Insuring against Rural Water Risk in Africa

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Community management of handpumps has been the accepted mode of thinking for rural water supply over three decades in Africa. The approach underpins the hundreds of millions of US dollars invested each year to fix broken handpumps and install new ones. With four out of five people without safe and reliable water living in rural areas the need is great, particularly as rural people tend to be poorer and be more vulnerable to increasing climate variability. However, despite billions invested in rural handpumps one in three handpumps do not work in rural Africa. This represents a huge wasted investment and is associated with high but avoidable health, welfare and livelihood costs. In times of austerity governments are rightly thinking harder on more sustainable solutions that provide greater value for money for taxpayers who generally foot the handpump bill. Encouragingly, the risk of handpump breakdown bears all the hallmarks of an insurable risk. A recent technological break-through by researchers at Oxford University makes an insurance model now feasible. The researchers designed and successfully launched a smart handpump that automatically texts how often it is being used to a maintenance team ready to respond. This provides good and reliable data on a regular basis to know how handpumps are working and critically when they fail so a trained mechanic can quickly get out to repair the pump. Like any insurance model premiums are lower with more handpumps as they spread the risk across all users. Rural Africans are already used to health and livestock insurance products so this would be a natural extension. What is not clear is how much users would pay and what level of maintenance service they would want. Handpumps are used by often over a hundred people for drinking water and for watering livestock. Understanding people's payment preferences is critical to designing a socially-acceptable insurance product. Equally it is important to know what insurance products are available in Africa and how they are performing to consider realistic alternatives. Linking consumer demand with insurance supply will then provide a credible basis to test such a new handpump insurance product in the next phase of the research. There is a lot of excitement and interest in the research with the project partners including the United Nations Children Foundation (UNICEF) and the global body representing mobile phone companies and operators (GSMA). The Kenyan government is also very supportive with the Water Services Regulatory Board a partner in the work as part of their mandate to deliver safe water to all Kenyan citizens. With over half of rural Kenyans lacking safe and reliable water there is a real need to address handpump performance. Kenya is not unique though. Across rural Africa similar problems are faced. If this project is successful it could help the 276 million rural Africans access safe and reliable water to make their lives and futures healthy and wealthier. That would be good news for everyone.