Institutional and Socio-Economic Review of the Use/Application of Electronic Prepayment Meter Technology in the Provision of Water Supply Services to Urban and Peri-Urban Areas
Report No 1206/1/04

Nov 2004


In many municipalities prepayment water meter technology has become a prominent instrument of water management contributing, with other measures, to the sustainability of water provision. This study aims to provide an understanding of the social and institutional context in which the technology fails or succeeds. This understanding is derived from an examination of the available literature, the analysis of surveys and by examining case studies.

The primary objective of the study was to understand how the technology could best be used to ensure sustainable water provision by local authorities. Key objectives were to determine how the changing institutional environment impacted on the uptake of the technology and, similarly, how socio-economic contexts affected its adoption.

The project methodology included:

Four threads serve to provide continuity and focus to the report :

In the literature study, it is pointed out that South Africa is a world leader in the development and application of prepayment water meters and the related technology. This is reflected in South African dominance of the literature. The Internet revealed a vast number of references to Chinese suppliers of prepayment water meters but little could be found on the social, institutional and economic context in which they employ the technology. The paucity of information on the Chinese experience is undoubtedly due to language issues.

Authors on prepayment technology tend to be either proselytes or detractors with few authors offering “objective assessment. Critic’s viewpoints were generally related to their distaste of privatisation and globalisation. The negative impact these forces have on human rights, and on the poor in particular informed much of their criticisms. South African critics emphasise the vulnerability of the poor and women as an argument against the use of prepayment water meters. Unfortunately these viewpoints were generally articulated before the introduction of the Free Basic Water policy. Even critics writing after the introduction of FBW do not adequately consider the impact of the policy.

Advocates of the technology are often found from amongst suppliers of the instruments and from the local authorities using it. Countries where these meters have been used or are being considered now include Nigeria, Tanzania, Egypt, Curaçao, Namibia and Brazil. The writing of advocates accentuate the technical aspects of the technology at the cost of social and institutional aspects emphasised by critics. Rabe’s research in Gauteng is highlighted as a strong contribution to the debate by a water service provider. His positive view of the technology is partly a function of assessing its impact in less in terms of income generation than it terms of minimising waste.

The National Postal Survey revealed a number of key insights including:

The NPS was biased as municipalities using prepayment meters were less likely to respond than those that were not using the technology. The anticipated uptake of the technology derived from the survey should be seen against this background. After neutralising bias in the responses received a probabilistic model of uptake predicted that:

The Labour Force Survey (LFS) conducted in 2001 by Statistics South Africa (SSA) covered a variety of attitudes and perceptions. This survey proved useful, particularly to identify response bias and assessing the impact of prepayment meters.

The conceptual framework adopted in this report centres on “tariff regimes” under which benefits are associated with particular combinations of costs and sanctions. Five tariff regimes are distinguished: billed, flat rate, prepayment, regulated and communal sources. These are discussed and compared in terms of prevalence, cost and their impact on consumption level. The LFS established that:

The information from the NPS and LFS was combined with data on water charges to unpick the attitudes and perceptions of current users. Aspects considered include perceptions of satisfaction with the technology in general and with cost effectiveness and technical reliability in particular. Prepayment meters in private houses, instead of communal taps, were viewed more critically by their users.

Among service providers there was a strong correlation between technical reliability and general satisfaction with the technology. The role of on-going support for the technology was highlighted by the correlation between support levels and high satisfaction levels regarding the meters in general and their technical reliability in particular. Contrary to popular perception vandalism was not cited by service providers as a particularly serious problem. Somewhat surprisingly service providers indicated that the FBW policy would have a minor impact on anticipated uptake of the technology.

Finally, case studies were conducted in municipalities selected to ensure a cross section of experiences with the technology. The eight municipalities selected were:

The highest number of prepayment meters in use at any stage appears in brackets behind the name of each municipality. The studies examined the experiences of service providers with the technology. The most salient findings were:

The Free Basic Water policy has had an important influence on municipalities’ installing the technology. The FBW, inter alia, altered their perceptions as to


It is generally concluded that prepayment water meter technology has a valuable role to play in sustainable water service delivery. The major recommendations arising from the study are:

Issues for further research are also identified, including:

  1. An examination of the potential of “low level technology” in reducing the cost of water to very low-income communities.
  2. An examination of the impact on households and service providers of an increase in the FBW allocation.
  3. Improved estimation of the full transaction costs associated with fixed rates and “traditional” billing
  4. Estimating the impact of HIV/AIDS on the water demand and the management of water service delivery by municipalities
  5. The Chinese experience should be examined by, inter alia, site visits which may further our understanding of the social and institutional aspects of the technology.