchise Model - Global Water...
TheSustainableVillageWaterSystemsProgram(SVWSP)forTanzania
TheFranchiseModel
AbouttheSustainableVillageWaterSystemsProgram(SVWSP)Program
The Sustainable Village Water Systems Program (SVWSP) is a multi-faceted initiative aimed at
makingmeasureable,far-reachingprogresstowardwaterandfoodsecurityinTanzania.ItisledbyThe
Ohio State University (OSU) and the University of Dodoma in Tanzania (UDOM) and executed with
government, industry and NGO partners. The program consists of a group of interrelated efforts
designedtobothnurturesustainabledevelopmentintheenergyandwatersectorsinTanzaniaandto
developtheworkforcethatwillbeabletoturnwaterandenergyintobusiness,prosperity,healthand
wellness.
The centerpiece of the SVWSP is a national water point rehabilitation effort that focuses on
providingsustainableaccesstowater,sanitation,andrenewableenergyforruralvillages identifiedby
theTanzanianMinistryofWater.Giventhatoneofthemainfactorsinruralwatersystemfailureislack
ofcapacityformaintenanceandrepair,akeyelementtoensurethesustainabilityofthewatersystem
willbeafranchise-basedfor-profitbusinessmodel.Thenewlyestablishedfranchisesystemwillcreate
mechanismsand incentives to independentlymaintainwaterpointsandcreateneweconomicactivity
tiedtothecontinuedfunctioningofthewatersystem.Oncearehabilitatedwatersystemisinplace,a
community’s assets, institutions, and training networks can be utilized to create new jobs, support
additional infrastructure development in the community, and establish alternate revenue streams.
Designed into each system will be the capabilities to support one pilot economic activity for the
community, such as brick-making, mobile charging stations, aquaponics, livestock, or other forms of
high-value agriculture. The goal is not simply to provide clean water, but also spur economic
developmentthatcreatessignificantandsustainablechangeineachcommunity.
Apriority focusof theSVWSP is to stronglyengagewomen in their communities.Womenwill be
encouragedtobecomefranchise-ownersoroperators,trainersandengageintheeconomicactivitythat
resultsfromtheprogram.Sincewomenbeartheprimaryresponsibilityofgatheringwaterandwillreap
thegreatestbenefitfromtheVillageWaterSystem,theyarethebiggeststakeholdersinthesuccessof
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theproject.Encouragingparticipationfromwomenhasbeenkeytothesuccessofotherwaterprojects
inAfrica.
“The[HESAWA]waterprojectsarereducingwomen'sworkloads,distancetravelledandliberate
timeforwomenwhonowcanparticipate inotheractivities.Womenhavemadeasustainable
contribution to the program, mainly taking up roles based on the social division of labor.
However, this is changing as bothmen andwomen have equal access to training to become
villagehealthworkersandwaterpumpcaretakersonabasisofequalparticipation.”
-UNESCOreportonHESAWAprogram,Tanzania(UNESCO,n.d.)
The initialphaseof theSVWSPwill target125villagesandtownsacrossTanzania,primarily in the
northwestandcentral regionsof the country.Upon successful completionof thepilot, theTanzanian
government has committed to fund an additional 5,000water points. In addition, this initial 125-site
pilotwillallowforon-the-groundlessonslearnedtobeappliedtosubsequentsites.
AVillageWaterSystem–ASystemsApproach
EachVillageWaterSystemwillconsistofawell,asolar-poweredpump,watertank(s),watertaps,
and piping to distributed tap stands, as dictated by the population dispersion and the needs of the
modeleconomicactivitychosenbythatcommunity.Forlargercommunitiesandundercertainaquifer
conditions,additionalwellsandpumpswillbeconstructedasneeded.Thegoal is tohaveasourceof
waterwithin400metersofallhouseholds,wherefeasible,andcapacitytoprovide25litersperperson
per day for domestic needs, as stated in the Tanzania NationalWater Sector Development Strategy
(2008).AcoresetofengineeringdesignswillserveasthetemplateforeachVillageWaterSystem.This
design will be modified as necessary to account for local characteristics such as water table depth,
aquiferyieldandrechargerate,topography,populationconcentration,presenceoflivestock,andother
factors impacting thewater point such as existing infrastructure or sources of contamination.Where
possible,non-functioningwaterpointswillberehabilitated.Onacase-by-casebasis,anewwellmaybe
installedwhenitrepresentsthemostcost-effectiveandsustainableapproach.
“Improveaffordabilitybyrightsizing:designandbuildassetsthatareappropriateforsmall-scale
networks, so that cost-recovery prices can be kept as low as possible. Realistically assess
demand and adopt design, construction standards and procurement rules to align network
designwithit.”
–WorldBankcasestudyreview(SyandWarner,2014).
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The Village Water Systems will use a standardized set of core parts in order to decrease the
complexityofthedesign,thesupplychain,andtherepair/maintenancenetwork.Preferredvendorswill
beidentifiedthatcanreliablyprovidesparepartsincountry,withpartwarranties.
Theobjectivesofthepreferredvendorsystemare:
• to develop a reliable, long-term supply chain that can support a large, multi-year water point
rehabilitationprojectinTanzaniainvolvingupto5,000solarpumpsystems;
• to support standardization ofwater systemdesign, implementation, operations andmaintenance
within-countryrepaircapacity,sparepartswarehousingandlogistics;
• tosecurethelowestpossiblepricesforwatersystemcomponentsandconstructionmaterials;and
• tosecureMasterOrderingAgreementsto lock-in long-termprices,standardorderinganddelivery
arrangements,warrantyprovisions,repairtimes,andothercommitments.
Tanzanianmanufacturersandsupplierswillbeprioritizedwheneverpossible.MajiTechEngineeringhas
beenselectedastheSVWSPin-countryconstructionvendorandwillprocureconstructionmaterialsand
equipmentfromthepreferredvendors.Thecurrentlistofproposedvendorsis:
MaterialsList PreferredVendors
SolarWaterPumpingSystems•Electricmotors•Controllers•Sensorsanddatacommunication
•Lorentz•Grondfos•PEnA
SolarPanels
•Tata•PEnA•ReneSola•STGInternational
PVCCasing •Plasco•Kibico
Cement
•NdolaEngineeringWorks•CementDistributorsCo.•MbeyaCementCo.•TangaCementCo
WaterStorageTanks
•Kiboko•Silafrica•TriTank•PolyTank
TheVillageWaterSystemwillbedesignedtoalsosupportthepiloteconomicactivitythatischosen
byeachcommunity,e.g.brick-making,aquaponics,cell-phonechargingstations,enhancedagriculture.
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Forinstance,ifthecommunitydecidestogrowfruittrees,thenthewatersystemwillbesitedandsized
toprovidewaterforthisactivity.Theeconomicactivitychosenwillneedtofitwithintheconstraintsof
the soil conditions, climate, the yield and quality of the aquifer, and the community needs and
capabilities.
Sanitation facilities will also be constructed or rehabilitated in each village and supported by
activitiestopromotehealthyhygienepractices.
“Good sanitation and hygiene practices are essential to prevent contamination of water
resources. Therefore,water supplyand sanitationprojects andhygienepromotion shouldbe
viewedas interdependentactivities. Implementing themtogether leads to thegreatesthealth
benefitandisconsideredabestpracticeinthesector.”
-USAIDWaterSupplyandSanitationSectorGuidelines(TheCadmusGroupInc,2015).
Sanitation efforts will focus on providing improved sanitation to schools and health clinics, and
developingasupplychainforconstructionmaterialsandspareparts.
