Leasing Hand Pumps: Opening New Markets for Affordable Drinking Water

Leasing Hand Pumps: Opening New Markets for Affordable Drinking Water

Madagascar
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

By offering hand pump leasing and maintenance services, we make community drinking water financially sustainable and affordable also if donor grants are not available.

About You
Location
Project Street Address
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Your idea
Field of Work

Water

Year the initative began (yyyy)

2007

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Positioning of your initiative on the mosaic diagram:
Which of these barriers is the primary focus of your work?

Participation can limit accountability, rather than solve service provision

Which of the principles is the primary focus of your work?

Value-added services mean added business income

If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic

This field has not been completed

Innovation
What is your signature innovation, your new idea, in one sentence?

By offering hand pump leasing and maintenance services, we make community drinking water financially sustainable and affordable also if donor grants are not available.

Describe your innovation. What makes your idea unique and different than others doing work in the field?

We believe that rural people are not necessarily interested in wells and handpumps but rather in what it delivers; Safe Drinking Water. A product has most value if it ensures a constant access to water, without being bothered about maintenance and community involvement issues.
Our approach is to keep ownership over the products we supply. We offer communities and other local organisations our products trough a leasing contract (operational leasing). The decision-making party is therefore still at local level (they decide to improve their water supply) but we stay the owner of the equipment. By accepting the agreement, we take the full responsibility for the provision of a constant quantity and quality of the water supplied by our wells and pumps. We are therefore the party that has the most concerns to keep them operational but are also the one who have the technical knowledge and experience to do this.

Delivery Model: How do you implement your innovation and apply it to the challenge/problem you are addressing?

We create demand through direct and social-marketing including personal field visits by BushProof and partner NGOs. After investigating the real needs and wishes concerning the product organisation (payment, responsibilities and the possibilities of additional services) water products and a customised lease system is offered. Our local partner NGOs help us gain 'insight' into the communities. Meanwhile, we will outsource the collection of leasing payment to partner micro-finance organisations, who have more expertise than us in managing rural debt.

How do you plan to expand your innovation?

We have sourced a mix of grants and loans from banks and private donors to generate the start capital necessary to construct the boreholes and manufacture the pumps. The money generated by the leasing contracts is immediately reinvested in the construction of new wells and pumps. The constant (growing) cash that becomes available from the growing number of contracts creates a constant construction of new water facilities. The growth will be exponential and the original start capital is able to create several facilities. If additional start capital will multiply impact substantially.

Do you have any existing partnerships, and if so, how do you create them?

We have close contact with local NGO’s in Madagascar and international donors that we are closely working together with on implementing this idea. Finance has already been obtained for covering the investment costs of the first 90 wells that will be leased out. This will increase visibility of this concept, leading to additional partnerships - for instance by NGOs that recognise the value of safe water but who lack the budgets to implement water projects themselves.

Impact
Provide one sentence describing your impact/intended impact.

A sustainable and affordable guarantee to scaling up financially-viable safe drinking water provision in both rural and semi urban areas throughout Madagascar.

What are the main barriers to creating or achieving your impact?

Leasing of wells with hand pumps is a novel concept to both communities, authorities and NGOs in Madagascar, requiring extra initial effort on creating partnerships. Secondly, guaranteed payment by lessees is important to assure financial viablity, necessitating partnerships with rural payment experts such as micro-finance organsations.

How many people have you served or plan to serve?

A non-refundable private investment has been obtained to provide starting capital for constructing the first 90 wells-to-be-leased out. These wells will serve an minimum of 13,500 people, while succesful expansion is expected to serve tens of thousands more in additional years.

Directly

13,500 initiatlly through the pilot project

Indirectly

Tens of thousands more, by rapdily scaling up the number of leased wells in subsequent years.

Please list any other measures of the impact of your innovation?

Because we outsource payment collection to micro-finance institutions, our approach enables regular-paying clients (rural groups that lease wells, and which might include women-groups, farmer or village associations, or even local authorities) to increase their credit-worthiness. This is a huge advantage that will enable them to apply for additional credit for other projects.

Is there a policy intervention element to your innovation, if so please describe?

The concept of leasing and contract-management of small-town water supply systems is starting to be actively discussed in Madagascar by bi-lateral donors and government departments. What we propose is to take this concept down to a smaller scale: remote rural villages.

Exactly who are the beneficiaries of your innovation?

The rural and semi-urban poor that desire safe drinking water, and are willing-to-pay, but do not have access to donor funds to finance the initial construction of water sources.

Sustainability
How is your initiative financed (or how do you expect your initiative will be financed)?

In the first instance through a non-refundable philanthropic investment that has already been secured, and which covers the capital investment of a first 90 wells. Income from leasing will allow additional scaling up, while demonstration of financial viability will furthermore enable us to source additional (soft) loans or blended-value investment funds to increase the rate of scaling up.

Provide information on your finances and organization:

BushProof is a social-enterprise that is currently 100% financed from earned income, mainly through the sale of hand pumps and drilled wells. Diversifying revenue drivers to include income from leasing increase the organisation's financial stability, while making safe water available to those that currently can't pay for it.

Annual budget:
2005 - 110,000 USD
2006 - 344,000 USD
2007 - 440,000 USD

What is the potential demand for your innovation?

Rural access to safe water in Madagascar is only 15%, providing a potential market of 12 million people. Our target is to scale up hand pump leasing to reach 1 million people after 5 years.

What are the main barriers to financial sustainability?

Willingness to pay for water in Madagascar, where NGO’s have build and donated water facilities for free. Secondly, mechanisms that enforce punctual payment of leasing fees in a remote rural setting while limiting transaction costs.

The Story
What is the origin of this innovation? Tell us your story.

A growing sense of dissatisfaction with the poor long-term sustainability of donor-funded drinking water infrastructure, which often is very poorly maintained, thus resulting in permanent break-down within a few years. Secondly, the very limited amount of donor funding available for water projects in Madagascar. Using private (philanthropic) investment funds instead of grants to finance construction of leased wells that are maintained by professional technicians solves both the funding and maintenance issues.

Please provide a personal bio. Note this may be used in Changemakers marketing material

Adriaan Mol has worked for over a decade for international development and crisis relief organisations, in technical and top field management positions, before co-founding award-winning social-enterprise BushProof. In developing this initiative, he was supported by Sierk Hennes, a graduate student of the TU university Delft, faculty Industrial Design and Engineering, who specialises in the intersection of business models and product use.