Factors Influencing the Financial Viability of a Water Service Provider in Kenya: The Case of Gusii Water and Sanitation Company Limited

Abstract

Water is vital for all known forms of life and therefore it is important to ensure adequate supply in the right quantity and quality. Kenya undertook major reforms in the water sector since 2000s to enhance service provision. A major aspect of this was ensuring financial viability of water service providers. However, most WSPs are financially unsustainable. WSPs are faced with weak management structures, processes and systems and poor systems of revenue collection. Therefore, in order to ensure the sustainability of WSPs, it was vital to investigate the interrelationship and importance of factors impacting corporate sustainability, paying greater attention to financial viability of a WSP. This study proposed that revenue adequacy was influenced by nonrevenue water, appropriate tariff design, effective billing and collection and new connections. Cost efficiencies in service delivery is influenced by nonrevenue water, energy efficiencies, staff cost rationalization and chemicals efficiency. Accordingly, this study adopted these factors in measuring the financial viability of water service providers in Kenya. This study was motivated by the studies that have highlighted the financial viability inadequacies of water service providers in sub – Saharan Africa, Kenya inclusive. The inefficiency of the water service providers contribute to limited water access which the quality of human life through increased disease burden, loss of productive time searching for water. The study used the case of Gusii Water and Sanitation Company Limited. The findings of this study can be used to evaluate whether the water reforms in the country are sustainable and effective. Such evidence can inform policies for ensuring attainment of the constitutional obligations towards water rights in Kenya, attainment of Vision 2030 goals as well as the MDGs.