Browsing by Author "Mucheru, Florence M."

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    Determinants of financial viability among regulated water Service providers in Kenya
    (KCA University, 2025) Mucheru, Florence M.
    The management of water resources as an economic good has been a subject of global discourse since the Dublin Conference in 1992. This conference highlighted the importance of treating water as an economic good and recommended the use of full-cost pricing to ensure the financial viability of water utilities. The principles established at the Dublin Conference influenced the development of Agenda 21 and the subsequent adoption of the UN’s Sustainable Development Goals (SDGs), emphasizing the provision of water and sanitation for all as a basic human right. The primary objective of this study was to determine the factors that affect the financial viability of regulated water service providers in Kenya. Specifically, the study assessed the effect of water tariff, non-revenue water, and personnel expenditure on the financial viability of water service providers in Kenya. The study was guided by stakeholder theory, agency theory, and public utility theory. Secondary data were utilized, sourced from the 89 public water companies in Kenya licensed by WASREB. The data spanned from 2016 to 2023, providing an eight-year period and enabling the creation of a panel dataset. The study covered the period of 2016 to 2023 as the Water Act 2016 was operationalized following a revision of the Water Act 2002, which brought major changes to the water and sanitation sector informed by the Constitution of Kenya 2010. A data collection sheet in Microsoft Excel was used as the data collection tool. Panel data were accessed from the Impact Performance Reports of Kenya’s Water Services Sector available on WASREB’s website. Descriptive and correlational methods of data analysis were employed to examine the relationship and effect of water tariff, non-revenue water, and personnel expenditure on financial viability of the 89 regulated water service providers in Kenya. To ensure the accuracy of the regression results, diagnostic tests were conducted to assess multicollinearity, autocorrelation and heteroskedasticity. The research questions presented in the study formed the basis for hypothesis testing. Each hypothesis was either rejected or retained depending on the results. Using a 95% confidence interval, the null hypothesis was rejected whenever the p-value was less than 0.05, while the alternative hypothesis was accepted. STATA was used for data analysis as it provided the tools and features required for data transformation and regression diagnostics. The regression analysis showed that water tariffs had a positive but insignificant effect on financial viability, while non-revenue water had a negative but insignificant effect. Personnel expenditure had a positive and significant effect, indicating that efficient management of staff costs enhances cost recovery. The study concludes that tariffs and NRW alone do not guarantee financial viability. The study highlights the role of personnel expenditure, suggesting that resources allocated to staff can improve efficiency when properly managed. Therefore, WSPs should invest in training, performance management systems, and outsourcing of non-core functions to enhance productivity and ensure that personnel costs translate into improved service delivery and cost coverage. WASREB should strengthen enforcement of benchmarks for personnel expenditure as a percentage of O&M and staff to connection ratios to minimize inefficiencies and prevent wage costs from undermining operational sustainability. By ensuring that personnel expenditure is aligned with efficiency and productivity, WSPs can improve financial viability.