TheNeedforaFranchiseModel
Water points in rural Africa currently face a high failure rate (40% according to a 2015 Tanzania
WaterPointMappingexercise), inpartbecausecommunitiesarenotalwaysable tomanagethemon
their own. To accomplish the goal of developing a sustainable system, we are proposing the
implementation of a franchisemodel. The core philosophy behind the establishment of a franchise-
basedsystemforwaterdeliveryandmaintenanceisthatawaterpointismorelikelytobesustainableif
individualshaveavestedeconomicinterestinthecontinualflowofwater.
“Avibrantanddiverselocalprivatesectoriscriticaltothedeliveryof[water]services,asa
largebodyofresearchconductedoverthepastdecadeshows.”
-WorldBankreport,(SyandWarner,2014).
AspointedoutinaWaterforPeopleliteraturereview(Foster,2012,p.20),amarket-basedapproach
aligns commercial incentiveswith sustainability objectives. The SVWSPmodel creates incentives and
controls to unlock these freemarket advantageswhile protecting the basic right of a community to
cleanwateraccess. Webelievethismodelcaneffectivelyaddressseveralexistingproblemsthatcan
preventlong-termsustainabilityofwaterprojects:
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• Lack of financial resources: the proposed franchise system establishes controls,metrics, and
incentivesthataddresstheunderlyingissuesthatleadtoalackofsustainability.
“[Thisstudy]didnotfindanyevidenceatthevillagelevelthatfindingpartswasamajor
problem;thebottleneckisfindingthefundstopayforthem.”
–WaterAidTanzaniareport,(Moon,2006).
“Theclearestresultfromthestudyisthatitispoorfinancialmanagementthatis
underminingsustainabilityintheareastudied.”
-WaterAidTanzaniareport,(Haysom,2006).
• Lackof knowledgeand institutional capacity: pre-installation andongoing training aswell as
written service contractswill equip the community and franchisepartnerswith thenecessary
skillsandstructuretoindependentlymanageVillageWaterSystems.
“[An]importantaspectistheneedforcapacitybuildingandinstitutionalstrengthening…
capacityofinstitutionsmustbeconsiderediftheyaretobeabletofulfillthenecessary
supportroleeffectively,andappropriateinstitutionalstrengtheningmayberequiredat
variousstages.”
-RuralWaterSupplyinAfrica,(HarveyandReed,2004).
• Lack of access to service and parts: the components of the Village Water Systems will be
standardized and the franchisees will maintain a supply of commonly needed parts and be
professionally trained to do preventativemaintenance andminor repairs. The franchisorwill
committotrainingmechanics,maintainingasupplychainforpartsdistribution,andperforming
major repairs. The burden on the community therefore will be reduced by having service
deliveryprovidedbyprofessionallystaffedorganizationswithqualifiedandcertifiedtechnicians
(Carter,2012).
“StandardizationofTechnologies.Thewidedispersionoftechnologiesposescostsinterms
ofavailabilityofsparepartsandthelocalknowledgetodealwiththedifferenttechnologies.
Standardizingtechnologiesandsettingminimumstandards,suchashandpumpsmay
reducethecostofsparepartswhereaseconomiesofscalemayalsohaveapositiveimpact
onthepriceofsuchtechnologies.”
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-WorldBankPublicExpenditureReviewoftheWaterSector,Tanzania,(vanden
Berg,etal.,2009).
TheSVWSPFranchiseModel
Afranchisesystemisoneinwhichaparty(thefranchisee)paysanotherparty(thefranchisor)afee
to license the right to proprietary knowledge, products, processes, or trademarks in order to sell a
product or service under the franchisor’s name. A franchise system provides benefits of scale and
consistent branding at the franchisor level, while enabling local entrepreneurs to implement the
business model at the community level. A franchise system helps implement a brand promise and
standardofqualitythroughoutthesystem,whichconsumerscanrelyon.Thefranchisorestablishesthe
franchisesystemandbrandstandards,provides thenecessary intellectualproperty, systems, logistics,
and traininganddevelopmentwhile the franchiseemanagesday-to-dayoperations. Franchised-based
models in theWASH (water, sanitationandhygiene) sectorarenotnewto thedevelopingworld.For
example, Sarvajal runs a franchised water kiosk system in mid-sized villages in India. Sanergy has
developed a franchised brand of fee-for-use toilets in urban Kenya. Jibu sells bottled purified water
through franchisee kiosks in urban areas of Rwanda and Uganda. Water Health International (WHI)
builds and operates branded clean water centers in India, Bangladesh, Philippines, and Ghana that
exhibitsomeaspectsofafranchisemodel.
Franchisee
Franchisor
Franchisee Franchisee
Franchisee
Figure1:FranchiseSystemDesign
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Inourmodel, therewill likelybeoneor two franchisors responsible forallVillageWaterSystems
installed inTanzania. AsshowninFigure1,thefranchisorwillpartnerwithmanyfranchisees,eachof
whomwillmanageeitheroneVillageWaterSystemoraclusterofthem.Severalpartiesareinvolvedin
theproposedfranchisemodel,whichcreateschecksandbalanceswithinthesystem.Thishelpsmitigate
the risk of fraudulent behavior and decreases the need for outside intervention to ensure ongoing
sustainability.
“Theserviceprovider,regulator,userandassetholderhaveimportantlydifferentinterestswith
respecttoawatersupply.Wheretheserolesareeachperformedbydifferentmembersofthe
village,stakeholders,intheirrespectivecapacity,canpursuetheinterestsoftheirpositionfree
ofinternalconflict,therebybetterfulfillingtherequirementsofthatrole.”
-WaterAidTanzania,(Haysom,2006)
The detailed roles and responsibilities of each party in the model and the reporting structure are
providedintheAppendices,butinshort,theresponsibilitiesofthekeyrolesareasfollows:
• Franchisor:anewlycreatedentity,backedbyanin-countrymanagementteamwithextensive
businessexperience.Thefranchisorisprimarilyinthebusinessofsupportingthefranchisees
andtheirnumberonepriorityisthesuccessofthelocalfranchisees.Thefranchisoris
responsibleforidentifyingandrecruitingfranchiseesaswellasprovidingthetraining,
marketing,andfieldsupportnecessaryforthefranchiseestobesuccessful.Theywillalso
maintainasupplychainbyworkingwiththepreferredvendorstoorderreplacementpartsand
distributethemtothefranchisees.Thiswilllikelybeimplementedwithseveralpartsdepots
strategicallylocatedthroughoutthecountrywhichstockthehighercost,longerleadtimeparts.
Thefranchisorwillalsoemployanetworkoflocalareamechanicstoconductmajorrepairson
thewaterpointsandacadreoffieldsupportconsultantswhowillprovidebusinesssupportto
thefranchisees.
• Franchisee:anewlycreatedsmallbusinesswhoisprimarilyinthebusinessofdeliveringtheend
producttoconsumers.Theyareresponsiblefortheday-to-daymanagementofthewater
points.Tasksrequiredtofulfillthisroleincludecollectionofuserfees,employingandmanaging
attendantsandsecuritypersonnel,keepingfinancialrecords,conductinglocalmarketingefforts,
completingminorrepairwork,maintainingtheequipmentandsiteincleanworkingorder,and
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cultivatingrelationshipswiththelocalCOWSO.Thefranchiseewillalsohaveasupplyoflower-
cost/high-usepartsandsupplieson-hand.
