African utilities embrace prepayment

A study by the World Bank, titled Can Africa Claim the 21st Century?, suggests there is optimism that Africa will take its place on the world stage. The World Bank has established a body of research called the Living Standards Measurement Study (LSMS). These household surveys have become an important tool in measuring and understanding poverty in developing countries. Africans are urged to take a more active and business-like approach to governance and economic management.

Utility Services

An important driver of this process is the provision of adequate utility supplies, not only to businesses but also to the homes of many millions of people who will build and strengthen their country’s economy.

The nature and structure of utilities is in a state of flux. Government departments are becoming quasi-government or even privatised entities responsible to shareholders. This move to more commercially aware enterprises brings with it the need for cost-effective, focused and customer service oriented programmes.

Technology Advancement

The Y2K analysis, started in most African utilities before the end of 1999, resulted in an important upgrade of a number of system infrastructures. Smart technologies are making their debut to ensure that consumers do pay for services.

The year 1990 saw the start of the Electricity for All programme in South Africa. The core principle behind this essentially social programme was one of payment for electrical utility services. However, revenue collection was seen as a major problem area if traditional billing methods were employed, and innovative designs of prepayment meters suited to our African scenario resulted. Traditional European products were usually too expensive, and their metering product specifications too narrow to address the network problems unique to Africa’s harsh environment.

Together with the World Bank, Tanzania took a positive decision to start an electricity meter replacement programme in the mid 1990s, to introduce prepayment metering in large numbers.

Lagos Customer

A World Bank report on the Tanzania project states: “The customer has more control over electricity use and can buy electricity in the desired quantities. …. The customer no longer has to worry about the accuracy of the electric bill. Also, time-consuming and often fruitless interaction with the utility company over inaccurate bills is avoided.” The report goes on to state that the system simplifies the utility’s business operations.

Multiple Utility Management

Water utility management has also taken up the challenge. There are cost-effective products now on the market, when even five years ago it seemed impossible that prepayment meters would meet stringent commercial return analysis models for utilities.

The introduction of cellular telephone networks has led to prepayment telephone options that have surpassed contracted (billed) customer figures in some countries. It is estimated that almost 75% of South Africa’s telephone network is prepaid. This prepayment concept has even filtered into landline telephones – a significantly large network of prepaid landline telephones now exists in South Africa.

The reason for the explosive growth of these prepayment options is primarily due to customer demand, and to utilities adopting the new technologies.

African Projects

Many African countries have taken steps to implement their own prepayment programmes to bolster their utility management systems. In the Côte d’Ivoire, the utility has licensed a commercial organisation to run its distribution and metering business. Excellent management methods have been employed that have converted the electricity revenue collection process into an efficient operation – but still employing billing methods. Recent indications reveal that there may be scope for implementing a prepayment programme in the Côte d’Ivoire to enhance revenue collection methods.

The Sudan has adopted a prepayment electricity system for its capital, Khartoum. Installations have been in both private and government dwellings, and the management system now gives the utility up-to-date information on sales and consumption patterns. The water utility is also investigating the use of prepayment technology. Nigeria and other West African countries are looking at ways of improving their utility revenue management systems.

In summary, the first African prepayment solutions appeared just over ten years ago. The products offered have stabilised in terms of performance, features, serviceability, lifetime expectation and cost. Prepayment is growing in popularity amongst utilities, and there are many well managed reference sites to show that we Africans are taking “a more active and business-like approach to governance and economic management” on our continent!