Following the first part of this blog series, this second post takes a closer look at the role mobile technology could play in slums to support access to innovative utility solutions through centralized or decentralized access.
The traditional approach to utility services often fails in slum communities, due to the socio- economic conditions and governance structures unique to these areas 1. Because they are not always formally recognised as part of cities, utility suppliers are reluctant to extend the grid or water networks. Moreover, the inherent poverty and informal activities throughout slums also make it challenging for utility service providers to assess the ability or willingness to pay of slum dwellers.
However, informal slum economies will be increasingly important sources of urban employment in coming years, as the formal sector will be most likely unable to provide sufficient opportunities. In 2011, Nairobi informal sector created 6 times more jobs than the formal sector 2 . Reflecting this dynamism, mobile phones are widespread in informal settlements and are an important tool for connectivity and productivity, supporting business activities and increasingly allowing residents to connect through social networks 3.
In this context, we have explored the role that mobile can play to support access to utilities services?
Creating Channels of Opportunities for Slum Dwellers
For a majority of the population being financially excluded from formal financial infrastructure (because of their lack of formal income, address or land tenure) mobile money has unique benefits, offering access basic banking services. In mature mobile money markets, mobile money agents are increasingly present in slums, allowing easier access to cash-in/cash out services and enabling residents to store their money digitally and not carry cash in unsafe environments. Similarly for access to utility services in slums, mobile could play an increasing role in:
Financing Access to Utility Solutions
The high cost of connection to the electricity grid or piped water networks makes it almost impossible for slum dwellers to have access to centralized services. Financing solutions coupled to the use of mobile channels can increase access to centralized services as well as help support the transition from illegal to legal connections. For example, Nairobi Water and Sewerage Company (NWSC), in partnership with the World Bank’s Africa Region team, is increasing access to piped water connections in slums under the Jisomee Mita programme (“Read Your Meter” in Swahili). Using self-metering and mobile payments, customers repay for their piped connection (financed through NWSC partnership with a local bank) through their water bills.
Such model – financing electricity connections without a full upfront fee – could also be applied to grid electricity supply, where pre-paid metering and mobile payments could allow a currently unconnected population living in the vicinity of grid networks, to afford electricity connections, while reducing the risk of default through affordable pre-paid electricity tariffs 4. Stand-alone energy solutions, such as lanterns and home solar systems installed using theft proof design 5, are also increasingly available on a Pay As You Go (PAYG) model – more than 300.000 solar PAYG systems have been installed worldwide, the majority in East Africa where mobile money ecosystems are more mature.
Increasing Information Flow between Customers and Service Providers
Trust and confidence-building between people and utility service providers are important factors to sustainable services. However the traditional approach of utility services involving three stakeholders (the government, the utility company and low-income residents) is often dysfunctional because of the poor level of accountability and interactions between these different entities. Feedback loops between service providers and customers appear critical in underserved settings to improve efficiency of current services and future planning. For example, NextDrop supports the Bangalore Water Supply and Sewerage Board in making data driven decisions by aggregating, analysing and disseminating information between their operations centre, valvemen and customers 6using calls and SMS.
Supporting Local Entrepreneurs Access Productivity Tools
Energy product providers, water kiosks operators and sanitation entrepreneurs could benefit from productive mobile applications available through feature phones or smartphones. Mobile data collection and geo-mapping tools for fieldwork 7, customer relationship management (CRM) and supply chain management (SCM) applications enable the digitization of an information collected at the field level; such information can then be uploaded in a database that can be further analysed to support utility services. For example, building on the Salesforce Force.com platform, Sanergy, a social enterprise providing low cost community toilet solutions and waste treatment in Nairobi slums, uses such enterprise applications to track the performance of its business from marketing, waste collection, toilet usage or entrepreneur income generation 8.
Data for decision making
The digitization of information related to slum dwellers and businesses makes data more available to financial institutions and decision makers for further financial inclusion and urban planning. New types of data such as mobile-phone usage patterns, airtime top-ups or mobile payments, offer new opportunities for institutions to have a better understanding of slum residents’ complex interactions or financial behaviours and needs 9. Mobile operators, utility companies processing mobile payments (such as solar Pay As You Go providers) and data analytics companies (such as Lendable or First Access) are using new approaches to tap into the new forms of data spun off from mobile usage to build better risk models.
For mobile technology to effectively support the economic development of slum dwellers, collaboration is key. Only through partnerships between utilities, financial institutions, technologists, local NGOs and mobile operators will the grounds be set for the development of innovative and efficient mobile enabled utilities solutions.
1. http://pdf.usaid.gov/pdf_docs/PNADB219.pdf
2. http://www.slideshare.net/RockefellerFound/constrained-opportunities-in-slum-economies
3. https://www.devex.com/news/beyond-m-pesa-kenya-s-market-slow-to-scale-mobile-solutions-82618
4. https://www.gsma.com/solutions-and-impact/connectivity-for-good/mobile-for-development/the-role-of-mobile-in-enabling-energy-water-access-for-under-grid-areas-of-kenya
5. Solar Works has developed a Roof Light product
6. https://www.gsma.com/solutions-and-impact/connectivity-for-good/mobile-for-development/improving-water-service-delivery-in-bangalore-the-case-of-nextdrop
7. Impact Tracker Technology Kopernik
8. https://captricity.com/blog/sanergy-captricity-appropriate-technology-challenging-environments/
9. http://www.mckinsey.com/insights/risk_management/new_credit-risk_models_for_the_unbanked