• CommunityOwnedWaterSupplyOrganization(COWSO):acommunity-basedorganization
thatrepresentsownershipofthephysicalassetsandwhosemainpurposeistorepresentthe
community’sinterestsandperformalocaloversightroleovertheperformanceofthefranchisor
andfranchisee.InmanycommunitiesaformofCOWSOalreadyexistsatthevillagelevel,so
thesenewresponsibilitiescanbeincludedwiththoseoftheexistingorganization.
AstandardFranchiseAgreementwillbedevelopedwhichisacontractbetweenthefranchiseeand
franchisorandgovernstherelationshipbetweenthem.Thisdocumentwillprovidetheguardrailstothe
franchiseeforrunningtheoperationandhighlightthesupportprovidedbythefranchisor.Inaddition,a
WaterServicesAgreement(WSA),developedforeachVillageWaterSystem,willcodifytheSVWSP
franchisesystem.TheWSAwillbethelegalbasisforoperatingthewaterpointandwillprovidea
transparentrelationshipbetweenthecommunityandthefranchisepartners.Inthisway,the
community’srighttowaterwillberespectedandfinancialincentivestoprovidethiswaterwillbe
createdforthefranchisepartners.
Pre-InstallationActivity
BeforeaVillageWaterSystemisinstalled,asiteassessmentwillbeconductedtolearnmoreabout
theexistinghardware(infrastructureandwaterassets)andsoftware(humanandinstitutionalcapacity).
The site assessments will review in-place infrastructure, engineering constraints, existence and
capabilitiesofcommunityorganizations(COWSOs),currentwatermanagementstructures,andexisting
sources / uses of water. In addition, the local presence of NGOswill be surveyedwith the intent of
leveragingtheirknowledgeofthecommunity,particularlywithregardtoareasofgreatestopportunity
for economic development, and to develop a partnership throughwhich the community can receive
support and training as described below. The community will also be consulted to determine which
modeleconomicactivitywillbesupportedbytheproposedwatersystem.Theseassessmentswillhelp
determine the level of investment needed to rehabilitate the existing water point and whether
additionalboreholeswillbeneededtoadequatelyprovidethecommunitywithenoughwaterforboth
domestic and enhanced economic uses. The assessmentswill also help start the process of building
communitysupportandbuy-infortheVillageWaterSystemandtheaccompanyingfranchisemodelthat
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willhelpassurethesustainabilityofthewaterandtheeconomicdevelopment.Todate,45siteshave
alreadybeenassessed.
Aftertheassessment,butstillpriortoinstallingaVillageWaterSystem,trainingwillbeconductedin
order to increase the human and institutional capacity within the community. This approach follows
best practices in the development field as noted in USAID Water Supply and Sanitation Sector
Guidelines: “Also important are educational and participatory efforts to encourage sustainable
behavioralpractices”(TheCadmusGroupInc.,2015).
Itwillbe importanttoconductatransparentprocess indevelopingtheWaterServicesAgreement
sothatthecommunityfullyunderstandsthecostsandbenefitsthatthefranchisesystemwillcreate.A
respectedpartywhothecommunityviewsasindependentorimpartialshouldbeinvolved,sinceaspects
ofwaterpointmanagementand feecollectionwillbe takenoutof thecommunity’scontrolandgiven
over to a private operator. This role may be filled by a local NGO that is active in the area or a
communityleader.Thegoalofthisprocessistoinvolvethecommunityinordertogaintheirbuy-inand
createasenseofownershipovertheprocessandsubsequentoutcomes.
Another importantpre-installationactivitywill be improving the community’s knowledgeof clean
water, sanitation, and associated health outcomes. A case study review by Hystra found that social
marketingtotheeconomicallydisadvantagedshouldbeagrowingemphasisofsocialentrepreneurship
in order to increase penetration and create lasting change (de Carvalho, et al., 2011). These initial
effortswill likely beNGO-led, though contracted by the franchisor, andwill focus on general health,
hygiene,andsanitationtrainingforthecommunityatlarge,withanemphasisoninvolvinglocalwomen
astrainers.Thecoreideaistocreateanetworkeffectthroughinvolvementofthewomeninthelocal
community, thereby changing the perceptions and practices for the next generation. Community
members will learn best practices for hygiene and sanitation. Subsequent social marketing efforts
emphasizingthehealthandeconomicbenefitsofcleanwaterwillbecarriedoutbythe franchisee (in
conjunctionwiththefranchisor)tostimulatedemandfortheservice.
MembersoftheCOWSOwillneedtobetrainedtofulfilltheirfinancialmanagement,reporting,and
oversight roles specific to the franchise system. Even in communities where COWSOs already exist,
training will be provided to ensure sufficient capabilities exist and to enable a smoothmanagement
transitiontothenewfranchisesystem.Thiswilllikelyneedtobeledbyanindependentparty,suchasa
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localNGO,inordertoavoidanyperceptionsofaconflictofinterestbetweenthefranchisepartnersand
thisoversightrole.
SelectionandTrainingofFranchisees
Recruitmentandselectionoffranchiseeswillbecrucialtothesuccessofthefranchisesystem.Alist
ofqualificationswill bedevelopedbasedon the requirementsof the franchisee role. Identifying local
womencapableoffulfillingthisrolewillbeapriorityoftherecruitmentandselectionprocess.Insome
locations it might be difficult to find someone whomeets all qualifications. This will likely require a
higherlevelofinvolvementfromthefranchisortoensuresuccessofthelocalfranchise.Ataminimum,
localfranchiseeswillneedtobehighlymotivated,well-respectedinthecommunity,andhavethedesire
and capacity to learn how to run a small business as opposed to simply being an employee of the
franchisor.
Whilerecruitmenteffortsof local franchiseeswill focuson identifyingpeoplecapableoffillingthe
role,on-boardtrainingwillstillneedtobeconductedtoensuretheyareequippedwiththenecessary
skillstorunthefranchise.Thistrainingwillhelpdevelopgeneralbusinessskills,includingaccountingand
financialmanagement,aswellasskillsspecifictooperatingandmaintainingtheVillageWaterSystem.
Additionally, responsibility for ongoing social marketing of clean water will fall in-part to the local
franchisee.Upfronttrainingforfranchiseeswillbeprovidedbythefranchisor.However,thistrainingwill
notbesufficientformostfranchiseestoreachtheirfullpotential.Ongoingoperationalsupportwillalso
need to be provided to help the franchisees learn frombest practices and continue to improve their
profitability. Therefore the franchisor will employ Field Support Consultants who will help the
franchiseesonanongoingbasis(theirroleisdescribedinthenextsection).
FranchisorWorkforceDevelopment
Thefranchisorwilltrainandemployanetworkoffull-timelocalareamechanics.Eachmechanicwill
beresponsibleforaclusterofvillages,withthenumberbasedonrequiredmaintenanceschedulesand
routeoptimization.Thefranchisorwillberesponsiblefortrainingandcertifyingthemechanicsthrough
an education program conducted by UDOM or the franchisor. This training program will provide a
standardizedcertificate that lendscredibility to theskillsof themechanicsandactsasaguarantee to
the quality of the support system for the water pumps. In addition to knowledge transfer and the
creationofjobs,thiswillalsoaddresstheneedforskilledlaborthatpreventsmanypumpsfrombeing
repaired.
