Across 2021 and 2022 the GSMA’s Digital Utilities programme and Water and Sanitation for the Urban Poor (WSUP) collaborated on research exploring four Kenyan water utilities experience of adopting digital solutions and their digitalisation journey more broadly. This blog, co-written by Eden Mati (WSUP) and Zach White (GSMA), summarises the report’s key findings and messages. You can read the full report here.
Digital solutions for water utilities
Digital solutions are equipping utility managers with new tools to meet the coming challenges of rapid urbanisation and climate change while also tackling long-standing sector challenges related to water losses and financial stability. These challenges, and an indication of their extent, are summarised in the table below.
Digital solutions in water are transforming how utilities and customers interact. Mobile money is a game-changer for revenue collection while IoT (internet of things) devices have created new ways to monitor water services and automate processes. Combined with mobile payments, IoT devices enable pay-as-you-go (PAYG) service models, and smart metering has become a clear use case. Finally, digital platforms and enterprise resource planning (ERP) apps are supporting more effective utility management and providing a foundation for digitalisation across utility operations.
Mobile services are critical to many of these services thus making mobile operators a natural partner for utility services. Utilities verticals have emerged as a key use case for IoT devices, and many mobile operators are looking beyond integrations to become more active players as part of their revenue diversification strategies.
In the water sector, to date, most research on digitalisation has focused on high-income country contexts and solutions. This bias in focus overlooks important differences in the complexity of water systems, digital payments architecture, availability of finance inherent in serving dense low-income neighbourhoods. In addition, it draws attention away from where digital solutions could have the greatest impact.
One of the aims for the research we conducted was to address part of the evidence gap. We took this on through examining the digitalisation journeys of four Kenyan water utilities and engaging the regulator (WASREB) for a sector-wide perspective. The four utilities in this research serve three of Kenya’s four largest cities. Combined, they are responsible for the water services of more than six million people, employ over 4,000 people and have an annual turnover of 11 billion Kenyan Shillings (about USD 104 million). In short, they are some of the larger and better-performing water utilities in Kenya, which is important context for the findings. Through detailed case studies and interviews with key players in the water sector, we identify important lessons and opportunities.
Key findings on digitisation journeys
We looked at the use of digital technology across a set of ‘domains’ that related to different digital/utility functions. Within these domains, we focused on mapping the use of some of the prominent technologies and solutions used in the sector. The figure below outlines a high-level mapping of where the different utilities were using key technologies.Key findings on digitisation journeys
The other aspect we looked at was the sequencing of the digitalisation efforts for the last ten or so years. Though the pattern broadly changed between utilities, we found there was a common progression at different points in time:
- Pre-2015 – The initial stages of digitalisation generally focused on payments, meter reading and billing.
- 2015–2019 – There was a focus on overhauling customer relationships and engagement, including web and social media presence. Many utilities also started piloting different smart meters or smart-ready meters and GIS mapping their customers.
- 2019–present – Some of the utilities shifted their focus to digital systems and overhauling their ERP systems. There was also an increased focus on deploying smart meters for household connections and kiosks.
Some key lessons from the experience of the four utilities
Four key lessons emerged from our analysis and are applicable to utilities at early stages of digitalisation.
- Investing progressively in digitalisation is vital. Making progress digitalising multiple areas of utility operations is critical to reaping the full benefits in any one area. For example, efficiencies in meter reading will only be realised when they are linked to more efficient billing and mobile payment processes.
- Digitalising core functions first can deliver quick wins. For utilities, this is most evident in metering and billing and in customer relationships. These are also the areas most likely to improve cash flow and support better customer experiences and relationships.
- When a new technology impacts on existing jobs and roles, there needs to be a plan in place for staff retraining or redeployment. This is critical to shaping a vision of digitalisation and reassuring staff that they have trust in their job security. Effective redeployment is also critical to reaping the benefits of more efficient processes. These transitions need to be supported by senior leadership so that digitalisation can be incorporated in broader change processes and staff feel that reassurances are credible.
- Investment in digital systems must occur alongside the digitalisation of operations or functions. Utilities that had recently made investments in their ERP systems stressed that this was vital to realising the benefits of their various digitalisation initiatives.
The research team identified five key opportunities for utilities based on their stated objectives and actions that are likely to overcome some of their main constraints.
- Peer learning between utilities. In many cases, the experience of one utility holds lessons for others. This extends to sharing information on market offerings and price and quality benchmarks. This is a clear opportunity in the Kenyan water sector, but also applies in other LMIC contexts.
- Documenting the pros and cons and the costs of digitalisation initiatives. This documentation should also be codified in regulatory guidance for the sector. Robust data on the benefits of digitalisation is still relatively limited. Documenting and sharing this data between utilities would help to inform investment decisions.
- Advanced metering (including PAYG solutions) and network monitoring and control. These are the technologies most likely to address non-revenue water (NRW) losses, which are still primarily managed manually.
- Digitally enabled financing solutions for financiers, innovators, and utilities. Innovative and flexible financing is already underway as new players emerge and new funds are developed by existing players.
- Stronger partnerships with mobile operators. Many of the digital solutions discussed in this report have mobile services at their core, including mobile payments, smart metering and network monitoring. This makes mobile operators an important partner for utilities. In Kenya, this opportunity is exemplified by Safaricom’s move into the smart metering space.
This report seeks to fill the evidence gap in utility digitalisation in LMICs. The case studies detail the extent of digitalisation in the utility sector and the scope for opportunity. Kenya is home to some of the larger and better-performing utilities and the experience of the water sector can provide guidance to utilities in other LMICs seeking to digitalise their operations.
Top image: Woman taking water from a pre-paid dispenser in Nairobi, Kenya. Credit: Brian Otieno