Abstract

The purpose of the study was to examine the moderating effect of government regulation on the joint influence of water pricing, infrastructure financing, utility efficiency and subsidies on financial sustainability of Water Service Providers (WSPs) in Kenya. It adopted pragmatism research philosophy using explanatory sequential mixed design, while targeting a population of 616 and a sample of 352 respondents comprising of senior managers from eighty-eight registered WSPs in Kenya. Quantitative data was collected using a structured questionnaire; additional data was collected using interview schedule administered on key informants. Data collected, was coded, cleaned and analyzed to obtain both descriptive and inferential statistics. A two-step regression analysis and analysis of variance (ANOVA) was carried out to establish the nature and the magnitude of hypothesized relationships. The results showed that government regulation has a positive and significant moderating effect on the joint influence of water pricing, infrastructure financing, utility efficiency and subsidies on financial sustainability of WSPs in Kenya. Unlike many studies which have focused on the demand side, this study focused on the supply side and revealed that financial sustainability is a product of many factors which government policy must address concomitantly thus calling for implementation of integrated water management policies.Keywords: Government Regulation, Water Pricing, Financial Sustainability, Infrastructure Financing, Utility Efficiency, SubsidiesJEL Сlassіfіcatіons: Q01, Q25, Q28DOI: https://doi.org/10.32479/ijefi.11443

Highlights

  • In development literature, sustainability emanated in a response to models of economic growth that characterized the approaches to development over the past half a century (Tango International, 2009)

  • Multicollinearity tests To test multicollinearity, the variables were subjected to the variance inflation factors (VIF) and tolerance tests in the regression analysis

  • According to the industry experts, regulation involves setting minimum service standards, development and implementation of an appropriate tariff policy and customer protection. They observed that that government regulation was smooth until the onset of devolution in 2013 after which conflicts emerged with different county governors wanting to set their own standards for Water Service Providers (WSPs) within their respective counties

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Summary

Introduction

Sustainability emanated in a response to models of economic growth that characterized the approaches to development over the past half a century (Tango International, 2009). In water service provision, United Nation (UN) define sustainability in line with the European Union Water Framework Directive (EWFD) as comprising of three interdependent pillars that impact on the optimality of the sector. These include economy, environment and ethics (Bernard, 2003) commonly referred to as 3Es. Worldwide, water is considered a basic human need, a human right, a key input in the industrial and commercial sectors as well as a major contributor to economic development (Chitonge, 2010; Tsitsifli et al, 2017; Montgomery et al, 2009).

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