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Thefranchisorwillalsotrainandemployanetworkoffieldsupportconsultants.Thisfieldstaffwill
actasthedirectcommunicationlinebetweenthefranchisorandthefranchisees.Theirprimarygoalisto
helpthefranchiseebeasprofitableaspossible,whileoperatingwithinthetermsoftheWaterServices
Agreementandthefranchiseagreement.Itisimportanttonotethatthisroleisnotintendedtobethe
franchisee’ssupervisororboss,butratheraconsultantwhoisanemployeeofthefranchisorandableto
provide support to the franchisees. The field support consultant will provide business consulting on
costs, staffing,marketing, and record keepingwith the end goal of improving the profitability of the
franchisee. They will also ensure that brand standards aremaintained at the local level and identify
problemsatafranchiseelevelbeforetheyleadtonon-performanceordefault.Fieldsupportconsultants
willneedtobehighlyeducatedindividualswhohavegreatinterpersonalskillsandarewillingtotravel
throughouttheirregiontovisiteachsiteonaregularbasis.
FranchiseSystemFinancialFlows
Figure2showsthefinancialflowsintheFranchiseModel. Theflowoffundsneedtobedesigned
with3keyideasinmind:
• IncentivesneedtobedesignedtoencourageallpartiestokeeptheVillageWaterSystemupand
runningandformaintenanceissuestobeaddressedquickly.
• Checksandbalancesneedtobeinplacesothatthecommunityisconfidentthateachpartyis
actingintheirbestinterest.
• Financial resourceshave tobeavailablewhenmajor repairsare requiredso thatdowntime is
minimized.
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Prior to the commencement of operations, the franchisor and franchisee will each submit a
refundable deposit into a Waterpoint Account for each Village Water System for which they have
enteredintoaWSA(theFranchisorBondandFranchiseeBond,respectively).Thesebondswillserveasa
guaranteefortheperformanceofthefranchiseeandfranchisor,andwillbeusedtocoverexpensesor
lossofrevenuecausedbythenon-performanceofcertainobligationsbyeitherparty.
In thenormalcourseofoperations, funds fromusertariffswillbecollectedbythefranchiseeand
distributedtothefranchisorandthecommunity’swaterfund,asfollows:
• Onadailybasis,anemployeeofthefranchiseecollectsusertariffsatthepointofsale.
• Onamonthlybasis, thefranchiseewilldeposita fixedamount (theMonthlyDeposit) intothe
communitywaterpoint’sbankaccount(theWaterpointAccount).TheMonthlyDepositamount
willbesetintheWSAandwillbesizedinordertocoveranticipatedmajorrepairs.Additionally,
over the long run, the cumulative amount could be useful for absorbing fluctuating revenue
flowsandotherseasonalityinthesystem.
• Onamonthlybasis,thefranchiseewillalsoremittheFranchiseFeetothefranchisor(TBDfixed
/%/mix).
• Revenuescollected inexcessof theMonthlyDepositandtheFranchiseFeeare for theuseof
thefranchiseetopayexpensesandretainasprofit.
UserWaterTariff
Franchisee
Franchisor
WaterpointAccount
FranchiseeAccount
Users
CreditProvider
WaterTariffs
MonthlyDeposit
FranchiseFee
Excessfunds
Loan P&IPaymentfor
Parts
FlowoffundsWatertariffscollectedbyfranchiseeareappliedinfollowingorder:1. Attendantandsecuritysalaries2. MonthlyDeposit3. FranchiseFee4. Excess(ifany)foruseat
franchiseediscretion
=Franchisepartners
=Associatedthirdparties
=Bankaccounts
=Ongoingfundsflow
=Asneededfundsflow
COWSO
FinancialOversightRole
Figure2:FlowofFunds
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Thistariffwillbebasedonaperliterrate,asagreeduponwiththecommunityintheWaterServices
Agreement. AWaterAid Tanzania report found this approach towork in the field: “Onepractice that
seemed to improve revenue collection in Dodoma was payment per bucket, as opposed to ad hoc,
annualormonthlycontributions.Thisisduetothefactthatthepaymentmethodisinescapable,simple
andtransparent”(Haysom,2006).Appendix3outlinesalternativetariffstructuresandidentifiessome
oftheadvantagesanddisadvantagesofeach.
Payment formsunderconsiderationarecash,mobilepayment services,prepaidwatercards /
tokens,orbartering inpastoral areas.Cashhas thebenefitofuniversal accessandeaseofusebut is
easytomisappropriate.Mobilepaymentservicesaremoresecureandtransparentbutrequiretheuser
toownamobilephoneandhavecellular serviceat the timeofpayment.Prepaidcards / tokensalso
reducethelikelihoodoftheftbutaddalayerofcomplexityandexpensetothesystem.Mobilemoney
services such as M-Pesa also incur fees for the user and the franchise partners, and only 35% of
Tanzanian households have an account (Economides and Jeziorski, 2015). To the extent that a low
burden/costprepaidcardsystemcanbeimplemented,thisislikelythebestformofpaymenttoensure
universalaccessaswellastransparencyandfinancialcontrol.Sarvajalusesaprepaidcardasacashless
pointofsalepaymentsystemutilizingcloud-basedRFID(radiofrequencyidentification)-enabledwater
vending machines in each of the villages. A realistic approach will likely combine a prepaid card or
mobiletechnologywhileretainingtheabilityforconsumerstopaycashonsiteintheshorttermwhile
migrating to a technology-based transfer for long term sustainability. The paymentwill also need to
accommodateoptionsfornon-cashpayment,forinstancepayingwithlivestock,cropsorbarteringother
services.
Oncethesystemisin-place,themodelcanbeadjustedtocreatetieredpricingbasedonserviceand
consumptionneeds.Forinstance,adeliverysystemcanbesetuptodeliverwatertoahouseholdforan
added fee, thereby freeing time for the woman of the household to pursue alternate employment
opportunities or engage in educational activities. Additionally, depending on the purchase pattern
duringtheday,differentiatedpricingmodelscanbeusedasawaytospreadthedemandevenlyacross
thedayforbetterutilizationandtosuittheconvenienceneedsofthecustomer.Forexample,watercan
bechargedatapremiumduringtherushhourssuchasmorningoreveningtimewhilealowerratecan
beappliedduringtheafternoon.Inadditiontoincreasingtheprofitabilityofthemodel,thisopportunity
also provides an option for low-income households to have access to clean water by leveraging the
differentiatedpricingwithslightmodificationsintheirneeds.
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RepairsandMaintenance
Repair and maintenance responsibilities for the VillageWater Systems will be split between the
franchiseeand the franchisor. The franchiseewill be responsible forminor repairsandmaintenance,
whichincludeskeepingallabove-groundinfrastructureingoodworkingorder.Theywillbesupportedin
thisrolebytrainingprovidedbythefranchisor,aswellasoperationalhandbooksinEnglish,Swahili,and
pictorialformat.Thefranchiseewillkeepastockofroutineparts(listTBD)sothatthereisnodelayin
addressingroutinemaintenanceissues.Thefranchiseewillalsohaveatechnicalsupportnumbertocall
(staffedbythefranchisor)iftheyhaveanyquestions.
The franchisor will be responsible for conducting site inspections on a regular basis, completing
moresignificantrepairstotheelectricalsystemsorin-groundpumpingsystems,andmaintainingaparts
supply chain.Asnotedabove, there shouldbe regional parts/supplydepots to facilitate rapid access.
Thefranchisorwillemployanetworkof localareamechanicswhowillvisiteachVillageWaterSystem
on a regular schedule in order to inspect the condition of the infrastructure and perform scheduled
preventativemaintenance. These routinemaintenance visitswill keep thewarranty agreementswith
thepreferredvendorsingoodstandingandwillhelptoreducetheoverallrepairandmaintenancecosts
associatedwith theequipment.Themechanicswill alsovisit villages,asneededat the requestof the
franchisee,tocompleterepairsbeyondtheexpertiseofthefranchisee.
