Case Study Developing Private Sector Supply Chains Water and to Deliver Rural Water Technology Sanitation Program Afridev Handpumps An international partnership to help the poor gain sustained in Pakistan access to improved water supply and Private demand emerges for sanitation services an affordable and reliable pump In the rural water supply and sanitation sector, goods and services (technology, training, repair services, financial and technical services, and facility management) are supplied to customers through a supply chain from manufacturers, importers, and service providers through a network of distributors. Payment flows in the opposite direction. BASIC SUPPLY CHAIN CUSTOMERS (COMMUNITIES, INDIVIDUALS) Goods and Services (Handpumps, Payment spare parts, repairs, DISTRIBUTORS credits) (RETAILERS, WHOLESALERS) Payment Goods and Services SUPPLIERS (MANUFACTURERS, SERVICE PROVIDERS) The Supply Chains Initiative is a global initiative led by the Water and Summary Sanitation Program. Collaborating partners include government departments, NGOs, and bilateral and Ten years ago, the Afridev handpump was relatively unknown outside of Africa. Today multilateral agencies. The aim of this it is manufactured in three out of the four provinces of Pakistan and more than 80,000 initiative is to develop practical tools that enable and encourage the private locally manufactured Afridev handpumps have been installed in the region. This case sector to provide goods and services study examines how this transformation occurred, and the effectiveness of the current related to rural water supply and sanitation. The initiative’s first phase supply chain for Afridev handpumps and spare parts in Pakistan. In particular, it focuses will focus on increasing the on the increasing importance of the private sector in a market that has been dominated understanding of the dynamics of the private sector supply chains for by External Support Agencies (ESAs) and the local government. handpumps, spare parts, and sanitation equipment. 2 Background been drastically reduced. As a result, dealing in Afridevs, or their spare parts, many parts of Afghanistan have seen has been greater still. a return to non-mechanized water Afridev handpumps were supply systems. Afridev originally introduced to Thus, despite the troubled economic Pakistan in the late 1980s by ESAs and political environment in the region, Handpumps organizing relief operations for the there is a significant demand for reli- influx of Afghan refugees to the North able and affordable handpumps, and in Pakistan West Frontier Province (NWFP). The the popularity of Afridev handpumps Afridev was selected following field has grown. Since 1990, the number of The introduction of Afridev trials of a number of handpumps, and local manufacturers producing Afridev handpumps into Pakistan it quickly became the standard com- handpumps has increased threefold, was the result of considerable collabo- munity handpump used in the region. and the rise in the number of traders ration between federal and provincial More than 10 years after the intro- duction of the Afridev handpump, the conditions in NWFP and Afghanistan have not improved. Recent political upheavals in Pakistan have weakened the economy, and rural infrastructure remains basic. Although paved roads connect most towns, and rural electri- fication is widespread, more than 40 per cent of the rural population does not have access to safe water. Rural communities in Pakistan gen- erally prefer mechanized water supply schemes, but the local government does not have enough funds to pro- vide schemes, or even to operate and maintain existing schemes. There are also major problems with the quality and availability of the electricity sup- AFRIDEV HANDPUMP ply, and tariffs are rising rapidly. Clearly, the reliability and sustainability The Afridev is a robust and reliable handpump suitable for lifting water of rural water supply systems that from a depth of 10 to 45 meters. User-friendly features, such as inexpensive, depend on electric pumps is question- lightweight components, and a design that allows easy removal of pump able under these circumstances. rods and below-ground components, give the Afridev a clear advantage over In Afghanistan, the situation is worse alternative products. The concept and design of the Afridev handpump was a still. The fighting continues, as does the co-operative effort; the Swiss Center for Development Cooperation in Tech- flow of Afghan refugees to Pakistan, nology and Management (SKAT) has made the standard specifications and and many of the refugee settlements manuals for the manufacture and installation of the Afridev available to the are now effectively permanent. Exten- public. sive damage to the rural economy