PALM Spare Parts Supply Chain Project

Afridev hand pump, a village level operation and maintenance (VLOM) type of pump is a standard pump used in the domestic water supply sector in rural areas of Amahara region and other regions in Ethiopia.

The supply chain for the spare parts of this pump is not yet established in a sustainable manner. The only attempt made in relation to this was by the Rural Water Supply and Environmental Programme (RWSEP) in Amhara Region. The RWSEP in collaboration with the Water Resources Development Bureau of the region distributed spare parts to 18 districts. But, as explained earlier, the result of a recent assessment indicated that this supply chain is not working and will not work in the future as well.

Therefore, my company will import spare parts in bulk from hand pump manufacturers in India every year and initially sell them to rural communities in 18 districts. In these 18 districts, there exist around 4000 Afridev hand pumps, which provide water supply services to nearly 2 million rural people. The rural people mainly depend on agriculture for their living.

The business will be located in Bahir Dar town, which is the capital of Amhara regional state and the nearest district is 42 kms and the farthest 250 kms away from the capital..

The selling price of the spare parts will be based on “ Cost –Plus Method” and my company believes a profit mark up of 20 % over the total import cost is very reasonable to generate profit. The project initially needs 3 people (including myself) at region level and 18 Artisans at district level. With in three years, the company aims to expand its market to 29 more districts and promote its business to the remaining 91 districts in the region and nationally.

The customers will buy the spare parts because my company will sale them at fair prices , within easy reach and without any bureaucratic process.

I have been in continuous contact with the communities and community representatives, i.e. water and sanitation committees of the potential customers between 2002 and 2005. I also contacted some of them between February and April 2007. All of the district capitals and most of the villages within districts are accessible by 4 wheel drive vehicles. The remaining villages could be reached either on foot or using pack animals. As I am used to the area, I will reach them frequently especially during the first year.

To speed up the sales, my company will advertise the spare parts through local television, radio and news papers. In addition to this, word of mouth advertisement will be made in the districts and in the villages.

The competitors of my company at the moment are the government water offices at district level and a few traders in Bahir Dar town. Both of them sale same quality spare parts imported from India. As the supply chain is not functional, most of the spare parts in the government water offices are already out of stock and the remaining will run out of stock in a very short period of time. As a result, the traders in Bahir Dar are selling some of the spare parts at 300% profit. My company’s service will be better because it will sale the spare parts at reasonable price as compared to the traders and once the service is properly established it will be sustainable.

So far, except a few on and of traders in Bahir Dar town who sale some spare parts at extremely high prices, no private service provider has attempted the business at district level. In addition to this, the service is being promoted and is going to be provided by a person (myself) who has wide knowledge on the issue and the area as well.

I prepared an O&MM Procedure; spare parts supply chain options and training manuals for facilitating O&MM activities of rural water supply services in 18 districts. In addition to this, I trained region and district level experts on the stated subjects and facilitated the distribution of imported spare parts to district government water offices for sale to the user communities. Finally, up on invitation by the regional water bureau, I carried out assessment on the status of O&MM activities between February and April 2007. The result of this assessment revealed the following:
• The government supply chain is not functioning and will not be functioning in the future as well.
• The user communities are wiling to pay for O&MM. In 4 districts alone, over 77,000 USD has been saved in local banks mainly for spare parts purchase.

From this process, I have learned that the involvement of the private sector in the spare parts supply chain is crucial.

In the first year, the business will employ 21 people (3 at region and 18 in the districts). During the second and third year, this number will increase to 30 and 50 respectively. So, the business will provide direct local employment opportunity to these people. On the other hand, in addition to supporting close family members, these employed people will send their children to school. Because of the extended family structure in Ethiopia, other family members of each of these people may also receive support.

Furthermore, the rural population, which receives sustainable clean water supply services is considered to generate indirect local income. Due to improved health, 2 ,3 and over 5 million rural people will actively employ themselves in productive activities in the first, second and third years respectively. As a result, food security and standard of living in particular will be improved and poverty in general will be reduced.

As a result of improved living condition, rural people will send their children to school. These school children will initially bring new skills and knowledge to their families and the general rural community and shape their future and the future of their country eventually. Further more, because of the availability of spare parts, the existing Artisans and pump attendants who are supposed to provide preventive and corrective maintenances respectively to the hand pumps will improve their skills.