The franchisor will also manage a supply chain of parts and components. To standardize all the
maintenance/repairparts in thesystem, the franchisorwillorderparts froma listofvettedpreferred
vendors, as described above. The supply chain will be designed so that major components can be
deliveredto thecommunityandthemechaniccanmakeanynecessary repairswithin96hours (note:
this number might be modified as the on-the-ground details of the supply chain and transportation
networkaredetermined).An inventoryofminorparts suchasgaskets, tap spouts, andpipingwill be
keptonhandbythefranchiseeandre-orderedinbatchesfromthefranchisor.
Allpartswillbepurchasedbythefranchiseethroughthefranchisorinordertotakeadvantagesof
purchasingeconomieswithpreferredvendersand tomaintainanacceptable standardofqualitywith
replacement parts. The labor of the local area mechanics will be provided to the franchisee by the
franchisor as part of the Franchise Fee. No additional payment will be required for their routine
inspections or one-off maintenance visits. It is important to create a fee structure that does not
discourageafranchiseefromsolicitingtheservicesofthetrainedmechanicswhennecessary.However,
15
theremayneedtobe limitsplacedonthenumberoffreeon-demandmechanicvisitssothattheydo
notbecomeoverburdenedwithunnecessaryrequestsbythefranchisees.
FinancingforWaterVillageSystemRepairs
Whenmajorrepairsarenecessary,fundswillbewithdrawnfromtheWaterPointAccountandpaid
tothefranchisorfornecessarypartsandlabor.TheCOWSO,franchisee,andfranchisormustallapprove
disbursementsfromtheWaterPointAccount.Thismulti-partysign-offaddsaccountabilityandwillhelp
prevent siphoningof funds forpurposesother than repairing the infrastructure. If funds in theWater
Point Account are insufficient to cover the cost of necessary parts, a third party credit provider will
guaranteetoarrangefinancingtocoverthecostofthereplacementparts.Thetermsofcreditextended
totheWaterPointAccountwillbeestablishedaspartoftheWSAinordertoavoidrepairdelaysasa
resultof arrangingornegotiating financing terms.The thirdparty creditproviderwill beable topool
waterpointloansacrosstheentirefranchisesysteminordertomitigateriskfromanysinglesite.Loan
repaymentswill bemade frommonthly disbursements from theWater PointAccount, not to exceed
50%oftheMonthlyDeposit(toensurefundsintheWaterPointAccountcontinuetobuildwhileloans
areoutstanding).
Analternativesourceoffinancingcouldbederivedthroughchargingaper-welllicensefeefromthe
franchisees, which would be pooled across water points. These funds would be used to provide
financingtorepairwaterpointsiffundsfromtheWaterPointAccountareinsufficient(conceptderived
fromFoster,2012).
BrandingandMarketing
Thefranchisesystemwillbepresentedasasinglebrandacrosstheentiresystem.Utilizingasingle
brandingimagewillaidinmarketingeffortsthattoutthequalityofthewaterandthebenefitsofpaying
forcleanwaterfromthefranchiseasopposedtousingfreeunimprovedwatersources.
Thebrandingwillstandforquality,reliability,andaffordability.Qualityisdeliveredtotheconsumer
byhavinghighstandardsforcleanliness,clarity,andtaste.Reliabilitywillbedeliveredbywaterflowing
every day of the week withminimal downtimes for repairs. Affordability does notmean free, but a
reasonablerateenabledbytheefficientdeliveryofwatercreatedbytheSVWSPfranchisesystem.
16
PerformanceIncentives
“The introduction of a private operator (PO) also served to dramatically improve revenue
collection….Flat-ratecontributionsandapunitivebondarehighlightedasimportantelements
oftheprivateoperator’scontract.”
-WaterAidTanzaniareport,(Haysom,2006).
Paymentstothefranchiseeandfranchisorwithinthefranchisesystemaredesignedtoincentivizeall
parties tokeeptheVillageWaterSystems ingoodworkingorder.Byrequiringa fixedpaymenttothe
WaterPointAccountregardlessofcollections,profitforthefranchisepartners isdependentonahigh
level of performance. In addition, non-performance can lead to a deduction from the franchisee and
FranchisorBondsandalossofinvestmentforthefranchisepartners.
Boththe franchiseeand franchisorwillhaveadditionalperformance incentivesandpenaltiesbuilt
intotheWSA,basedonimportantperformancemetrics.HarveyandReedcitethesetypesofclausesas
importantforprivateoperatorarrangements:“Contractswithprivatecontractorsshouldbedevisedto
ensureservicequalitystandardsandtopermittheenforcementoffinesorpenaltiesforfailuretomeet
standards”(HarveyandReed,2004).
Incentive1:Akeytowatersystemsustainabilityisahighlevelofservice.Inordertofurtherincentivize
thefranchisortoactswiftlyandcomprehensivelyinthecaseofanoutage,apenaltymechanismwillbe
putinplaceasfollows:
• Afterareportedoutage,thefranchisorwillhavea96hourgraceperiodtorestoreservice(may
vary depending on the severity of the issue). After this grace period, the franchisor will be
required to deposit, into theWater PointAccount, the daily-proratedportionof theMonthly
Deposituntilserviceisrestored.
• Thefranchisorandfranchiseewillbeheldaccountableforthenumberofoperationaldaysper
month.Additionalpenaltieswillbeputinplaceifwaterisnotavailabletotheend-consumers
formorethan6dayspermonth(the6-daybufferperiodiscontingentonthefeedbackfromthe
pilotstudypertainingtothewaterpointlocationsandrealisticresponsivenessofthein-country
supplychain).
17
Thesepenaltieswill both incentivize the franchisor to restore service in a timelymanner andwill
helpmaintain long-term financial sustainability of the VillageWater System by depositing additional
fundsintotheWaterPointAccount.
Incentive2:Twonecessarycontributorsto financialsustainabilityofeachVillageWaterSystemare(i)
consistentcollectionoftariffsand(ii)depositofthesecollectionsintoasecureaccount.
• Abenchmarktariffcollectionpercentage(actualrevenuedividedbyrevenuebasedonmetered
flow)willbesetforthefranchiseetoachieve.Iffranchiseerevenueisbelowthisbenchmark,the
franchisee will be required to fund the deficit from their share of excess proceeds to make
wholetheMonthlyDepositandFranchiseFeepayments.
While there is a concern that a private operator would siphon off funds for themselves, a 2006
WaterAidTanzaniastudyfoundthatprivateoperatorsaremuchmorelikelytoprovidegreaterefficiency
infundcollectionsthanautonomouswater-committeemanagedsites(WaterAidTZ,Moon).
MitigatingtheRiskstotheSustainabilityoftheSystem
Aswithanylarge-scaleandinnovativeproject,thereareseveralriskstothelong-termsustainability
ofthisbusinessmodel.Wehavetriedtopredictthepotentialissuesandbuildmechanismstomitigate
theserisks.
Inadequateyield fromthewaterpoint tomeetdemand –Thewater flowmightnotbe sufficient to
meetdemand,decreaseovertime,and/orthewaterqualitymaybecomeunacceptable.
• Pre-construction site assessments will be conducted to determine population, demand and
aquifer yield estimates in order to properly size and locate thewater systems.Water quality
testing will also be conducted to verify that the water meets acceptable standards for
consumption.
