We are nearing a ‘moment’ where digital adoption by many water utilities in low- and middle-income countries is increasingly in reach. Technologies are maturing at the same time as many of the fundamental ingredients needed for adoption are increasingly in place. This blog provides a summary of recent research conducted by the GSMA , delivered in partnership with Water and Sanitation for the Urban Poor (WSUP), on digital adoption by four water utilities in Kenya.

Read the report: Water Utility Digitalisation in Low- and Middle-Income Countries: Experiences from the Kenyan water sector

Digital adoption by Kenyan water utilities

The motivation for our work with WSUP stemmed from the fact that we are still unable to answer some very basic questions surrounding digital adoption. What’s the proportion of utilities accepting digital payments, how many have digitalised customer relationships, or use smart meters? We simply don’t have good answers to these questions at the moment. Furthermore, beyond understanding just which specific digitalisation initiatives have been undertaken we have a limited understanding of the processes utilities move through in progressive digitalisation. And as highlighted in a recent systematic review of the literature on LMIC adoption, we are also lacking good data on the costs and benefits of these initiatives.

The work we did was a ‘small N’ study, and looked in-depth at just a few utilities, and in no way addresses all of the big questions above. Nonetheless, it is one of the few pieces that takes a detailed look at digital adoption processes over a longer period. For that reason, we hope that it is a useful resource in drawing attention to LMIC digitalisation and can serve as inspiration for further work.

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. The aims of this work were to build detailed case studies, mapping the use of technology across six key domains, to build a clearer picture of patterns in digital adoption. Though there was of course variation between the utilities we found that generally there were some common progressions at different points in time:

• Pre-2015– the initial stages of digitalisation generally focused on payments and digitalising some specific utility functions like meter reading and billing.

• 2015–2019– here there was more of 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– after implementing some of the specific initiatives above, focus shifted more to digital systems, and overhauling their ERP systems to create single digital environments and lay the foundations for more advanced solutions. There was also an increased focus on deploying smart meters for household connections and kiosks.

The full report contains an analysis of the factors that act as a barriers or enablers, and a summary of some key lessons. For the sake of brevity, we do not discuss them in this blog.

Where to next?

As part of the research, five key opportunities were identified for the utilities. These were written in reference to the Kenyan water sector but have been adapted here to highlight their broader relevance.

• Stronger peer learning between utilities could support more effective implementation. In many cases, we observed the experience of one utility held lessons for others. Some of the workshops we hosted were the first time utilities had the opportunity to exchange directly on digitalisation. There is scope here for leadership from a wide range of stakeholders working with utilities to take on this convening role.

• Better documentation of the pros and cons and the costs of digitalisation initiatives would equip utilities to make more informed decisions. Robust data on these are still relatively limited, leaving utilities in the dark in making procurement and investment decisions. Regulators codifying learning in guidance could also be beneficial in many contexts.

• Advanced metering (including PAYG solutions) and network monitoring and control remains frontier tech for many utilities.  In Kenya these were the technologies most likely to address non-revenue water (NRW) losses, which were still only at the piloting stages of implementation.

• Digitally enabled financing solutions are increasingly becoming available. Innovative and flexible financing is already underway as new players emerge and new funds are developed by existing players.

• Stronger partnerships with mobile operators could offer new opportunities. Many of the digital solutions discussed in the report have mobile services at their core, making mobile operators an important partner for utilities, and there is scope to extend these partnerships beyond simple integrations.

While the utilities were selected for their size and as we knew of specific digitalisation initiatives, the research team was genuinely surprised at how far and fast the utilities were moving, with little documentation or attention. Our suspicion is that this is the case with many more utilities across African and Asian markets, and that there is likely much more we have to learn.

There are many encouraging initiatives in this area. For example, the IWA’s Digital Transformation Hub seeks to collect digitalisation case studies from utilities, takes open submissions, and would certainly be enriched through LMIC contributions. At World Water Week 2022 the GSMA will be presenting alongside colleagues from the World Bank who have been doing work on developing a Digital Maturity Tool, and in another session with Aqua for All and National Bank Kenya on their experiences with digitally enabled innovative finance. Looking across regions, the findings from our work in Kenya have striking similarities with those emerging from ADB’s work, highlighted in the recently published comprehensive set of case studies cropping up from their e-Marketplaces on Water Security and Resilience.

While all of this work unquestionably adds much, it’s far from a crowded field, and there’s scope for the wide range of stakeholders that work with utilities – regulators, associations, national ministries, donors, and development banks – to take on leadership roles. From our experience there is also certainly demand for this learning to be packaged in practical guidance for utilities, as many are still at those fundamental first steps in their digitalisation journeys.

About the GSMA 

The GSMA Mobile for Development programme works at the intersection of the mobile ecosystem and the development sector to stimulate digital innovation. For over a decade, we have supported digital innovation through a mix of seed grants to innovators, brokering partnerships with mobile operators, research and insights, and advocacy.

The last decade has seen a phenomenal expansion in connectivity and mobile financial services. In 2021 the mobile money ecosystem passed a major milestone, processing over $1 trillion in payments from 1.3 billion registered accounts. And in 2020 the scales tipped so that a majority of the world, over 4 billion people, accessed the internet through a mobile device; with 94 per cent of the global population is now covered by a mobile broadband network. These two changes in particular are critical enablers for digital adoption. Of course, not all digital solutions in water draw on mobile services, but many do, and this is one of the reasons that we include Digital Utilities as one of our focus areas.