HNP Cooperative Model and Other Topics

2011.07.31

Goals

Create a sustainable, cooperative model for the operationEncourage owner/stewardship of users/residents of Kibera of their own basic servicesMake the center self-sustainingPhase-in services and price appropriatelyAssume initial capital expenditures covered by external funds (HNP USA)

Why a Cooperative?

Resource hoarding is a problem in KiberaTheft/Looting is also a concernA group of 1500 member/users will have a stake in protecting the centerLocal Kiberans with HNP training will provide the labor to operate and manage the centerNo profits returned to outside organization – but re-invested in Co-op to provide sustainability/independence

Services Provided

BasicFill water containers for carry-awayShowersToilets

ExtendedAdult educationInternet accessMarketplaceElectricityMicrofinanceOther services

Price References

Approximately 100 Kenyan shillings per 1 USD

Without HNP:To fill a 5 gallon water container: 3-20 shillings, monthly average of 6 KES/5 gallon jugPrices unpredictable, highly variableMust spend 1-2 hours to source

Survey results for willingness to pay:Shower: 5 kenyan shillingsToilet: 2 kenyan shillings

Proposed Pricing

Subscriptions (450-510 shillings/mnth) (approx. 15-17/day)

Includes daily access to shower, water, toilet, adult learning courses, internet caféFree access for children of member

Walk-on fees (at an average of 7 KES per person/service)

Additional fees for premium servicesNew water containers, internet Café, Green Marketplace services/products

Size of Co-op

Capacity for 1500 members using center on a daily basis at 14,400 gallons/day

Will consume waste-water treatment capacity at 15,000 gallons per dayExcess fresh water capacity availableCreation of grey water for resale/irrigation

Monthly revenue from subscriptions at full capacity:

1500 x 510 = 765,000 Kenyan shillings (approx. $8401)

Monthly revenue from Walk-on fees 2000 x 7(x 30) = 420,000 KES ($4,612)

Monthly Costs

15 full-time employees at $6/day/person = $2,700/month (includes security. Does not include all Extended services)Maintenance: $900/monthReserve for Capital Improvements: $2000/monthBuffer / Other Misc Costs: $1000 / monthOversight/Permits/Training future & present employees: $2000 / month

Cooperative Model

Day-to-day operationalcost breakdown

Adding on Premium Services

Internet50 shillings / hr

ElectricityTBD

OtherTBD

Co-Op Summary

Operation is sustainable as a Co-op of 1500 subscribers

Need to investigate:Costs of publicizing services/attracting membersFuture surveys to price extended/premium servicesSpecific impact on health of water, as well as other health related activities: food preparation, hand washing, water carrier cleanliness, home cleanliness and nutrition.

Economic Impact

Additional research needed

Preliminary Findings on:Value of water servicesImpact of adult education/financial planning

Water Services

Water services can be thought of as a health plan for Kiberan residents

Western countries spend 10-20% of income on healthKiberans live on 200-300 shillings/day.Price of 510/month for center represents approximately 5.7% - 8.5% of income.

Consistency of prices/availability allows for backbone on which to plan daily financesTime savings of 0-2 hours/day is worth approx. 10-60 shillings/day at average income level.

Impact of Adult Education

Based on study of education amongst poor areas in Bolivia*ROI on education (annualized):

For illiterate --> basic level: 20%For basic --> intermediate level: 9%

For each dollar spent on education, 1.09 - 1.20 dollars worth of future value are created.Planning water and water-finances provides a starting point for practical financial literacy

* http://upi-yptk.ac.id/Ekonomi/Psacharopoulos_Private.pdf