• Monitoringsystemswillbeput inplacetoregularlyassesstheflowofwater inandoutofthe
borehole,sothatthefranchiseeandfranchisorcangetregularinformationontheperformance
ofthewellandcanproactivelyforeseeissues,forexampletheaquiferdrying-uportheborehole
siltingup.Inaddition,atechnicianhiredbythefranchisorwillregularlyvisiteachwaterpointto
assesstheflowandqualityofthewater.Thiswillhelpproactivelyaddressany issueswiththe
siteandanticipatetheneedfornewdrillingbeforeitarises.
18
Insufficientdemandfromthecommunityatthegivenprice -Somecommunitiesmaybereluctantto
pay forwater,particularly if theyhavereceived it for free in thepast. Inaddition,notallcommunity
memberswillbeabletopayorfeelthatthewaterisworthspendingpreciousresourceson.
• Severalactivitieswillhelpstimulatedemand:
o During the pre-installation phase of the project, NGO partners will be contracted to
conductcommunityeducationandawarenessprogramsaroundthebenefitsofcleanwater
(asopposedtopreviouslyaccessed“free”butillness-causingwatersources).
o Onanongoingbasis,NGOpartnerswillprovidesanitationandhygienetrainingtoensure
that good practices reinforce the health benefits of clean water. Alternately, after the
initial trainingby theNGOs, localwomen in thecommunitycanbeemployed tobecome
thechampionintheircircles,spearheadingongoingawarenesseffortsandmotivatingthe
localcommunityforchange.
o ThetariffratewillbeagreeduponinadvanceintheWSAsothatallpartiesareawareand
issuesofinequitycanbeaddressedpriortoinstallation.
o Consistentbrandingacrossthefranchisesystemwillbuildtrustinthequalityandreliability
ofthewaterservicesprovided.
o The systems approach to SVWSP includes creating economic opportunities for people in
thecommunitybycreatingnewbusinessactivities. Thegoal isfortheseopportunitiesto
improvehouseholdincomes,makingiteasiertospendmoneyonwater.
• Atiered-pricingmodelcanbeusedsothattheprice is lowestat thewaterpoint location,but
consumerscanchoosetopaymoretohavethewaterdelivered.Waterrequiredforeconomic
activitieswill alsobechargedatahigherprice.Thismodel takes intoaccounta formofprice
subsidizationtocreatelow-costoptionsforconsumers.
Misappropriationofrevenue,eitherviauncollectedfeesortheftoffees
• Sensorswill be installed in each system tomonitor the amount ofwater pumped,which can
then be compared to the revenue collected in order to enforce the franchisee’s benchmark
collectionspercentagerequirement.
• MonthlyreportsfromtheCOWSO,franchisee,andfranchisoraresubmittedtothedistrictwater
engineer.Multiple levelsofreportingfrompartieswithvariedinterestswillhelptodiscourage
dishonestyasthiswouldbeevidentinirreconcilablereports,whichcouldbeauditedbyathird
party(e.g.-districtwaterministryorNGO).
19
• Onlyemployeesof the franchiseewillhaveaccess to thepumpandwater tap, socommunity
membersshouldnotbeabletoobtainwaterwithout firstpaying for it.Theemployeesof the
franchiseewouldberesponsibleforoperatingthepumponaday-to-daybasis,therebylimiting
thescopeforunauthorizedwaterconsumption.
• Mechanisms will be created within the community to provide an allocation of water for the
extremelypooranddisadvantaged.Thiswillreducethesocialpressuretoprovidewaterfreeof
chargetothoseunabletopayandwillbeaccountedforinthefinancialviabilityofthesystem.
Frequentequipmentbreakdowns
• The franchise system establishes the franchisor as a capable party responsible for all major
repairs.
• Delaysduetoroutinerepairandmaintenanceissueswillbeminimizedasthefranchiseeswillbe
trainedtoconducttheworkandwillhaveaninventoryofpartsonhand.
• Thefranchisorisrequiredtoconductregularlyscheduledinspectionsandroutinemaintenance
topreventavoidableequipmentbreakdowns.
• The franchisee is incentivized to completeminor repairs and reportmajor repairs in a timely
mannerasdowntimedirectlyaffectstheirrevenues.
• The franchisor is incentivized to complete repairs in a timelymanner due to the operational
dayspenaltymechanism.
• On-site pumpoperators are trainedon appropriate use of the system to avoid over-pumping
(e.g.bymanually turningon the solar-poweredpump forprolongedperiodsof time)orother
inappropriateuse
• NGOpartnersprovidetrainingonthehealthandeconomicbenefitsoftheentireVillageWater
Systemtodiscouragetheft,repurposingofpartsorothermisconduct.
Lackofthirdpartyserviceproviders-HarveyandReednotethat“Privatesectorprovisionofsparesis
not, in general, a viable option on the basis of profit alone.Where spares supply is linked to other
privatesectoractivitiessuchastechnicalservicesforconstruction,operationandmaintenance,andthe
provisionofpumpsandequipment,itismuchmorelikelytobesustained”(HarveyandReed,2004).
• Multiple responsibilities and sourcesof cash flowhavebeenbundled into the franchisor role.
Thisapproachensures that the franchisorwillhaveconsistent revenuestreamsandthatvital,
20
but lessprofitable, functionswillstillbeundertaken,sincefailuretoperformonedutyputsat
riskthefranchisor’srightstotheothersourcesofcash.
Seasonality -Franchiseesare likelytoexperienceseasonality indemandforwaterduetovariations in
rainfallduringtherainyanddryseasons.Duringperiodsofhighrainfall,alternativesourcesofwaterare
availableandpresenta compelling cost-benefit trade-off for the ruralpoor.AWorldBank case study
reportonprivateoperatorsnotesthatconsumers“aresavvyaboutmakingtrade-offsbetweenpriceand
valueinchoosingtheirwatersource”(SyandWarner,2014).GrundfosLIFELINKinstallationshaveseena
65%decreaseindemandduringthesixwettestmonths,whileVergnet-managedwatersalesinBurkina
Fasowere28%lowerduringtherainyseason.
• The requiredamountof theFranchisee’sMonthlyDeposit canbestructured tobevariable to
account for these revenue fluctuations.However, someexpenseswillnotbe seasonal, likean
attendant’ssalary,scheduledmaintenance,andrepairs,sofranchiseeswillneedtopreparefor
this.
• Tariffs can be varied throughout the year to try and smooth revenues for the franchisee,
potentially encouraging a differentmix of domestic and commercial consumption during the
year.
Unanticipated delays to franchisor breakeven – The franchisor businessmodel requires aminimum
level of services regardless of thenumberof franchisees. This could result in an initially high level of
fixedcosts relative to thenumberofpositivecash flowwaterpoints.Awidegeographicdispersionof
theinitial125pilotsitesmightrequirethatfieldconsultantsandmechanicsareemployedinareasthat
donothaveenoughsitestosupporttheirsalaries. Ifsitedevelopmentdoesnotproceedasquicklyas
planned,thesefixedcostsmayresultinoperatinglossesforthefranchisorforlongerthananticipated.
Forthisreason,thefranchisorwillneedtobewellcapitalizedandrunbymanagementwithalong-term
viewandcommitmenttomakingthesystemviable.Withoutsufficientsupportfromthefranchisor,the
franchiseeswillfailaswell.
