Financial Sustainability and Cost Recovery in Small Towns Water Systems in Eastern Region of Ghana

Abstract

The sustainability of water facilities is one of the major challenges in the delivery of safe water to rural communities and small towns in Ghana. This study therefore aimed at assessing the financial sustainability of the small towns water systems in the Eastern Region based on the level of cost recovery. Secondary Data collected from various STWS were used. Variables of interest were analysed using descriptive statistics and a random effect regression, and a pooled logit regression. Interviews were also conducted. The study found more than 50% of the STWS in Eastern Region are unable to raise their expected revenue. Again, the study revealed that most STWS are relatively efficient, having positive net-incomes after all expenditures, and improved remuneration and regular maintenance helps to improve revenue from STWS. Further, majority of the STWS are financially sustainable because the operation, maintenance costs and the capital maintenance costs are all recovered from tariffs. It was revealed that user financing of full implementation costs for STWS is an unrealistic goal and that cost recovery for on-going service delivery, recurrent operation, and maintenance may be a more achievable target. It is recommended that the WSMT managing the STWS should be equipped with financial management skills for effective management of the revenue generated from the STWS. They should undertake regular maintenance and repairs and improve staff remuneration to increase productivity, improve revenue generation, and enhance the financial sustainability of the STWS. The Municipal and District Assemblies should monitor the activities of the WSMT and provide technical support in terms of budgeting, financial reporting and auditing of their accounts to contribute to the financial sustainability of the STWS.