With Water scarcity becoming an increasing issue, as outlined in the GEO-4 report, the idea of providing fresh water supplies to communities in the developing world would seem a difficult proposition. Manila Water has shown that whilst this is challenging to achieve, the rewards to both the company and the community are great.
Business Insight
In an attempt to improve water services in the Philippines capital Manila the system was privatised under the National Water Crisis Act 1995. Manila Water, owned by one of the country’s largest private companies the Ayala Group, was awarded a 25-year contract to take over the operation of Manila’s East Zone, home to five million people.
Transformation
The company inherited almost 1,500 existing employees along with outdated infrastructure in some of the city’s poorest regions. Combined with currency devaluations and the impact of El Nino, the first few years of operation were challenging to say the least.
A value principle of ‘we care’ was rolled out across the organisation. ‘We care’ applies to customers, employees, the environment, shareholders and the urban poor.
The roll-out was supported by training programmes focusing on technical, financial, project and relationship management skills. It aimed to provide the skills required to make the ‘we care’ proposition a reality.
Critically employees were encouraged to participate in corporate programmes beyond their job description to bring together a range of skills and experiences to address issues. Cross-functional teams were established to help formulate key policies and provide input on decisions. An environment of information sharing and localised problem solving was created and acknowledged through high profile awards programmes. In fact the recipients of the highest accolade, the Tower awards, are listed on the company’s website.
Careful planning and prioritisation of areas for connection was undertaken to ensure that operating costs were efficiently minimised. One of the key priority areas for connections was some of the poorest areas of the city, connected under the company’s ‘Water for the Community’ programme. At first glance this may seem a strange choice as they would hardly seem the most profitable segment of the market. However, ironically many in these areas were already paying significantly more for their water from water vendors selling by the bottle or the drum.
Those that weren’t had often connected themselves illegally to the system. Not only were they extracting water free of charge, the damage to pipes by doing this caused massive leakages from the system. By connecting these households at a reasonable rate Manila Water was able to reduce the amount of non-revenue water lost in the system from 63% to 30.4%, dramatically enhancing its revenue potential.
End Game
During its first ten years of operation Manila Water has achieved some impressive financial, social and environmental outcomes.
Total customer numbers swelled from two million to five million. At the same time the number of customers receiving 24-hour availability has increased from 26% to 98% and the company has achieved 100% compliance with water quality standards.
Water volumes, and therefore water sold, increased from 440 million litres per day to 948.
The ‘Water for the Community’ programme has reached over 850,000 residents who previously had no access to clean and affordable water
Manila Water’s cultural change achievements have been recognised with numerous awards, including the Asian CSR Award for Best Workplace Practices in 2006.
The company became profitable in 2001 and has been able to attract additional financing from international development banks, including the International Finance Corporation, as well as the UK’s own United Utilities. The next phase of development focuses on sewerage and sanitation services. In 1997 only 7% of the East Zone was connected to the sewerage system.
It is here that there are many expected environmental benefits. It is near impossible due to space and cost limitations to build a centralised sewer network. Instead communal septic tanks are being turned into compact treatment plants. The tanks are being outfitted with equipment for primary and secondary treatment enabling clean wastewater to be released into rivers and streams.
By focusing on localised solutions and encouraging creative input from an empowered team Manila Water has demonstrated that it is possible to run a profitable business whilst still meeting the needs of the poorest members of society.
References:
Manila Water Company website
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