Inabilitytofindqualifiedpeopletofillnecessaryroles–thefranchisesystemdependsonhavinghighly
capableindividualstofillseveralkeyroles–franchisormanagement,franchiseemanagement,andfield
supportconsultants.To theextent that thesepeoplearedifficult to find inall regionsof thecountry,
training costs will need to be higher or salariesmay need to be higher than anticipated in order to
attractahighlyindemandworkforce.
21
IssuesRequiringFurtherExploration
WhiletheFranchisingConceptTeamhasputalotoftimeintodevelopingtheseideasand
gettinginitialinputfromexperts,wecontinuetocollectfeedbackandrefinetheconceptandthe
details.WewillnotintegratetheFranchisingConceptintotheSVWSPmodeluntilweareconfidentin
everyaspectofitsdesign.TheTeamwelcomesallfeedback,critiquesandideas,butsomeoftheissues
thatweknowweneedtoaddressarethefollowing:
• Wedonotwanttodenyanyonetherighttowater,sowewouldliketohaveamechanism
inplacesothatindividualswhocannotaffordwaterarestillabletoacquiresome.
• Weknowthatitiscriticalthattheprogramhassupportfromthecommunity,soweneedto
identifythebestprocessforbuildingandsustainingcommunitybuy-in.
• Weneedtothinkthroughhowtherelationshipsbetweenalltheinvolvedpartieswillbe
managed-inparticulartherelationshipsbetweentheNGOs,theCOWSOs,thefranchisorsand
thefranchisees.
• Weneedtodeterminemanyofthefinancialdetails,suchastheamountofthemonthlydeposit
totheWaterPointAccountandtothefranchisor.Weareworkingonbuildingthedetailed
businesscasethatwilldemonstrateprofitabilityforallpartiesundervaryingassumptions.
• Notallfranchiseeswillbesuccessful,soweneedtospecifydefaultandterminationconditions
forfranchiseesandhowtomanagetheseterminationsandfindreplacements.
• Identifyingandselectingtherightpeopletorunlocalfranchiseswillbecriticaltothefinancial
sustainabilityofthesystem.Developingtherightcriteriaandapproachforrecruitmentneedsto
becompleted.
• WeneedtodeterminewhoisgoingtoprovidethetrainingtotheCOWSOsandthe
communities.WehavesuggestedthatwillbedonebyNGOs,butweneedtodeterminewhich
NGOsandhowthatprocesswillbemanaged.
• Weneedtodeterminewhattheappropriatetime-windowisforgettingrepairsdone.Wehave
stated96hoursbutisthattherightnumber,andinwhatcircumstancescanthatbeextended
withoutpenaltytothefranchisor?
• WewanttobeabletomeasurecommunityoutcomesthatresultfromputtingaVillageWater
Systeminplaceinacommunity.Forexample,wewanttoknowtheimpacttheVillageWater
22
Systemhasonhealth,educationandincomesofcommunitymembers.Weneedtodesigna
processforobtainingbaselinedataaswellascollectingrelevantdataonaperiodicbasis.
• WewanttobesurethattheUniversityofDodomaandourlocalNGOsareabletosupportthe
day-to-day training and educational requirements, and to provide the required technical and
agricultural extension-like services to the local entrepreneurs and villagers to ensure
sustainability.
• Wewanttobesurewehavebuy-infromthekeyGovernmentMinistriesfortheconceptandfor
itsproposedimplementationtimeline.
• We want to be able to ensure the long term supply of water and to execute the required
researchtodevelopmappingofsustainableyieldsfromgroundwaterandsurfacewatersources
fortheregionsinwhichwewillbedeployingsystems.
• Wewant tobe sureweprovide thevillagesand the townswith the technology theyneed to
succeed – so we are exploring innovative cell phone applications including billing/payment,
operationaldata,marketinfo,techsupport,etc.
ProvidingWaterandEconomicActivitiestoGrowtheLocalEconomy
TheSVWSPisamulti-facetedinitiativeaimedatmakingmeasureable,far-reachingprogresstoward
waterandfoodsecurityinTanzania.Therolethatthenationalwaterpointrehabilitationeffortplaysin
thatgoalistoprovideeconomicopportunitiesforlocalcommunitymembers.Itstartswithconvenient
access to clean water, which improves the health of all community members and reduces the time
womenandchildrenspendcollectingwater.Childrencannowspendmoretimeinschoolandwomen
canspendmoretimeonincome-generatingactivities.
However, the power of the SVWSP is in the systems approach that it takes to improving the
livelihoodsandopportunitiesforthevillagecommunitymembers.TheVillageWaterSystemisdesigned
to not only provide water for household use, but also provide the means for other economic
opportunities.Solarpowerinexcessofpumpingneedscanbeusedtocreateaphonechargingstation
business. Excesswaterbeyondwhat isneededfordailyconsumptioncanbeusedtodevelopabrick-
makingbusiness,engageinaquaponics,expandlivestockherdsorgrowvegetablegardensandfruittree
nurseries. Members of the community (with a focus on women) can become local franchise
owners/operatorsorcanbeemployedasattendantsatthewaterpoints.Womencantakeonrolesas
23
trainersorobtainloansfromthethirdpartycreditproviderstostartorgrowtheirownsmallbusinesses.
All these parts working collectively creates the opportunities for communities to grow their local
economy, which in turn stabilizes village support for the upkeep of the water system as it becomes
indispensable. The proposed franchise model has been designed to provide low-cost water to
consumers while putting in place themechanisms and incentives to ensure the sustainability of the
system.
AccordingtotheWorldHealthOrganization,every$1investedinwaterandsanitationcanyieldan
economicbenefitofasmuchas$34,butthisonlyhappensifthefocusoftheeffortgoesbeyondmerely
installing the infrastructure. The SVWSP Program is designed to provide not justwater, but awater
systemandabusinessmodelthathelpsassurethesustainabilityandongoingeconomicopportunitiesso
thattheinitialinvestmentcanrealizeitsfullestpotential.
24
References
TheCadmusGroupInc.(2015).SectorEnvironmentalGuidelines:WaterSupplyandSanitation.RetrievedfromUSAIDGEMSwebsite:www.usaidgems.org/bestPractice.htm.
Carter,Richard.(2012).‘MythsofRuralWaterSupply’,WaterAidandRuralWaterSupplyNetworkWebinar.
deCarvalho,Alexandre;Graf,Jessica;Kayser,Olivier;VousVouras,Christian.(2011).AccesstoSafeWaterfortheBaseofthePyramid:LessonsLearnedfrom15CaseStudies.Hystra.
Economides,NicholasandJeziorski,Przemyslaw.(2015).MobileMoneyinTanzania.NETInstituteWorkingPaperNo.#14-24.
Foster,Tim.(2012).PrivateSectorProvisionofRuralWaterServices:ADeskStudyforWaterforPeople.WaterforPeople.
Harvey,PeterandReed,Bob.(2004).RuralWaterSupplyinAfrica.Water,EngineeringandDevelopmentCentre;LoughboroughUniversity.
Haysom,Alexia.(2006).AstudyofthefactorsaffectingsustainabilityofruralwatersuppliesinTanzania.SubmittedasathesisinpartialfulfilmentoftherequirementsfortheDegreeofMScWaterManagementfromCranfieldUniversity.PublishedbyWaterAidTanzania.
Moon,Sam.(2006).PrivateoperationintheruralwatersupplyincentralTanzania:Quickfixesandslowtransitions.WaterAidTanzania.
Sy,Jemima;Warner,Robert;Jamieson,Jane.(2014).TappingtheMarkets:OpportunitiesforDomesticInvestmentsinWaterandSanitationforthePoor.Washington,DC:WorldBank.