and Two types of Afridev pumps are produced in Pakistan: the Indus pump, which infrastructure has eliminated public is manufactured according to the standard SKAT specification; and a smaller services in many areas, and people’s indigenously developed Afridev variant, known locally as the Kabul pump. capacity to pay for private services has 2 governments, External Support Agen- an Afghan political party, with the edly affected by the plummeting cies (ESAs), NGOs, and local indu- intent to increase the availability of low- foreign exchange value of the stry, over a period of several years. The cost handpumps in Afghanistan; the Pakistani rupee. most significant intervention was a two Lahore-based manufacturers, Pro- At the outset, the factories concen- large-scale program led by UNICEF. gressive Steel Industries (PSI) and Shani trated on the manufacture and galva- The UNICEF approach was to use Engineering, were existing steel fabri- nizing of the metal pump components their program to generate a ‘critical cation companies whose skills and (body, handle, fulcrum, rod hanger mass’ of Afridev handpumps that spare capacity enabled them to pins, and pump rods) and left the fab- would encourage political support, and respond to demand from the ESAs; and rication of the plastic and rubber com- produce enough product knowledge the final factory, Kawsar Engineering ponents (plunger, foot valve, bushes, and process skills to sustain local Works, was set up by former employ- seals, bobbins) to specialist manufac- manufacture. In the initial phase ees of the DACAAR handpump factory turers in Lahore. In the last few years, UNICEF assisted in setting up two fac- who already had experience in the however, the combination of a desire tories. The Danish Committee for Aid manufacture of Afridev handpumps. to reduce production costs, and to Afghan Refugees (DACAAR) estab- However, they were all aware of the increased confidence in their fabrica- lished the first factory in Swabi, about large handpump programs under way tion skills, has led several of the manu- a one-and-a-half-hour drive east of in Pakistan and Afghanistan, and of facturers to start producing their own Peshawar. A company called Engineer- the high price of the Afridev handpump, rubber and plastic parts, and three of ing Concern (EC), in Karachi in south- and it was the potential value of the factories now make the majority of ern Pakistan, started the second. These orders for these handpump programs their Afridev components in-house. factories began by using Afridev that was their primary motivation for During the period 1991-99, infla- handpumps from Kenya as templates starting production. tion in Pakistan averaged over 10 per for their production and, despite some cent, so the fact that the Afridev initial difficulties, they were soon handpump now sells for 20 per cent producing several thousand Afridevs Costs less than it did nine years ago illus- a year. trates the increases in efficiency that Production increased in the early Government departments competition has produced. However, 1990s when the Local Government, Elec- and ESAs have both actively there is some concern that this price tions & Rural Development Department encouraged competition between the competition is starting to cause a ‘race (LGE & RDD) adopted the Afridev as its manufacturers. Promising manufactur- to the bottom’. Some ESA contracts are standard community handpump. At the ers have been awarded small orders now being awarded largely on price, same time relief activities in Afghanistan to stimulate their growth, and the large and manufacturers are being tempted expanded, but prices remained relatively contracts have been let through com- to use inferior materials and cheaper stagnant. UNICEF and DACAAR realized petitive ‘open bidding’ procedures. This production processes to lower their that this was largely due to the duopoly strategy has been effective, and the costs. PSI (Lahore) is currently under- that the two existing manufacturers had average cost of an Indus (Afridev) selling their competitors by 10 to 15 on the supply of Afridev handpumps in handpump, not including pipework and installation, is now only US$ 130 (see Pakistan, so they set out to encourage Table 1 other manufacturers to begin production. Table 1). Interestingly, whilst Table 1 Cost of Indus pump in Pakistan They were successful. Four more Afridev shows that the dollar price has dropped Year Rs OER US$ handpump factories, two in Peshawar dramatically (more than halving since 1987 - - 700 and two in Lahore, are now in production, 1991), the rupee price has dropped by and prices have dropped considerably. only 20 per cent. It appears that, 1991 8,000 25 320 There were a number of reasons for because the majority of