Challenges facing water service providers in Kenya in accessing the output based aid-commercial financing

Date
2021
Authors
Cherotich, Heather
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Volume Title
Publisher
Strathmore University
Abstract
Water is an essential component in the development of any economy. Although the Kenyan government has made some strides towards water supply and sanitation coverage within the country, recent statistics by the water services regulatory board reveal that water supply and sanitation service provision still remains scanty clue to insufficient finances. Water Service Providers (WSPs) are confronted with numerous hurdles which stifle their ability to sustainably fulfill their legal obligation of providing water and sanitation services without relying on aid support from government or non-governmental organizations. This paper examined the challenges that water service providers in Kenya face in accessing commercial financing from commercial banks. The specific objectives were to identify the current sources of financing within the water and sanitation sector, to determine the challenges facing water service providers in Kenya in accessing the output based aid-commercial financing, and to rank the challenges from the most prevalent to the least prevalent. A positivism research philosophy and exploratory research design was used for this study. Kenya was the unit of analysis. To achieve the objectives, the study used primary data. Questionnaires were administered to the commercial/finance managers of the water service providers. The collected data was analyzed using SPSS. The target population of the study comprised of the water service providers in Kenya. The study used a non-probability sampling technique of purposive sampling where the sample was known and a simple random sampling. The sample constituted 8 water service providers which applied for and accessed the facility, 6 water service providers which applied for but did not access the facility and 56 WSPs which did not apply for the loan at all. From the findings, this study aimed at coming up with recommendations and solutions that water service providers need to implement for them to access the output based aid-commercial financing. Empirical data an8lysis used collection. The study established that consumer tariffs were the main sources of infrastructure financii1g for water service providers. The study also established economic efficiency challenges was the most prevalent and persistent followed by corporate governance challenges then lastly infom1ation asymmetry. Under cooperate governance, the PPMC analysis showed a high positive relationship between proper financial management and ease of access to OBA financing (r = 0.5; p = 0.000: n= 62). flll1her, the analysis revealed the existence of a moderate positive relationship between level of utility oversight and supervision and case of access to OBA financing (r = 0.3; p = 0.16; n=62). The analysis also shows low positive relationship between availability of information and control system <md ease of 8ccess to OBA financing (1=0.2; p = 0.1 I; n = 62). Under Economic efficiency, the PPMC analysis indicated that there was a high positive relationship between revenue collection efficiency and access to OBA (J=0.508; p = 0.00: n = 62). It showed operational efficiency has a moderate positive effect on access to OBA (1= 0.309; p=0.015; n =62) Under Information Asymmetry, the PPMC analysis indicate that there was a low positive relationship between knowledge of OBA financing and access to OBA (r = 0.220: p = 0.08.5; n =62). The findings also reveal a low positive relationship between knowledge on fees and commissions and access to OBA(r = 0.188; p = 0.144; n =62). The analysis also shows a low positive relationship between know ledge on the interest rate of loans and collateral requirements and access to OBA (r= 0.136; p = 0.292: 11 = 62).
Description
A Research dissertation submitted in partial fulfilment of the requirements for the Degree of Master of Science in Development Finance
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