UnitedNationsEducational,Scientific,andCulturalOrganization(UNESCO).(n.d.).HealthThroughSanitationandWater.RetrievedJanuary25,2016,fromwww.unesco.org/most/africa7.htm
vandenBerg,Caroline;Burke,Eileen;Chacha,Leonard;Kessy,Flora.(2009).PublicExpenditureReviewoftheWaterSector,Tanzania.TheWorldBank.
www.saner.gy
www.sarvajal.com
www.waterhealth.com
25
Appendix1:FranchisePartnerDetailedRolesandResponsibilities
Thefranchisorwillberequiredto:
1. Submitaone-timerefundabledeposit(FranchisorDeposit)intoeachWaterPointAccountpriortocommencementofoperations.
a. The Franchisor Deposit acts as a guarantee against certain services the franchisor isobligatedtoperformundertheWSA.
b. The Franchisor Deposit will be used to cover actual expenses incurred as a result offranchisor’snon-complianceornon-performanceofcertainobligationsundertheWSA
c. At theendof the contract term,or voluntary replacementof franchisorwith anotherparty,theremainderoftheFranchisorDepositwillbereturnedtothefranchisor.
2. Hireandtraincertifiedmechanics.TrainingcouldalsobeoutsourcedtoUDOM,NGOsorothersuitableproviders.
3. Haveacertifiedmechanic conducta regularly scheduledsite inspectionofeachVillageWaterSystem(frequencytobedetermined).
4. Employ field support consultants to provide business ongoing consultation services to thefranchisees.
5. Provide franchisees with field handbooks to assist in financialmanagement and operations /repairsoftheVillageWaterSystem.
6. Respond to franchisee or community service request within 48 hours (or agreed upontimeframe).
7. Guaranteecompletionofmajorrepairsbynetworkoflocalareamechanics.
8. Holdaninventoryofpartsandorderappropriatequantitiesfromthepreferredlistofapprovedvendorsformaintainingquality,timelinessandstandardofrepairs.
9. SubmittheQuarterlyFranchisorReport(describedbelow)toeachfranchiseeandCOWSO.
10. ServeasBackupFranchiseeintheeventofnon-performanceoffranchisee.
11. Identify,recruit,andprovidetrainingforfranchisees.
12. Marketservicesandbrandtolocalcommunities.
13. Provideongoingtrainingformechanics,franchisees,andCOWSOs.
14. HireNGOpartners toconduct training forcommunityawareness, sanitationandhygieneonaregularandpre-determinedbasis(e.g.quarterlyforthefirstyearandannuallythereafter).
15. Monitor the borehole and solar system sensors to help proactively anticipate issues withboreholequalityorsolarsystemperformance.
16. On a yearly basis, provide technician for assessing the yield of each water point at thecommunitylevel.
26
Thefranchiseewillberequiredto:
1. Submitaone-timerefundabledeposit(FranchiseeDeposit) intotheWaterPointAccountpriortocommencementofoperations.
a. The Franchisee Deposit acts as a guarantee against the services the franchisee isobligatedtoperform.
b. The Franchisee Deposit will be used to cover actual expenses incurred as a result offranchisee’snon-complianceornon-performanceofcertainobligationsundertheWSA
c. At theendof the contract term,or voluntary replacementof franchiseewithanotherparty,theremainderoftheFranchiseeDepositwillbereturnedtothefranchisee.
2. Submit a Monthly Franchisee Report to the COWSO, the franchisor, and the District WaterEngineer.
3. CompleteminorrepairsandmaintenancetotheVillageWaterSystem.
4. Employpersonnelforcollectionoffunds,distributionofwater,andsitesecurity(withafocusonfemaleemployment).
5. RemitMonthlyDeposittoWaterPointAccount.
6. RemitMonthlyFranchiseFeetofranchisor.
7. ReportanyoutagesormaintenanceissuesinatimelymannertothefranchisorandCOWSO.
CommunityOwnedWaterSupplyOrganization(COWSO)will:
1. GrantexclusiveoperationsandservicesarrangementtofranchiseeandfranchisorintheWaterServicesAgreement.
2. OverseeWaterPointAccountandauthorizedisbursementsforrepairs.
3. Actasliaisonbetweenfranchisepartnersandcommunitymembers.
4. Reportoutagestofranchisepartners.
5. Supportsecuritymeasuresputinplacebyfranchisee.
6. Maintainrecordofoperationaldays.
27
Appendix2:ReportingRequirements
Eachofthereportsgeneratedbythepartnerswillbecirculatedamongthefranchisepartners.
TheMonthlyFranchiseeReportwillinclude:
• Revenues
• Expenses
• Quantityofwaterpumped
• Quantityofwatersold
• Numberofoperationaldaysforperiod
• EvidenceofMonthlyDepositandFranchiseFeepayment
• Maintenanceschedule
• Concerns(ifany)
• Otherkeyinformation(ifneeded)
TheQuarterlyFranchisorReportwillinclude:
• Revenuepermonth
• Expensespermonth
• Numberofregularmaintenancevisitsperformed
• Credithistoryforeachsite
• Numberoftrainingsconductedforsocialandcommunityawarenessineachcommunity
• Numberofcertifiedmechanicsinnetwork,numberlost,numberrecruited
• Detailsaboutmajorbreakdownrepairs[ifany]
• Numberoffieldconsultantvisits
• Benchmarkingoffranchiseeperformance
• Otherkeyinformation[ifneeded]
28
Appendix3-WaterTariffStructure
Threemodels were considered for the water tariff. The advantages and disadvantages are outlinedbelow.Theproposedmodelusesaperbucket/litertariffstructure(Item3below)becauseithasbeenfoundtoworkbest inpractice. Whicheversystemisadopted,however, itneedstoaccommodatetherealitythatnoteveryonehascash,somechanismswillneedtobeput inplacetoallowpeopletopaywithlivestock,cropsortobarterotherservices.
1. Flat monthly fee per household, structured as either unlimited access or a capped daily ormonthlyamount.
• An unlimited accessmodel is likely to lead to overconsumption and low revenue perliter,resultinginamismatchbetweencostsandrevenuesasadditionalstrainisimposedonthepumpswhenmorewateriswithdrawn
• Alumpsummonthlytariffmayalsobeproblematicforcommunitymemberswhohaveirregularincomeandlittleaccesstosavingsinstitutions
2. Setamountfromthecommunity
• Allowsthecommunitytocreateacollectionmethodthat theyviewasmostequitableand fair; encourages participation and a sense of ownership among communitystakeholderswhoaremoreawareoflocalsensitivities
• Likelylacksarealisticenforcementmechanismandaccountabilityintheeventofalackoffunds
• Maybesubjecttovolatilelocalpoliticaldynamics
3. Perbucket/litertariff
• Thisapproachbestmatchesrevenueswithcosts
• Transparentprocessthatiseasytoimplementatthedistributionpointasallpumpswillbefittedwithameter
• This model is already implemented in some communities in Tanzania so likely to beculturallyappropriateandacceptedbycommunitymembersasfair
• Resultsingreaterseasonalityinrevenues
• Basedontheaveragedomesticconsumptionpatterntakingintoaccountthehouseholdsize, excess consumption for other economic activities such as agriculture could bechargedatadifferentrate.Onacase-to-casebasis,pipescouldbeinstalledatthewelllocationforpumpingwaterelsewhereforothermeteredusagessuchasagricultureoraquaculture.